More annual reports from Pact Group Holdings Ltd:
2023 ReportPeers and competitors of Pact Group Holdings Ltd:
Jamieson WellnessaA
n
n
u
a
l
R
e
p
o
r
t
2
0
2
2
Leading the
Circular Economy
1
i
w
e
v
r
e
v
O
Pact's Role in
the Circular
Economy
Contents
Overview
Pact’s Role in the Circular Economy
Pact Group at a Glance
Our Capabilities
Financial and Operational Overview
A View from the Chairman
A Message from the CEO
Sustainability
Awards and Industry Recognition
Review of Operations and Financial Performance
Overview of Business Strategy
Operational and Financial Summary
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Governance
Corporate Governance Overview
Financial Report
Directors' Report
— Remuneration Report
Auditor's Independence Declaration
Financial Statements
Directors' Declaration
Independent Auditor's Report
Shareholder Information
2023 Shareholder Calendar
Corporate Directory
1
1
2
3
4
6
8
10
11
12
14
18
28
30
32
35
42
58
59
116
117
122
126
127
Pact's Vision is to Lead the Circular Economy through Packaging, Reuse and Recycling solutionsPerformanceGovernanceFinancial ReportShareholder Information
2
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Pact Group
At a Glance
Operating across the whole Circular Economy,
we deliver smarter scaled solutions to a vast range
of trusted brands.
Our Capabilities
Our Values
Packaging
Reuse
Recycling
Contract Manufacturing
133
locations
15
countries
The largest recycler of
rigid plastic in Australasia
9 years recognised as
one of Australasia’s Most
Innovative Companies1
1 Australian Financial Review Most Innovative Companies List 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021.
3
i
w
e
v
r
e
v
O
Our
Capabilities
Eliminating
single-use
through reuse
solutions.
Reducing
waste through
recycling
solutions.
Bringing
brands
to life
Pioneering a
whole
of product
lifecycle
approach
to sustainable
packaging.
Dairy &
Beverage
Processed
Food
Environmental
Solutions
Retail
Accessories
rHDPE
rPET
Home
Care
Personal
Care
Health &
Personal Care
Closures
Infrastructure
Solutions
Supply
Chain
Solutions
rLDPE
rPP
Vitamins &
Supplements
Edible Oils
Fresh Food
Bulk
Packaging
Household &
Industrial
Promotional
Packing
s
n
o
i
s
i
v
D
r
u
O
i
s
t
n
e
m
g
e
S
t
e
k
r
a
M
PerformanceGovernanceFinancial ReportShareholder Information
4
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Financial and
Operational
Overview
Revenue up 4% to
$1.838b
Underlying EBIT
$156m
15% lower than FY21
Underlying NPAT
$70m
25% lower than FY21
Net debt reduced by
$24m
Total dividends
5.0 cents per share
(65% franked)
Solid financial and operating
performance
• Widespread and persistent supply
chain and labour challenges well
managed.
• Continued focus on managing
significant raw material and supply
chain cost inflation .
• Volume growth in Packaging &
Sustainability and crate pooling
services.
• Combined underlying earnings in
the Packaging & Sustainability and
Materials Handling & Pooling segments
in line with pcp.
• Disciplined price recovery in Packaging
& Sustainability and Materials Handling
& Pooling.
• Contract Manufacturing earnings
significantly impacted by higher costs
and lower volumes.
Delivering on our strategy to
Lead the Circular Economy
• Acquired Synergy Packaging.
• Commenced operations at our Circular
Plastics Australia (PET) joint venture
recycling facility in Albury.
• Delivered packaging innovation with
recycled milk bottles.
• Announced a sustainability partnership
with Woolworths Group Ltd.
• Continued to drive the turnaround of
our Packaging business, the scale up of
reuse solutions and growth in our Asian
platform.
5-Year
Financial History
5
i
w
e
v
r
e
v
O
4
7
6
1
,
4
3
8
1
,
9
0
8
1
,
2
6
7
1
,
8
3
8
1
,
4.3%
Revenue $m
FY18
FY19
FY20
FY21
FY22
7
3
2
1
3
2
4
3
2
2
0
3
5
1
3
0
9
2
FY18
FY19
FY20 Exc
AASB16
FY20 Inc
AASB16
FY21
FY22
5
6
1
8
4
1
1
5
1
6
6
1
3
8
1
6
5
1
FY18
FY19
FY20 Exc
AASB16
FY20 Inc
AASB16
FY21
FY22
5
9
7
7
1
8
3
7
4
9
0
7
FY18
FY19
FY20 Exc
AASB16
FY20 Inc
AASB16
FY21
FY22
8.0%
Underlying
EBITDA $m
14.6%
Underlying
EBIT $m
25.0%
Underlying
NPAT $m
PerformanceGovernanceFinancial ReportShareholder Information
6
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
A View from
the Chairman
Dear Fellow Shareholders
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 2022.
In FY22 we faced a further period of significant
volatility in the markets in which we operate, influenced
by the COVID pandemic, geopolitical factors, and
disruption to global supply chains. I am extremely proud
of the way in which our people have responded to
those challenges, demonstrating the resilience of our
business, and continuing to drive innovative solutions
for our customers. Our teams have made great progress
this year in delivering on our Vision to Lead the Circular
Economy and supporting our customers on their own
sustainability journeys.
Our Sustainability Journey
At Pact, sustainability underpins our Vision, strategy,
and business decisions. We have been a leader in
sustainability for many years and it is an ongoing
process of development, seeking to improve our
performance, and helping us to make positive changes
in alignment with our customers and other stakeholders.
Pact’s latest initiative in our drive for a more sustainable
future is an emissions reduction target. We have
committed to reducing greenhouse gas emissions by
50% in Australia and New Zealand by 2030 in relation
to the emissions produced directly at recycling and
manufacturing facilities, and the indirect emissions
from purchasing electricity from the grid to power
those facilities, from a FY21 baseline.
In what is a first for an Australian-based manufacturing
company, Pact Group has also reached an agreement
to convert $420 million of existing loan facilities
into Sustainability-Linked Loans (SLLs). Under this
arrangement, Pact will receive loan margin benefits
if annual sustainability performance targets are
achieved, and a margin penalty if it underperforms. The
sustainability performance targets are:
1. An increase in the percentage of recycled content
across Pact's packaging portfolio.
2. Increasing the amount of recycled material
processed and distributed to the external market.
3. Reducing scope 1 and 2 greenhouse gas emissions.
4. Reducing the gender pay gap.
Our recycled content in packaging target aligns with
Australian Packaging Covenant Organisation (APCO)
targets, to which Pact is a signatory. Pact's 2025 End
of Waste Promise is to eliminate all non-recyclable
packaging and offer 30% average recycled content
across Pact's plastic packaging portfolio.
To help achieve these targets, Pact is investing $75
million over three years to install new technology
and equipment with the capability to increase the
recycled content in products including milk bottles,
food packaging, mobile garbage bins and industrial
packaging across our Australian network. This will also
assist our customers in meeting their own ambitious
APCO targets.
In addition, we have recently announced that we are
working to establish a strategic partnership with
Woolworths that will see Pact use approximately
18,000 tonnes of recycled plastic each year to
manufacture and supply for Woolworths’ own brand
range, including milk bottles, meat trays, fruit and
vegetable punnets, and beverage bottles. As part of
this partnership Woolworths plans to replace corrugate
boxes for transporting produce with Pact’s reusable
plastic produce crates over the next three years,
increasing usage from approximately 50 million to 80
million crates a year.
Pact is also leading the way in the construction of a
national network of recycling infrastructure, alongside
our industry and government partners, creating food
grade recycled resins for use in packaging. This pipeline
has the potential to lift our recycling capacity up to
120,000 tonnes each year and will also help to create
thousands of sustainable jobs.
Our Innovation
Innovation is in Pact’s DNA. In FY22 Pact was proud to
be recognised as one of Australia and New Zealand’s
Most Innovative Companies for the ninth consecutive
year in the prestigious annual list published by The
Australian Financial Review and Boss Magazine. We
were ranked ninth on the Manufacturing list from
more than 700 nominated organisations. Pact was
recognised for our world first innovative freeway
noisewalls made from up to 75% recycled plastic,
including traditionally hard to recycle soft plastics.
We win when our customers win. Through our
market leading innovative recycled plastic
solutions, we have helped solve a number of
challenges for our customers and convert
numerous products to recycled product.
We have achieved a number of firsts for
the use of recycled content and these
showcase the kind of solutions that
can be achieved by an integrated,
industry-wide approach and each
of these innovations represents
another step towards the End
of Waste.
7
i
w
e
v
r
e
v
O
Dividend
Ray Horsburgh
The Board has resolved to pay a final dividend of 1.5
cents per share, franked to 65%, in respect of the year
ended 30 June 2022. This will take total dividends for
the year to 5 cents per share and represents a payout
ratio of 25% of underlying net profit after tax. This is
lower than our medium-term target to pay dividends
greater than 40% of underlying net profit after tax,
however in view of the current economic environment
we believe this to be a prudent approach. The Board
intends to return to our target payout ratio as
economic conditions improve and normalise.
On behalf of all of us at Pact Group, I would like to
pay tribute to Ray Horsburgh, who passed away in
August. Ray was a distinguished and highly respected
industry leader who served on the Pact Board for five
years between 2015 and 2020. We remain grateful for
his invaluable advice and the contribution he made
to growing our business. He will be deeply missed and
remembered fondly by many people.
Thank you
I would like to express my thanks and appreciation to
you, our shareholders, for your continued support. Thank
you also to my fellow Directors and to our dedicated
management team. Most importantly, thank you to
our talented and innovative people right around the
Group. Through our collaboration and creativity, we are
delivering on our commitments and continuing to see
momentum in our strategic transformation. We have
come a long way on our journey to delivering a more
sustainable future, and I look forward to partnering with
our customers and other stakeholders to continue that
journey, creating an exciting future for our Company
and delivering returns to you, our shareholders.
Raphael Geminder
Non-Executive Chairman
At Pact, sustainability
underpins our Vision, strategy,
and business decisions.
PerformanceGovernanceFinancial ReportShareholder Information
A Message
from the
CEO
8
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Dear Shareholder
The Group has delivered a solid financial and operating
performance in FY22 despite the very tough conditions
that we faced in our operating environment. We saw
substantial increases in raw material, energy, shipping
and labour costs in addition to experiencing continual
uncertainty from COVID-related disruption to customer
supply chains and labour availability. I am pleased to
report that despite these conditions the Group was
able to deliver revenue ahead of last year, earnings in
line with our half year guidance and reduced net debt.
These results reflect our ongoing effort to grow our
core business combined with our strong focus on the
management of controllable costs and recovery of
increased material and input costs through our pricing.
Group Performance & Business Overview
In FY22 the Group delivered revenue of $1.838 billion,
up 4% on the prior year. We saw solid demand in our
core segments and volume growth in Packaging &
Sustainability and in crate pooling services despite
challenging market conditions. We also continue to see
escalating demand for recycled content. Underlying
EBIT was $156.2 million for the year, 15% lower than
FY21, but a resilient performance given the challenges
in the operating environment. Lower earnings were
predominantly driven by our Contract Manufacturing
segment, with combined earnings in our Packaging
& Sustainability and Materials Handling & Pooling
segments essentially in line with the prior year. Underlying
NPAT was $70.2 million compared to $93.5 million in FY21.
Many environmental factors had an adverse impact on
the business in FY22. Labour costs and availability were
affected by the flow on effects of the COVID pandemic,
and supply side challenges remain with record low
unemployment. Supply chain disruption and delays
have been of an unprecedented scale, with shipping
reliability below 40%. Raw material pricing was another
key challenge across all categories with rapid price
increases including HDPE resin up 35% from the start
of the year to a peak in May 2022.
I am pleased to report that our balance sheet remains
strong, with net debt of $561 million reduced by $24
million compared to the prior year and $40 million
compared to the first half of FY22. Operating cashflows
were solid despite the supply chain disruptions and
higher inventory levels held to ensure we could meet
customer demand. We continue to maintain a strong
focus on managing cashflow and working capital and
expect to see inventory levels declining as supply chain
reliability improves. Gearing was consistent with the
half year at 2.7 times, comfortably below our target
range of 3.0 times.
Our Packaging & Sustainability segment reported
revenue growth of 7% to $1.209 billion and underlying
EBIT growth of 5% to $110 million, an excellent result
in the current trading conditions. The result reflects
strong performances in the New Zealand dairy and fresh
food businesses, large format industrial packaging in
Australia, contract wins in Asian closures and disciplined
cost recovery. Our recycling business also delivered
revenue and earnings growth and will be integral to our
strategy as more recycling facilities come online.
9
i
w
e
v
r
e
v
O
The Materials Handling & Pooling segment delivered
3% revenue growth to $354 million, but 8% lower EBIT
at $50 million. Organic growth was delivered in crate
pooling services, despite supply chain and flood related
disruption in northern Australia, and the infrastructure
sector. This segment benefited last year from post-
COVID related demand in retail accessories which did
not repeat in FY22 and was impacted by significantly
fewer council bin contract tender issues in the year,
along with lags in some cost recoveries.
The Contract Manufacturing segment reported revenue
5% lower at $306 million and an EBIT loss of $4 million.
Excluding the impact of significant one-off COVID-
related hand sanitiser demand and of the fire at its
automotive plant, both in FY21, revenue was broadly
in line with the prior year. However, the business was
negatively impacted by elevated higher raw material
and supply chain costs with a net $10 million of
increased costs that were unable to be recovered.
We have a turnaround plan in place for this business
and it is starting to gain traction.
At Pact we are focused on
bringing the Circular Economy
to life and in doing so, growing
returns to our shareholders.
Safety and People
Safety is a key focus. The Group has invested further
in safety programs and processes in FY22 and I am
pleased to report that our Total Recordable Injury
Frequency Rate improved by 38% to 9.6 during the
year. We are determined to drive further improvement
in that metric. COVID continued to present significant
challenges across our operations in FY22, particularly in
Asia, but strict health and safety protocols have been
maintained at all facilities to protect employees and
the community.
At Pact we have a diverse and engaged workforce who
are Proud to be Pact. We have introduced leadership
and sales excellence programs which have also been a
great success in empowering our people and will assist
in selling our circular economy proposition. I remain
extremely proud of our talented and dedicated people
for embracing our Vision and Values and driving our
strategy forward.
Strategy
Our strategy to Lead the Circular Economy through
Reuse, Recycling and Packaging solutions is on track.
We have made further significant progress on several
initiatives in FY22, including:
• Commencement of operations at our new Circular
Plastics Australia (PET) joint venture recycling
facility in Albury, attaining international food safety
approval.
• Completion of the acquisition of Synergy Packaging
for $20 million, enhancing our ability to supply
recycled packaging in the health and beauty sector.
• An important partnership with Woolworths to convert
all its own brand products to recycled content by
2025, replacing 1.2 billion pieces of plastic packaging
with recycled plastic, and to scale up its use of Pact’s
reusable plastic produce crates over the next three
years from 50 million to 80 million per year.
• Converting numerous customers in Australia and
New Zealand to recycled product, including milk
bottles, closures, and meat trays.
We have two additional recycling facilities under
construction and a further three are in the planning
phase. With this pipeline of new facilities, combined
with our investments in new technology and equipment
at our packaging manufacturing facilities across
Australia, we are leading the way in the manufacture
of high-quality recycled resin and in the production of
packaging, closures, and products with high recycled
content.
Outlook
The environmental factors that we faced in FY22 are
continuing to impact on the first half performance in
FY23 and we expect ongoing supply chain disruption,
cost increases across most spend categories and
volatile labour availability. Our expectation is that
conditions will improve and costs stabilise in the second
half of the year. Despite the disruptions and challenges
that the Group will continue to face, we forecast slight
growth in underlying EBIT in FY23. Consistent with
our previous approach, and given the uncertainties of
the operating environment, the Group will provide an
update on trading at our AGM in November.
At Pact we are focused on bringing the Circular
Economy to life and in doing so, growing returns to our
shareholders. There are several targets that we are
working towards through FY23 and beyond. These are
to:
• deliver value from the Circular Economy of at least
an additional $25 million of EBIT, with the run rate
achieved by the end of FY25;
• increase the average recycled content across
plastics to 30% by the end of FY25;
• lift EBIT margins in Packaging Australia to 10% by
FY26;
• refine the portfolio and reset gearing levels to below
2.5 times by FY24;
• achieve a safety target of TRIFR below 8.0 by FY24;
and
• achieve an emissions target to reduce our Scope 1
and 2 Greenhouse Gas emissions by 50% by 2030 in
Australia & New Zealand from a FY21 baseline.
Thank You
Finally, I would like to take this opportunity to thank
you, our shareholders, for your continued support of
the Company and to thank the Chairman and Board
of Directors for their support and guidance as we have
continued to drive our strategic vision. I also extend my
sincere gratitude to the dedicated Pact team across all
our regions for their efforts and commitment in another
challenging year.
I remain excited for the future of Pact and look forward
to updating you all on further progress in FY23.
Sanjay Dayal
Managing Director & Group CEO
GovernanceFinancial ReportShareholder InformationPerformance
11
i
w
e
v
r
e
v
O
Awards and
Industry
Recognition
At Pact, one of our core values is that we win
when our customers win. This helps build strong
partnerships, to benefit us now and in the future.
In FY22, the Group, and our customers have achieved
numerous awards and industry recognition for leading
the Circular Economy through innovative Packaging,
Reuse and Recycling solutions.
The Australian Financial Review (AFR) Boss Magazine
Most Innovative Companies List
For the ninth consecutive year, Pact was honoured to be
recognised as one of Australia and New Zealand’s Most
Innovative Companies . The initiative we were recognised
for was our world first innovative freeway noisewalls
made from up to 75% recycled plastic. Situated along
Mordialloc Freeway, the walls transform approximately
570 tonnes of hard-to-recycle plastic materials into
panels spanning 32,000 square metres.
2022 WorldStar Packaging Awards
In FY22, Pact won two prestigious WorldStar Packaging
Awards for packaging made from locally sourced
recycled resin.
2022 Australasian Packaging Innovation & Design
Awards (PIDA)
The PIDA Awards recognise companies that are making
a significant difference in their field across Australia and
New Zealand. In FY22, Pact won three out of the four
awards on offer in the sustainable packaging design
category for the use of locally recycled resin.
10
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Sustainability
The future depends on the
sustainable work we do today.
Pact’s Sustainability Strategy is structured into three key
pillars: Our People, Our Planet, Our Principles. These pillars
underpin our Vision to Lead the Circular Economy and
drive our purpose to design out waste, keep resources and
materials in circulation, and regenerate natural systems.
People
Pact Group
Sustainability
Principles
Planet
Minimising our
operational
impact
In FY22, Pact Group
committed to reducing
its greenhouse gas
emissions by 50% in
Australia and New Zealand
by 2030, from a FY21 baseline.
Pact’s target relates to the emissions
the company is directly and indirectly producing.
Direct, or scope 1 emissions, covers sources that Pact
either owns or controls such as the gases generated
at its facilities from furnaces, boilers, heavy machinery
and LPG forklifts. Indirect, or scope 2 emissions, are
emissions that Pact causes indirectly from purchasing
electricity from the grid to power its facilities.
Pact will initially focus on reducing emissions at its
operations in Australia and New Zealand, where the
company has its biggest footprint. Pact’s greenhouse
gas emissions reduction target will expand to include
its operations throughout the Asia Pacific in the
coming years.
Planet
Reducing our
environmental
impact.
People
Providing a
safe and
respectful
workplace
with highly
motivated and
engaged talent.
Principles
Conducting our
business responsibly
and investing in
programs that
positively impact
the communities in
which we operate.
Pact’s Sustainability Report represents our
commitment to enhanced transparency, accountability,
and performance. It outlines and reflects on the impact
of the Group’s operations and supply chain on the
environment, focusing on social and environmental
impacts, alongside our governance and leadership
principles.
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 the
Group.
Pact’s Sustainability Report is available on the
Company’s website: www.pactgroup.com/sustainability/
Our business activities
have a direct impact on the
environment and as a leader
of the Circular Economy, it is
our responsibility to ensure
we contribute positively to
the global action on climate
change. Our 50% emissions
reduction target also means
we are aligning ourselves with
the expectations of our
suppliers, customers,
and society .
Sanjay Dayal
Pact Group CEO and Managing Director
PerformanceGovernanceFinancial ReportShareholder Information
13
e
c
n
a
m
r
o
f
r
e
P
Freeway noisewalls
made from up to
75%
recycled plastic
12
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Review of
Operations
and
Financial
Performance
OverviewGovernanceFinancial ReportShareholder Information
14
Overview of
Business Strategy
Our Vision
Pact’s Vision is to Lead the
Circular Economy through Reuse,
Recycling and Packaging solutions
Our target
Our target is top quartile shareholder
returns and 30% recycled content
across the portfolio by 2025
Our Priorities
Our Values
The Group will seek to deliver long-term value focussing
on three core areas, with six key priorities:
• Strengthen our core
— Focus the portfolio and strengthen the balance
sheet.
Strong Values are the foundation of all successful
organisations and at Pact we have Values that focus
on providing a safe, inclusive, and inspiring workplace
for everyone and a high-performance culture:
• Safety — we will make safety our priority and take
— Turnaround and defend our core Australia and New
pride in our workplace.
Zealand consumer packaging businesses.
• Customer — we will win when our customer wins,
• 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.
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.
Leadership and Capability
Strong leadership and capability will underpin the
delivery of our strategy.
• A customer-centric operating model has been
implemented, and key leadership positions are in place.
• 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; and
— strong employee alignment, supported by incentive
and share ownership programs.
15
e
c
n
a
m
r
o
f
r
e
P
Execution of Our Strategy
The Group has continued to make progress in the
delivery of the strategy in FY22.
Turnaround and defend core Australia and New Zealand
consumer packaging businesses
Operations in our Australian packaging business
have stabilised, and margins are targeted to improve
having been impacted in FY22 by lags in recovering
significantly higher input and freight cost as a result
of global supply chain disruptions. Our new operating
model and investment in projects to support platform
capability, efficiency, light-weighting and use of recycled
content are delivering improvements in operational
performance, supporting our customers in achieving their
sustainability targets and delivering innovative products
for recycled content solutions. We have developed
detailed segment strategies which are guiding our
investment decisions and will drive growth in margins.
We are targeting to return margins in our Australian
packaging business to global industry standard by 2026.
Our New Zealand business has delivered volume growth
in FY22, including a first full year contribution from Flight
Plastics and has announced a site rationalisation in the
fresh food segment, realising operational synergies from
the Flight acquisition. .
Lead plastics recycling in Australia and New Zealand
The Group has continued to progress the development
of a national network of recycling infrastructure
and is leading the industry in providing scaled, best
in class facilities to provide high quality food grade
recycled resins. Our new Circular Plastics Australia
(PET) joint venture recycling facility in Albury NSW
was commissioned during the year and two more joint
venture facilities in Laverton and Altona Victoria are
under construction and expected to be commissioned in
2023. In addition a further three potential sites are under
evaluation in Australia and New Zealand. The completion
of this pipeline would lift recycling capability in total
up to a potential 120,000 tonnes per annum. Strong
support has been received to date from both state and
federal governments.
The Group has established a Demand Team and there
has been strong demand for offtake from our new
facilities, with offtake from our Albury and Laverton
facilities almost fully committed. Pact is now well
positioned to be the partner of choice for customers
seeking strategic partnerships to access local recycled
content that will be necessary to deliver ambitious
2025 sustainability targets. The Group has signed a
partnership with Woolworths to exclusively supply
recycled packaging for products across their own brand
range, including milk bottles, meat trays, fruit and
vegetable punnets and beverage bottles. More than
18,000 tonnes of recycled plastic resin sourced from our
recycling facilities in Australia and other local facilities
will be used to manufacture this high quality recycled
and recyclable packaging.
Our joint recycling and manufacturing capability
closes the loop and enables us to deliver change and
sustainable solutions. In recycled content firsts we
are producing at scale 100% recycled content PET
milk bottles and 30% recycled HDPE milk bottles for
customers and have developed fully recyclable meat
trays in New Zealand.
In FY22 Pact completed the acquisition of Synergy
Packaging, a Victoria based manufacturer of non-
beverage rigid PET and recycled PET packaging
supplying mainly to small health and personal care
businesses. Synergy’s recycled PET capabilities align
directly with Pact’s strategy, complements our existing
business and will assist in meeting the increasing
demand for recycled packaging.
Pact also 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.
The Group is also planning an investment of $75 million
over 3 years to upgrade our manufacturing capability
and to:
• enable up to 50% recycled content in milk bottles;
• boost production of 100% rPET beverage bottles;
• upgrade mobile garbage bin manufacturing capability
to meet growth from 4 bin waste collection initiatives
and increase use recycled content; and
• Increase capability to use recycled content in
industrial packaging.
A $20 million grant has been awarded from the Federal
Government’s Modern Manufacturing Initiative to
support this investment.
Scale-up reuse solutions
Pact’s crate pooling services delivered organic growth
in FY22 and achieved increased penetration in the fresh
produce sector and diversification into new produce
categories. Pooling opportunities in other categories
are also being evaluated.
In addition, Woolworths is planning to scale up the
use of Pact’s reusable and recyclable produce crates
to replace traditional single-use cardboard and
polystyrene boxes, increasing usage from 50 million to
80 million crates per year. These reusable crates are
designed to be used more than 140 times before being
replaced.
Our hanger reuse services business was successful
in winning major contract renewals in Australia and
Europe.
We expect momentum in the growth of reuse solutions
to continue as customers increasingly seek sustainable
alternatives to single-use packaging.
Grow Asian packaging platform
The closures business delivered organic growth in
FY22 despite widespread supply chain disruption and
the impact of COVID-19 and lockdowns in the region.
Growth in the business has been supported by the
consolidation of our regional platform and capital
investment in capacity initiatives. The Group will
continue to focus on accelerating growth in Asia and
further leveraging capability in the region.
Annual Report 2022OverviewGovernanceFinancial ReportShareholder Information 16
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Case Study
Proven ability
to build a scaled
solution for high-
quality food grade
recycled resin
Pact Group is leading the Circular Economy
by continuing with an investment program
to build world class recycling facilities
producing high-quality recycled plastic resin
and flake.
Significant progress has been made in relation to this
network of recycling facilities. Circular Plastics Australia
(PET) is joint venture between Pact Group, Cleanaway,
Asahi Beverages and Coca-Cola Europacific Partners.
The recycling facility in Albury commenced operations
during the year and has attained international food
safety approval, and is supplying high-quality food grade
recycled resin. A second polyethylene terephthalate
(PET) recycling facility with similar capacity is under
construction in Melbourne with the same joint venture
partners, while a mixed plastics recycling facility is under
construction in Laverton, Victoria in partnership with
Cleanaway. A further three recycling facilities are in the
early stages of planning. Upon completion of the current
program, we will have the capacity to produce up to
120,000 tonnes of high-quality recycled content.
New South Wales (Albury)
• Circular Plastics Australia (PET) joint venture
recycling facility in Albury, which is operated by Pact,
commenced operations during the year.
• 20,000 tonne food grade recycled polyethylene
terephthalate (PET) capacity.
• Food grade certification in place and supplying high
quality recycled resin.
• 600kW on site solar installed. Since installation in
March 2022 these panels have generated 166.1 MWh.
Victoria (Laverton)
• 15,000 tonne recycled high-density polyethylene
(HDPE) and 5,000 tonne polypropylene (PP) capacity.
• Expected to commence operations in 2023.
• Construction has commenced, footings have been
completed and the equipment is in transit from
Europe.
Victoria (Altona)
• 20,000 tonne food grade recycled PET capacity.
• Expected to commence operations in 2023.
• Construction is well progressed, equipment from
Europe has arrived in Australia and installation will
commence in October 2022.
Three additional facilities under consideration:
• Western Australian mixed plastics facility, in the order
of 15,000 tonne capacity.
• Queensland recycling plant, in the order of 6,000
tonne capacity for recycled PET.
• New Zealand recycling plant in the order of 15,000
tonne capacity for recycled natural and coloured
HDPE, LDPE and PP.
17
e
c
n
a
m
r
o
f
r
e
P
New South Wales
(Albury)
20,000
tonne food grade recycled
PET capacity
Victoria
(Laverton)
tonne recycled HDPE and
15,000
5,000
tonne recycled PP capacity
Victoria
(Altona)
20,000
tonne food grade recycled
PET capacity
3 additional
facilities under
consideration
OverviewGovernanceFinancial ReportShareholder Information
18
Operational and
Financial Summary
The Group has reported revenue of $1,837.7 million for the year ended 30 June 2022, up 4% compared to the prior
corresponding period (pcp). The statutory net profit after tax (NPAT) for the year was $12.2 million, compared to
$87.5 million in the pcp. Underlying NPAT3 for the year was $70.2 million, down 25% compared to $93.5 million in the pcp.
Overview
• Revenue up 4.3% to $1,837.7 million
(pcp: $1,761.6 million)
• Statutory NPAT of $12.2 million (pcp: $87.5 million)
• Underlying EBITDA1 down 8.0% to $289.8 million
(pcp: $314.9 million)
• Underlying EBIT2 down 14.6% to $156.2 million
(pcp: $182.9 million)
• Underlying NPAT3 down 25.0% to $70.2 million
(pcp: $93.5 million)
• Widespread and persistent supply chain challenges
and labour shortages continue to be well managed.
• Continued focus on recovering significant raw
material and supply chain cost inflation.
• Revenue growth of 4%
— Volume growth in the Packaging & Sustainability
segment and in crate pooling services.
— Disciplined price recovery in the Packaging &
Sustainability and Materials Handling & Pooling
segments largely offsetting higher input costs.
• Combined underlying earnings in the Packaging
& Sustainability and Materials Handling & Pooling
segments in line the pcp, with significant raw material,
freight and labour cost inflation mitigated through
pricing discipline and overhead reductions.
• Contract Manufacturing earnings significantly
impacted by higher costs and lower volumes. Non-
cash impairments of $84 million before tax recognised
in the period.
• Net debt6 reduced by $24 million compared to the pcp
despite increased supply chain disruption.
— Cashflow from operating activities impacted by
higher inventory holdings.
- to mitigate raw material and customer supply
chain disruption.
- higher material and supply chain input costs.
— Cashflow from investing activities benefitted from
a property sale in China and reduced acquisition
activity.
Key financial highlights — $ millions
Revenue
Underlying EBITDA1
Segment Underlying EBIT2
Packaging & Sustainability
Materials Handling & Pooling
Contract Manufacturing Services
Underlying EBIT2
Underlying NPAT3
Reported NPAT
Total Dividends – cents per share
— Gearing4 remains within target range at 2.7x
(compared to 2.4x in the pcp).
• Execution of strategy to Lead the Circular Economy
continues with several strategic milestones advanced
in the period:
— Acquisition of Synergy Packaging to accelerate
growth in the Health and Personal Care segment.
— Continued momentum in building a national
network of plastics recycling infrastructure.
- new Circular Plastics Australia (PET) joint venture
recycling facility in Albury commenced operations
with food safe accreditation in place.
- two additional facilities in Laverton and Altona,
Victoria on track to be operational in 2023.
- three further potential new facilities are being
evaluated in WA (supported by Government
funding), Queensland and New Zealand.
- capacity potential of 120,000 tonnes when
pipeline complete.
— Pact facilities now capable of producing with an
average 10% recycled content and increasing.
— Funding grants totalling $20 million awarded from
the Federal Government’s Modern Manufacturing
Initiative supporting the upgrade of facilities to
enable use of recycled materials.
— Firsts in sustainable packaging – producing 100%
recycled content milk bottles and fully recyclable
meat trays.
— A sustainability partnership with Woolworths to
produce high quality recycled packaging for a range
of own brand products.
— Site rationalisation in New Zealand fresh food
segment announced, realising synergies from the
Flight acquisition.
— Continued crate pooling penetration and conversion
in the fresh produce sector.
— Major contract renewals won in hanger reuse
services.
• Final ordinary dividend of 1.5 cents per share
(65% franked, to be paid in October 2022), taking
total dividends for the year to 5.0 cents per share
(pcp: 11.0 cents per share)
2022
1,837.7
289.8
110.2
49.9
(4.0)
156.2
70.2
12.2
5.0
2021
1,761.6
314.9
104.6
54.4
23.8
182.9
93.5
87.5
11.0
Change %
4.3%
(8.0%)
5.3%
(8.3%)
(116.7%)
(14.6%)
(25.0%)
(86.1%)
(55.0%)
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 26 for definitions.
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
NPAT
Revenue
Group revenue for the year was $1,837.7 million, up 4.3%
compared to $1,761.6 million in the prior corresponding
period (pcp).
Revenue was ahead in the Packaging & Sustainability
segment by 6.9%, benefitting from volume growth and
the pass through of significantly higher material and
other input costs. Volume growth was delivered notably in
Asia closures, the dairy and fresh food packaging sectors
in New Zealand, and in recycling services.
The Materials Handling & Pooling segment was also
2.8% ahead due to supply chain recoveries and growth in
pooling and infrastructure demand.
Contract Manufacturing revenue was 4.8% lower.
Excluding the impact of significant one-off COVID-19
hand sanitiser sales and the impact of the fire at its
automotive plant in 2021, revenue was broadly in line.
19
e
c
n
a
m
r
o
f
r
e
P
2021
Change %
2022
1,837,697
21,745
1,761,572
20,625
(1,569,622)
(1,467,309)
289,820
15.8%
(133,657)
156,163
8.5%
(77,172)
78,991
(56,625)
(29,379)
19,191
12,178
314,888
17.9%
(132,013)
182,875
10.4%
(8,414)
174,461
(51,171)
(38,156)
2,400
87,534
4.3%
(8.0%)
(14.6%)
(54.7%)
(86.1%)
Underlying EBIT1
The Group delivered solid performance in an extremely
challenging environment. Underlying EBIT for the
year of $156.2 million was $26.7 million or 14.6% lower
than the pcp, with the reduction largely due to lower
earnings in the Contract Manufacturing segment.
The Group delivered pleasing results in its Packaging
& Sustainability and Materials Handling & Pooling
segments, benefiting from volume growth in key sectors
and outstanding management of COVID-related
disruption to operations and the supply chain. Overall
combined underlying earnings in these two segments
were slightly ahead of the pcp, with significant raw
material, labour and freight cost inflation mitigated
through strong pricing discipline and efficiency savings.
The Contract Manufacturing segment was significantly
impacted by lower volumes as noted above and lags in
recovering sharply higher raw material costs.
Further detail on revenue and earnings in each of the
Group’s operating segments is contained in the Review of
Operations below.
Annual Report 2022OverviewGovernanceFinancial ReportShareholder Information 20
Underlying Adjustments
Net Finance Expense
Net financing costs for the year were $56.6 million,
an increase of $5.5 million compared to the pcp. The
increase includes $2.1 million relating to higher interest
in lease liabilities. Interest on borrowings was also $3.4
million higher through a combination of higher interest
rates in the period and increased amortisation of
borrowing costs due to a refinancing undertaken in the
period.
Income Tax Expense and Significant Tax Items
The income tax expense for the year (excluding tax on
underlying adjustments) was $29.4 million, representing
an average tax rate of 29.5% of underlying net profit
before tax, slightly higher than the pcp (29.0%) due
to profit mix, but consistent with the statutory tax
rates payable by the Group across its main operating
geographies. Tax on underlying adjustments was a
benefit of $19.2 million for the year, compared to a
benefit of $2.4 million in the pcp.
Net Profit after Tax
The reported net profit after tax for the year was $12.2
million compared to $87.5 million for the prior year.
Excluding underlying adjustments, NPAT was $70.2
million, a decrease of $23.3 million or 25.0% compared to
$93.5 million in the pcp.
Pre-tax underlying adjustments for the year were an
expense of $77.2 million. This includes transaction costs
of $6.7 million, business restructuring costs of $17.8
million (restructuring costs of $10.7 million, asset write
downs of $4.4 million and a right of use asset impairment
of $2.7 million) related to the exit of sites in Australia, New
Zealand and China, clean-up costs and other expenses
arising from a factory fire in the prior year at a Contract
Manufacturing site of $1.7 million, inventory write
downs and related disposal costs of $17.8 million and
impairment and write off expenses of $72.3 million. The
inventory write down primarily relates to hand sanitiser
inventory with no realisable value, and the impairment
and write off expenses includes $67.6 million of non-cash
impairments in the Contract Manufacturing segment
(a tangible asset write off of $37.6 million and intangible
asset impairments of $29.9 million) following an annual
assessment of recoverable amounts and reflecting
challenging trading conditions and a moderated
medium-term outlook for this business. In addition,
impairment and write off expenses include $4.7 million
for the write down of idle assets in the Packaging &
Sustainability segment. Pre-tax underlying adjustments
also contain income of $7.0 million from settlements of
insurance claims from events in prior periods, income of
$2.7 million for net gains on two lease modifications, a
profit of $20.5 million from the sale of land and vacating
premises in China, and income of $8.9 million relating to
compensation for the closure of the business in China.
Pre-tax underlying adjustments in the prior year were an
expense of $8.4 million. This included 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 contained
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.
21
e
c
n
a
m
r
o
f
r
e
P
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 $560.8 million was $24.2 million lower than
30 June 2021. The improvement was driven by solid
operating cashflows, notwithstanding increased working
capital requirements, and proceeds from the disposal
of property in China. The reduction in net debt was
also achieved despite lower earnings in the Contract
Manufacturing segment and increased investment in
strategic projects and initiatives. Net debt including
lease liabilities at 30 June 2022 was $1,046.8 million, a
decrease of $8.2 million compared to 30 June 2021.
The Group retains significant undrawn debt capacity,
with $326.0 million committed undrawn facilities.
The increase in other current assets of $26.8 million
includes a decrease in trade and other receivables of
$11.8 million and an increase in inventories of $41.9
million. The increase in inventories was driven by higher
resin and other raw material costs and the need to hold
additional safety stock due to continued uncertainty
and disruption in global supply chains and international
freight.
The reduction in property plant and equipment (including
right of use assets) of $8.0 million primarily reflects
additions of $149.3 million (including right of use asset
additions of $46.3 million and capitalisation of work
in progress of $32.1 million), acquisition of subsidiaries
and businesses of $17.6 million and lease modifications
of $14.6 million, partly offset by depreciation of $133.0
million, disposals of $8.7 million and impairment and
write off expenses of $49.4 million. The net book value of
right of use assets included within property, plant and
equipment at 30 June 2022 was $381.6 million compared
to $372.5 million at 30 June 2021.
2022
101,513
429,668
1,006,175
425,683
92,532
2,055,571
486,007
662,286
483,501
1,631,794
423,777
1,046,780
560,773
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
Change %
63.3%
6.7%
(0.8%)
(7.3%)
33.8%
2.4%
3.4%
2.3%
5.4%
3.5%
(1.9%)
(0.8%)
(4.1%)
The decrease in intangible assets of $33.7 million mainly
relates to the impairment of intangible assets in the
Contract Manufacturing business of $29.9 million and
adverse foreign exchange translation of $5.5 million,
partly offset by increases of $2.4 million related to
acquisitions.
The increase in other liabilities, payables and provisions
of $24.7 million primarily relates to a payable for the
acquisition of Synergy Packaging Pty Limited.
Financing metrics
2022
2021
Change
Gearing4
Gearing (including
leasing)4
Interest cover5
Interest cover
(including leasing)5
2.7x
3.6x
7.4x
5.1x
2.4x
3.4x
9.6x
6.2x
0.3
0.2
(2.2)
(1.1)
At 30 June 2022 gearing was 2.7x, an increase of 0.3x
compared to the pcp with the benefit of lower net
debt more than offset by the impact of lower earnings.
Including the impact of lease accounting, gearing was
3.6x (compared to 3.4x in the pcp). Interest cover at 7.4x
was 2.2x lower than the pcp through a combination of
lower earnings and higher interest expense as noted
above. Including the impact of lease accounting, interest
cover was 5.1x (compared to 6.2x in the pcp).
Gearing and interest cover both remain well within
targeted levels.
Annual Report 2022OverviewGovernanceFinancial ReportShareholder Information 22
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
Proceeds from sale of property, plant and equipment
Proceeds from government grants
Repayment of lease liability principal
Payment of dividends
Statutory net cash flows provided by operating activities
was $174.6 million for the year, down $46.4 million
compared to the prior year. The inflow from securitisation
of trade debtors was $1.2 million for the year compared
to an inflow of $3.2 million in the pcp. Excluding
securitisation cash flows, statutory operating cash flow
was $44.4 million lower than the pcp. The reduction
was primarily due to lower earnings and higher working
capital investment in response to continued supply chain
challenges. Net finance costs and interest cash flows
were $7.5 million higher, but tax cash payments were $3.5
million lower.
Payments for property, plant and equipment were $90.3
million for the year, $12.1 million higher than the pcp.
The Group has continued to provide capital to support
the turnaround of its Packaging business whilst also
investing in initiatives aligned to the business strategy to
Lead the Circular Economy. During the year, the Group
has invested in projects supporting customer growth,
automation, efficiency, light-weighting and the use of
recycled content in both the Australian and New Zealand
packaging businesses. Other projects have also been
undertaken to support capacity initiatives in the Asian
closures and recycling platforms, the systems integration
of the hanger reuse business and the expansion of the
crate pooling services. In addition, the Group is investing
in a new liquids facility and high-speed line in the
Contract Manufacturing business to increase capability
and reduce cost.
Payments for investments in associates and joint
ventures of $12.6 million in the current year and $9.0
million in the pcp relate to further investments in the
joint ventures with key suppliers and customers that are
building a national network of recycling infrastructure to
supply high-quality food grade recycled resins.
Payments for the purchase of businesses and
subsidiaries, net of cash acquired, of $23.8 million in
the pcp represents the acquisition of 100% of the net
2022
174,614
(90,336)
(12,602)
785
-
26,645
8,000
(52,087)
(32,707)
2021
Change %
221,034
(78,283)
(9,009)
(23,836)
(23,307)
6,900
-
(47,413)
(27,520)
(21.0%)
15.4%
39.9%
n/a
n/a
286.2%
n/a
9.7%
18.8%
assets of Flight Plastics, a New Zealand based packaging
manufacturer with integrated PET recycling capability
operating in the fresh food segment.
Payments for deferred acquisition consideration of $23.3
million in the pcp represents deferred consideration
and post completion adjustments in respect of the
acquisition of TIC (acquired in the first half of FY19).
Proceeds from sale of property, plant and equipment of
$26.6 million represents cash disposal proceeds from the
sale of land and vacating premises in China.
Proceeds from government grants of $8 million are
grants received from the Federal Government’s Modern
Manufacturing Initiative.
Repayments of lease liability principal represents the
payment of liabilities recognised after the adoption of
AASB16 in FY20. The increase of $4.7 million compared to
the pcp reflects lease asset additions.
The dividend payments of $32.7 million reflect the 6
cents per share final dividend from FY21 (paid in October
2021) and the 3.5 cents per share interim dividend from
FY22 (paid in April 2022). The $27.5 million dividend
payments in the pcp reflect the 3 cents per share final
dividend from FY20 (paid in October 2020) and the 5
cents per share interim dividend in respect of FY21 (paid
in April 2021).
Review of Operations
The Group’s operating segments are:
• Packaging & Sustainability
• Materials Handling & Pooling
• Contract Manufacturing Services
Inter-segment revenue eliminations of $30.7 million
(pcp: $35.4 million) are not included in the segment
financial information below.
23
e
c
n
a
m
r
o
f
r
e
P
Packaging &
Sustainability
The Packaging & 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 65% of the Group’s revenue in FY22.
$’000
Revenue
Underlying EBITDA1
EBITDA margin %
Underlying EBIT2
EBIT margin %
Revenue for the Packaging & Sustainability segment of
$1,208.6 million for the year was $77.5 million or 6.9%
higher than the pcp. The segment delivered volume
growth in the New Zealand dairy, agriculture and fresh
food packaging sectors, including a first full year
contribution from Flight Plastics. The closures business
in Asia also delivered organic growth despite widespread
supply chain disruptions and the impact of COVID-19
and lockdowns in the region. Volumes were resilient
in other parts of the segment despite the ongoing
pandemic and disruption to supplies of resin and pallets
and labour shortages. Pact’s Recycling business also
delivered revenue growth with improved demand for
sustainable packaging and recycled content. Segment
revenue also benefitted from the pass through of
significantly higher raw material and other input costs in
the period.
2022
2021
Change %
1,208,575
1,131,088
197,713
16.4%
110,197
9.1%
190,734
16.9%
104,616
9.2%
6.9%
3.7%
(0.5%)
5.3%
(0.1%)
Underlying EBIT for the year of $110.2 million was
$5.6 million or 5.3% up on the pcp. Segment earnings
benefitted from improved overall volumes, cost savings,
efficiency benefits and favourable foreign exchange
translation. Price recovery of higher input costs and
challenges in the supply chain were well managed, but
the result was impacted by lags in some recoveries,
lower pricing to some customers in Asia and increased
insurance and depreciation expenses.
Despite higher input costs, EBIT margins for the year
were broadly in line with the pcp at 9.1%.
Annual Report 2022Financial ReportShareholder InformationOverviewGovernance 24
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Materials Handling
& Pooling
The Materials Handling & 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
Pact Retail Accessories (formerly TIC), a closed loop plastic garment
hanger and accessories reuse business operating across several
countries in Asia as well as in Australia, the USA and the UK. Materials
Handling & Pooling contributed 19% of the Group’s revenue in FY22.
2022
353,529
83,433
23.6%
49,939
14.1%
2021
Change %
344,008
85,579
24.9%
54,446
15.8%
2.8%
(2.5%)
(1.3%)
(8.3%)
(1.7%)
Underlying EBIT for the segment of $49.9 million was
$4.5 million (8.3%) lower compared to the pcp. Earnings
were impacted by lower retail volumes as noted above,
additional COVID-related labour costs and lags in
recovering higher resin and freight costs that were
incurred as a result of supply chain disruption. IT costs
were also higher following the full systems integration of
hanger reuse services, and depreciation expense was up
on the pcp following investment in crate pooling assets
and new hanger reuse facilities.
EBIT margins were 1.7% lower at 14.1%.
$’000
Revenue
Underlying EBITDA1
EBITDA margin %
Underlying EBIT2
EBIT margin %
Revenue for the Materials Handling & Pooling segment
of $353.5 million for the year was $9.5 million (2.8%)
higher than the pcp. In the Reuse business, organic
growth was delivered in crate pooling (excluding the
$4.8 million impact of the cessation of the crate
wash contract with Coles), benefiting from increased
penetration in fresh produce markets and the delivery
of conversion opportunities, albeit slowing in the second
half. Infrastructure volumes were also higher, supported
by the completion of the supply of noisewalls to the
Mordialloc Bypass project in Victoria, and revenue
was favourably impacted by higher pricing to recover
higher input costs. Partly offsetting these benefits, bin
volumes were lower as limited council contracts were
tendered in FY22. Demand for hanger reuse services
was solid, though volumes were slightly lower overall
as post-lockdown related demand from the early
part of the prior year period was cycled out and retail
demand slowed towards the end of FY22. Lower volumes
were offset however by improved price recovery and
favourable foreign exchange translation.
25
e
c
n
a
m
r
o
f
r
e
P
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 16% of the Group’s revenue in FY22.
$’000
Revenue
Underlying EBITDA1
EBITDA margin %
Underlying EBIT2
EBIT margin %
2022
306,324
8,674
2.8%
(3,973)
(1.3%)
2021
321,915
38,575
12.0%
23,813
7.4%
Change %
(4.8%)
(77.5%)
(9.2%)
(116.7%)
(8.7%)
Revenue for the Contract Manufacturing Services
segment of $306.3 million for the year was $15.6 million
(4.8%) lower than the pcp.
Hand sanitiser and other hygiene product volumes
were lower following elevated demand driven by the
COVID-19 pandemic in the prior year, and automotive
volumes were also lower following the factory fire in
2021. Excluding these impacts, revenue was slightly
up on the prior year and ahead in the second half,
reflecting new business growth, customer onshoring and
the impact of price rises to recover higher input costs.
Volumes improved in the homecare and personal care
sectors, but remained volatile in health and wellness,
with lower nutraceutical volumes.
Underlying EBIT for the year was a loss of $4.0 million
compared to earnings of $23.8 million in the pcp. The
loss was driven primarily by a combination of lower
volumes (including hand sanitiser and automotive)
and significantly higher raw material and supply chain
costs, which were impacted by global freight market
volatility, higher commodity prices and supply disruption
and COVID-related lockdowns. These higher costs
were unable to be fully recovered in the period with
less than 50% of customers on contracts with rise and
fall clauses. Increased input costs were partly offset
by lower depreciation and amortisation expenses as
a result of the impairment of tangible and intangible
assets in the segment.
Financial ReportShareholder InformationOverviewGovernance
26
Outlook
Pact expects ongoing supply chain disruption, cost
increases across most spend categories and volatile
labour availability. Despite these disruptions, we forecast
underlying EBIT to grow slightly in FY23.
Consistent with our approach last year and given the
uncertainties of the operating environment, the Group
will provide an update on trading at the AGM.
Other Events of Significance
Acquisition of Synergy Packaging Pty Ltd
On 31 May 2022, the Group purchased 100% of the
shares of Synergy Packaging Pty Ltd for a provisional
consideration of $19.9 million with settlement deferred
until 1 July 2022. Synergy Packaging is a Victoria based
manufacturer of non-beverage rigid PET containers
supplying mainly to small health and personal care
businesses.
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).
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.
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 that align with the
ISO27001 framework, mock data breach assessments,
cyber security training and penetration testing.
Global Pandemics and Infectious Diseases
Pact Group has followed all local regulatory
requirements relating to Covid-19. The business
navigated through the year by adhering to site “Covid
Safe Plans” to keep our manufacturing plants operating.
Pact also ran a “Proud To Be Vaxxed” campaign to
encourage employees to be vaccinated. The Group also
offered free flu vaccination vouchers to all employees to
mitigate the risk of influenza throughout our workforce.
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
27
e
c
n
a
m
r
o
f
r
e
P
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.
Consumer Demand
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
(eg. 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 (e.g. plastics, recycled and recyclable materials)
or technology in the wider industry 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.
Interest Rate Risk
When variable debt is utilised, it exposes the Group to
interest rate risk. Pact seeks to manage risks associated
with interest rates and finance costs by assessing and,
where appropriate, utilising a mix of fixed and variable
rate debt and interest rate swaps or options when
variable debt is in place.
Volatility of Foreign Exchange, Commodity Prices and
Economic Environment
Pact’s financial reports are prepared in Australian
dollars. However, a substantial proportion of Pact’s
revenue, expenditures, cashflows, assets and liabilities
are exposed to translation risk from offshore operations
or operations in Australia that have a functional
currency that is not the Australian dollar. The largest
exposures are the New Zealand dollar from our New
Zealand operations. Pact is also exposed to 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.
To manage this exposure 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.
Pact also has exposure to foreign exchange risk through
operating activities, mainly the purchases of raw
materials that are denominated in a different currency
from the entity’s functional currency. US dollars are
the main exposure. The Group manages these risks
through customer pricing, including contractual rise and
fall adjustments, and utilises forward foreign currency
contracts to eliminate or reduce currency exposures on
short-term commitments.
The Group is also 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.
Any appreciation of the Australian dollar against
the functional currencies of operations would have
an adverse effect on the Group's future financial
performance, while any appreciation of the Australian
dollar against the transactional exposures (mainly US
dollars) would have a positive effect on the Group's
future financial performance.
Global Supply Chain Disruptions
Global supply chains have experienced major disruptions
over the last two years as a result of the pandemic,
surges in product demand driven by Government
stimulus, and reduced supply side capacity, including
freight and shipping lines. Further disruptions have
been caused by the war in Ukraine which has resulted
in significantly higher oil and other commodity prices
and COVID-related lockdowns in China. To address
supply chain risks, Pact built inventory buffers, qualified
alternate resins and created multiple resin supply chains.
Pact has also been impacted by higher detention cost
due to supplier resin distribution capacity constraints.
Additional costs are not always able to be passed
through via increased sell prices. Management of supply
chain risk also include close collaboration with Pact’s key
suppliers, regular scheduled forecasting, maintenance
of contracts with preferred shipping lines, dual sourcing
of major supplies and focussed coordination and
communication with customers.
BCP and Incident Management
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 resilience program that is currently being
implemented across all our sites.
Compliance Risks
The diversity of Pact Group operations require
compliance with extensive legislative requirements
including: modern slavery; competition and consumer
law; health and safety; industrial relations; employment;
anti-bribery and corruption; environment; customs
and international trade; taxation; and corporation’s law.
Changes in government policy may also have an adverse
effect on the Group’s financial performance. Pact has
in place a Compliance Framework, which is based on
ISO 37301:2021 Compliance Management Systems,
and which sets out the standards, requirements, and
accountability for managing regulatory compliance
obligations across the Group. The Compliance Framework
creates an integrated, strategic, consistent and risk
informed approach to the management of Pact Group’s
compliance obligations and is subject to continual review
and assurance.
Annual Report 2022OverviewGovernanceFinancial ReportShareholder Information 28
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Governance
Bottle made with
100%
recycled plastic*
29
e
c
n
a
n
r
e
v
o
G
* Excluding cap
OverviewPerformanceFinancial ReportShareholder Information
30
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 2022 Corporate
Governance Statement is available on the website:
www.pactgroup.com/investors/investor-
communications/#corporate-governance-.
Pact Group is
committed to
providing all
stakeholders with
accessible, accurate
and timely information
on our activities and
performance.
31
e
c
n
a
n
r
e
v
o
G
Annual Report 2022OverviewPerformanceFinancial ReportShareholder Information 32
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Financial
Report
Pail made with
50%
recycled plastic*
33
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
* Excluding handle
OverviewPerformanceGovernanceShareholder Information
34
Financial
Report
Consolidated Financial Report
For the year ended 30 June 2022
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 2022. This Consolidated
Financial Report was issued in accordance with a
resolution of the Directors on 17 August 2022.
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
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,
contingencies and other liabilities
2.4 Other provisions
2.5 Leases
Section 3: Our Operational Footprint
3.1 Business combinations
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 Employee benefits expenses and provisions
5.2 Share-based payments
5.3 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
80
81
84
85
87
91
96
97
102
106
107
107
109
110
111
112
113
114
115
115
116
117
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 2022.
Directors
The following persons were directors of the Company during the year and 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 several other advisory and board positions.
Raphael holds a Master of Business Administration in Finance from Syracuse University, New York.
Other directorships
Director of several private companies.
Lyndsey Cattermole AM
Independent Non-Executive Director
Member of the Board since 26 November 2013
Member of the Nomination and Remuneration Committee
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 directorships
Non-executive director of Wellness and Beauty Solutions Ltd and Melbourne Rebels Rugby Union Ltd. Director
of several private companies. Previously a non-executive director of Myer Holdings Limited (15 October 2018 -
29 October 2020).
35
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
36
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
Member of the Audit, Business Risk and Compliance Committee
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 from 2006 to 2012. He also held leadership roles with
Nylex, Visy and Pacifica.
Jonathan holds a Bachelor of Engineering (Mechanical) from the University of Melbourne and a Master of
Business Administration from the Royal Melbourne Institute of Technology.
Other directorships
Executive chairman of Pro-Pac Packaging Limited, and a Non-executive director and chairman of Planet
Innovation Ltd. 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
Carmen is based in Hong Kong and has broad base management experience in the packaging and
material science industry. Carmen is currently the Corporate Vice President of Henkel, heading its global
electronics SBU. Prior to that, Carmen led the global powder resins business of Covestro, was the Chief
Marketing Officer of the Resins and Functional Material business for Royal DSM, President for Laird PLC
and VP/GM of Materials Group at Avery Dennison. Carmen has also held leadership positions across sales,
marketing and business development with organisations such as Worldmark and Dell Computer.
Carmen holds 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.
Other directorships
Director of a private company.
Michael Wachtel
Independent Non-Executive Director
Member of the Board since 21 April 2020
Chair of the Audit, Business Risk and Compliance Committee
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 holds a Bachelor of Laws and Commerce from the University of Cape Town and a Master of Laws from
the London School of Economics. Michael has completed the Harvard Business School Executive Program, is a
Fellow of the Australian Institute of Company Directors and is a Certified Tax Advisor.
Other directorships
Director 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 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
Kathryn de Bont
General Counsel & Company Secretary
Kathryn was appointed to the positions of General Counsel and Company Secretary on 1 June 2022. Kathryn
has been part of the legal team at Pact since November 2018. Prior to this, Kathryn worked in legal and
governance roles in both private practice and industry, including with Sodexo, Programmed Maintenance
Services Limited, Skilled Group Limited, Visy and Ashurst.
Kathryn holds a Bachelor of Arts and Bachelor of Laws (Hons) from Monash University.
37
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
38
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 17 August 2022.
Raphael Geminder
Lyndsey Cattermole
Jonathan Ling
Carmen Chua
Michael Wachtel
Sanjay Dayal
Relevant Interest
in Ordinary Shares
160,982,256
586,476
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
10
10
10
10
10
10
10
10
10
10
10
10
NM
NM
7
7
7
NM
NM
7
6
7
NM
NM
4
4
4
NM
NM
NM
4
4
4
NM
NM
NM
NM — Not a member of the relevant committee
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, recycling and sustainability services and contract manufacturing services.
Dividends
The directors have determined to pay a final dividend of 1.50 cents after the end of the financial year
(2021: 6.0 cents).
The table below shows dividends paid (or payable) during the year ended 30 June 2022 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 2022
Final Dividend (per ordinary share)
1.50 cents
0.98 cents
0.52 cents
6 October 2022
Interim Dividend (per ordinary share)
3.50 cents
2.28 cents
1.22 cents
6 April 2022
Prior 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
Other events of significance
Please refer to the Review of Operations and Financial Performance in the ASX announcement on
17 August 2022.
Significant events after balance date
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 2022 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.
39
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
40
Directors’ Report
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 an Environmental Policy and a Workplace Health and Safety Policy. The system
is fundamental to achieving compliance with WHSE regulations in all jurisdictions in which the Group
operates and is implemented at all 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 ensures it takes every opportunity to continuously
improve 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 (Cth). The National Greenhouse and Energy Reporting
Act 2007 requires that Pact report 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 its WHSE metrics as published in Pact’s
Sustainability Report.
Share options and rights
The total number of performance rights on issue at the date of this report is 3,030,082. Refer to the
Remuneration Report (Section 3) for further details of performance 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 provided deeds of access, indemnity and insurance to all Directors of the Company, the
CFO and the Company Secretary which provide indemnities against losses incurred in their role as
Directors, CFO 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.
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 to the Group during the year are
as follows:
$
Tax services
Consulting services
Other assurance related services
Total
2022
2021
362,000
231,000
971,000
824,000
84,000
250,000
1,417,000
1,305,000
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.
41
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
42
Directors’ Report –
Remuneration Report
Remuneration Report (audited)
This Remuneration Report for the year ended 30 June 2022 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 FY22
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 2022
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 2022, the Nomination and Remuneration Committee did not obtain
remuneration advice or recommendations from any external remuneration consultants.
43
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Non-Executive Directors (NEDs)
Raphael Geminder
Non-Executive Chairman
Lyndsey Cattermole
Non-Executive Director
Jonathan Ling
Carmen Chua
Michael Wachtel
Executive KMP
Sanjay Dayal
Paul Washer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Full Year
Full Year
Full Year
Full Year
Full Year
Managing Director and Group CEO
Full Year
Chief Financial Officer
Full Year
There have been no other changes to KMP after the reporting date and before the date the Financial
Report was authorised for issue.
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
Directors’ Report –
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 chart shows the target remuneration mix for each of those components for 2022(1)
CEO
CFO
34%
33%
33%
59%
24%
17%
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).
45
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
44
Directors’ Report –
Remuneration Report
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
Purpose
Reward framework components
Fixed annual
remuneration (FAR)
Short-term incentive
(STI) at risk
Long-term incentive
(LTI) at risk
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
Reward for the
creation of sustainable
long-term shareholder
value
Focuses on leading
positive organisational
culture and
engagement with
customers, community
and people
Performance
link
Sustained
performance and
leadership in executive
role
Annual performance
targets:
• Group EBIT
• Operational and
strategic KPIs
• Safety
Three-year relative
total shareholder
return (relative TSR)
performance against
selected ASX 200
companies
Payment
vehicle
and quantum
Base salary,
superannuation
May include other
benefits and cash
allowances
Target ASX200 Market
Median (excluding
Financial services and
mining)
Annual cash incentive
Target opportunity
• CEO 100% FAR
• CFO 40% of FAR
• Maximum
opportunity
equivalent to 150%
of target for both
executive KMP
• Subject to Board
discretion and
clawback provision
Annual performance
rights grant
Target opportunity
• CEO 100% FAR
• CFO 30% of FAR
• Subject to Board
discretion and
clawback provision
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
46
Directors’ Report –
Remuneration Report
3. Executive remuneration arrangements (continued)
Detail of incentive plans
Opportunity
Performance
measures &
weighting
FY22 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 150% of FAR
STI is linked to Group 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.
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
Threshold (meets 95% of Target)
50% of Target
Target (meets 100% of Target)
100% of Target
Stretch (meets 120% of Target)
150% 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 –
Remuneration Report
3. Executive remuneration arrangements (continued)
FY22 Long-term incentive plan
Opportunity
CEO: Maximum opportunity equivalent to 100% of FAR
CFO: Maximum opportunity equivalent to 30% of FAR
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 LTI plan (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).
47
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
Directors’ Report –
Remuneration Report
4. Executive remuneration outcomes for FY22 (continued)
STI Outcomes
Performance of STI measures
In 2022 the Group did not achieve a baseline financial performance at or above the Financial Gateway.
STI outcome for 2022
The table below shows details of the Executive KMP STI opportunity and payment outcome for 2022.
Sanjay Dayal
Paul Washer
LTIP Outcomes — CEO and CFO
LTIP allocations
Total STI target
opportunity $
STI earned%
of target
1,280,251
245,140
-
-
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 — CEO
Performance
rights
Granted
Fair value
of rights at
grant date
Value of rights
included in
compensation
for the year
Performance period
2022 LTIP
1 December 2021
289,351
$312,499
$104,166
1 July 2021 to 30 June 2024
2021 LTIP
1 December 2020
497,967
$856,503
$285,501
1 July 2020 to 30 June 2023
2020 LTIP
1 December 2019
538,189
$721,173
$240,391
1 July 2019 to 30 June 2022
$630,058
49
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Statutory net profit/(loss) after
tax ($000)
Underlying net profit after tax
(NPAT)(1) ($000)
74,488
(289,587)
88,847
87,534
12,178
Paul Washer — CFO
94,661
77,307
73,245
93,544
70,159
2022 LTIP
1 December 2021
41,571
$44,897
$14,966
1 July 2021 to 30 June 2024
48
Directors’ Report –
Remuneration Report
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. A pro rata
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 FY22
Business performance in FY22
The Group experienced adverse trading conditions with market lockdowns, rapid supply chain cost
increases, supply chain disruptions and labour shortages throughout 2022 as pandemic measures
and geopolitical conflicts impacted global supply chains. Despite these challenges the Packaging &
Sustainability Segment and the Materials Handling & Pooling Segment delivered solid performance
whilst the Contract Manufacturing segment was impacted by lower volumes and cost increases not fully
recovered. The Group has continued to execute its Leading the Circular Economy strategy by delivering
on the Albury joint venture recycling facility, with two further facilities currently under construction, and
expanded its Health & Personal Care Segment through the acquisition of Synergy Packaging Pty Limited.
The table below summarises key indicators of the performance of the Company and relevant shareholder
returns over the past 5 financial years. It is noted that Underlying EBIT is a performance measure linked to
the STI Plan.
Performance measure
2018
2019
2020
2021
2022
Underlying NPAT growth %(1)
(5.3%)
(18.3%)
(5.3%)
27.7%
(24.9%)
Underlying EBIT(1) ($000)
164,506(2)
148,404(2)
166,263
182,875
156,163
Underlying EBIT growth %
(2.9%)
(9.8%)
12.0%(3)
10.0%
(14.6%)
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)
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
5.0
1.81
2.13
20
Earnings per share(1) growth %
(9.1%)
(23.3%)
(8.7%)
28.6%
(25.9%)
Cumulative TSR %(4)
14.0%
(39.9%)
(49.1%)
(16.7%)
(55.4%)
(1) Before underlying adjustments (refer to Note 1.1 in the Consolidated Financial Report).
(2) EBIT before underlying adjustments from 2018 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 $6.44).
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
50
Directors’ Report –
Remuneration Report
4. Executive remuneration outcomes for FY22 (continued)
LTIP Outcomes — CEO and CFO (continued)
Executive KMP performance rights testing
Directors’ Report –
Remuneration Report
4. Executive remuneration outcomes for FY22 (continued)
Executive KMP remuneration for the year ended 30 June 2022
The table below show the LTI plan awards tested at the end of 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
2020 LTIP
1 July 2019 to 30 June 2022
The 2020 grant was tested in July 2022. As the minimum
relative TSR performance hurdle was not met, awards in
relation to the 2020 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
Balance at
1 July 2021
Number
granted
Number
lapsed/
forfeited
Balance at
30 June 2022
Vested at
30 June 2022
Unvested at
30 June 2022
Sanjay Dayal
1,105,940
289,351
(69,784)
1,325,507
Paul Washer
-
41,571
-
41,571
-
-
1,325,507
41,571
Mr Sanjay
Dayal (CEO)
Mr Paul
Washer
(CFO)
Former
Executive
KMP
Mr Richard
Betts
(Former CFO)
Total
Executive
KMP
remuneration
Salary &
fees
STI &
bonuses
Other
benefits(2)
Superannuation
$
2022
1,252,751
$
-
$
54,280
2021
1,215,300 1,154,554
48,021
2022
585,350
-
25,649
2021
170,833(1)
64,279
65,807(2)
$
27,500
25,000
27,500
7,428
2022
-
-
-
-
Long
service
leave(3)
$
-
-
-
-
-
LTIP(4)
$
630,058
533,592
14,966
Employee
Share
Scheme(5)
$
-
-
-
-
25,000
2021
441,876(1)
204,473
17,148
18,750(1)
10,639 (61,224)(6)
2022
1,838,101
-
79,929
55,000
-
645,024
-
-
-
-
$
-
-
-
-
-
$
1,964,589
2,976,467
653,465
333,347
%
32%
57%
2%
19%
-
-
399,825
1,031,487
14%
- 2,618,054
25%
44%
2021
1,828,009 1,423,306
130,976
51,178
10,639
472,368
25,000
399,825 4,341,301
51
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
(1) Salary and fees and superannuation disclosed for Mr. Betts is based on his period as a designated KMP until
31 March 2021, and for Mr Washer is based on his commencement date of 15 March 2021.
(2) Other benefits include annual leave provision for Mr Dayal. In relation to Mr Washer this included annual leave
provision plus a $50,000 benefit in relation to relocation costs in 2021, and a $75 Covid Vaccination Bonus in
2022.
(3) Long term benefits include 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 a hybrid model with relative TSR
hurdles.
(5) Includes the Company’s employee share ownership scheme. For Mr Washer a $25,000 benefit has been
included in 2021.
(6) Following Mr Betts cessation of employment, 205,534 unvested LTIP rights were forfeited in the prior year.
The negative amount of $61,224 is due to the reversal of share-based payment expense in the prior year
following the forfeiture of these rights.
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
52
Directors’ Report –
Remuneration Report
4. Executive remuneration outcomes for FY22 (continued)
Executive KMP remuneration for the year ended 30 June 2022 (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 2022. 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)
Mr Sanjay
Dayal
Mr Paul
Washer
$
1,280,251
612,850
$
-
-
$
54,280
25,649
Performance
rights vested
in 2022(4)
$
Employee
share
scheme(5)
$
Total
$
-
-
-
-
1,334,531
638,499
(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 2022 are calculated on the same basis as the
remuneration table on page 51.
(3) Other benefits annual leave provision for Mr Dayal and Mr Washer shown on an accruals basis, and a
$75 Covid Vaccination Bonus in 2022 for Mr Washer.
(4) The 2020 LTIP tranche was measured against the relative TSR hurdle as at 30 June 2022. 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 Financials, Metals and Mining sectors).
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 sets out annual NED fees..
Responsibility
Board fees
2022(1)
2021
Non-Executive Directors (excluding the Chairman)
$117,649
$115,569
Audit, Business Risk and Compliance Committee
Chair
Member
Nomination and Remuneration Committee
Chair
Member
(1) 2022 NED fee schedule is effective from 1 September 2021.
$32,086
$31,519
$8,022
$7,880
$32,086
$31,519
$8,022
$7,880
NEDs do not participate in any incentive programs.
The remuneration of NEDs for the year ended 30 June 2022 is detailed in the following table.
53
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
54
Directors’ Report –
Remuneration Report
5. Non-Executive Directors’ remuneration arrangements (continued)
Non-Executive KMP remuneration for the year ended 30 June 2022
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
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Total Non-Executive KMP remuneration
2022
2021
113,910
113,241
-
-
157,292
154,338
125,300
121,934
149,294
146,171
-
53,273
545,796
588,957
11,390
125,300
10,758
123,999
-
-
-
-
-
-
-
-
-
157,292
154,338
125,300
121,934
149,294
254
146,425
-
-
5,061
58,334
11,390
557,186
16,073
605,030
55
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
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 2022:
KMP
Raphael Geminder
Lyndsey Cattermole
Jonathan Ling
Carmen Chua
Michael Wachtel
Sanjay Dayal
Paul Washer
Balance
1 July 2021
152,252,175
541,433
48,786
150,000
41,925
40,000
Movements
Balance
30 June 2022
8,730,081
160,982,256
45,043
-
-
-
-
586,476
48,786
150,000
41,925
40,000
28,507
-
28,507
7. Capacity to control by KMP
Raphael Geminder is the Director of Kin Group Pty Ltd (“Kin Group”) and Salvage Pty Ltd (“Salvage”).
As at 30 June 2022 Kin Group held 157,346,327 shares in Pact Group Holdings Ltd (“Pact Group”), representing
an ownership stake of 45.74%. Raphael Geminder’s total ownership stake in Pact Group is 160,982,256 shares
reflecting an ownership stake of 46.80%, including the investments held by Kin Group and Salvage.
Kin Group Pty Limited has assessed that it does have the capacity to control Pact Group Holdings Ltd as at
30 June 2022 through its share ownership of 46.8%. Therefore, notwithstanding that Pact Group Holdings Ltd
currently operates with a majority independent Board of Directors, Kin Group Pty Ltd is considered to be the
ultimate parent entity of Pact Group Holdings Ltd when the de facto control considerations contained under
AASB 10 are assessed.
8. Related party transactions with KMP
The following table provides the total amount of transactions with related parties for the year ended
30 June 2022:
$’000
Related parties — Directors' interests(1)
Sales
Purchases
Other
expenses
Net amounts
receivable
2022
2021
15,094
14,431
3,364
3,712
5,853
5,658
1,456
907
(1) Related parties — Director’s interests include the following entities: Kin Group Pty Ltd; 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; The Reject Shop Limited; Propax Pty Ltd; Gem-Care Products Pty Ltd; and The Hive
(Australia) Pty Ltd.
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
56
Directors’ Report –
Remuneration Report
8. Related party transactions with KMP (continued)
Sales to related parties
The Group has sales of $15.1 million (2021: $14.4 million) to related parties including Green’s General Foods
Pty Ltd, The Reject Shop Limited, Remedy Kombucha Pty Ltd, Propax Pty Ltd, Gem-Care Products Pty Ltd
and The Hive (Australia) Pty Ltd. Sales are for packaging and contract manufacturing services.
Pro-Pac Packaging Limited (Pro-Pac)
Pro-Pac, an entity for which Mr Raphael Geminder owns 57.6% (2021: 51.6%), is an exclusive supplier of
certain raw materials such as flexible film packaging, flexible plastic bags and tapes to Pact. The Group’s
supply agreement with Pro-Pac expired on 31 December 2021 and is now continuing on a month-on-
month basis. The total value of purchases by Pact under this arrangement is approximately $3.3 million
(2021: $3.7 million). The supply arrangement is negotiated independently between Pact and Pro-Pac.
Mr Jonathan Ling is also the Executive chairman of Pro-Pac Packaging Limited.
Property leases with related parties
The Group leased 11 properties (9 in Australia and 2 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 2022
was $5.9 million (June 2021: $5.7 million). The rent payable under these leases was determined based on
independent valuations and market conditions at the time the leases were commercially agreed.
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.
Signed in accordance with a resolution of the Board of Directors:
Raphael Geminder
Chairman
17 August 2022
Sanjay Dayal
Managing Director and
Group Chief Executive Officer
57
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
58
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
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 2022, 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;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene 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
17 August 2022
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 2022
$’000
Revenue
Raw materials and consumables used
Employee benefits expense
Notes
2022
2021
1.1, 1.2
1,837,697
1,761,572
(823,926)
(734,175)
5.1
(441,800)
(438,079)
Occupancy, repair and maintenance, administration and selling expenses
(302,319)
(293,843)
Interest and other income
Other losses
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
20,617
18,145
(6,493)
(6,939)
(133,657)
(132,013)
(72,256)
(2,687)
(57,142)
(51,766)
1,645
3,075
22,366
123,290
1.3
(10,188)
(35,756)
12,178
87,534
12,178
87,534
Gain on remeasurement of defined benefit liability
100
339
Items that will be reclassified subsequently to profit or loss
Gain on cash flow hedges taken to equity
Foreign currency translation gains/(losses)
13,188
5,269
1,535
(6,429)
Income tax benefit/(expense) on items in other comprehensive income
(3,945)
(1,664)
Other comprehensive gain/(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
10,878
(2,485)
23,056
85,049
23,056
85,049
23,056
85,049
1.1
1.1
3.5
3.5
25.4
25.3
The Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying
notes.
59
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
60
Financial Report
Consolidated Statement of Financial Position
For the year ended 30 June 2022
$’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
Bank overdraft
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
2022
2021
4.1
2.1
2.1
4.4
2.2
3.3
2.2
4.4
1.3
2.1
4.1
1.3
5.1
2.4
2.5,4.1
4.4
5.1
2.4
4.1
2.5,4.1
1.3
101,513
117,495
284,603
13,391
4,239
9,940
62,152
129,305
242,706
13,397
1,714
15,740
531,181
465,014
-
2,038
7
2,015
1,006,175
1,014,199
45,489
35,110
425,683
459,369
8,737
36,268
-
32,029
1,524,390
1,542,729
2,055,571
2,007,743
389,439
351,207
2,384
13,105
44,690
7,140
72,022
879
-
25,198
41,616
1,970
70,932
271
529,659
491,194
8,777
12,754
659,902
413,985
-
6,717
8,928
11,923
647,163
399,012
8,319
9,334
1,102,135
1,084,679
1,631,794
1,575,873
423,777
431,870
4.2
4.2
1,751,706
1,750,476
(891,277)
(902,383)
(436,652)
(416,223)
423,777
431,870
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
61
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Financial Report
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
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 2022
As at 1 July 2021
1,750,476 (928,385)
(3,172)
24,715
4,459 (416,223) 431,870
Profit for the year
Other comprehensive
income
Total comprehensive
income
-
-
-
Issuance of share capital
1,230
-
-
1,230
Dividends paid
Share-based payments
Transactions with owners
in their capacity as owners
Balance as at 30 June
2022
Year ended 30 June 2021
-
-
-
-
-
-
-
-
-
9,243
1,535
9,243
1,535
-
-
-
12,178
12,178
100
10,878
12,278
23,056
-
-
-
-
-
-
-
-
(1,230)
-
-
-
(32,707)
(32,707)
1,558
-
1,558
328
(32,707)
(31,149)
1,751,706 (928,385)
6,071
26,250
4,787 (436,652)
423,777
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
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
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
62
Financial Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2022
$’000
Notes
2022
2021
Cash flows from operating activities
Receipts from customers
Receipts from securitisation programs
Payments to suppliers and employees
Income tax paid
Interest received
Proceeds from securitisation of trade debtors
1,011,271
1,153,783
1,089,156
855,898
(1,842,354)
(1,711,204)
(27,588)
(31,065)
695
1,188
588
3,196
Borrowing, trade debtor securitisation and other finance costs paid
(57,754)
(50,162)
Net cash flows provided by operating activities
4.1
174,614
221,034
Cash flows from investing activities
Payments for property, plant and equipment
(90,336)
(78,283)
Payments for investments in associates and joint ventures
(12,602)
(9,009)
Purchase of businesses and subsidiaries, net of cash acquired
3.1
Payments for deferred acquisition consideration
Proceeds from sale of property, plant and equipment
Proceeds from government grants
Proceeds from joint venture loans
Sundry items
785
-
26,645
8,000
1,442
1,095
(23,836)
(23,307)
6,900
-
1,104
1,049
Net cash flows used in investing activities
(64,971)
(125,382)
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 increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
432,361
247,997
(422,165)
(280,722)
(52,087)
(47,413)
(32,707)
(27,520)
(74,598)
(107,658)
35,045
(12,006)
62,152
76,004
Effect of exchange rate changes on cash and cash equivalents
1,932
(1,846)
Cash and cash equivalents at the end of the year
4.1
99,129
62,152
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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 2022.
1.1 Group results
$’000
Year ended 30 June 2022
Packaging and
Sustainability
Materials
Handling and
Pooling
Contract
Manufacturing
Services
Eliminations
Total
Revenue
1,208,575
353,529
306,324
(30,731)
1,837,697
Underlying EBITDA(1)
Underlying EBIT(2)
197,713
110,197
83,433
49,939
8,674
(3,973)
-
-
289,820
156,163
Packaging and
Sustainability
Materials
Handling and
Pooling
Contract
Manufacturing
Services
Eliminations
Total
$’000
Year ended 30 June 2021
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
(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. This is a non-IFRS measure.
(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
Packaging & Sustainability
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
63
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
64
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)
Costs arising from factory fire(3)
Inventory write-downs and related disposal costs(4)
Insurance settlements for events in prior periods
Profit on sale of properties(5)
Net gain on lease modifications(6)
Compensation for business closure(9)
Business restructuring programs
• Restructuring costs(7)
• Asset write-downs
• Right of use asset impairment
Underlying adjustments in other losses
Impairment and write-off expenses(8)
• Tangible assets write-off
•
Intangible assets impairment
Total underlying adjustments
Reported EBIT
Finance costs(10)
Net profit before tax
Income tax expense(11)
Net profit after tax from continuing operations
Notes
2022
2021
156,163
182,875
(6,709)
(1,712)
(17,775)
6,958
20,504
2,698
8,900
(1,743)
(3,983)
-
1,787
4,408
-
-
(10,710)
(6,196)
2.2
2.2
2.2
2.2
(4,376)
(2,694)
(4,916)
(42,313)
(29,943)
(77,172)
78,991
(56,625)
-
-
(5,727)
(2,687)
-
(8,414)
174,461
(51,171)
22,366
123,290
(10,188)
(35,756)
12,178
87,534
(1) Underlying adjustments includes items that are individually material or do not relate to the operating
business.
(2) Transaction costs includes professional fees, stamp duty and all other costs associated with business
acquisitions and divestments.
(3) Clean-up and other miscellaneous expenses arising from a factory fire that occurred on 19 March 2021
at Lurnea plant in the Contract Manufacturing segment.
(4) Write down of hand sanitiser inventory with no realisable value including related cost of disposal ($17.5
million) and inventory write off as part of a business closure in China ($0.3 million).
(5) Profit recognised in China in the Packaging and Sustainability segment for the sale of land and
vacating premises.
(6) Net gain recognised on the modification of lease terms and conditions.
(7) Business restructuring relates to the optimisation of business facilities across the Group.
(8) The write-off of plant and equipment and impairment of goodwill and other intangibles.
(9) Net compensation for business closure for a site in China not relating to land and buildings.
(10) Net finance costs includes interest income of $517,000 (2021: $595,000).
(11) Included in income tax expense is a tax benefit on underlying adjustments of $19.2 million
(2021: $2.4 million).
Financial Report
Notes to the Financial Statements
1.1 Group results (continued)
Basic and diluted earnings per share
Earnings per share (EPS) (cents) — basic
Earnings per share (EPS) (cents) — diluted
Calculated using:
• Net profit attributable to ordinary equity holders ($’000)
• Weighted average of ordinary shares (shares) — basic
• Weighted average of ordinary shares (shares) — diluted
2022
3.5
3.5
2021
25.4
25.3
12,178
344,244,569
346,927,573
87,534
343,993,595
346,160,722
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 5.2.
1.2 Revenue from contracts with customers
Disaggregation of revenue from contracts with customers
65
t
r
o
p
e
R
Packaging and
Sustainability(1)
Materials
Handling
and
Pooling
Contract
Manufacturing
Services(2)
Eliminations
Total
l
i
a
c
n
a
n
F
i
$’000
Year ended 30 June 2022
Australia
New Zealand
Asia and others
633,995
166,597
306,299
342,173
767
203,560
103,469
-
-
- 1,106,891
-
-
342,940
307,029
- 1,756,860
-
80,837
(30,731)
-
Revenue from contracts with customers
1,179,728
270,833
306,299
Revenue from asset hire services(3)
-
80,837
Inter-segment revenue
28,847
1,859
-
25
Revenue
1,208,575
353,529
306,324
(30,731)
1,837,697
(1) 0.2% of total revenue for Packaging and Sustainability is recognised over time.
(2) 3.6% 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 2022OverviewPerformanceGovernanceShareholder 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% (2021: 30%)
Adjustments in respect of income tax of previous years
Research and development
Impairments of goodwill
Tax on unremitted foreign income
Non-assessable insurance proceeds
Overseas tax rate differential
Income tax expense reported in the Consolidated Statement of Comprehensive
Income
Comprising of:
• Current year income tax expense
• Deferred income tax (benefit)/expense
• Adjustments in respect of previous years income tax
Included in the above is a tax benefit on underlying adjustments of $19.2 million for the year ended
30 June 2022 (2021: $2.4 million).
67
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
2022
2021
22,366
123,290
6,710
2,188
(837)
5,781
4,297
(1,092)
36,987
1,491
-
-
1,799
-
(5,534)
(3,835)
(1,325)
10,188
(686)
35,756
19,217
33,662
(11,217)
2,188
603
1,491
Revenue from asset hire services(3)
Inter-segment revenue
Revenue
-
81,887
32,777
2,585
-
77
-
81,887
(35,439)
-
1,131,088 344,008
321,915
(35,439)
1,761,572
Sundry items
66
Financial Report
Notes to the Financial Statements
1.2 Revenue from contracts with customers (continued)
Disaggregation of revenue from contracts with customers (continued)
$’000
Year ended 30 June 2021
Australia
New Zealand
Asia and others
Packaging and
Sustainability(1)
Materials
Handling
and
Pooling
Contract
Manufacturing
Services(2)
Eliminations
Total
611,006
161,733
321,838
303,820
646
183,485
97,157
-
-
-
-
-
1,094,577
304,466
280,642
Revenue from contracts with customers
1,098,311
259,536
321,838
- 1,679,685
(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.
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 2022OverviewPerformanceGovernanceShareholder Information
68
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
2022
Deferred
income tax
2022
Current
income tax
Asset/
(Liability)
2021
Current
income tax
Asset/
(Liability)
2021
Deferred
income tax
(25,198)
22,695
(21,175)
(19,217)
11,217
(33,662)
23,351
(603)
(687)
(1,501)
153
(1,644)
Charged to other comprehensive income
3,945
(3,945)
(1,644)
1,644
Net payments
Acquisitions
Foreign exchange translation movement
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
27,588
-
464
-
548
537
31,065
-
65
-
-
(53)
(13,105)
29,551
(25,198)
22,695
15,377
9,344
1,104
141,265
9,315
176,405
(140,137)
36,268
(143,633)
(141)
(3,080)
(146,854)
140,137
(6,717)
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)
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
reevaluates its assessment of its 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 its 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.
69
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
70
Financial Report
Notes to the Financial Statements
1.4 Dividends
$’000
Dividends paid during the financial year
Proposed dividend(1)
2022
2021
32,707
27,520
5,164
20,640
(1) The Directors have determined to pay a final dividend of 1.50 cents per ordinary share after the end of
the financial year (2021: 6.0 cents). Dividends are franked at 65% (2021: 65%).
Franking credit balance(2)
Franking account balance as at the end of the financial year at 30%
(2021: 30%)
8,405
9,800
Franking credits/(debits) that will arise from the payment/(refund) of income
tax payable as at the end of the financial year
(4,624)
10,700
Franking credits that will be utilised from the payment of dividends as at
the end of the financial year
(1,438)
(5,755)
Total franking credit available for the subsequent financial year
2,343
14,745
(2) Franking credits of $9.1 million have been utilised during the financial year (2021: $7.7 million).
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 5.1 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)
2022
75,601
(232)
2021
78,357
(345)
42,126
51,293
117,495
129,305
6
9
5
4
6
,
1
6
8
0
6
,
1
7
6
2
1
,
6
7
0
1
1
,
1
1
4
1
,
0
7
2
1
,
0
7
0
1
,
6
2
4
Not due
< 30
31–60
> 61
Days
2022
2021
(2) At 30 June 2022 $35.9 million (2021: $27.7 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 2022, the Group had expected credit losses of $0.2 million (2021: $0.3 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.
71
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
72
Financial Report
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 2022.
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
2022
2021
155,899
125,626
25,883
102,821
23,709
93,371
284,603
242,706
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 has assessed there will be no material impact as a result
of this decision on its current accounting policy.
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
2022
2021
311,900
273,154
77,539
78,053
389,439
351,207
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.
73
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
74
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 and others
Total
2022
2021
800,277
835,813
379,629
409,273
251,952
228,482
1,431,858
1,473,568
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 2022
At 1 July 2021 net of accumulated depreciation
54,754
489,594
36,179
372,518
61,154 1,014,199
Additions and transfers
Acquisition of subsidiaries and businesses
Subsequent reassessment of lease liability
1,776
-
-
57,874
8,838
-
Disposals
(5,884)
(2,422)
(436)
Impairment and write-off expenses
(10,505)
(36,184)
Lease modification
Foreign exchange translation movement
Depreciation charge for the year
-
1,481
(962)
-
(166)
11,164
46,321
32,115
149,250
-
-
-
-
8,572
3,599
-
(2,694)
10,990
153
-
-
-
-
(98)
782
(300)
17,563
3,599
(8,742)
(49,383)
10,990
1,699
(68,142)
(5,385)
(58,511)
- (133,000)
At 30 June 2022 net of accumulated depreciation
40,660
449,392
41,424
381,577
93,122 1,006,175
Represented by:
At cost
Accumulated depreciation
Year ended 30 June 2021
61,521
1,200,383
62,855
542,195
93,122
1,960,076
(20,861)
(750,991)
(21,431)
(160,618)
-
(953,901)
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
-
-
(237)
-
-
27,303
(1,607)
-
-
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
85,142
1,243,020
53,592
474,625
61,154
1,917,533
Accumulated depreciation
(30,388)
(753,426)
(17,413)
(102,107)
-
(903,334)
(1) Property consists of the following: leasehold improvements of $31.5 million (2021: $40.6 million) and
accumulated depreciation of $16.1 million (2021: $16.8 million), and freehold property of $30.1 million
(2021: $44.6 million) and accumulated depreciation of $4.8 million (2021: $13.6 million).
75
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Financial Report
Notes to the Financial Statements
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 right-of-use (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.
Where a grant is received for the upgrade of plant and equipment, the amount received is offset against
the cost of the plant and equipment. If a grant is received for plant and equipment where the Group has
yet to commission, the amount received is recognised as deferred income and included as part of Trade
and Other Payables.
The Group assesses at each reporting date whether there is an indication that an asset 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 cash-generating unit (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 2022OverviewPerformanceGovernanceShareholder Information
76
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 2022
Notes
Customer
contracts
Other
intangibles(1)
Goodwill
Total
At 1 July 2021 net of accumulated amortisation
and impairment
Adjustment for prior period acquisition
Acquisition of subsidiaries and businesses
4,746
7,211
447,412
459,369
-
-
-
-
(1,933)
(1,933)
4,325
4,325
Financial Report
Notes to the Financial Statements
2.2 Non-current assets (continued)
Goodwill and other intangibles (continued)
$’000
2022
2021
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
259,349
261,870
-
21,030
165,826
166,274
425,175
449,174
Impairment(2)
(4,292)
(6,382)
(19,269)
(29,943)
(1) This is the lowest level where goodwill is monitored.
Foreign exchange translation movements
-
(118)
(5,360)
(5,478)
Amortisation
(454)
(203)
-
(657)
At 30 June 2022 net of accumulated amortisation
and impairment
-
508
425,175
425,683
Represented by:
At cost
28,106
11,834
675,576
715,516
Accumulated amortisation and impairment
(28,106)
(11,326)
(250,401)
(289,833)
(1) Other intangibles are recognised at cost and amortised on a straight-line basis over 25 years.
(2) Relates to Contract Manufacturing segment.
Year ended 30 June 2021
At 1 July 2020 net of accumulated amortisation and
impairment
5,657
7,873
442,538
456,068
Additions
Transfer to Property, Plant & Equipment
Foreign exchange translation movements
-
-
-
-
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)
How Pact accounts for goodwill
Goodwill is:
• 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.
Key estimates and judgements — Impairment of goodwill and other intangibles
Value in Use (VIU) for Packaging and Sustainability and Materials Handling and Pooling
The recoverable amount of each of the CGUs (except for Contract Manufacturing Services) 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 has used its current expectations and what is considered reasonably achievable when
assigning values to key assumptions in its 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.
Fair Value less cost of disposal (FVLCOD) for Contract Manufacturing Services
In determining FVLCOD, a 5 year discounted cash flow model is used based on a methodology consistent
with that applied by the Group in determining the value of the business strategies and maximising the
use of market observed inputs. These calculations, classified as Level 3 on the fair value hierarchy, are
compared to valuation multiples, or other fair value indicators where available, to ensure reasonableness.
A $67.6 million impairment was recognised in respect of its goodwill ($19.3 million), intangibles ($10.7
million) and plant and equipment ($37.6 million) in ‘impairment expenses’. Earnings in the Contract
Manufacturing CGU have been materially impacted by COVID-19 and supply chain impacts, as well as
volume losses in key categories.
77
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
79
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
78
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.
The discount rates and terminal growth rates applied to cashflow projections are detailed below. The
calculation of VIU and FVLCOD for the related 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 — For VIU 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.
• Cash Flows — For FVLCOD cash flows are based on the EBIT growth over the forecast period based on
past experience, expectations of general market conditions and a program of business improvement
strategies. Long-term 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 — For both VIU and FVLCOD 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.
2022
Discount rate (pre-tax)(1)
Terminal growth rate(1)
2021
Discount rate (pre-tax)(1)
Terminal growth rate(1)
Packaging and
Sustainability
Materials
Handling and
Pooling
Contract
Manufacturing
Services
9.4% - 16.0%
11.8% - 13.3%
1.0% - 6.8%
1.0% - 1.2%
9.4% - 15.4%
11.8% - 13.3%
1.0% - 5.2%
1.0% - 1.2%
14.0%
1.0%
12.9%
1.0%
Financial Report
Notes to the Financial Statements
2.2 Non-current assets (continued)
Goodwill and other intangibles (continued)
Annual impairment testing (continued)
Packaging and
Sustainability
Materials
Handling and
Pooling
Contract
Manufacturing
Services
2021
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 undertakes annual impairment testing based on 30 April carrying values. This was reassessed at
30 June 2021 for any triggers of impairment.
(2) This is the level at which the recoverable amount would be equal to the carrying amount.
2.3 Capital expenditure commitments, contingencies and other liabilities
Capital expenditure commitments
Capital expenditure commitments contracted for at reporting date, but not provided for are:
$’000
Payable within one year
Payable after one year but not more than five years
Total
2022
2021
32,599
45,985
1,438
7,870
34,037
53,855
(1) The % range of the discount rate and terminal growth rate is representative of the different countries
Contingent consideration dispute
within each CGU.
The below table shows the carrying amount and headroom analysis across the segments:
Packaging and
Sustainability
Materials
Handling and
Pooling
Contract
Manufacturing
Services
2022
Carrying amount (at 30 April) ($’000)(1)
1,157,414
428,424
145,471
Headroom (times)
Breakeven analysis(2)
Terminal growth rate; and
Discount rate
1.12
1.26
1.06
↓ 0.5%
↑ 1.0%
↓ 1.0%
↓ 1.0%
↑ 2.0%
0.0%
(1) Pact undertakes annual impairment testing based on 30 April carrying values. This was reassessed at
30 June 2022 for any triggers of impairment.
(2) This is the level at which the recoverable amount would be equal to the carrying amount.
During the 2020 financial 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.
In 2021 the Group received dispute notices in relation to this contingent consideration obligation. Pact Group
Holdings Ltd and a number of its related bodies corporate (“Pact”) have commenced legal proceedings against
TIC Group Pty Ltd and various related parties (“TIC”) in the Commercial Court of the Supreme Court of Victoria
challenging the validity of the dispute notice, and TIC has brought a counterclaim seeking payment of $30 million
plus interests and costs. Pact is vigorously defending the counterclaim and is of the view that no earn out amount
is payable. The proceeding is currently in the early stages of discovery and has not yet been listed for trial.
Contingencies
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.
Other Commitments and guarantees
At 30 June 2022, the Group had bank guarantees and other trade finance arrangements totalling $32.5 million
(2021: $25.2 million) in respect of various property leases, material purchases and other contractual obligations.
Government grants
During the financial year, the Group received $8 million from the Federal Government’s Modern Manufacturing
Initiative for the upgrade of plant and equipment. This grant is conditional upon the Group completing these
projects.
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
80
Financial Report
Notes to the Financial Statements
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
Movement in provisions
Year ended 30 June 2022
At 1 July 2021
Provided for during the year
Transfer
Utilised
Foreign exchange translation movement
At 30 June 2022
Year ended 30 June 2021
At 1 July 2020
Acquisition of subsidiaries and businesses
Provided for during the year
Utilised
Foreign exchange translation movement
At 30 June 2021
2022
2021
7,140
7,140
12,754
12,754
Business
restructuring(1)
Make good on
leased premises(2)
1,970
10,710
32
(5,408)
(164)
7,140
-
-
6,196
(4,226)
-
1,970
11,923
1,298
(32)
(464)
29
12,754
9,967
111
2,010
(101)
(64)
11,923
1,970
1,970
11,923
11,923
Total
13,893
12,008
-
(5,872)
(135)
19,894
9,967
111
8,206
(4,327)
(64)
13,893
(1) Business restructuring — The business restructuring programs relate to the optimisation of business
facilities across the Group. This liability is expected to be settled in the next 12 months.
(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. This liability is expected to be settled as the Group exits leased premises.
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.
81
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Financial Report
Notes to the Financial Statements
2.4 Other provisions (continued)
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.
• 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.
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:
Right of use assets
Lease liabilities
$’000
Balance as at 1 July 2021
Additions
Acquisition of subsidiaries and businesses
Subsequent remeasurement of lease
liability
Property
Plant and
equipment
363,116
43,407
8,572
3,663
9,402
2,914
-
(64)
(54,192)
(4,319)
(58,511)
Depreciation expense
Impairment expense
Lease modification
Interest expense
Payments
Foreign exchange translation movement
Balance as at 30 June 2022
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
Balance as at 30 June 2021
(2,694)
10,775
-
-
801
373,448
353,525
13,143
27,303
(1,407)
(51,472)
24,099
-
-
(2,075)
363,116
-
215
-
-
(19)
8,129
10,617
2,988
-
(200)
(4,177)
218
-
-
(44)
9,402
Total
Total
372,518
469,944
46,321
8,572
3,599
(2,694)
10,990
-
-
782
45,567
9,441
3,469
-
-
9,326
28,256
(80,343)
347
381,577
486,007
364,142
454,859
16,131
27,303
(1,607)
(55,649)
24,317
-
-
(2,119)
372,518
15,866
27,192
(1,683)
-
23,289
26,117
(73,530)
(2,166)
469,944
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
82
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)
2022
1,661
383
332
2021
1,510
358
(62)
14,339
12,747
(1) Includes council rates, taxes, insurance and other lease related payments. Outgoings are 18.9% of the
Group’s property lease payments in the financial year (2021:18.6%).
The lease liabilities included in the Consolidated Statement of Financial Position are:
$’000
Current
Non-current
2022
2021
72,022
70,932
413,985
399,012
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
2022
2021
74,632
72,990
255,099
226,991
384,459
388,749
714,190
688,730
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
2022
52,087
28,256
1,661
383
332
2021
47,413
26,117
1,510
358
(62)
13,894
12,232
(1) Of the total lease payments, 16.6% (2021: 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.
83
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
85
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
84
Financial Report
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 2022 acquisition
$’000
Consideration paid or payable
Comprising of:
• Consideration payable
• Assets
- Cash and cash equivalents
- Trade and other receivables
-
Inventory
- Property, plant and equipment
- Right of use assets
- Deferred tax assets
- Prepayments
- Other assets
• Liabilities
- Trade payables and accruals
- Lease liabilities
- Employee benefits provisions
- Other liabilities
Fair value of identifiable net assets
Provisional goodwill arising on acquisition
Synergy
Packaging
Pty Ltd(1)
19,941
785
3,070
4,842
8,838
8,572
548
234
345
1,125
9,441
407
645
15,616
4,325
(1) On 31 May 2022, the Group purchased 100% of the shares of Synergy Packaging Pty Ltd for a
consideration of $19.9 million with settlement consideration payable on 1 July 2022. Synergy Packaging
is a Victoria-based manufacturer of non-beverage rigid PET containers supplying mainly to small health
and personal care businesses. The acquisition of Synergy Packaging compliments the Groups strategy
to Lead the Circular Economy through reuse, recycling and packaging solutions.
Provisional goodwill of $4.3 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 Synergy Packaging Pty
Ltd reputation for quality and service. Goodwill is allocated to the Packaging and Sustainability reportable
segment. This goodwill will not be deductible for tax purposes. Due to the timing of the acquisition,
the Group is still determining the fair value of identifiable net assets, in particular, property, plant and
equipment and right of use assets and identifiable intangible assets.
From the date of acquisition to 30 June 2022, Synergy Packaging Pty Ltd contributed $1.6 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 2021, contributions to revenue for the period ended 30 June 2022 would
have been $19.0 million higher and the contribution to profit before tax for the Group would have been
$2.5 million higher.
Financial Report
Notes to the Financial Statements
3.1 Business combinations (continued)
Summary of 30 June 2022 acquisition (continued)
Included within the Consolidated Statement of Comprehensive Income are acquisition-related costs of
$0.3 million.
Completion of prior year acquisition accounting
In the current period a decrease of $1.9 million has been recognised in goodwill in relation to the fair value
determination for property, plant and equipment as part of the finalisation of acquisition accounting for
Flight Plastics.
3.2 Controlled entities
During the year, the Group deregistered Bidware Pty Ltd, Middleton Asset Financing and Leasing Pty Ltd,
Plaspak (PET) Pty Ltd, Plaspak Contaplas Pty Ltd, Plaspak Minto Pty Ltd and Sustainapac Pty Ltd.
Australian incorporated entities that are party to the Deed of Cross Guarantee at 30 June 2022(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
Pascoes Pty Ltd
Power Plastics Pty Ltd
Jalco Australia Pty Ltd
Jalco Care Products Pty Ltd
Alto Packaging Australia Pty Ltd
Packaging Employees Pty Ltd
Summit Manufacturing Pty Ltd
Jalco Cosmetics Pty Ltd
Astron Plastics Pty Ltd
Sunrise Plastics Pty Ltd
Jalco Promotional Packaging Pty Ltd
VIP Plastic Packaging Pty Ltd
Inpact Innovation Pty Ltd
Skyson Pty Ltd
Cinqplast Plastop Australia Pty Ltd
Brickwood (VIC) Pty Ltd
Steri-Plas Pty Ltd
Brickwood (Dandenong) Pty Ltd
Sulo MGB Australia Pty Ltd
Brickwood (NSW) Pty Ltd
VIP Steel Packaging Pty Ltd
Brickwood (QLD) Pty Ltd
VIP Drum Reconditioners Pty Ltd
Alto Manufacturing Pty Ltd
Vmax Returnable Packaging Systems Pty Ltd
Baroda Manufacturing Pty Ltd
Viscount Plastics Pty Ltd
Salient Asia Pacific Pty Ltd
Viscount Plastics (Australia) Pty Ltd
Plaspak Closures Pty Ltd
Viscount Rotational Mouldings Pty Ltd
Plaspak Pty Ltd
Viscount Logistics Services Pty Ltd
MTWO Pty Ltd
Viscount Pooling Company Pty Ltd
Snopak Manufacturing Pty Ltd
Viscount Pooling Systems Pty Ltd*
Pact Group Industries (Asia) Pty Ltd
Pact Retail Accessories (Australia) Pty Ltd
Viscount Plastics (China) Pty Ltd
Ruffgar Holdings Pty Ltd
Synergy Packaging 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.
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
86
Financial Report
Notes to the Financial Statements
Financial Report
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 Management Pty Ltd(2)
Pact Group Holdings (Hong Kong) Limited(11)
New Zealand
Pact Group Holdings (NZ) Ltd(15)
Pact Group Finance (NZ) Ltd(4)
Pact Group (NZ) Ltd(4)
VIP Steel Packaging (NZ) Ltd(16)
VIP Plastic Packaging (NZ) Ltd(16)
Alto Packaging Ltd(17)
Roots Investment Holding Private Limited(6)
Pact Retail Accessories (Hong Kong) Limited(12)
Pact Retail Accessories (Asia) Limited(12)
Talent Group Development Ltd(12)
Fast Star International Holdings Ltd(12)
India
Pact Closure Systems (India) Private Limited(11)
Auckland Drum Sustainability Services Ltd(16)
AMRS Business Services Private Limited(12)
Viscount FCC Ltd(16)
Tecpak Industries Ltd(16)
Astron Plastics Ltd(16)
Pacific BBA Plastics (NZ) Ltd(16)
Viscount Plastics (NZ) Ltd(18)
Indonesia
PT Plastop Asia Indonesia(13)
PT Plastop Indonesia Manufacturing Inc(13)
Stowers Containment Solutions Ltd(16)
South Korea
Sulo NZ Ltd(3)
Pact Group Closure Systems Korea Ltd(6)
Pact Retail Accessories (New Zealand) Ltd(4)
Nepal
China
Closure Systems International Nepal Private Limited(11)
Guangzhou Viscount Plastics Co Ltd(5)
Langfang Viscount Plastics Co Ltd(5)
Changzhou Viscount Plastics Co Ltd(5)
Philippines
Plastop Asia Inc(14)
Pact Group Closure Systems (Guangzhou) Co. Ltd(6)
Pact Closure Systems (Philippines), Inc(11)
Pact Group Closure Systems (Tianjin) Co. Ltd)(6)
Pact Group Packaging Systems (Guangzhou) Co. Ltd(8) Singapore
Dongguan Top Rise Trading Co. Ltd(9)
Asia Peak Pte Ltd(11)
Regent Plastic Products Ltd(7)
Ningbo Xunxing Trade Co. Ltd(10)
Bangladesh
TIC Trading (Bangladesh) Ltd(10)
United States Of America
Pact Retail Accessories (USA) LLC(12)
Pact Group (USA) Inc(15)
TIC Manufacturing (Bangladesh) Ltd(10)
United Kingdom
TIC Industries (Bangladesh) Pty Ltd(10)
Pact Retail Accessories (UK) Ltd(15)
(1) All entities are wholly owned
(2) Owned by Skyson Pty Ltd
(3) Owned by Sulo MGB Australia Pty Ltd
(4) Owned by Pact Group Holdings (NZ) Ltd
(5) Owned by Viscount Plastics (China) Pty Ltd
(6) Owned by Pact Group Holdings (Hong Kong)
Limited
(7) Owned by Talent Group Development Ltd
(8) Owned by Roots Investment Holding Private
Limited
(9) Owned by TIC Group (Asia) Ltd
(10) Owned by Fast Star International Ltd
(11) Owned by Pact Group Industries (Asia) Pty Ltd
(12) Owned by Davmar Investments Pty Ltd
(13) Owned by Asia Peak Pte Ltd
(14) Owned by Ruffgar Holdings Pty Ltd
(15) Owned by Pact Group Industries (ANZ) Pty Ltd
(16) Owned by Pact Group (NZ) Ltd
(17) Owned by VIP Plastic Packaging (NZ) Ltd
(18) Owned by Pacific BBA Plastics (NZ) Ltd
How Pact accounts for controlled entities
Controlled entities are 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:
• has power over the investee;
• 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)
Principal
place of
operation About
New
Zealand
Is an associate company distributing plastic bottles
and related spray products.
Pact’s
ownership
interest
Carrying
value
2022
2021
50% 686
776
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% 2,189
1,861
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.
50% 14,629 16,156
50% 3,087
3,273
Australian
Recycled Plastics
Pty Ltd(1)
Australia
A joint venture which processes kerbside collected
recyclable plastic materials to produce PET flake and
HDPE flake simultaneously.
50.8% 4,104
4,037
Circular Plastics
Australia (PET)
Pty Ltd(2)
Circular Plastics
Australia (PET)
Holdings Pty
Ltd(3)
Circular Plastics
Australia Pty
Ltd(4)
Australia
A joint venture that will recycle PET bottles to produce
new bottles and food and beverage packaging.
Australia
A newly established holding company of Circular
Plastics Australia (PET) Pty Ltd
-
-
9,007
Australia
A joint venture which processes post consumer HDPE
and PP into various forms of plastic resins and flakes for
use as raw materials in the production of finished plastic
products.
50.0% 7,676
33.3% 13,118
-
-
45,489 35,110
(1) Ownership interest at 30 June 2022 and 30 June 2021.
(2) On the 3 August 2020 the Group entered into an agreement to acquire 40% of the shares in Circular Plastics
Australia (PET) Pty Ltd (formerly called Circular Plastics Australia Pty Ltd), a company that operates a
plastics recycling plant in Albury (Australia). Following a transfer of shares during the period, Circular Plastics
Australia (PET) Pty Ltd is 100% owned by Circular Plastics Australia (PET) Holdings Pty Ltd.
(3) From 17 December 2021, the Group owns 33.33% of Circular Plastics Australia (PET) Holdings Pty Ltd. Circular
Plastics Australia (PET) Holdings Pty Ltd is the holding company of Circular Plastics Australia (PET) Pty Ltd
and Circular Plastics Australia (PET) Vic Pty Ltd.
(4) During the period the Group entered into a new joint venture with Cleanaway Pty Ltd, of which the Group has
50% ownership. Circular Plastics Australia Pty Ltd owns 100% of Circular Plastics Australia (PE) Pty Ltd.
87
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
88
Financial Report
Notes to the Financial Statements
Financial Report
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 joint ventures, the table below shows
summarised financial information of the Group’s investment:
$’000
Gempack
Circular
Plastics
Australia
(PET)
Holdings
Pty Ltd(1)
Circular
Plastics
Australia
(PET)
Pty Ltd(2)
Circular
Plastics
Australia
Pty Ltd(3)
Other
Total
Year ended 30 June 2022
Summarised Statement
of financial position
Cash and cash
equivalents
Other current assets
5,353
10,396
7,522
3,430
Non-current assets
18,786
77,056
Current liabilities
(4,960)
(11,756)
Non-current liabilities
(316)
(36,894)
Net assets
29,259
39,358
Carrying amount of the
Group’s investment
14,629
13,118
-
-
-
-
-
-
-
3,472
1,154
17,501
-
14,154
27,980
17,676
8,570
122,088
(1,474)
(2,778)
(20,968)
(4,323)
(1,797)
(43,330)
15,351
19,303
103,271
7,676
10,066
45,489
Year ended 30 June 2021
Summarised Statement
of financial position
Cash and Cash
equivalents
Other current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Carrying amount of the
Group’s investment
7,922
11,656
19,602
(5,651)
(1,217)
32,312
16,156
-
-
-
-
-
-
-
565
82
32,965
(11,096)
-
22,516
9,007
-
-
-
-
-
-
-
2,956
11,443
12,969
24,707
9,062
61,629
(4,214)
(20,961)
(1,510)
(2,727)
19,263
74,091
9,947
35,110
(1) Incorporates the results of Circular Plastics Australia (PET) Holdings Pty Ltd, Circular Plastics Australia
(PET) Pty Ltd and Circular Plastics Australia (PET) Vic Pty Ltd.
(2) In the prior year, the balances represented the financial information of Circular Plastics Australia (PET)
Pty Ltd.
(3) Incorporates the results of Circular Plastics Australia Pty Ltd and Circular Plastics Australia (PE) Pty Ltd.
$’000
Gempack
Circular
Plastics
Australia
(PET)
Holdings
Pty Ltd(1)
Circular
Plastics
Australia
(PET)
Pty Ltd(2)
Circular
Plastics
Australia
Pty Ltd(3)
Year ended 30 June 2022
Summarised Statement of
financial performance
Revenue
Interest income
Interest expense
25,875
5,527
2
665
4
297
Depreciation and amortisation
2,232
1,114
Income tax (benefit)/expense
22
(1,049)
Net profit/(loss) for the year
2,188
(2,449)
Other comprehensive
gain/(loss) for the year
Total comprehensive
income/(loss) for the year
(123)
-
2,065
(2,449)
Group’s share of profit/(loss)
for the year
1,094
(816)
Year ended 30 June 2021
Summarised Statement of
financial position
Revenue
Interest income
Interest expense
27,314
13
892
Depreciation and amortisation
2,294
Income tax expense/(benefit)
Net Profit/(loss) for the year
Other comprehensive loss for
the year
Total comprehensive
income/(loss) for the year
Group’s share of profit for
the year
95
3,932
(1,060)
2,872
1,966
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
-
-
-
6
-
6
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
Total
21,013
52,415
-
326
994
833
6
1,288
4,340
(194)
2,729
2,468
33
(90)
2,762
2,378
1,367
1,645
19,494
46,808
-
415
1,283
800
2,236
17
1,307
3,577
895
6,174
(6)
(1,066)
2,230
5,108
1,107
3,075
89
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
90
Financial Report
Notes to the Financial Statements
3.3 Associates and joint ventures (continued)
Summary of associates and joint venture financial information at 30 June (continued)
Dividends received from associates and joint ventures during the year was $1.1 million (2021: $1.6 million).
Total loans and borrowings including shareholder loans provided to the joint ventures and associates
was $11.6 million (2021: $12.6 million). Guarantees and other securities provided to the joint ventures and
associates was $6.0 million (2021: $2.2 million).
The joint ventures and associates had capital commitments at 30 June 2022 of $3.6 million (2021: nil), out
of which the Group’s share of capital commitments was $1.8 million (2021: nil). No contingent liabilities
were noted at 30 June 2022 (2021: 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 its 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.
Financial Report
Notes to the Financial Statements
Section 4 — Our Capital Structure
This section details specifics of the Groups’ 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 2022:
Current
$’000
Bank overdraft
Lease liabilities
Total current interest-bearing loans and borrowings
Non-current
$’000
Syndicated Facility Agreements(2)
Subordinated Debt Facility(2)(3)
Capitalised borrowing costs
Notes
2022
2,384
2.5
72,022
74,406
2021
-
70,932
70,932
Notes
2022
2021
589,690
604,611
75,411
46,549
(5,199)
(3,997)
Total bank borrowings (including capitalised borrowing costs)
659,902
647,163
Lease liabilities
2.5
413,985
399,012
Total non-current interest-bearing loans and borrowings
1,073,887
1,046,175
$’000
Notes
2022
2021
Total bank borrowings (including capitalised borrowing costs)
659,902
647,163
Bank overdraft
Cash and cash equivalents
Net debt before lease liabilities
Lease liabilities
Net debt(1)
(1) This is a non-IFRS measure.
(2) The Group syndicated facilities are as follows.
2,384
-
(101,513)
(62,152)
560,773
585,011
486,007
469,944
1,046,780
1,054,955
91
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
92
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
Subordinated term debt facility(3)
Loan facility
Loan facility
Term facility
Total facilities
Facilities utilised
Facilities unutilised
April 2025
July 2025
January 2026
January 2027
December 2027
Total
Facilities
$’000
22,764
235,819
74,833
185,255
274,274
200,000
992,945
666,907
326,038
(3) The Subordinated Term Debt Facility is denominated in USD and was converted to AUD $74.8 million
of subordinated financing. This is fully hedged. The USD debt is translated to AUD using the AUD/USD
spot rate as at 30 June 2022, and disclosed as a financial liability of $75.4 million, while the fair value
of the hedges at 30 June 2022 is $0.6 million (2021: $4.1 million) and is disclosed in other current
financial assets.
The Group uses interest rate swaps to manage interest rate risk.
Fair values
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).
The carrying amount and fair value of the Group’s non-current borrowings are as follows:
2022
$’000
Carrying
Value
Fair Value
Carrying
Value
2021
$’000
Fair Value
Syndicated Facility Agreements
589,690
589,690
604,611
604,611
Subordinated Debt Facility
75,411
75,411
46,549
46,549
Total bank borrowings
665,101
665,101
651,160
651,160
Financial Report
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
2022
22,959
2,987
297
90
2021
20,557
2,058
387
296
Total interest expense on borrowings
26,333
23,298
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
481
28,256
55,070
2,072
57,142
511
26,117
49,926
1,840
51,766
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 2022 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.
93
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
94
Financial Report
Notes to the Financial Statements
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
4.1 Net debt (continued)
Reconciliation to cash at the end of the year
$’000
Net profit for the year
Non cash flows in operating profit:
Depreciation and amortisation
(Profit)/loss on sale of property, plant and equipment
Share of net profit in associates
Share-based payments expense
Impairment and write-off expenses
Inventory write downs and related disposal costs
Other
Changes in assets and liabilities:
Decrease in trade and other receivables
(Increase) in inventory
2022
12,178
2021
87,534
133,657
132,013
(20,504)
261
(1,645)
(3,075)
1,371
72,256
17,775
427
1,335
-
-
45
13,155
15,825
(53,065)
(15,306)
(Increase)/decrease in net deferred tax assets and liabilities
(10,246)
712
Increase/(decrease) in trade and other payables
13,102
(11,520)
Increase in employee entitlement provisions
Increase in other provisions
(Decrease)/increase in current tax liabilities
2,298
6,126
(12,271)
3,749
3,972
5,489
Net cash flow provided by operating activities
174,614
221,034
The cash and cash equivalents balance in the Consolidated Statement of Financial Position is reconciled to
cash as shown in the Consolidated Statement of Cash Flows at the end of the financial year as follows:
$’000
Notes
2022
2021
Balance per Consolidated Statement of Financial Position
Bank overdraft
Balance per Consolidated Statement of Cash Flows
101,513
62,152
(2,384)
-
99,129
62,152
Non-Cash activities
Issue of shares via employee share purchase scheme
4.2
1,230
-
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 three 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 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.
95
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
96
Financial Report
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
2022
$’000
Number of
shares
2021
$’000
Movements in contributed equity
Ordinary shares:
Beginning of the year
343,993,595
1,750,476 343,993,595
1,750,476
Issued during the period(1)
296,458
1,230
-
-
End of the year
344,290,053
1,751,706 343,993,595
1,750,476
(1) On 25 August 2021, 296,458 shares were issued in relation to the employee share plan.
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
2022
26,250
6,071
2021
24,715
(3,172)
(928,385)
(928,385)
4,787
4,459
(891,277)
(902,383)
(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 2022
At 30 June 2022, the Group hedge cover is 37% (2021: 38%) of
its variable debt facilities drawn excluding the Group exposure
to the sale of receivables under securitisation 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 $3.1 million and reduce equity by $2.4
million (2021: $2.9 million reduction in net profit after tax and
reduce equity by $0.6 million), including the impact on discount
on sale of receivables.
Sensitivity analysis performed by the Group showed that a
+1 percentage point movement in NZD interest rates would
reduce net profit after tax by $1.2 million and reduce equity by
$1.1 million (2021: $1.3 million reduction in net profit after tax
and reduce equity by $0.8 million), including the impact on the
discount on sale of receivables.
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 (2021: $0.4 million).
The total impact on net profit after tax from a +1 percentage
point movement in interest rates is a reduction of $4.7 million
(2021: $4.6 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.
97
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
98
Financial Report
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 incorporated 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 2022
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 the net Group
exposure once
the Group has
entered into a firm
commitment for a
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 2022, 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 AUD/USD ($1.2) million to $1.5 million.
Sensitivity analysis performed by management showed that a
10% +/- movement in its major translational currencies as at
30 June 2022 would have the following impact on equity:
AUD/NZD ($6.6) million to $8.1 million
AUD/CNY ($15.7) million to $19.1 million
AUD/USD ($4.1) million to $5.0 million
AUD/PHP ($2.3) million to $2.8 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:
AUD/NZD ($2.1) million to $2.5 million
AUD/CNY ($1.9) million to $2.3 million
AUD/USD ($2.0) million to $2.5 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 2022
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.
99
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
100
Financial Report
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
Lease liabilities
1 July 2021 Cash flows
Non-cash
changes
Foreign
exchange
movement
30 June
2022
(469,944)
80,343
(96,059)
(347)
(486,007)
Non-current interest-bearing loans
and bank borrowings
(651,160)
(10,196)
-
(3,745)
(665,101)
Total liabilities from financing activities
(1,121,104)
70,147
(96,059)
(4,092)
(1,151,108)
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 low 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. This will be
mitigated through use of recycled content.
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
>5 years
Total
Year ended 30 June 2022
Financial assets(1)
Cash and cash equivalents
Trade and other receivables
Interest rate swaps
101,513
117,495
1,054
Foreign exchange forward contracts(2)
145,601
-
-
2,376
7,920
Total inflows
Financial liabilities(1)
365,663
10,296
-
-
5,555
333
5,888
Trade and other payables
(389,439)
-
-
Foreign exchange forward contracts(2)
(142,792)
(8,025)
(341)
-
-
-
-
-
-
-
101,513
117,495
8,985
153,854
381,847
(389,439)
(151,158)
Interest bearing loans and bank
borrowings(3)(4)
(14,137)
(13,907)
(544,256)
(205,275)
(777,575)
Total outflows
Net outflow
(546,368)
(21,932)
(544,597)
(205,275)
(1,318,172)
(180,705)
(11,636)
(538,709)
(205,275)
(936,325)
Year ended 30 June 2021
Financial assets(1)
Cash and cash equivalents
Trade and other receivables
62,152
129,305
Foreign exchange forward contracts(2)
74,685
Total inflows
266,142
-
-
4,380
4,380
-
7
2,800
2,807
Financial liabilities(1)
Trade and other payables
(351,207)
-
-
Foreign exchange forward contracts(2)
(73,154)
(4,464)
(2,804)
Interest rate swaps
Interest bearing loans and bank
borrowings(3)(4)
(1,594)
(8,029)
(1,487)
(1,170)
(7,898)
(681,920)
Total outflows
Net outflow
(433,984)
(13,849)
(685,894)
(167,842)
(9,469)
(683,087)
-
-
-
-
-
-
-
-
-
-
62,152
129,312
81,865
273,329
(351,207)
(80,422)
(4,251)
(697,847)
(1,133,727)
(860,398)
(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 cashflows
associated with the cross currency swap.
(4) Refer Note 2.5 for details on lease maturity analysis.
101
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
102
Financial Report
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; and
• 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 hedging instrument and hedged item on the Consolidated Statement of Financial Position
of the Group is as follows:
$’000
Year ended 30 June 2022
Hedged
item
Notional
amount
Carrying
amount
Asset/
(Liability)
Change in
fair value(5)
Cash flow
hedge
reserve
Foreign exchange forward contracts(6) (7)
Cross currency swaps(6)
Interest rate swaps(6)
Year ended 30 June 2021
Foreign exchange forward contracts(6) (7)
Cross currency swaps(6)
Interest rate swaps(6)
Committed
purchases
& FX
component
of Debt
FX
component
of debt
Floating
component
of debt
Committed
purchases
FX
component
of debt
Floating
component
of debt
151,209
3,581(1)
(879)(3)
1,251
(24)
50,287
446(2)
4,592
(15)
245,098
8,949(4)
13,121
6,311
82,570
1,715 (1)
(271)(3)
(2,783)
273
50,287
(4,147)(2)
(4,961)
(286)
246,542
(4,172)(4)
4,285
(2,921)
(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 current financial assets 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 a tranche of the USD loan. The impact from movements in foreign currency rates was a favourable
$0.5 million. This amount fully offsets the translation of the tranche of the USD loan, with the other tranche
hedged through a FX swap.
(3) The carrying amount is included in other current financial liabilities in the Consolidated Statement of
Financial Position.
(4) The carrying amount of $8.7 million is included in other non-current financial assets, $0.2 million is included in
other current financial assets 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 hedging instruments represent level 2 of the fair value hierarchy.
(7) A gain of $2.6 million (2021: $1.1 million gain) is included in other (losses)/gains in the Consolidated Statement
of Comprehensive Income.
103
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
104
Financial Report
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 2022
Committed purchases
Cross currency swaps
Floating component of debt
Year ended 30 June 2021
Committed purchases
Cross currency swaps
Floating component of debt
Total hedging
gain/(loss)
recognised in
OCI
Amount
reclassified
to profit or
loss
(24)
(15)
-
-
6,311
(3,023)
273
(286)
-
-
(2,921)
1,696
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
- Cross currency swaps
-
Interest rate swaps
FX impact
Tax effect
Closing balance of cash flow hedge reserve
2022
(3,172)
(424)
387
13,189
36
2021
(6,777)
1,360
(519)
4,319
109
(3,945)
(1,664)
6,071
(3,172)
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.
105
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
106
Financial Report
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 Employee benefits expenses and provisions
The Group’s employee benefits expenses for the year ended 30 June were as follows:
$’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
2022
2021
392,246
393,273
22,688
25,308
1,558
19,599
23,515
1,692
441,800
438,079
26,102
18,588
24,123
17,493
44,690
41,616
The Group’s non-current employee benefits provisions of $8.8 million relate to long service leave
entitlements of $6.6 million (2021: $6.9 million), and a defined benefit net liability of $2.2 million (2021: $2.0
million). The defined benefit net liability resides in six foreign jurisdictions.
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 vested 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.
Financial Report
Notes to the Financial Statements
5.2 Share-based payments
Long Term Incentive Plan (LTIP)
Under the 2022 LTIP scheme 289,351 performance rights were granted to the CEO (approved by resolution at
the Annual General Meeting on 29 November 2021), and 569,265 performance rights were granted to senior
executives and employees. These performance rights have performance hurdles and vesting conditions
consistent with those outlined in the 2022 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 29 November 2021 is $1.08.
The key assumptions in the independent valuation in relation to the 2022 LTIP were as follows:
Share price at valuation date
Annualised volatility
Annual dividend yield
Risk free rate
$2.56
40.0%
4.8%
0.8%
Expected life of performance right
36 months
Model used
Hybrid Model with relative TSR hurdles
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 $1,558,000 (2021: $1,692,000).
5.3 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
2022
2,464
66
-
645
-
2021
3,971
67
11
497
400
3,175
4,946
107
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
108
Financial Report
Notes to the Financial Statements
5.3 Key management personnel (continued)
The following table provides the total amount of transactions with related parties for the year ended
30 June 2022:
$’000
Related parties — Directors'
interests(1)
Sales
Purchases
Other
expenses
Net amounts
receivable
2022
2021
15,094
14,431
3,364
3,712
5,853
5,658
1,456
907
(1) Related parties — Directors' interests include the following entities: Kin Group Pty Ltd; 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; The Reject Shop Limited; Propax Pty Ltd; Gem-Care Products Pty
Ltd; and The Hive (Australia) Pty Ltd.
Sales to related parties
The Group has sales of $15.1 million (2021: $14.4 million) to related parties including: Green’s General
Foods Pty Ltd; The Reject Shop Limited; Remedy Kombucha Pty Ltd; Propax Pty Ltd; Gem-Care Products
Pty Ltd; and The Hive (Australia) Pty Ltd. Sales are for packaging and contract manufacturing services.
Pro-Pac Packaging Limited (Pro-Pac)
Pro-Pac, an entity for which Mr Raphael Geminder owns 57.6% (2021: 51.6%), is an exclusive supplier
of certain raw materials such as flexible film packaging, flexible plastic bags and tapes to Pact. The
Group’s supply agreement with Pro-Pac expired on 31 December 2021 and is now continuing on a
month-on-month basis. The total value of purchases by Pact under this arrangement is approximately
$3.3 million (2021: $3.7 million). The supply arrangement is negotiated independently between Pact and
Pro-Pac. Mr Jonathan Ling is also the Executive chairman of Pro-Pac Packaging Limited.
Property leases with related parties
The Group leased 11 properties (9 in Australia and 2 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 2022 was $5.9 million (June 2021: $5.7 million). The rent payable under these leases
was determined based on independent valuations and market conditions at the time the leases were
commercially agreed.
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 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.
• 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 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.
109
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
110
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
Costs arising from factory fire
Inventory write downs and related disposal costs
Insurance settlements for events in prior periods
Profit on sale of properties
Net gain on lease modification
Compensation for business closure
Business Restructuring Programs
Restructuring costs
Asset write downs
Right of use asset impairment
Underlying adjustments in other losses
Other (losses)/gains
Unrealised gains/(losses) on revaluation of foreign exchange forward
contracts
Loss on sale of property, plant and equipment
Realised net foreign exchange (losses)/gains
Total other losses
2022
2021
(6,709)
(1,712)
(17,775)
6,958
20,504
2,698
8,900
(1,743)
(3,983)
-
1,787
4,408
-
-
(10,710)
(6,196)
(4,376)
(2,694)
(4,916)
-
-
(5,727)
976
(1,538)
(1,001)
(1,552)
(1,577)
(261)
587
(1,212)
Total (losses) before tax
(6,493)
(6,939)
$’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
2022
2021
76,586
107,369
1,748,259
1,778,826
1,748,259
1,778,825
1,571,706
1,570,476
4,670
3,760
64
64
171,818
204,525
1,748,259
1,778,825
-
-
125,000
125,000
The above is a summary of the individual financial statements for Pact Group Holdings Ltd at 30 June.
Pact Group Holdings Ltd:
• is the parent of the Group;
• is a for-profit company limited by shares;
• is incorporated and domiciled in Australia;
• has its registered office at Level 5, Building 1, 658 Church Street, Cremorne, Victoria, Australia; and
• is listed on the Australian Stock Exchange (ASX) and its shares are publicly traded.
Kin Group Pty Limited has assessed that it does have the capacity to control Pact Group Holdings Ltd as at
30 June 2022 through its share ownership of 46.8%. Therefore, notwithstanding that Pact Group Holdings Ltd
currently operates with a majority independent Board of Directors, Kin Group Pty Ltd is considered to be the
ultimate parent entity of Pact Group Holdings Ltd when the de facto control considerations contained under
AASB 10 are assessed.
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.
111
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
112
Financial Report
Notes to the Financial Statements
6.4 Deed of cross guarantee
$’000
Closed group consolidated income statement
(Loss)/profit before income tax
Income tax benefit/(expense)
Net (loss)/profit for the year
Retained earnings at beginning of the year
Net (loss)/profit for the year
Dividends provided for
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
Current tax assets
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
2022
2021
(77,717)
11,077
(66,640)
(175,629)
(66,640)
3,466
(238,803)
17,405
43,832
153,721
11,680
126,899
4,624
3,154
5,076
366,391
1,910
609,073
518,686
40,734
203,757
6,393
35,639
1,416,192
1,782,583
208,388
124,068
-
37,820
1,330
48,489
832
420,927
6,143
8,907
522,018
284,940
-
822,008
1,242,935
539,648
1,751,706
(973,255)
(238,803)
539,648
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
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)
2022
2021
Fees for auditing the statutory financial report of the parent covering the group
and auditing the statutory financial reports of any controlled entities
1,433,500
1,380,281
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
84,480
235,587
186,785
99,050
168,948
31,452
-
13,500
971,051
823,778
2,844,764
2,583,648
Fees for auditing the financial report of any controlled entities
646,661
588,528
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
-
-
6,591
-
36,353
65,923
Total fees to other overseas member firms of Ernst & Young
653,252
690,804
Total auditor’s remuneration
3,498,016
3,274,452
113
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
114
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):
The table below shows revenue recognised in each geographic region that Pact operates in.
2022
2021
1,505,552
1,420,901
504,567
466,193
154,870
234,047
2,164,989
2,121,141
$’000
Australia
New Zealand
Asia and others
Total
6.8 Subsequent events
2022
2021
1,189,943
1,179,013
338,754
299,996
309,000
282,563
1,837,697
1,761,572
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 2022 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.
Receivables included in securitisation programs
(145,354)
(145,105)
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
36,268
32,029
(332)
(322)
2,055,571
2,007,743
2022
2021
657,636
637,348
172,648
154,175
119,734
102,977
950,018
894,500
662,286
647,163
13,105
25,198
6,717
(332)
9,334
(322)
1,631,794
1,575,873
(1) These reconciling items are managed centrally and not allocated to reportable segments.
115
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
116
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 2022 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 2022.
This Declaration is made in accordance with a resolution of the Directors.
Raphael Geminder
Chairman
Dated 17 August 2022
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 2022, 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 2022
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
117
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
118
Recoverability of property, plant and equipment, intangible assets and goodwill
Information other than the financial report and auditor’s report thereon
Why significant
How our audit addressed the key audit matter
At 30 June 2022, the Group’s
consolidated statement of financial
position includes property, plant and
equipment of $1,006.2 million and
intangible assets and goodwill of $425.7
million, collectively representing 70% of
total assets.
The Group performs an annual
impairment test of its property, plant and
equipment, intangible assets and
goodwill. During the financial year, an
impairment expense totalling $72.3
million was recognised against these
assets.
The carrying value of property, plant and
equipment, intangible assets and
goodwill was considered 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 include:
Future cash flow assumptions;
Discount rate and terminal growth
rate assumptions; and
Sensitivities applied to the
impairment test.
The Group’s disclosures regarding
property, plant and equipment,
intangible assets and goodwill are
included in Note 2.2.
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.
In considering future cash flow assumptions, we:
Performed a comparison to the Group’s historic
trading performance
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
Assessed whether the impairment testing
methodology met the requirements of Australian
Accounting Standards
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
property, plant and equipment, intangible assets or
goodwill
• We assessed the adequacy of disclosures in relation
to property, plant and equipment, intangible assets
and goodwill.
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 2022 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
119
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022OverviewPerformanceGovernanceShareholder Information
120
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
121
t
r
o
p
e
R
l
i
a
c
n
a
n
F
i
Annual Report 2022A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Report 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 2022. In our opinion, the Remuneration Report of Pact Group Holdings Ltd for the year ended 30 June 2022, 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 17 August 2022 OverviewPerformanceGovernanceShareholder Information
122
2
2
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Shareholder
Information
Pact's Reusable Plastic Crates
(RPC’s) are designed to be used
and sanitised more than
140
times before being
recycled
123
n
o
i
t
a
m
r
o
f
n
I
l
r
e
d
o
h
e
r
a
h
S
OverviewPerformanceGovernanceFinancial Report
124
Shareholder
Information
The shareholder information set out below is based on the information in the Pact Group Holdings Ltd
share register as at 1 September 2022.
Ordinary shares
Pact has on issue 344,290,053 fully paid ordinary shares.
Voting rights
The voting rights attaching to each class of equity securities are set out below:
• Fully paid ordinary shares: every member present at a meeting of the Company in person or by proxy,
attorney or representative shall have one vote and upon a poll each share shall have one vote.
• LTIP performance rights: no voting rights.
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:
Name
Investors Mutual Ltd
Kin Group Pty Ltd1
1
Includes Kin Group Pty Ltd and Salvage Pty Ltd
Date of
notice
Number of
ordinary
shares
% of issued
capital
30/3/2021
22,519,891
6.55%
30/11/2021
160,982,256
46.80%
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
holders
3,443
3,981
1,111
960
Number of
securities
1,757,948
10,476,644
8,351,841
23,399,585
54
300,304,035
9,549
344,290,053
There were 1,196 holders of less than a marketable parcel of 338 ordinary shares (minimum of $500)
based on the closing market price of PGH shares of $1.48 on 1 September 2022.
125
n
o
i
t
a
m
r
o
f
n
I
l
r
e
d
o
h
e
r
a
h
S
Shareholder
Information
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
Continue reading text version or see original annual report in PDF format above