More annual reports from Pact Group Holdings Ltd:
2023 ReportPeers and competitors of Pact Group Holdings Ltd:
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Leading the
Circular Economy
Contents
Overview
Pact Group at a Glance
Financial and Operational Overview
A View from the Chair
A Message from the CEO
Review of Operations and Financial Performance
Overview of Business Strategy
Operational and Financial Summary
Governance
Corporate Governance Overview
Financial Report
Directors' Report
Remuneration Report
Auditor's Independence Declaration
Financial Statements
Directors' Declaration
Independent Auditor's Report
Shareholder Information
2024 Shareholder Calendar
Corporate Directory
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Pact Group
At a Glance
Operating across the whole Circular Economy,
we deliver smarter scaled solutions to a vast range
of trusted brands.
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.
133
locations
15
countries
Our Values
Circular Plastics Australia (PET) — Pact’s
joint-venture with Cleanaway, Asahi
Beverages and Coca-Cola Europacific
Partners — named as one the Australian
Financial Review’s Sustainability Leaders
for 2023.
PerformanceGovernanceFinancial ReportShareholder Information
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Financial and
Operational
Overview
Revenue up 6% to
$1,948.6b
Underlying EBIT
$145.3m
7% lower than FY22
Underlying NPAT
$44.8m
36% lower than FY22
Inventory reduced by
$32.4m
or 11%
Total dividends
Nil
In light of temporarily elevated gearing and capital
investment requirements, the Board has resolved
not to pay a final dividend in respect of FY23
5-Year
Financial History
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FY19
FY20
FY21
FY22
FY23
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FY20 Exc
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FY20 Inc
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FY21
FY22
FY23
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FY20 Exc
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FY20 Exc
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FY20 Inc
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FY21
FY22
FY23
6%
Revenue $m
4%
Underlying
EBITDA $m
7%
Underlying
EBIT $m
36%
Underlying
NPAT $m
PerformanceGovernanceFinancial ReportShareholder Information
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A View from
the Chair
A Message
from the CEO
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Dear Fellow Shareholder
On behalf of the Board of Directors of Pact Group, it is my
pleasure to present our Annual Report for the year ended
30 June 2023.
Pact’s Vision is to Lead the Circular Economy and I am
proud of the progress we have made in FY23 towards
achieving that goal.
Circular Economy Strategy
Our Circular Economy Strategy is the basis for our
investments and future growth. Pact’s integrated plastic
packaging, recycling and reuse capabilities and solutions
place us in a unique position to enable our customers to
achieve their own sustainability targets.
In FY23 we signed strategic partnerships with two of
Australia’s leading supermarkets – Woolworths Group
and ALDI Australia – to supply recycled plastic packaging
for their own brand range, including milk bottles, meat
trays, fruit and vegetable punnets, and beverage bottles.
Our Circular Economy
Strategy is the basis
for our investments
and future growth
To support these partnerships and our other valued
customers, Pact is continuing to make significant
investments in new recycling plants and in our packaging
manufacturing capabilities to incorporate more recycled
content in our product offerings.
I am pleased to report that in FY23 we achieved an
average 12% recycled content across our product portfolio.
We are increasing our current plastic recycling capacity
with two new Circular Plastics Australia facilities nearing
completion in Melbourne in late 2023, adding to the
Pact-operated CPA (PET) recycling plant in Albury NSW
which has been operating successfully for more than
18 months. These three facilities alone will have the
combined capacity to produce up to 60,000 tonnes of
high-quality resin each year.
In recognition of the contribution of these facilities to
Australia’s circular economy, the Circular Plastics Australia
(PET) joint venture was named as one of The Australian
Financial Review's Sustainability Leaders for 2023 in
manufacturing and consumer goods.
In our Materials Handling & Pooling division, global
infrastructure investment manager Morrison & Co agreed
to purchase a 50% stake in the Crate Pooling business
which, following completion of the sale, will allow Pact to
reduce its overall debt.
Board Changes
On 16 November 2022, Lyndsey Cattermole and
Jonathan Ling retired as Directors of the Company.
The Board and I thank Lyndsey and Jonathan for their
invaluable contributions since joining the Board in
November 2013 and April 2014, respectively.
Lyndsey and Jonathan, I don’t know how to thank you
both enough for everything that you have done and for
the many years you have dedicated to our Company, you
are leaving behind an incredible legacy, in a Company
that has re-invented itself in innovation and in Leading
the Circular Economy. I hope you are proud of what we
have built together, and that Pact can continue to grow
and prosper because of the foundations that you both
painstakingly helped build over so many years. We wish
you both the very best for the future and on a personal
note I will miss having you around the board room table.
Unconditional takeover offer from Bennamon Industries
Pty Ltd for Pact Group Holdings Ltd
I wanted to acknowledge the current takeover offer from
Bennamon Industries Pty Ltd for Pact Group. I recognise
that Shareholders will consider this offer through the
Bidder’s and Target’s Statements which I encourage you
to read and make your own conclusions. I would like to
reiterate that I continue to have every confidence in
Pact Group, its employees, its business and its long-
term future. However, with the current challenging
economic and operating environment, high leverage and
substantially reduced institutional investor support, I
do believe the future success of Pact is best achieved
under private ownership.
Thank You
Central to Pact’s success in FY23 is our people and
their commitment to our Circular Economy Strategy as
well as living our Values of Safety, Customer, Integrity,
Innovation and Respect.
I would like to thank all our talented and innovative
people right around the Group, including my fellow
Directors and our dedicated management team.
Through our collaboration and creativity, the business
is progressing its Circular Economy Strategy throughout
a challenging operating environment.
Pact is committed to delivering a more sustainable
future and I look forward to partnering with our
customers and other stakeholders as we continue to
offer solutions that benefit the environment and deliver
returns to our Shareholders.
Dear Shareholder
I am pleased to report that in FY23, the Group has
accelerated our strategy to Lead the Circular Economy.
We have focussed on large capital programs to build
plastic recycling infrastructure with our joint-venture
partners and upgrade our packaging manufacturing
platforms to keep up with the demand for sustainable
packaging.
Our progress reflects the efforts of everyone at Pact
as we strive to bring our strategy to life and grow the
business.
Group Performance
In FY23, the Group delivered solid revenue growth,
made excellent progress on our capital works program,
and accelerated our Circular Economy Strategy.
Group revenue totalled $1.949 billion, which is up
6% on last year, reflecting strong cost recovery across
our businesses combined with some volume growth.
Overall, it was a good result in what was a challenging
year with damaging weather events in Australia and
New Zealand, changes in customer spending patterns
due to elevated inflation, and a slowdown in demand
out of China in the second half of the year.
We delivered revenue and growth in two of our three
segments. In Packaging & Sustainability — where
we continue to see escalating customer demand
for sustainable packaging — and in Contract
Manufacturing — where we are benefitting from the
trend to onshoring and a move towards bulk and private
label buying. Packaging Australia delivered cost recovery
and a strong performance from our Health and Personal
Care business, including the recently acquired Synergy
Packaging operations. Packaging New Zealand’s fresh
food and dairy and beverage businesses performed well
despite weather events impacting supply.
Our high-speed liquid fill line at Horsley Park will be
commissioned by the end of this year and will position
our Contract Manufacturing business as a leader in the
homecare liquid market in Australia.
In our Materials Handling & Pooling Reuse segment we
invested in our SULO bin capacity in response to strong
demand from councils for the fourth bin rollout. We are
now positioned for accelerated growth in this sector.
Volume in the crate pooling business was up, with the
program to replace corrugate boxes continuing at pace.
Revenue was down overall in the segment due to a sharp
drop in garment retail demand which impacted our
Retail Accessories business.
Strategy
made with recycled content for their own brand
products. Pact will supply Woolworths with packaging
for its own brand portfolio using around 18,000 tonnes
of recycled plastic resin sourced from the Pact operated
PET and HDPE recycled manufacturing facilities. With
ALDI we will supply recycled plastic packaging for
approximately 300 million units of the retailer’s fresh
food, dairy, beverage and home care products.
We continued to invest in recycling capability to
enable us to source high-quality recycled resin from
our facilities and make it into sustainable packaging
solutions for Woolworths, ALDI and other customers.
The Pact-operated Circular Plastics Australia (CPA)
PET recycling facility is fully operational in Albury,
while a second CPA PET recycling facility and a HDPE
and PP recycling plant, both in Melbourne, are due to
open later this year.
Another significant focus in FY23 was upgrading
our packaging platforms across Australia to produce
high-quality packaging containing recycled content
at scale. Our recycled content across our plastics
portfolio now averages 12%, which is great progress,
as we move towards our target of 30% by FY25.
Safety & People
We continue to invest in safety, and pleasingly, our
Total Recordable Injury Frequency Rate is down 26%
on the same time last year, which means we are
keeping more of our people safe. I am really proud of
this outcome in the context of the large capital build
program that the Company has embarked on.
Outlook
While we anticipate continued revenue growth with
two new recycling facilities commencing operations in
late 2023, inflationary pressures are continuing which
we expect will impact consumer demand and buying
patterns in FY24. Input costs remain elevated but are
stabilising and we remain focussed on a reduction in
our cost to serve.
Thank You
I would like to thank our Shareholders for continuing
to support the Company and our strategy to Lead the
Circular Economy. I also would like to thank all the Pact
team members for their dedication and commitment
across all our segments throughout the year. Finally, I am
grateful to our Board of Directors for their support and
guidance as we execute our strategy.
Raphael Geminder
Non-Executive Chair
In FY23, we signed two important strategic partnerships
with Woolworths and ALDI to supply plastic packaging
Sanjay Dayal
Managing Director & Group CEO
GovernanceFinancial ReportShareholder InformationPerformance
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Review of
Operations
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Financial
Performance
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Jar made from
100%
recycled plastic*
* Excluding lid
OverviewGovernanceFinancial ReportShareholder Information
8
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.
— Turnaround and defend our core Australian and
New Zealand consumer packaging businesses.
• Expand reuse and recycling capability
— Lead plastics recycling in Australia and
New Zealand.
— Scale up reuse solutions.
— Differentiate industrial and infrastructure
businesses.
• Leverage regional scale
— Grow our Asian packaging platform.
Key Enablers
The Group has identified the following key enablers to
help achieve our Vision:
• A safe, diverse and motivated workforce.
• Competitive manufacturing.
• A segment skilled sales capability.
• Differentiated solutions through technical expertise
and innovation.
• Circular Economy credentials and communication.
• Disciplined capital management.
• Data-driven decision making.
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
pride in our workplace.
• Customer — we will win when our customer wins, and
we will deliver when and what we say.
• Integrity — we will strive for results with honesty and
integrity.
• Innovation — being innovative is in Pact’s DNA and
will drive the Circular Economy.
• Respect — we will create a better workplace through
respect and collaboration.
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.
— Strong employee alignment, supported by incentive
and share ownership programs.
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The Group has also commenced an investment
of $75 million over four years to 2026 to upgrade
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 four bin waste collection
initiatives and increase use of 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, of which $15 million has been
received to date.
During FY23 the Group invested in platform upgrades
in its Australian dairy, processed food packaging and
mobile garbage bin platforms to activate recycled
content inclusion.
Scale-up reuse solutions
In FY23 the Group has continued to drive crate pooling
penetration and conversion from corrugate
to reusable plastic crates in the fresh produce sector
and has delivered further investment in the crate pool
and facilities including a new wash site in Auckland,
New Zealand.
The Group has also secured an extension to the existing
contract with Woolworths Group to own, operate, wash
and store a crate pool which the retailer uses in its
fruit and vegetable supply chain. The crates replace
single-use corrugated cardboard, waxed cardboard
and polystyrene boxes and are designed to be used
around 140 times before being recycled. This contract
was originally announced on 16 May 2016 and has now
been extended for a further 10 years, upon expiry of
the existing contract term. The current annual revenue
generated by Pact in connection with this contract
exceeds $50 million per annum.
Grow Asian packaging platform
The Group has continued to invest in new capacity in
the Asian closures business and has also consolidated
into a new site in the Philippines manufacturing
deodorant bottles and caps. The Asian businesses
delivered growth in FY23 in India, Nepal, Korea and
Indonesia, and managed operations successfully
through disruption related to China’s zero-COVID
policy.
Execution of Our Strategy
The Group has continued to make progress in delivering
our Circular Economy Strategy in FY23.
Turnaround and defend core Australia and New Zealand
consumer-packaging businesses
Operations in our Australian packaging business are
stable, although both FY23 and FY22 were impacted
by higher input and freight cost as a result of global
supply chain disruptions. In FY23 the Australian and
New Zealand packaging businesses were successful in
recovering higher input cost and inflationary impacts
through sales price increases. We continue to target to
return margins in our Australian packaging business to
the global industry standard of 10% by 2026.
The New Zealand business also delivered volume growth
in its fresh food and dairy packaging sectors in FY23,
and in Australia volume growth was delivered in health
and personal care and in the closures business. The
recent acquisitions of Synergy Packaging in Australia in
FY22 and Flight Plastics in New Zealand in FY21 are also
performing well.
The Australian business has invested in a new packaging
site in Victoria, and the site rationalisation announced in
our New Zealand fresh food business is now essentially
complete and realising synergies from the Flight Plastics
acquisition.
Lead plastics recycling in Australia and New Zealand
The Group has continued to progress its development
of a national network of recycling infrastructure and
continues to lead the industry in providing scaled, best-
in-class facilities to provide high quality food grade
recycled resins.
• The Circular Plastics Australia (PET) joint venture in
Albury, the biggest PET recycling plant in Australia,
is fully operational.
• Joint venture recycling facilities in Laverton (HDPE)
and Altona (PET) are currently in the testing phase
and will be operational in calendar year 2023, with
offtake committed. These sites will have the capacity
to produce an additional 47,000 tonnes of recycled
resin and flake per annum.
• Strong support has been received to date from the
Victorian Government through the Recycling Victoria
Infrastructure Fund and the Australian Government
through its Recycling Modernisation Fund.
Pact is 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. We have recently
announced a new strategic partnership with Aldi
Australia to supply recycled packaging for products
across the supermarket’s exclusive brand range,
including milk bottles, meat trays, fruit and vegetable
punnets, beverage bottles and shampoo bottles. Pact
will make the packaging at its facilities in New South
Wales, Victoria and Queensland using recycled PET and
HDPE plastic resins. This partnership follows on from
that announced with Woolworths Group to exclusively
supply recycled packaging for products across its own
brand range.
Annual Report 2023OverviewGovernanceFinancial ReportShareholder Information 10
Operational and
Financial Summary
Pact Group Holdings Ltd (ASX: PGH) (Pact or the Company) and
its subsidiaries (collectively, the Group) has reported revenue of
$1,948.6 million for the year ended 30 June 2023, up 6% compared
to the prior corresponding period (pcp). The statutory reported net loss
after tax for the year was $6.6 million, compared to a statutory reported
net profit after tax (NPAT) of $12.2 million in the pcp. Underlying NPAT3 for
the year was $44.8 million, down 36% compared to $70.2 million in the pcp.
Overview
• Revenue up 6.0% to $1,948.6 million
(pcp: $1,837.7 million)
• Statutory reported loss after tax of $6.6 million
(pcp: profit $12.2 million)
• Underlying EBITDA1 down 4.4% to $277.0 million
(pcp: $289.8 million)
• Underlying EBIT2 down 7.0% to $145.3 million
(pcp: $156.2 million)
• Underlying NPAT3 down 36.1% to $44.8 million
(pcp: $70.2 million)
• Revenue growth of 6%:
- Cost recovery and volume growth in the Packaging
& Sustainability and Contract Manufacturing
segments.
- Materials Handling & Pooling segment volume
growth and cost recovery in Reuse more than offset
by lower volumes in Retail Accessories.
• Underlying earnings in Packaging & Sustainability and
Materials Handling & Pooling impacted by adverse
weather events in Australia and New Zealand, changes
in consumer spending patterns and slower demand
recovery in China following the end of the zero COVID
policy in January 2023.
• Materials Handling & Pooling performance improved
in the second half with underlying EBIT in line with the
pcp.
• Turnaround underway in Contract Manufacturing with
earnings growth and a return to positive underlying EBIT.
• Non-cash impairment loss of $52.6 million recognised
in the Packaging & Sustainability segment relates to
the write down of property, plant and equipment in
Australia of $48.1 million and China of $4.5 million.
• Net debt6 at $586 million was up $25 million
compared to the pcp:
- Improved operating cash flow, benefitting from
lower inventory.
- Increased capital expenditure, $40 million up on
the pcp.
- Continued investment in plastic packaging
platforms to enable recycled content, upgrades
to packaging facilities in Philippines, Thailand,
Laverton in Victoria and the closure of the
Hastings site in New Zealand.
- Upgrades to mobile garbage bin platforms in
Australia to support council bin rollouts, including
recycled content.
- Further investment in the crate pool.
- Progressing a new facility with a high-speed
liquid laundry fill line in Contract Manufacturing.
- Other cash outflows from investing activities
$39 million higher with the current year including a
$20 million payment for the acquisition of Synergy
Packaging and the prior year including proceeds
from a property sale in China.
- Gearing4 temporarily elevated at 3.0x
(compared to 2.7x in the pcp).
• The Group continues to execute its strategy to
Lead the Circular Economy:
- Synergy Packaging integrated and performing
ahead of expectations in the health and personal
care sector.
- Continued momentum in building a national
network of plastics recycling infrastructure.
- The Circular Plastics Australia (PET) joint
venture recycling facility in Albury NSW is fully
operational.
- The two additional facilities that will manufacture
recycled resin are in development in Laverton
(HDPE) and Altona (PET), Victoria will commence
operations this calendar year.
- Recycled content in plastic packaging now at 12%.
- Strategic partnerships announced with two major
Australian retailers.
- Continued crate pooling penetration and conversion
in the fresh produce sector along with investment in
the crate pool and new facilities.
- A 10-year extension to the contract to own, operate,
wash and store a crate pool for Woolworths Group.
• In light of temporarily elevated gearing and capital
investment requirements, the Board has resolved not
to pay a final dividend in respect of FY23.
• Announced the sale of 50% of the Group’s Crate
Pooling and Crate Manufacturing business, which
forms part of the Materials Handling & Pooling
segment, with completion expected later this calendar
year, subject to regulatory and other approvals.
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Key financial highlights
$ millions
Revenue
Underlying EBITDA1
Segment Underlying EBIT2
Packaging & Sustainability
Materials Handling & Pooling
Contract Manufacturing
Underlying EBIT2
Underlying NPAT3
Reported Net (Loss)/Profit After Tax
Total Dividends – cents per share
2023
1,948.6
277.0
101.7
40.2
3.3
145.3
44.8
(6.6)
-
2022
1,837.7
289.8
110.2
49.9
(4.0)
156.2
70.2
12.2
5.0
Change %
6.0%
(4.4%)
(7.7%)
(19.5%)
183.6%
(7.0%)
(36.1%)
(154.2%)
(100.0%)
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 18 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
Net profit after tax
2022
Change %
2023
1,948,598
18,226
1,837,697
21,745
(1,689,790)
(1,569,622)
277,034
14.2%
(131,769)
145,265
7.5%
(66,401)
78,864
(82,677)
(17,752)
14,960
(6,605)
289,820
15.8%
(133,657)
156,163
8.5%
(77,172)
78,991
(56,625)
(29,379)
19,191
12,178
6.0%
(4.4%)
(7.0%)
(0.2%)
(154.2%)
Annual Report 2023OverviewGovernanceFinancial ReportShareholder Information 12
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Revenue
Underlying Adjustments
The Group focussed on recovering rapidly increasing
input costs in FY23 and delivered an additional
$95 million in revenue through price recovery in the
period. These price increases were a significant
contributor to the 6.0% increase in Group revenue for
the year, up $110.9 million to $1,948.6 million, compared
to $1,837.7 million in the pcp. Environmental factors
continued to disrupt supply chains and the agricultural
sector as severe weather patterns caused significant
damage to infrastructure in Australia and New Zealand.
China continued with its zero-COVID policy in the first
half of the year, and customer demand was uncertain
as cost-of-living pressures from high inflation and
interest rate increases were absorbed by consumers.
Revenue was up in the Packaging & Sustainability
segment by 6.1%, benefitting from the acquisition of
Synergy Packaging, the pass through of higher input
costs and volume growth in New Zealand and in the
Australian closures business. Volumes were lower in the
Australian packaging business, notably in coatings and
industrial packaging in the second half of the year.
The Materials Handling & Pooling segment was 1.9%
lower than the pcp. Volume growth and cost recovery
in the Reuse business was more than offset by lower
volumes in the Retail Accessories business in the first
half of the year as customers adjusted inventory levels
to pre-pandemic levels. The second half of the year
delivered an improved performance.
Contract Manufacturing revenue was 16.6% higher than
the pcp, with growth across its homecare, personal care
and wellness sectors combined with successful cost
recovery.
Underlying EBIT2
Underlying EBIT for the year of $145.3 million was
$10.9 million or 7.0% lower than the pcp, with growth
in the Contract Manufacturing segment ($7.3 million)
more than offset by lower earnings in Packaging &
Sustainability ($8.5 million) and Materials Handling
& Pooling ($9.7 million). Contract Manufacturing
benefitted from strong volume growth, partly offset by
some operating inefficiencies and additional costs to
support the expansion and turnaround of the business.
Packaging & Sustainability earnings were impacted
by slower demand in the second half in New Zealand,
China and in the Australian agricultural sector, along
with higher labour, storage and freight costs. In Materials
Handling & Pooling the Reuse business delivered
earnings growth through improved volumes and cost
savings, but earnings were significantly lower in Retail
Accessories due to lower demand, predominantly in the
first half. Second half earnings for the segment were in
line with the prior year.
Further detail on revenue and earnings in each of the
Group’s operating segments is contained in the Review
of Operations.
Pre-tax underlying adjustments for the year were an
expense of $66.4 million including transaction costs
of $4.0 million and costs associated with business
restructuring programs of $13.8 million (restructuring
costs of $9.3 million and asset write downs of $4.5
million). These programs included the exit of a site in the
New Zealand packaging business and the transition to
new manufacturing facilities in the Australian packaging
business as well as the Contract Manufacturing segment.
In addition, the Group recognised an impairment loss
of $52.6 million relating to Australian and Chinese
packaging assets in the Packaging & Sustainability
segment which are no longer expected to generate
benefits given current strategic plans. These costs
were partly offset by income of $1.2 million from the
settlement of insurance claims from events in prior
periods and $2.8 million from the reassessment of costs
associated with the profit on sale of property in China in
the prior year.
Pre-tax underlying adjustments in the prior year were
an expense of $77.2 million. These related primarily to
non-cash intangible asset impairments and tangible
asset write offs in the Contract Manufacturing segment
along with Group business restructuring costs.
Net Finance Expense
Net financing costs for the year were $82.7 million,
an increase of $26.1 million compared to the pcp.
The increase includes $3.5 million higher interest on lease
liabilities, relating mainly to two new properties in the
Packaging & Sustainability and Contract Manufacturing
segments. Interest on borrowings was $18.7 million higher,
primarily due to significantly higher interest rates in the
period, and losses on de-recognition of financial assets
also $4.5 million up on the pcp. Partly offsetting these
increases, interest income was $0.7 million higher.
Income Tax Expense and Tax on Underlying Adjustments
The income tax expense for the year (excluding tax on
underlying adjustments) was $17.8 million, representing
an average tax rate of 28.4% of underlying net profit
before tax, 1.1% lower than the pcp (29.5%, due to
profit mix with comparatively higher profits in lower
tax jurisdictions in the period), but consistent with the
statutory tax rates payable by the Group across its main
operating geographies. Tax on underlying adjustments
was a benefit of $15.0 million for the year, compared to
a benefit of $19.2 million in the pcp.
Net Profit after Tax
The reported net loss after tax for the year was $6.6
million compared to net profit after tax of $12.2 million
for the prior year. Excluding underlying adjustments,
NPAT was $44.8 million, a decrease of $25.3 million or
36.1% compared to $70.2 million in the pcp.
Balance Sheet
$’000
Cash
Other current assets
Property plant and equipment
Intangible assets
Other non-current assets
Total assets
Lease liabilities
Bank borrowings and overdrafts
Other liabilities payables and provisions
Total liabilities
Net assets
Net debt including lease liabilities6
Net debt6
Net debt of $585.6 million was $24.8 million higher than
30 June 2022. Higher net debt levels were driven by
increased capital investment in strategic projects and
a $20 million payment for the acquisition of Synergy
Packaging. These impacts were mitigated by an improved
operating cash flow performance. Net debt including
lease liabilities at 30 June 2023 was $1,117.9 million, an
increase of $71.1 million compared to 30 June 2022,
with $46.4 million of additional lease liabilities. The Group
retains significant undrawn debt capacity, with $331.0
million in committed undrawn facilities.
Other current assets were $5.9 million lower than the pcp.
Inventories were $32.4 million lower, driven by reduced raw
materials due to an easing in disruption to global supply
chains and softening resin prices towards the end of the
period. Trade and other receivables were $21.2 million
higher, including increased trade debtors in the Contract
Manufacturing segment on significantly higher revenues.
The increase in property plant and equipment (including
right of use assets) of $42.0 million primarily reflects
additions of $206.1 million (including right of use asset
additions of $73.8 million) and lease modifications of
$25.7 million, partly offset by the impairment of $52.6
million and depreciation of $131.7 million. The net book
value of right of use assets included within property,
plant and equipment at 30 June 2023 was $420.2 million
compared to $381.6 million at 30 June 2022. Additions to
right of use assets includes the two new properties in the
Packaging & Sustainability and Contract Manufacturing
segments, as well as a new Retail Accessories facility in
China in the Materials Handling & Pooling segment.
2023
79,061
431,373
1,048,217
428,503
95,032
2,082,186
532,361
664,628
476,506
1,673,495
408,691
1,117,928
585,567
2022
101,513
437,258
1,006,175
425,683
92,532
2,063,161
486,007
662,286
491,091
1,639,384
423,777
1,046,780
560,773
Change %
(22.1%)
(1.3%)
4.2%
0.7%
2.7%
0.9%
9.5%
0.4%
(3.0%)
2.1%
(3.6%)
6.8%
4.4%
Intangible assets were in line with the prior year with the
movement relating only to foreign exchange translation.
The increase in lease liabilities of $46.4 million mainly
reflects additions of $73.1 million, lease modifications
of $25.2 million and interest expenses of $31.7 million,
less lease payments of $86.1 million. The additions
include the same properties noted above in relation
to right of use assets.
The decrease in other liabilities, payables and provisions
includes the $20.1 million payment for the acquisition of
Synergy Packaging Pty Limited during the year.
Financing metrics
2023
2022
Change
Gearing4
Gearing (including
leasing)4
Interest cover5
Interest cover
(including leasing)5
3.0x
4.0x
4.3x
3.6x
2.7x
3.6x
8.0x
5.3x
0.3
0.4
(3.7)
(1.7)
At 30 June 2023 gearing was 3.0x, an increase of
0.3x compared to the pcp due to higher net debt,
lower earnings and higher lease payments. Including the
impact of lease accounting, gearing was 4.0x (compared
to 3.6x in the pcp). Interest cover at 4.3x was 3.7x 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
3.6x (compared to 5.3x in the pcp). Focus remains on
managing the gearing metric back below 3.0x from
its current temporarily elevated level.
Annual Report 2023OverviewGovernanceFinancial ReportShareholder Information 14
Cash Flow
Key Items — $’000
Net cashflows provided by operating activities
Payments for property, plant and equipment
Payments for investments in associates and joint ventures
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 $186.4 million for the year, up $11.8 million compared
to the prior year. The inflow from securitisation of trade
debtors was $3.6 million for the year compared to an
inflow of $1.2 million in the pcp. Excluding securitisation
cash flows, statutory operating cash flow was $9.4 million
improved on the pcp despite lower earnings with an
improved working capital performance driven by lower
inventories. Net finance costs and interest cash flows
were $20.1 million higher due mainly to increased interest
rates and higher lease liabilities, but tax cash payments
were $14.8 million lower in the period.
Payments for property, plant and equipment were
$129.8 million for the year, $39.5 million higher than the
pcp. Aligned with strategy, a primary focus has been
on upgrading the packaging manufacturing platform
(to enable the production of high-quality packaging
with increased recycled content), increasing capacity
and relocating facilities. We have invested $63 million
in the Packaging & Sustainability segment, including a
new packaging site in Victoria, the upgrade of a dairy
site in Western Australia and continued investment in
the Group’s Asian platforms. In the Materials Handling
& Pooling segment, the Group has invested $33 million
completing the upgrade of mobile garbage bin platforms
in Victoria and NSW to meet significant new demand
from local councils for bin rollouts, expanding the crate
pool, upgrading a wash site and expanding the Group’s
capability to manufacture megabins. In Contract
Manufacturing the Group has invested $34 million,
largely on the new facility in NSW which will contain
a high-speed liquid filling line, increasing capacity to
produce liquid laundry, health and personal care products.
This facility will open in FY24.
Payments for investments in associates and joint
ventures in the prior year of $12.6 million related to
further investments in joint ventures with key suppliers
and customers that are building a national network of
recycling infrastructure to supply high-quality food grade
recycled resins.
2023
186,398
(129,838)
(869)
(20,097)
116
7,000
(54,350)
(5,164)
2022
Change %
174,614
(90,336)
(12,602)
-
26,645
8,000
(52,087)
(32,707)
6.7%
43.7%
n/a
n/a
n/a
(12.5%)
4.3%
(84.2%)
Payments for deferred acquisition consideration of
$20.1 million in the year relates to the acquisition of
Synergy Packaging (acquired in the second half of FY22).
Proceeds from the sale of property, plant and equipment
of $26.6 million in the pcp represents cash disposal
proceeds from the sale of land and vacating premises
in China.
Proceeds from Government grants of $7.0 million in
the current year and $8.0 million in the prior year 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 $2.3 million compared to
the pcp reflects lease asset additions.
Dividend payments of $5.2 million in the current year
reflect the 1.5 cents per share final dividend from FY22
(paid in October 2022). The payments of $32.7 million
in the prior year reflect the 6.0 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).
Review of Operations
The Group’s has three operating segments working
together across the Circular Economy:
• Packaging & Sustainability
• Materials Handling & Pooling
• Contract Manufacturing
Inter-segment revenue eliminations of $37.5 million
(pcp: $30.7 million) are not included in the segment
financial information below.
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Packaging &
Sustainability
The Packaging & Sustainability segment is a leader in sustainable
packaging and plastics recycling, differentiated through
manufacturing, technical and innovation capability and access to
recycled materials. It 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. The Packaging & Sustainability segment
contributed 65% of the Group’s revenue in FY23.
$’000
Revenue
Underlying EBITDA1
EBITDA margin %
Underlying EBIT2
EBIT margin %
Revenue for the Packaging & Sustainability segment
of $1,282.1 million for the year was $73.5 million or
6.1% higher than the prior year. Revenue was ahead in
the Australian packaging business which benefitted
from the acquisition of Synergy Packaging ($18 million
incremental impact) and increased revenue from
the pass through of higher input costs. The business
delivered volume growth in the health and personal care
sector, but this result was offset by softer demand in
other markets, including the agricultural and coatings
sectors. Revenue in the New Zealand packaging business
was also ahead, driven by cost recovery but also with
higher volumes in the fresh food and dairy packaging
sectors. These were offset by lower industrial steel drum
and kiwifruit tray volumes, impacted by unfavourable
weather conditions during the year. Volumes were well
ahead in the Australian closures business, but the Asian
business was impacted by lower volumes in China, due
to COVID-related disruption and softening demand, as
well as by sugar shortages in the Philippines during the
year. In the Recycling business volumes were lower in the
infrastructure and construction sectors, and the honey
season was impacted by adverse weather conditions
in New Zealand. Segment revenues were also adversely
impacted by foreign exchange translation, mainly relating
to the stronger Australian dollar compared to the
New Zealand dollar in FY23.
2023
2022
Change %
1,282,115
1,208,575
188,777
14.7%
101,727
7.9%
197,713
16.4%
110,197
9.1%
6.1%
(4.5%)
(1.7%)
(7.7%)
(1.2%)
Underlying EBIT for the year of $101.7 million was
$8.5 million or 7.7% down on the pcp. Segment earnings
benefitted from the acquisition of Synergy Packaging,
improved volumes in health and personal care and
Australian closures and slightly lower depreciation.
Higher input costs were largely recovered through price
increases in Australia and New Zealand. These benefits
were more than offset by the impact, particularly in the
second half, of softening demand in the agricultural
sector, the impact of weather in New Zealand on the
industrial dairy (steel drums) and kiwifruit season and
reduced demand in China. In addition, some higher input
costs, including electricity, were not fully recoverable in
Asia, and the Australian and New Zealand businesses
incurred higher labour, storage and freight costs in the
period. The Recycling business also incurred some
one-off costs associated with the qualification and
initial commissioning of the joint venture recycling facility
in Albury. Foreign exchange translation was also adverse
in respect of the New Zealand dollar.
EBIT margins for the year at 7.9% were 1.2% lower as
New Zealand and Asia volumes weakened in the second
half of the year and cost pressures continued.
Annual Report 2023OverviewGovernanceFinancial ReportShareholder Information 16
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Materials Handling
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The Materials Handling & Pooling segment is an integral service
provider to major supermarkets, retailers and governments and provides
sustainable and efficient supply chain solutions through best-in-class
reuse platforms and technology. The Reuse business 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. The segment also
includes Pact Retail Accessories, 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. The Materials Handling
& Pooling segment contributed 17% of the Group’s revenue in FY23.
$’000
Revenue
Underlying EBITDA1
EBITDA margin %
Underlying EBIT2
EBIT margin %
Revenue for the Materials Handling & Pooling segment
of $346.7 million for the year was $6.8 million (1.9%)
lower than the prior year. Revenues were ahead in the
Reuse business through a combination of price recovery
and higher volumes, with strong momentum towards the
end of the period. Volume growth was delivered through
mobile garbage bin contract wins, demand for NBN
telecom pits and the continued conversion of corrugate
boxes to reusable plastic crates in the Australian
pooling business. Pooling volumes were adversely
affected in the first half of the year by poor weather
and growing conditions in Australia and New Zealand
but recovered in the second half in Australia. In the
Retail Accessories business, volumes were significantly
lower as a result of a sharp slowdown in demand in the
US and European garment retail sectors and disruption
to the supply chain in China due to COVID and
associated lockdowns during the year. Lower volumes
were partly offset by favourable foreign exchange
translation mainly relating to the weaker Australian
dollar compared to the US dollar in FY23.
2023
346,698
73,973
21.3%
40,215
11.6%
2022
353,529
83,433
23.6%
49,939
14.1%
Change %
(1.9%)
(11.3%)
(2.3%)
(19.5%)
(2.5%)
Underlying EBIT for the segment of $40.2 million was
$9.7 million (19.5%) lower than the pcp. Earnings in the
Reuse business were ahead, positively impacted by
volume growth and overhead cost savings. Higher raw
material and input costs were successfully recovered
through price increases. In the Retail Accessories
business earnings were significantly lower with savings
from a cost reduction program more than offset by
the impact of lower volumes in the US and Europe.
Lower earnings in the segment were attributable to
the first half of the year as an improved performance
in the second half delivered underlying EBIT in line with
the pcp.
EBIT margins were 2.5% lower at 11.6%, impacted by
lower volumes and earnings in the comparatively higher
margin Retail Accessories business.
Contract
Manufacturing
The Contract Manufacturing segment is a leading supplier of
innovative contract manufacturing services for the home, personal
care and health and wellness categories in Australia. The business
includes manufacturing capability for liquid, powder, aerosol and
nutraceutical products. The Contract Manufacturing segment
contributed 18% of the Group’s revenue in FY23.
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$’000
Revenue
Underlying EBITDA1
EBITDA margin %
Underlying EBIT2
EBIT margin %
2023
357,318
14,284
4.0%
3,323
0.9%
2022
306,324
8,674
2.8%
(3,973)
(1.3%)
Change %
16.6%
64.7%
1.2%
183.6%
2.2%
Revenue for the Contract Manufacturing segment of
$357.3 million for the year was $51.0 million (16.6%)
higher than the pcp.
The segment delivered strong volume growth, with
volume ahead in all categories (home, personal care
and health and wellness). The segment has benefited
from contract wins and a trend towards onshoring
production back into Australia following global supply
chain disruption in recent years. The business has also
been successful in re-pricing key contracts to recover
increases in raw materials and other input costs. The
completion of the new high speed liquid filing facility
in NSW is expected in FY24 and will assist in further
driving the turnaround of this business.
Underlying EBIT for the year was a profit of $3.3 million,
delivering a $7.3 million turnaround from the loss of
$4.0 million in the pcp. The increase in underlying
earnings has been driven by higher volumes, with higher
raw material and other input cost inflation largely
recovered through pricing. The impact of higher
volumes on earnings has been offset to an extent
by some operating inefficiencies as the business has
expanded and started the transition to a new site.
In addition, some additional labour and maintenance
costs have been incurred to support the turnaround
and growth of the business. The segment did benefit
from reduced depreciation and amortisation as a result
of the impairment of tangible and intangible assets in
the prior year.
OverviewGovernanceFinancial ReportShareholder Information
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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. Since last year, there has
been an increased level of macroeconomic uncertainty,
such as cost and wage inflation, increases in interest
rates, geopolitical tensions, and pressures on retaining
and attracting talent. We have teams in place to
actively monitor these risks and have also expanded our
capability to manage our risks through the appointment
of subject matter experts and risk champions across
our business. The Group applies a three lines of defence
model approach to managing risk and compliance
obligations.
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.
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 ISO 27001 framework, mock data breach
assessments, cyber security training and penetration
testing.
People Risks
The future financial and operational performance of the
Group is significantly dependent on the performance
and retention of key personnel, in particular executive
and senior leaders. 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. Pact
has designed senior leadership programs at executive
leadership level for continued development including
coaching and mentoring. The talent sourcing strategy
also includes proactive networking and curation of
talent pools for critical roles.
Health and safety risks
In line with manufacturing and chemical industries,
Pact has an exposure to health, safety and environment
(HSE) incidents, including physical and psychological
injury. Failure to comply with HSE legislation and
industry better practice may result in harm to a person,
persons, the environment or our communities. This may
lead to negative operational, reputational and financial
impacts. Pact has a dynamic HSE management system
that includes 10 significant risk control standards based
on our risks of serious injury, fatality and the potential of
these. Sites have completed self-assessments against
these standards and formed action plans from any gaps
found. Our Pact Safe governance program includes
collaborative gap analysis reviews by Group HSE with
each site to ensure the identification of gaps and
implementation of corrective actions. Another key focus
is on shared learnings from any serious or potentially
serious incident or fatality where sites action any
relevant recommendations. Divisional HSE governance
has been uplifted to accelerate the HSE maturity and
the reduction of risk across the business.
18
Subsequent Events
As announced to the ASX on 24 July 2023, the
Company has extended its existing contract to own,
operate, wash and store a crate pool for Woolworths
Group (Woolworths Contract) for a further 10 years,
upon expiry of the existing contract term. Pact’s crate
manufacturing and pooling business forms part of its
Materials Handling & Pooling segment. The current
annual revenue generated by Pact in connection with
the Woolworths Contract exceeds $50 million per
annum. Woolworths Group had an option under the
Woolworths Contract to purchase 50% of the shares
in the Pact entity that provides services to Woolworths.
Woolworths has agreed to remove this option.
Pact has announced the sale of 50% of its Crate
Pooling and Crate Manufacturing business to Morrison
& Co. a global infrastructure investment manager.
Completion is expected later this calendar year and
it is subject to regulatory and other approvals. Pact
will retain 50% ownership of the business via a joint
venture. The cash proceeds from the sale net of
transaction costs, duties and taxes are in the order
of $160 million, with a further earn out of $20 million.
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 2023 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.
Outlook
In relation to factors impacting FY24, inflationary
pressures continue to impact on consumer demand and
buying patterns, and input costs remain elevated but are
stabilising. We remain focussed on a reduction in our cost
to serve. We will provide an update on performance at our
Annual General Meeting.
Notes
This Review of Operations and Financial Performance 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 underlying 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 underlying EBITDA divided by rolling 12 months net
finance costs (excluding 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.
Annual Report 2023OverviewGovernanceFinancial ReportShareholder Information 20
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 (eg. plastics, recycled and
recyclable materials); and changes in cost, convenience
or health 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.
Relationships with our customers coupled with our
commitment to provide industry-leading sustainable
packaging solutions are critical to our success
particularly given the nature of the packaging industry
and the other supply choices available to customers.
Pact also closely monitors supply and demand which
is especially critical during pandemics or changing
economic conditions 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, cash flows, 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.
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.
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Global Supply Chain Disruptions
Environment and Sustainability Risks
Packaging, in particular plastic packaging, has been
identified globally as a significant environmental
issue and in response, in 2018 Pact developed our
End of Waste 2025 Targets. Under this strategy Pact
has committed by 2025, to eliminate all problematic
packaging that we produce, have solutions to reduce,
reuse and recycle all single-use secondary packaging
for retailers and include an average of 30% recycled
content across our plastics portfolio. To achieve these
targets, we are working with our customers to transition
their products out of less recyclable plastics and into
more circular alternatives, scaling up our market share
for returnable products including produce crates and
retail hangers, and partnering across industry to build
state of the art plastics recycling facilities in Australia
whilst also investing in machinery to increase the amount
of recycled plastic that can be added into our plastics
portfolio. Through these activities, the Group is realising
its Vision to Lead the Circular Economy.
Climate Change related risks such as food security
and drought could impact our customers’ operations
and have downstream impacts on our own business
operations. The Group has committed to reducing our
Scope 1 and 2 emissions by 50% in Australia and
New Zealand by 2030 from a FY21 baseline, in line with
minimising the impact of climate change under
the ambitious 1.5°C scenario.
The Company annually produces a Sustainability
Report that 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.
The Sustainability Report is prepared in accordance
with the Global Reporting Initiative standards.
The Board oversees the effectiveness of the Group’s
environment and sustainability policies and retains
ultimate oversight of material environmental and
sustainability risks and opportunities, including those
related to climate change.
Global supply chain disruptions experienced during
the pandemic have steadily improved over the last six
months along with the reliability of shipping and supply
chains out of Asia. Supply disruptions are still apparent
out of the Middle East and Europe due to the conflict
in Europe. Pact has taken a number of mitigating steps
over the last two years to address disruption to supply
including introducing alternative resins into the business.
Centralisation of the resin supply chain model was
implemented in early 2023 to stabilise, consolidate and
reduce overall working capital relative to resin. In the last
12 months several new suppliers have been identified in
Asia to further reduce the risk of supply and disruption.
BCP and Incident Management
The Group 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.
Legal and Regulatory Compliance Risks
The Group is required to comply with extensive
global legislative and regulatory requirements,
including those relating to health and safety; modern
slavery; competition and consumer law; industrial
relations; employment; anti-bribery and corruption;
environment; customs and international trade;
taxation; and corporation’s law. Failure to comply
with these requirements could negatively impact our
employees, customers, and operations, and expose
the Group to litigation, regulatory investigations or
enforcement action which may adversely impact our
reputation and the Group’s financial performance.
Pact has a Compliance Framework in place based
on ISO 37301:2021 — which sets out the standards,
requirements and accountability for managing
regulatory compliance obligations across the Group.
The Group’s compliance framework creates an
integrated, strategic, consistent and risk informed
approach to the management of its compliance
obligations and is subject to continual review and
assurance. Pact has legal and compliance teams who
advise the Group on, and monitor legal, and regulatory
issues, and government policy changes.
Annual Report 2023OverviewGovernanceFinancial ReportShareholder Information 22
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Bottle made with
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OverviewPerformanceFinancial ReportShareholder Information
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Corporate
Governance
The Board recognises the importance
of good corporate governance and
its role in ensuring the accountability
of the Board and management to
Shareholders and other stakeholders.
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 annual Corporate Governance Statement outlines
the key aspects of the Group’s corporate governance
framework and practices. The Board considers that
the Group’s corporate governance framework and
practices have complied with the ASX Corporate
Governance Council’s Corporate Governance Principles
and Recommendations (fourth edition) for the financial
year, except as otherwise detailed in the Corporate
Governance Statement. The 2023 Corporate Governance
Statement is available on the website: pactgroup.
com/investors/investorcommunications/#corporate-
governance-.
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Pact Group is
committed to
providing all
stakeholders
with accessible,
accurate and timely
information on
our activities and
performance.
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Financial
Report
Consolidated Financial Report
For the year ended 30 June 2023
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 2023. This Consolidated Financial Report
(Report) was issued in accordance with a resolution of
the Directors on 16 August 2023.
Information is only included in the 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 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 within 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
Consolidated Statement of Comprehensive Income
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
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Directors’
Report
The Directors present their report on the consolidated entity consisting 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 2023.
Directors
The following persons were Directors of the Company during the year and up to the date of this report, unless
otherwise indicated:
Raphael Geminder
Sanjay Dayal
Carmen Chua
Michael Wachtel
Lyndsey Cattermole AM (ceased on 16 November 2022)
Jonathan Ling (ceased on 16 November 2022)
Information on Directors
The qualifications, experience, special responsibilities and other details of Directors in office during the period
and as at the date of this report, unless otherwise indicated, are:
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Non-Executive (Current)
Raphael Geminder
Non-Executive Chair
Member of the Board since 19 October 2010
Member of the Audit, Business Risk & Compliance Committee
Member of the Nomination & Remuneration Committee
Raphael founded Pact in 2002. Prior to founding Pact, Raphael was the co-founder and
Chair 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.
Carmen Chua
Independent Non-Executive Director
Member of the Board since 1 September 2018
Chair of the Nomination & Remuneration Committee
Member of the Audit, Business Risk & Compliance Committee
Carmen is based in Hong Kong and has broad management experience in the packaging
and material science industry. Carmen currently holds the following positions at Henkel:
President of Henkel Asia Pacific, Regional Head of Henkel Adhesive Technology, Corporate
Senior Vice President of the global Mobility and Electronics division, and member of the
Adhesive Executive Committee. Previously, Carmen led the global powder resins business
of Covestro, was the Chief Marketing Officer of the Resins and Functional Material
business for Royal DSM, was President for Laird PLC and VP/GM of the 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.
Annual Report 2023OverviewPerformanceGovernanceShareholder Information
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Directors’ Report
Directors’ Report
Directors (continued)
Michael Wachtel
Independent Non-Executive Director
Member of the Board since 21 April 2020
Chair of the Audit, Business Risk & Compliance Committee
Member of the Nomination & Remuneration 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 has a Bachelor of Commerce and Bachelor of Laws 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 (since 1 September 2018) and St Vincent’s
Medical Research Institute.
Non-Executive (Former)
The below information regarding former Non-Executive Directors, Lyndsey Cattermole
and Jonathan Ling, is current as at cessation date of 16 November 2022:
Lyndsey Cattermole AM
Independent Non-Executive Director
Member of the Board (26 November 2013 to 16 November 2022)
Member of the Nomination & Remuneration Committee (ceased 16 November 2022)
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 to 29 October 2020).
Directors (continued)
Jonathan Ling
Non-Executive Director
Member of the Board (28 April 2014 to 16 November 2022)
Chair of the Nomination & Remuneration Committee (ceased 16 November 2022)
Member of the Audit, Business Risk & Compliance Committee (ceased 16 November 2022)
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
Chair of Pro-Pac Packaging Limited (since 8 April 2019), and a non-executive director and
chair of Planet Innovation Ltd. Director of several private companies.
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.
Other directorships
Director of Chemistry Australia Ltd.
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 private practice and industry,
including with Sodexo, Programmed Maintenance Services Limited, Skilled Group Limited,
Visy and Ashurst (formerly Blake Dawson).
Kathryn holds a Bachelor of Arts and Bachelor of Laws (Hons) from Monash University.
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Directors’ Report
Directors’ Report
Review of operations and financial performance
A review of the operations of the Group during the year and of the results of those operations is available
at pages 8 to 21. The Review of Operations and Financial Performance also provides an overview of Outlook,
Business Strategy and Business Risks.
Dividends
The Directors have determined that there will be no final dividend in relation to the year ended 30 June 2023.
The table below shows dividends paid (or payable) during the year ended 30 June 2023 and the
comparative year.
Dividends
Amount
per security
Franked
amount per
security
Unfranked amount
per security
sourced from the
conduit foreign
income account
Date payable
Current year to 30 June 2023
Final Dividend (per ordinary share)
Interim Dividend (per ordinary share)
Prior 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
Other events of significance and subsequent events
Please refer to the Review of Operations and Financial Performance on pages 8 to 21.
Directors’ shareholding
As at the date of this Directors' Report, the relevant interests of the Directors in the shares and
performance rights of the Company:
Director
Raphael Geminder
Carmen Chua
Michael Wachtel
Sanjay Dayal
Number of
ordinary shares
Number of
performance rights
171,309,594
210,000
41,925
40,000
-
-
-
1,438,396
Directors’ meetings
The table below shows the number of Directors’ meetings, including meetings of the Audit, Business Risk
& Compliance Committee (ABRCC) and the Nomination & Remuneration Committee (NRC), and the
number of meetings attended by each Director in their capacity as a member during the year:
Board
Director
Eligible
Attended
Audit, Business Risk and
Compliance Committee
Attended
Eligible
Nomination and
Remuneration Committee
Eligible
Attended
Raphael Geminder(1)
Lyndsey Cattermole(2)
Jonathan Ling(3)
Carmen Chua(4)
Michael Wachtel(5)
Sanjay Dayal
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4
4
8
8
8
8
4
4
7
8
8
3
NM
3
6
6
3
NM
3
6
6
4
2
2
2
2
4
2
2
2
2
NM
NM
NM
NM
(1) Raphael Geminder was appointed a member of the ABRCC on 16 November 2022.
(2) Lyndsey Cattermole (Director and NRC member) retired from the Board and ceased applicable
committee membership on 16 November 2022.
(3) Jonathan Ling (Director, ABRCC member and NRC Chair) retired from the Board and ceased applicable
committee memberships on 16 November 2022.
(4) Carmen Chua was appointed as a member and Chair of the NRC on 16 November 2022.
(5) Michael Wachtel was appointed as a member of the NRC on 16 November 2022.
(6) NM — Not a member of the relevant committee.
Principal activities
Pact is a leading provider of specialty packaging solutions, servicing consumer and industrial sectors.
Pact specialises in the manufacture and supply of rigid plastic and metal packaging, materials handling
solutions, contract manufacturing services and recycling and sustainability services.
There have been no significant changes in the nature of these activities during the year.
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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 Vision of a safe and engaging workplace and not compromising our environmental
Values. The system is aligned with ISO 14001 and operates under the Group’s Environmental Policy and
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, conducts a thorough investigation into underlying causes of issues
or incidents, and ensures it takes every opportunity to continually 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 2,963,479 as shown in the
table below:
Performance rights
FY20 LTI
FY21 LTI
FY22 LTI
FY23 LTI
Total
Balance as at
1 July 2022
1,015,536
1,167,433
847,113
Movements during the year
Granted
Lapsed/Forfeited
Balance as at
30 June 2023
-
-
-
(1,015,536)
(171,951)
(148,560)
-
995,482
698,553
-
1,269,444
-
1,269,444
3,030,082
1,269,444
(1,336,047)
2,963,479
Each performance right entitles the holder to one fully-paid ordinary PGH share upon vesting and exercise.
There is no exercise price pertaining to the performance rights and the performance rights carry no
voting or dividend rights. Refer to the Remuneration Report (Section 3) and Note 5.2 of the accompanying
financial statements for further details of performance rights on issue.
During the period, 1,269,444 performance rights were granted, 1,336,047 lapsed or were forfeited and
no performance rights over ordinary shares were exercised. There were no share options over shares in
existence.
No person entitled to performance rights had or has any rights by virtue of the performance right to
participate in any share issue of the Company.
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
Chief Financial Officer (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 (Cth) (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), the Company
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.
Auditor and non-audit services
EY continues in office as auditor of the Company (Auditor) in accordance with section 327 of the Act.
No current or former audit partners are Directors or officers of the Company.
During the year EY performed other assignments in addition to its 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 compliance services
Tax advisory services
Consulting services
Other assurance services
Total
2023
2022
156,000
194,000
284,000
866,000
279,000
971,000
94,000
84,000
813,000
2,115,000
The Board has considered the position and, in accordance with the advice received from the ABRCC, 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 did not compromise the auditor
independence requirements of the Act for the following reasons:
• All non-audit services have been reviewed by the ABRCC 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.
Auditor's independence declaration
A copy of the Auditor’s independence declaration, as required under section 307C of the Act, is set out on
page 51 and forms part of this Directors’ Report.
Rounding
Figures in the Directors’ Report and financial statements are presented in Australian dollars with all values
rounded to the nearest $1,000 (where rounding is applicable), unless otherwise stated, in accordance with
the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which this legislative instrument applies.
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Directors’ Report
Directors’ Report
Remuneration Report
This Remuneration Report for the year ended 30 June 2023, which forms part of the Directors’ Report,
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 KMP remuneration arrangements for FY23
4. Executive KMP remuneration outcomes for FY23
5. Executive KMP remuneration arrangements for FY24
6. Non-Executive Director remuneration arrangements
7. Equity holdings of KMP
8. Capacity to control by KMP
9. Related party transactions with KMP
10. Loans to 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 the:
• Non-Executive Directors of the Board of the Company (current and former); and
• Managing Director and Group Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) of
the Company and the Group (together, the Executive KMP).
Key Management Personnel
Name
Position
Term as KMP in FY23
2. Governance
Nomination and Remuneration Committee (NRC)
The NRC 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 executive leadership team’s performance assessment processes to ensure it is structured and
operates to realise business strategy; and
• review and recommend to the Board, remuneration arrangements for the Chair and NEDs.
The NRC is comprised of three NEDs and meets as often as the members deem necessary to fulfil the NRC’s
obligations. It is intended that the NRC meets no less than three times a year. The NRC Charter is available
at pactgroup.com.
Use of remuneration consultants
The NRC may seek advice from independent remuneration advisers with respect to information and
recommendations relevant to remuneration decisions. Decisions to engage remuneration consultants are
made by the NRC or the Board. Contractual engagements and briefing of the consultants are undertaken by
the NRC Chair and the remuneration recommendations of the consultants are to be provided directly to the
NRC Chair. During the financial year ended 30 June 2023, the NRC did not obtain remuneration advice or
recommendations from any external remuneration consultants.
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Non-Executive Directors (NEDs)
Raphael Geminder
Non-Executive Chair
Carmen Chua
Michael Wachtel
Executive KMP
Sanjay Dayal
Paul Washer
Former NEDs
Non-Executive Director
Non-Executive Director
Full Year
Full Year
Full Year
Managing Director and Group CEO Full Year
CFO
Full Year
Lyndsey Cattermole
Former Non-Executive Director
Ceased 16 November 2022
Jonathan Ling
Former Non-Executive Director
Ceased 16 November 2022
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 2023OverviewPerformanceGovernanceShareholder Information
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Directors’ Report
Directors’ Report
3. Executive KMP remuneration arrangements for FY23 (continued)
Executive KMP remuneration mix
The following chart shows ‘target’ Executive KMP remuneration mix for FY23:
CEO
CFO
32%
39%
29%
56%
33%
11%
FAR
STI
LTI
Executive KMP remuneration mix shown is comprised of: FAR (fixed annual remuneration, being base
remuneration + superannuation + allowances); STI at target opportunity; and LTI at target opportunity (based
on the fair value of performance rights at grant date).
3. Executive KMP remuneration arrangements for FY23
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 the Company’s executive reward framework.
The diagram below illustrates the Remuneration Framework for the CEO and CFO for FY23:
Pact Executive KMP Remuneration Approach
Designed to drive Group Strategy, organisational culture, and long-term shareholder value creation
Governing principles underpinning Pact’s reward framework
Aligns with
shareholder value
creation
Attracts, retains
and motivates
capable talent
Reflects Group
strategy and
organisational
culture
Drives high
performance
culture that
recognises
outperformance
Simple and
transparent
Reward framework components
Fixed annual
remuneration (FAR)
Short-term incentive
(STI) at risk
Long-term incentive (LTI)
at risk
Purpose
Competitively set to attract
and retain capable talent
reflecting role scope and
accountabilities.
Determined based on
market positioning
statement.
Reward for annual
performance to deliver
superior business, customer
and shareholder value.
Provides specific focus on
annual strategic priorities.
Performance link
Sustained performance and
leadership in executive role.
Annual performance targets:
• Underlying Group EBIT.
• Operational and strategic
key performance
indicators (KPI).
• Safety.
Other performance targets
and review timeframes set
at Board discretion, from
time to time.
Reward for the creation
of sustainable long-term
shareholder value.
Focusses on leading positive
organisational culture and
engagement with customers,
community and other
stakeholders.
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 incentive with two
components: cash and
deferred equity.
Annual performance rights
grant, subject to Board
discretion.
Target opportunity:
• CEO 90% FAR.
• CFO 20% of FAR.
• Subject to Board
discretion and clawback
provision.
Target opportunity:
• CEO 120% FAR
- 100% cash, 20%
deferred equity.
• CFO 60% of FAR
- 40% cash, 20%
deferred equity.
• Maximum opportunity
equivalent to 150% of
target for Executive KMP.
• Subject to Board discretion
and clawback provisions.
Where other performance
targets and review
timeframes are set at Board
discretion, other payment
vehicles, quantum and
payment timings may be
applicable.
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3. Executive KMP remuneration arrangements for FY23 (continued)
Detail of incentive plans
3. Executive KMP remuneration arrangements for FY23 (continued)
Detail of incentive plans (continued)
FY23 STI Plan
FY23 LTI Plan
Opportunity
CEO: Target opportunity equivalent to 120% of FAR, with 100% cash and 20%
deferred equity (12-month vesting period subject to ongoing employment).
CFO: Target opportunity equivalent to 60% of FAR, with 40% cash and 20% deferred
equity (12-month vesting period subject to ongoing employment).
Maximum outcome for the CEO and CFO is capped at 125% of FAR.
Performance
measures &
weighting
STI is linked to underlying Group EBIT, operational and strategic KPIs, and safety:
CEO: underlying Group EBIT (90%), Group safety (10%)
CFO: underlying 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. Underlying Group EBIT is a key indicator of the
underlying growth of the business, supporting future capital investments and enables
the payment of dividends to Shareholders.
At the beginning of FY23, the operating environment was challenged with significant
disruption from ongoing pandemic concerns in a number of geographies. To incentivise
management, the Board established a half-year and full-year STI plan as follows:
Half-Year STI Plan
Half-year payout schedule
At Board discretion, where Pact achieves its half-year underlying Group EBIT hurdle of
$75 million (Half-Year Underlying Group EBIT Hurdle), participants are eligible to receive
a one-off payment of 50% of their full year Target STI opportunity. Payment is fixed at
50% of total cash Target STI opportunity, and consequently outperformance does not
trigger a higher payout opportunity. The half-year payout is not subject to clawback.
Full-Year STI Plan
For any full-year STI award to be made, the Group must achieve a baseline Group
financial performance measure as determined by the Board for the relevant
performance period, 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 that 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 Individual Gateway reinforces Pact’s
expectation of, and commitment to, 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 Pact Values, the Code of Conduct and
risk and compliance standards.
Full year 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, net of any half-year payment, below:
Performance against underlying
Group EBIT Target
Payout against STI % Target
Opportunity
Below Target
Nil
Threshold (meets 95% of Target)
50% of Target Opportunity
Target (meets 100% of Target)
100% of Target Opportunity
Stretch (meets 120% of Target)
150% of Target Opportunity
Straight line vesting applies between Threshold and Stretch.
The FY23 business performance table on page 43 provides additional information on
these performance measures, including an overview of performance outcomes.
Opportunity
CEO: Maximum opportunity equivalent to 90% of FAR (100% in FY21 and FY22)
CFO: Maximum opportunity equivalent to 20% of FAR (30% in FY22)
Refer to the 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 (ie. 1 July 2022 – 30 June 2025).
The number of performance rights allocated to the Executive KMP and other eligible employees
is based on their maximum LTI opportunity divided by the five-day volume weighted average
price (VWAP) following public announcement of the prior year’s financial results.
Vesting of rights is subject to a Relative TSR^ hurdle over a three-year performance period.
Peer Group: S&P/ASX 200 comparator group, excluding companies in the Financial Services &
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 Company’s TSR over the performance period with the TSR
of other companies in a peer group.
LTI are also subject to an Individual Gateway condition consistent with the STI Plan, linked
to adherence to Pact Values, Code of Conduct and risk & compliance standards. Where
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 at Board discretion.
Cessation of
employment
If a LTI participant resigns or is terminated for cause, any unvested LTI plan 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.
Rights attaching
to performance
rights
Clawback
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.
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).
Hedging
To ensure the variable components of the Company’s remuneration structure remain ‘at
risk’, employees may not hedge against the risk inherent in arrangements such as the LTI
Plan, or any other equity-based incentive plans. Prohibitions against hedging are set out in
the Company’s Policy for Dealing in Securities. Under the LTI Plan rules, a breach of hedging
restrictions will result in immediate lapse of granted performance rights.
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3. Executive KMP remuneration arrangements for FY23 (continued)
4. Executive KMP remuneration outcomes for FY23 (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 KMP 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 of 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 KMP remuneration outcomes for FY23
HY23 Business performance
The Group operated in a challenging environment during HY23 with severe weather patterns, conflict in
Europe and the continuation of China’s zero-COVID policy impacting global supply chains. Despite these
challenges, revenue grew by 8% and underlying Group EBIT of $75.4 million was achieved.
FY23 Business performance
The Group operating environment began to improve in the second half of the year as China’s zero-COVID
policy ended; however the China recovery slowed in the fourth quarter. In addition, severe weather
impacted supply chains across New Zealand and demand was volatile as consumer behaviour changed
to accommodate cost of living challenges associated with high inflation and interest rate increases.
Across the full financial year, the Packaging & Sustainability segment revenue growth kept pace with
the increasing cost of the supply chain and inflationary pressures; however sluggish demand in China
and New Zealand, especially in the second half, resulted in an underlying EBIT performance lower than
FY22. The Materials Handling & Pooling segment had a difficult first half as Retail Accessories customers
adjusted inventory levels to pre-pandemic levels and our pooling business suffered from demand lost from
severe weather across Australia. The segment performance was robust in the second half, delivering an
underlying EBIT result in line with the previous year. The Contract Manufacturing segment began its turn-
around in performance by growing volumes and recovering input costs though price increases. The Group
continues to focus on its Leading the Circular Economy Strategy announcing strategic partnerships with
two Australian retailers, the near completion of two recycling facilities (rPET and rHDPE) in Victoria, and
completing the upgrade of its mobile garbage bin platform across Victoria and New South Wales.
The table below summarises key performance indicators of the Company and relevant Shareholder returns over
the past five financial years. It is noted that underlying EBIT is a performance measure linked to the full-year
STI Plan.
Performance measure
2019
2020
2021
2022
2023
Statutory net profit/(loss)
after tax
Underlying Net profit after
tax (NPAT)(1)
$’000
(289,587)
88,847
87,534
12,178
(6,605)
$’000
77,307
73,245
93,544
70,159
44,836
Underlying NPAT growth(1)
%
(18.3)
(5.3)
27.7
(24.9)
(36.2)
Underlying EBIT(1)
$’000
148,404(2)
166,263
182,875
156,163
145,265
Underlying EBIT growth
%
(9.8)
12.0(3)
10.0
(14.6)
(7.0)
Dividends per ordinary
share
Closing share price
(30 June)
3-month average share
price (1 April to 30 June)
Earnings per share(1)
Earnings per share(1) growth
Cumulative TSR(4)
cps
-
3.0
11.0
5.0
-
$
$
cps
%
%
2.79
2.51
23
(23.3)
(39.9)
2.19
3.70
1.81
0.66
2.01
21
(8.7)
(49.1)
3.70
27
28.6
(16.7)
2.13
20
(25.9)
(55.4)
0.83
13
(35.0)
(75.5)
(1) Before underlying adjustments (refer to Note 1.1 in the Consolidated Financial Report).
(2) EBIT before underlying adjustments in 2019 excludes the impact 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 2018).
The three-month average share price has been used in all periods (the three-month average share
price for the starting period was $5.57).
STI Outcomes
Performance of half year STI measures
The Half-Year Underlying Group EBIT Hurdle was met and paid in full to the Executive KMP in March 2023
following release of the Company’s half-year results.
Performance of full year STI measures
The Full-Year Financial Gateway was not met, and consequently no further payments were made to Executive
KMP in relation to FY23 performance.
The table below shows details of the Executive KMP Full Year STI ‘at target’ opportunity and gross payment
outcome for 2023 in AUD.
Sanjay Dayal
Paul Washer
Total cash STI
target opportunity
$
Cash STI $
earned(1)
1,317,834
645,167
233,753
123,069
(1) STI paid in March 2023 to the Executive KMP following Board approved payment of 50% of the target STI
due to Pact achieving its Half Year Underlying EBIT Hurdle of $75 million.
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4. Executive KMP remuneration outcomes for FY23 (continued)
Executive KMP remuneration
Executive
Year
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Salary &
fees
STI bonus
Other
benefits(1)
Superannuation
Long service
leave(2)
Total
Performance
related %
Share-
based
payments
(equity
settled)
LTIP(3)
$
$
$
2023
1,290,334
645,167
41,635
2022
1,252,751
-
54,280
2023
557,126
123,069
64,615
2022
585,350
-
25,649
2023
1,847,460
768,236
106,250
2022
1,838,101
-
79,929
Sanjay
Dayal
(CEO)
Paul
Washer*(4)
(CFO)
Total
Executive
KMP
remuneration
$
27,500
27,500
27,257
27,500
54,757
55,000
$
-
-
-
-
-
-
$
$
454,493
2,459,129
630,058
1,964,589
22,053
794,120
14,966
653,465
476,546
3,253,249
645,024
2,618,054
%
45%
32%
18%
2%
38%
25%
* Paul Washer’s employment arrangements were transferred from an Australian Pact employing entity to a
New Zealand Pact employing entity effective 1 November 2022. Remuneration data in the table above is
in AUD, with NZD converted to AUD consistent with the Group’s translation methods for foreign currency
transactions.
(1) Other benefits include annual leave provisions, shown as a liability as at 30 June 2023. For Paul Washer, other
benefits also include a retention payment of $63,863 in FY23.
(2) Long-term benefits include movements in the long service leave provision in relation to long service leave
entitlements after five years of continuous service.
(3) An independent valuation of the LTIP performance rights was performed to establish the fair value in
accordance with AASB2 Share-based Payment. Valuation of the rights was done using a hybrid model with
Relative TSR hurdles.
(4) Superannuation for Paul Washer reduced in line with applicable Kiwisaver requirements.
4. Executive KMP remuneration outcomes for FY23 (continued)
LTIP Outcomes
LTIP allocations
The table below outlines the performance rights granted to the CEO and CFO for participating in the LTI
Plan and the relevant performance period for each fiscal year.
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
FY23 LTIP
1 December 2022
651,078
$194,477
$64,826 1 July 2022 to 30 June 2025
FY22 LTIP
1 December 2021
289,351
$312,499
$104,166 1 July 2021 to 30 June 2024
FY21 LTIP
1 December 2020
497,967
$856,503
$285,501 1 July 2020 to 30 June 2023
$454,493
Paul Washer — CFO
FY23 LTIP
1 December 2022
69,260
$21,263
$7,088 1 July 2022 to 30 June 2025
FY22 LTIP
1 December 2021
41,571
$44,897
$14,966 1 July 2021 to 30 June 2024
$22,054
The performance hurdles applicable to the FY23 LTI performance rights are also applicable to the FY21
and FY22 performance rights on issue.
The Company sought and received shareholder approval under ASX Listing Rule 10.14 to issue the FY21,
FY22 and FY23 performance rights to the CEO.
Executive KMP performance rights testing
The table below shows the LTI Plan awards tested at the end of the current financial year.
Year
Performance period
Outcome
Sanjay Dayal
FY21 LTIP
1 July 2020 to 30 June 2023 The FY21 grant was tested in July 2023. As the minimum
Relative TSR performance hurdle was not met, awards in
relation to the FY21 grant lapsed in full on
15 August 2023.
Executive KMP performance rights holdings
The table below shows the movement in Executive 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 2022
Number
granted
Number
lapsed/
forfeited
Balance at
30 June 2023
Vested at
30 June 2023
Unvested at
30 June 2023
Sanjay Dayal
1,325,507
651,078
(538,189)
1,438,396
Paul Washer
41,571
69,260
-
110,831
-
-
1,438,396
110,831
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4. Executive KMP remuneration outcomes for FY23 (continued)
Executive KMP remuneration (continued)
The table on the previous page shows Executive 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 2023. The table below
has not been prepared in accordance with Australian accounting standards. The benefits disclosed below
exclude the expense for rights that are unvested.
Fixed
remuneration(1)
$
1,317,834
584,383
STI bonus(2)
Other benefits(3)
Total
$
645,167
123,069
$
41,635
64,615
$
2,004,636
772,067
Sanjay Dayal
Paul Washer*
* Paul Washer’s employment arrangements were transferred from an Australian Pact employing entity to
a New Zealand Pact employing entity effective 1 November 2022. Remuneration data in the table above
is in AUD, with NZD converted to AUD consistent with the Group’s translation methods for foreign
currency transactions.
(1) Fixed remuneration includes salary and fees, and superannuation contributions.
(2) STI attributable to the year ended 30 June 2023 are calculated on the same basis as the remuneration
table above.
(3) Other benefits include annual leave provisions, shown as a liability as at 30 June 2023. For Paul Washer,
other benefits also include a retention payment of $63,863 in FY23.
5. Executive KMP remuneration arrangements for FY24
The Board has determined that no LTI grant will be awarded to Executive KMP for FY24. The Executive
KMP remuneration framework has been revised for FY24 to comprise FAR and a cash STI. These revisions
to Executive KMP remuneration for FY24 are due to the Board requiring management to focus on short-
term initiatives to accelerate improvement in the financial performance of the Company. Further details
will be provided in the FY24 Remuneration Report.
6. Non-Executive Director remuneration arrangements
Remuneration policy
The NRC seeks to set aggregate remuneration at a level that provides the Company with the ability to attract
and retain 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 periodically 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.
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.
Raphael Geminder does not receive a fee for his position as Chair and Non-Executive Director of the Company
nor for his service on Board committees.
There were no changes to NED fees during FY23. The previous increase to NED fees (being an increase of 1.8%)
occurred in September 2021. The table below sets out annual NED and Board committee fees.
Responsibility
Board fees
2023
2022(1)
Non-Executive Directors (excluding the Chair)
$117,649
$117,649
Audit, Business Risk and Compliance Committee
Chair
Member
Nomination and Remuneration Committee
Chair
Member
(1) 2022 NED fee schedule was effective from 1 September 2021.
$32,086
$32,086
$8,022
$8,022
$32,086
$32,086
$8,022
$8,022
NEDs do not participate in any Company incentive programs and NED remuneration is not linked to Company
performance. NEDs may be reimbursed for expenses reasonably incurred in attending to the Company’s affairs.
NEDs do not receive retirement benefits other than the superannuation contributions disclosed in this report.
The Company operates a Director Share Acquisition Plan (DSAP) which allows NEDs to sacrifice a portion of
after-tax fees to the acquisition of Company shares on a periodic basis at the prevailing market rate. Shares
acquired in this way are not subject to performance targets, as they are acquired in place of cash payments.
The remuneration of NEDs for the year ended 30 June 2023 is detailed in the following table.
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6. Non-Executive Director remuneration arrangements (continued)
7. Equity holdings of KMP
Non-Executive KMP
Year
Short-term
benefits
Post-employment
benefits
Fees
$
Superannuation
$
Total
$
Current Non-Executive KMP
Raphael Geminder
Carmen Chua(1)
Michael Wachtel(2)
Former Non-Executive KMP
Lyndsey Cattermole(3)
Jonathan Ling(4)
Total Non-Executive KMP remuneration
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
-
-
145,725
125,300
154,749
149,294
47,603
113,910
59,756
157,292
407,833
545,796
-
-
-
-
-
-
-
-
145,725
125,300
154,749
149,294
4,523
52,126
11,390
125,300
-
-
59,756
157,292
4,523
412,356
11,390
557,186
(1) Appointed Chair of the NRC effective 16 November 2022. Member of the ABRCC FY22 and FY23.
(2) Appointed as a member of the NRC effective 16 November 2022. Chair of the ABRCC FY22 and FY23.
(3) Ceased as a Director and member of the NRC effective 16 November 2022. Fees include amounts
sacrificed in relation to DSAP participation during FY22 and FY23.
(4) Ceased as a Director, Chair of the NRC and member of the ABRCC effective 16 November 2022.
The following table shows the number of fully-paid ordinary shares held by KMP (directly and indirectly)
including their related parties and any movements during the year ended 30 June 2023:
KMP
Current NEDs
Balance
1 July 2022
Additions
Disposals
Raphael Geminder
160,982,256
10,327,338
Carmen Chua
Michael Wachtel
Executive KMP
Sanjay Dayal
Paul Washer
Former NEDs
Lyndsey Cattermole(1)
Jonathan Ling(1)
150,000
41,925
40,000
28,507
586,476
48,786
60,000
-
-
-
5,733
-
-
-
-
-
-
-
-
Balance
30 June 2023
171,309,594
210,000
41,925
40,000
28,507
592,209
48,786
(1) Shares shown as held by Lyndsey Cattermole and Jonathan Ling at 30 June 2023 are their balances as at
the date of their retirement from the Board on 16 November 2022.
8. 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 2023 Kin Group held 167,673,665 shares in the Company, representing an ownership stake of
48.70%. Raphael Geminder’s total ownership stake in Pact is 171,309,594 shares, reflecting an ownership stake
of 49.76%, including the investments held by Kin Group and Salvage.
Kin Group has assessed that it does have the capacity to control the Company as at 30 June 2023 through its
share ownership of 49.76%. Therefore, Kin Group is considered to be the ultimate parent entity of Pact when the
de facto control considerations contained under AASB 10 are assessed.
9. Related party transactions with KMP
The following table provides the total amount of transactions with related parties for the year ended
30 June 2023:
$’000
Year
Sales
Purchases
Other
expenses
Net amounts
receivable
Related parties — Directors' interests(1)
2023
2022
8,167
15,094
3,184
3,364
6,339
5,853
954
1,456
(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, The Hive (Australia)
Pty Ltd, BG Wellness Holdings Pty Ltd and Brimful Beverages Pty Ltd.
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Directors’ Report
9. Related party transactions with KMP (continued)
Sales to related parties
The Group has sales of $8.2 million (2022: $15.1 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;
The Hive (Australia) Pty Ltd; BG Wellness Holdings Pty Ltd; and Brimful Beverages Pty Ltd. Sales are for
Packaging & Sustainability and Contract Manufacturing.
Pro-Pac Packaging Limited (Pro-Pac)
Pro-Pac, an entity in which Raphael Geminder owns 66.52% (2022: 57.4%), 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 this arrangement is approximately $3.2 million (2022: $3.3 million). The
agreement is on commercial terms which the Board has determined are at arms’ length in accordance
with section 210 of the Act. Former director Jonathan Ling is also the chairman of Pro-Pac.
Property leases with related parties
The Group leased 10 properties (eight in Australia and two in New Zealand) from Centralbridge Pty Ltd
(as trustee for the Centralbridge Unit Trust), Centralbridge Two Pty Ltd, Centralbridge (NZ) Limited and
Albury Property Holdings Pty Ltd. These are controlled by entities associated with 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 2023 was $6.2 million (June 2022:
$5.9 million). The rent payable under the Centralbridge Leases was determined based on independent
valuations and market conditions at the time the leases were commercially agreed. As at 30 June 2023,
the total lease liabilities owing to Centralbridge Leases is $34.2 million (June 2022: $32.4 million). The
leases are on commercial terms which the Board has determined are at arms’ length in accordance with
section 210 of the Act.
10. Loans to KMP
There were no loans to KMP or any of their closely related parties during the year (2022: nil).
This Directors’ Report is signed in accordance with a resolution of Directors.
Raphael Geminder
Chair
16 August 2023
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
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 2023, 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
16 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
16
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Financial Report
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
$’000
Revenue
Raw materials and consumables used
Employee benefits expense
Notes
2023
2022
1.1, 1.2
1,948,598
1,837,697
(898,500)
(823,926)
5.1
(464,968)
(441,800)
Occupancy, repair and maintenance, administration and selling expenses
(324,288)
(302,319)
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
(Loss)/profit before income tax expense
Income tax expense
Net (loss)/profit for the year
Net (loss)/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
17,658
20,617
(15,849)
(6,493)
(131,769)
(133,657)
(52,586)
(72,256)
(83,883)
(57,142)
1,774
1,645
(3,813)
22,366
1.3
(2,792)
(10,188)
(6,605)
12,178
(6,605)
12,178
Gain on remeasurement of defined benefit liability
109
100
Items that will be reclassified subsequently to profit or loss
(Loss)/gain on cash flow hedges taken to equity
Foreign currency translation (losses)/gains
(1,695)
13,188
(2,731)
1,535
Income tax benefit/(expense) on items in other comprehensive income
505
(3,945)
Other comprehensive (loss)/gain for the year, net of tax
Total comprehensive (loss)/income for the year
(3,812)
10,878
(10,417)
23,056
Attributable to:
Equity holders of the parent entity
Total comprehensive (loss)/income for the Group
cents
Basic earnings per share
Diluted earnings per share
(10,417)
23,056
(10,417)
23,056
1.1
1.1
(1.9)
(1.9)
3.5
3.5
The Consolidated Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.
Financial Report
Consolidated Statement of Financial Position
For the year ended 30 June 2023
$’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
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 and bank borrowings
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
Notes
2023
2022
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
79,061
146,262
101,513
125,085
252,179
284,603
16,581
5,620
10,731
13,391
4,239
9,940
510,434
538,771
1,212
2,038
1,048,217
1,006,175
46,812
45,489
428,503
425,683
2,628
44,380
8,737
36,268
1,571,752
1,524,390
2,082,186
2,063,161
389,926
397,029
1,021
11,096
47,077
2,464
80,747
91
2,384
13,105
44,690
7,140
72,022
879
532,422
537,249
5.1
2.4
4.1
6,369
12,903
663,607
2.5, 4.1
451,614
8,777
12,754
659,902
413,985
1.3
6,580
6,717
1,141,073
1,102,135
1,673,495
1,639,384
408,691
423,777
4.2
4.2
1,751,706
1,751,706
(894,703)
(891,277)
(448,312)
(436,652)
408,691
423,777
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
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Financial Report
Consolidated Statement of Changes in Equity
For the year ended 30 June 2023
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 2023
As at 1 July 2022
1,751,706 (928,385)
6,071
26,250
4,787 (436,652)
423,777
Loss for the year
Reserves reclassified to
profit for the year
Other comprehensive
(loss)/income
Total comprehensive
income
Dividends paid
Share-based payments
Transactions with owners in
their capacity as owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,658
(1,190)
(5,389)
(1,190)
(2,731)
-
-
-
-
-
-
-
-
-
-
-
(6,605)
(6,605)
-
2,658
109
(6,470)
(6,496)
(10,417)
(5,164)
(5,164)
495
-
495
495
(5,164)
(4,669)
Financial Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
$’000
Notes
2023
2022
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
1,011,463
1,011,271
1,154,984
1,089,156
(1,893,647)
(1,842,354)
(12,833)
(27,588)
883
3,561
695
1,188
Borrowing, trade debtor securitisation and other finance costs paid
(78,013)
(57,754)
Net cash flows provided by operating activities
4.1
186,398
174,614
Cash flows from investing activities
Payments for property, plant and equipment
Payments for investments in associates and joint ventures
(129,838)
(90,336)
(869)
(12,602)
Purchase of businesses and subsidiaries, net of cash acquired
-
Payments for deferred acquisition consideration
3.1
(20,097)
785
-
Balance as at 30 June 2023
1,751,706 (928,385)
4,881
23,519
5,282 (448,312) 408,691
Proceeds from sale of property, plant and equipment
116
26,645
Proceeds from Government grants
2.3
7,000
8,000
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/(loss)
Total comprehensive
income
-
-
-
Issuance of share capital
1,230
Dividends paid
Share-based payments
-
-
Transactions with owners in
their capacity as owners
1,230
-
-
-
-
-
-
-
-
-
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)
Balance as at 30 June 2022
1,751,706 (928,385)
6,071
26,250
4,787 (436,652)
423,777
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
(Payments to)/proceeds from joint venture loans
Dividend income from joint ventures and associates
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liability principal
(1,464)
1,470
1,442
1,095
(143,682)
(64,971)
636,933
432,361
(639,906)
(422,165)
(54,350)
(52,087)
Payment of dividends
1.4
(5,164)
(32,707)
Net cash flows used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes on cash and cash equivalents
(62,487)
(74,598)
(19,771)
35,045
99,129
(1,318)
62,152
1,932
Cash and cash equivalents at the end of the year
4.1
78,040
99,129
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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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 2023.
1.1 Group results
$’000
Year ended 30 June 2023
Packaging &
Sustainability
Materials
Handling &
Pooling
Contract
Manufacturing
Eliminations
Total
Revenue
1,282,115
346,698
357,318
(37,533)
1,948,598
Underlying EBIT(1)
101,727
40,215
3,323
-
145,265
Packaging &
Sustainability
Materials
Handling &
Pooling
Contract
Manufacturing
Eliminations
Total
$’000
Year ended 30 June 2022
Revenue
1,208,575
353,529
306,324
(30,731)
1,837,697
Underlying EBIT(1)
110,197
49,939
(3,973)
-
156,163
(1) Underlying EBIT — Earnings before underlying adjustments, finance costs and loss on de-recognition of
financial assets, net of interest income, tax. Underlying EBIT is a non-IFRS measure.
Pact’s chief operating decision maker is the CEO, who has a focus on the financial measures reported in the
table above. As required by AASB 8: Operating Segments, the results above have been reported on a consistent
basis to that supplied to the CEO.
The 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
& 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
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
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(7)
Business restructuring programs(8)
• Restructuring costs
• Asset write downs
• Right of use asset impairment
Underlying adjustments in other losses
Impairment and write-off expenses(9)
• Tangible assets write off
•
Intangible assets impairment
Total underlying adjustments
Reported EBIT
Net finance costs(10)
Net (loss)/profit before tax
Income tax expense(11)
Net (loss)/profit after tax from continuing operations
Notes
2023
2022
145,265
156,163
(4,038)
-
-
1,236
2,827
-
-
(6,709)
(1,712)
(17,775)
6,958
20,504
2,698
8,900
(9,292)
(10,710)
(4,548)
-
(13,815)
(4,376)
(2,694)
(4,916)
(52,586)
(42,313)
-
(29,943)
(66,401)
78,864
(77,172)
78,991
(82,677)
(56,625)
(3,813)
(2,792)
(6,605)
22,366
(10,188)
12,178
2.2
2.2
2.2
2.2
(1) Underlying adjustments include 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) Prior period 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) Prior period 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) Profits recognised in China in the Packaging & Sustainability segment for vacating and transferring land
in the prior period. The current period gain is a reversal of previously estimated costs associated with the
transaction.
(6) Prior period net gain recognised on the modification of lease terms and conditions.
(7) Prior period net compensation for business closure for a site in China not relating to land and buildings.
(8) Business restructuring relates to the optimisation of business facilities across the Group. This includes
$2.4 million in relation to accelerated depreciation of assets.
(9) Write off of plant and equipment and impairment of goodwill and other intangibles.
(10) Net finance costs includes interest income of $1,206,000 (2022: $517,000).
(11) Included in income tax expense is a tax benefit on underlying adjustments of $15.0 million (2022: $19.2
million), including income tax losses recognised and assessable income on capital gains. Refer Note 1.3 for
further details.
Annual Report 2023OverviewPerformanceGovernanceShareholder Information
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Financial Report
Notes to the Financial Statements
1.1 Group results (continued)
Basic and diluted earnings per share
Earnings per share (EPS) (cents) — basic
Earnings per share (EPS) (cents) — diluted
Calculated using:
• Net (loss)/profit attributable to ordinary equity holders ($’000)
• Weighted average of ordinary shares (shares) — basic
• Weighted average of ordinary shares (shares) — diluted
2023
(1.9)
(1.9)
2022
3.5
3.5
(6,605)
344,290,053
346,748,166
12,178
344,244,569
346,927,573
Earnings per share is calculated by dividing the net (loss)/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
$’000
Year ended 30 June 2023
Australia
New Zealand
Asia and others
Revenue from asset hire services(3)
Inter-segment revenue
Revenue
Packaging &
Sustainability(1)
Materials
Handling
& Pooling
Contract
Manufacturing(2)
Eliminations
Total
634,139
175,800
357,317
370,974
967
241,332
85,002
-
-
-
83,067
35,671
1,862
-
-
- 1,167,256
-
-
371,941
326,334
- 1,865,531
-
83,067
(37,533)
-
1,282,116
346,698
357,317
(37,533) 1,948,598
Revenue from contracts with customers
1,246,445
261,769
357,317
(1) 0.2% of total revenue for Packaging & Sustainability is recognised over time.
(2) 3.9% of total revenue for Contract Manufacturing is recognised over time.
(3) Revenue from asset hire services is accounted for under AASB 16: Leases.
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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 2022
Australia
New Zealand
Asia and others
Packaging &
Sustainability(1)
Materials
Handling
& Pooling
Contract
Manufacturing(2)
Eliminations
Total
633,995
166,597
306,299
- 1,106,891
342,173
767
203,560
103,469
-
-
-
-
342,940
307,029
Revenue from contracts with customers
1,179,728
270,833
306,299
- 1,756,860
Revenue from asset hire services(3)
Inter-segment revenue
Revenue
-
80,837
28,847
1,859
-
25
-
80,837
(30,731)
-
1,208,575
353,529
306,324
(30,731)
1,837,697
(1) 0.2% of total revenue for Packaging & Sustainability is recognised over time.
(2) 3.6% of total revenue for Contract Manufacturing 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. Management
has assessed that it generally takes 60 days between the satisfaction of performance obligations and
customer payments.
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 2023OverviewPerformanceGovernanceShareholder Information
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Financial Report
Notes to the Financial Statements
1.3 Taxation
Reconciliation of tax expense
$’000
Accounting (loss)/profit before tax
Income tax calculated at 30% (2022: 30%)
Adjustments in respect of income tax of previous years
Research and development
Impairments of goodwill/tangible assets write off
Gain on return of capital
Profit on sale of properties
Tax on unremitted foreign income
Non-assessable insurance proceeds
Overseas tax rate differential
Sundry items
Income tax expense reported in the Consolidated Statement of Comprehensive
Income
Comprising of:
• Current year income tax expense
• Deferred income tax expense/(benefit)
• Adjustments in respect of previous years income tax
2023
(3,813)
(1,144)
(1,438)
(203)
738
4,657
(707)
5,561
2022
22,366
6,710
2,188
(837)
5,781
-
-
4,297
-
(1,092)
(3,210)
(1,462)
2,792
(5,534)
(1,325)
10,188
12,877
19,217
(8,647)
(11,217)
(1,438)
2,188
Included in the above is a tax benefit on underlying adjustments of $15.0 million for the year ended 30 June
2023 (2022: $19.2 million), including income tax losses recognised and assessable income on capital gains.
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
Tax benefit recognised
2023
Current
income tax
asset/
(liability)
2023
Deferred
income tax
asset/
(liability)
2022
Current
income tax
asset/
(liability)
2022
Deferred
income tax
asset/
(liability)
(13,105)
29,551
(25,198)
22,695
(1,597)
(2,634)
(19,217)
11,217
2,953
(11,280)
(1,515)
11,280
(687)
(1,501)
-
-
Credited/(charged) to other comprehensive income
-
505
3,945
(3,945)
Net payments
Acquisitions
Other
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
12,833
-
(428)
(472)
-
-
428
185
27,588
-
-
464
-
548
-
537
(11,096)
37,800
(13,105)
29,551
14,968
9,130
13,145
150,471
10,435
198,149
(153,769)
44,380
(157,723)
(134)
(2,492)
(160,349)
153,769
(6,580)
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)
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.
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Notes to the Financial Statements
1.4 Dividends
$’000
Dividends paid during the financial year(1)
Proposed dividend
2023
5,164
-
2022
32,707
5,164
(1) The directors have determined not to pay a final dividend in relation to the year ended 30 June 2023
(2022: 1.5 cents, 65% franked).
Franking credit balance(2)
Franking account balance as at the end of the financial year at 30% (2022: 30%)
562
8,405
Franking credits/(debits) that will arise from the payment/(refund) of income tax
payable
1,437
(4,624)
Franking credits that will be utilised on the payment of dividends as at the
financial year end
-
(1,438)
Total franking credit available for the subsequent financial year
1,999
2,343
(2) Franking credits of $8.5 million have been utilised during the financial year (2022: $9.1 million).
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Notes to the Financial Statements
1.3 Taxation (continued)
How Pact accounts for taxation
Income tax charges:
• Comprise of current and deferred income tax charges and represent the amounts expected to be paid
to and recovered from the taxation authorities in the jurisdictions that Pact operates.
• Are recorded in Equity when the underlying transaction that the tax is attributable to is recorded
within Other Comprehensive Income.
Pact uses the tax laws in place or those that have been substantively enacted at reporting date to
calculate income tax. For deferred income tax, Pact also considers whether these tax laws are expected
to be in place when the related asset is realised or liability is settled. Management periodically re-
evaluates its tax position assessments, in particular where they relate to specific interpretations of
applicable tax regulation.
Deferred tax assets and liabilities are recognised on all assets and liabilities that have different carrying
values for tax and accounting, including those arising from a single transaction, except for:
• initial recognition of goodwill; and
• any undistributed profits of Pact’s subsidiaries, associates or joint ventures where either the
distribution of those profits would not give rise to a tax liability or the directors consider they have the
ability to control the timing of the reversal of the temporary differences.
Specifically, for deferred tax assets:
• They are recognised only to the extent that it is probable that there are sufficient future taxable
amounts to be utilised against. This assessment is reviewed at each reporting date.
• They are offset against deferred tax liabilities in the same tax jurisdiction, when there is a legally
enforceable right to do so.
• If acquired as part of a business combination, but not satisfying the criteria for separate recognition
at that date, would be recognised subsequently if new information about facts and circumstances
changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not
exceed goodwill) if it was incurred during the measurement period or in the Consolidated Statement of
Comprehensive Income.
Australian tax consolidated group
Pact Group Holdings Ltd (the head entity) and its wholly-owned Australian subsidiaries formed a tax
consolidated group (Australian tax consolidated group), effective January 2014.
The Australian tax consolidated group continues to account for their own current and deferred tax
amounts. The Group has applied the Group allocation approach in determining the appropriate amount
of current and deferred taxes to allocate to members of the tax consolidated group. The head entity
also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax
losses and unused tax credits assumed from controlled entities in the tax consolidated group.
A tax funding agreement is in place such that Pact Group Holdings Ltd pays/receives any taxes owed
by/owed to the Group to/from the Australian Tax Office. Assets or liabilities arising under this tax funding
agreement are recognised as amounts receivable from or payable to the head entity. Any difference
between the amounts assumed and amounts receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly owned tax consolidated entities.
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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 2023.
In assessing expected credit losses, the Group has considered current economic conditions. Management
considers the credit risks 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.
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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)
2023
88,109
(277)
2022
83,191
(232)
58,430
42,126
146,262
125,085
7
9
7
0
7
,
1
5
4
8
6
,
0
8
1
6
1
,
1
7
6
2
1
,
5
9
4
1
1
4
1
,
0
6
3
6
2
4
2023
2022
Not due
< 30
31–60
> 61
Days
(2) At 30 June 2023 $38.4 million (2022: $35.9 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. The remaining balance of other receivables
represents amounts receivable from joint ventures and associates, insurance receivable and others.
At 30 June 2023, the Group had expected credit losses of $0.3 million (2022: $0.2 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.
• Debtor securitisation programs which allow Pact to sell receivables, at a discount to a third party on a
non-recourse basis. The securitisation program has a committed facility limit of $130.0 million
(2022: $130.0 million) and an uncommitted limit of $15 million (2022: $5.0 million).
• Receivables finance program which allows Pact to sell selected receivables at a discount to a third party on
a non-recourse basis. This program has an uncommitted facility limit of $35.0 million (2022: $35.0 million).
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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
Financial Report
Notes to the Financial Statements
2.2 Non-current assets (continued)
Property, plant and equipment
The key movements in property, plant and equipment over the year were:
2023
2022
125,319
155,899
26,363
25,883
100,497
102,821
252,179
284,603
$’000
Property(1)
Plant and
equipment
Assets
for hire
Right of
use asset
Total
Capital
work in
progress
Estimated useful life
Freehold: 40–50 years
Leasehold improvements: 10–15 years
3–20
years 10 years
3–20
years
n/a
Year ended 30 June 2023
At 1 July 2022 net of accumulated depreciation
40,660
449,392
41,424
381,577
93,122
1,006,175
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 determining the net realisable value (NRV) of inventories, the Group has assessed in particular what
costs are necessary to sell inventories under AASB 102: Inventories.
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
2023
2022
327,896
319,490
62,030
77,539
389,926
397,029
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.
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
2023
2022
839,618
800,277
384,797
379,629
252,305
251,952
1,476,720
1,431,858
Additions and transfers
Disposals
Asset write downs
Impairment(2)
Reassessment of leases
Foreign exchange translation movement
962
(20)
-
-
-
(521)
112,574
(2,987)
(1,195)
(52,586)
-
408
9,363
(813)
-
-
-
73,770
9,404
206,073
-
(3,353)
-
25,653
-
-
-
-
(3,820)
(4,548)
(52,586)
25,653
3,009
144
2,076
902
Depreciation charge for the year
(2,589)
(63,628)
(6,004)
(59,518)
-
(131,739)
At 30 June 2023 net of accumulated depreciation
38,492
441,978
44,114
420,205
103,428
1,048,217
Represented by:
At cost
Accumulated depreciation
Year ended 30 June 2022
60,639
1,282,056
68,793
643,930
103,428
2,158,846
(22,147)
(840,078)
(24,679)
(223,725)
- (1,110,629)
At 1 July 2021 net of accumulated depreciation
54,754
489,594
36,179
372,518
61,154
1,014,199
Additions and transfers
1,776
57,874
11,164
46,321
32,115
149,250
-
-
-
17,563
(8,742)
(49,383)
14,589
1,699
Acquisition of subsidiaries and businesses
-
8,838
-
8,572
153
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)
-
-
(2,694)
14,589
-
(166)
(98)
782
(300)
(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
61,521
1,200,383
62,855
542,195
93,122
1,960,076
Accumulated depreciation
(20,861)
(750,991)
(21,431)
(160,618)
-
(953,901)
(1) Property consists of the following: leasehold improvements of $31.1 million (2022: $31.5 million) and accumulated
depreciation of $16.6 million (2022: $16.1 million), and freehold property of $29.5 million (2022: $30.1 million) and
accumulated depreciation of $5.5 million (2022: $4.8 million).
(2) The impairment loss of $52.6 million represents the write down of property, plant and equipment within the
Packaging & Sustainability segment relating to the Packaging & Sustainability Australia of $48.1 million and
Packaging China of $4.5 million cash generating units (CGU). This arises as assets are no longer expected to
generate benefits given current strategic plans and includes the replacement of plant and equipment required
across multiple platforms to ensure customers have scaled recycled packaging solutions. The recoverable
amount was based on fair value less cost of disposal (FVLCOD), using a five-year discounted cash flow model
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. In determining FVLCOD, cash flows for Packaging & Sustainability Australia were discounted
at a rate of 11.82% on a post-tax basis and a terminal value growth rate of 2.83% from FY2029. Cash flows for
Packaging China were discounted at a rate of 11.20% on a post-tax basis and a terminal value growth rate of
3% from FY2029. Other key assumptions included were capital expenditure and growth rates.
Annual Report 2023OverviewPerformanceGovernanceShareholder Information
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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.
At each reporting date the Group assesses whether there is an indication that an asset at a
Geography Segment level may be impaired. If any such indication exists, the Group makes an estimate
of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less
costs to sell and its value in use and is determined for an individual asset, unless the asset generates
cash inflows that are largely dependent on those from other assets or groups of assets and the asset’s
value in use cannot be estimated to approximate its fair value. In such cases the asset is tested for
impairment as part of the CGU to which it belongs. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset or CGU is considered impaired and is written down to its
recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. Impairment losses are recognised in the Consolidated Statement of Comprehensive
Income.
An assessment is also made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such an indication exists,
the recoverable amounts are estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If this is the case the carrying amount of the asset is increased to its
recoverable amount. The increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
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 2023
At 1 July 2022 net of accumulated amortisation and
impairment
Additions
Adjustment for prior period acquisition
Write-off expenses
Foreign exchange translation movements
Amortisation
At 30 June 2023 net of accumulated amortisation
and impairment
Represented by:
At cost
Accumulated amortisation and impairment
Customer
contracts
Other
intangibles(1)
Goodwill
Total
-
-
-
-
-
-
-
-
-
508
425,175
425,683
73
-
(14)
(2)
(30)
-
73
(288)
(288)
-
(14)
3,081
3,079
-
(30)
535
427,968
428,503
11,908
678,369
690,277
(11,373)
(250,401)
(261,774)
(1) Other intangibles includes trademarks and patents recognised at cost and amortised on a straight-line
basis between 20-25 years.
Year ended 30 June 2022
At 1 July 2021 net of accumulated amortisation and
impairment
4,746
7,211
447,412
459,369
Adjustment for prior period acquisition
Acquisition of subsidiaries and businesses
-
-
-
-
(1,933)
(1,933)
4,325
4,325
Impairment(2)
(4,292)
(6,382)
(19,269)
(29,943)
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)
(2) Relates to Contract Manufacturing segment.
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Notes to the Financial Statements
2.2 Non-current assets (continued)
Goodwill and other intangibles (continued)
$’000
Goodwill allocated to the following group of CGUs and segments(1):
Packaging & Sustainability
Materials Handling & Pooling
(1) This is the lowest level where goodwill is monitored.
How Pact accounts for goodwill
Goodwill is:
2023
2022
261,886
259,349
166,082
165,826
427,968
425,175
• 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 CGU’s retained.
Key estimates and judgements — Impairment of goodwill and other intangibles
Value in use (VIU) for Packaging & Sustainability and Materials Handling & Pooling
The recoverable amount of each CGU (except for Contract Manufacturing) 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 five years. Management has
used its current expectations and what is considered reasonably achievable when assigning values to
key assumptions in their value in use calculations.
Fair value less cost of disposal (FVLCOD) for Contract Manufacturing
In determining FVLCOD, a five-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.
In the prior period a $67.6 million impairment was recognised in respect of Contract Manufacturing
goodwill ($19.3 million), intangibles ($10.7 million) and plant and equipment ($37.6 million) in ‘impairment
expenses’.
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 cash flow 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 growth domestic
product (GDP) growth rates.
• 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. Cost of disposal is calculated based on 1% of the recoverable value.
• 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.
2023
Discount rate (pre-tax)(1)
Terminal growth rate(1)
2022
Discount rate (pre-tax)(1)
Terminal growth rate(1)
Packaging &
Sustainability
Materials Handling
& Pooling
Contract
Manufacturing
10.1% - 16.7%
12.5% - 14.0%
2.0% - 6.1%
2.0%
9.4% - 16.0%
11.8% - 13.3%
1.0% - 6.8%
1.0% - 1.2%
14.0%
2.0%
14.0%
1.0%
(1) The % range of the discount rate and terminal growth rate is representative of the different countries within
each CGU.
The table below shows the carrying amount and headroom analysis across the segments:
2023
Carrying amount (at 30 April) ($’000)(1)
Headroom (times)
Breakeven analysis(2)
Terminal growth rate; and
Discount rate
Packaging &
Sustainability
Materials Handling
& Pooling
Contract
Manufacturing
1,170,577
1.14
↓ 0.5%
↑ 1.0%
445,276
1.27
↓ 1.0%
↑ 2.0%
168,357
1.08
0.0%
↑ 1.0%
(1) Pact undertakes annual impairment testing based on 30 April carrying values. This was reassessed at
30 June 2023 for any triggers of impairment.
(2) This is the level at which the recoverable amount would be equal to the carrying amount.
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Financial Report
Notes to the Financial Statements
2.2 Non-current assets (continued)
Goodwill and other intangibles (continued)
Annual impairment testing (continued)
2022
Packaging &
Sustainability
Materials Handling
& Pooling
Contract
Manufacturing
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%
↑ 2.0%
↓ 1.0%
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.
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
Contingent consideration dispute
2023
9,105
2022
32,599
-
1,438
9,105
34,037
During the 2020 financial year the Group reversed a contingent consideration obligation of $30.0 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 Company received dispute notices in relation to this contingent consideration obligation. A number of
the Company’s related bodies corporate (Pact Claim Group) 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 $30.0 million plus
interests and costs. The Pact Claim Group is vigorously defending the counterclaim and is of the view that no earn
out amount is payable. The proceeding is currently in the preparatory stages 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 2023, the Group had bank guarantees and other trade finance arrangements totalling $29.1 million
(2022: $32.5 million) in respect of various property leases, material purchases and other contractual obligations.
Government grants
During the financial year, the Group received $7.0 million (2022: $8.0 million) from the Federal Government’s
Modern Manufacturing Initiative for the upgrade of plant and equipment. The grant is recognised as deferred
income and then offset against the cost of the plant and equipment when capitalised. This grant is conditional
upon the Group completing these projects.
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 2023
At 1 July 2022
Provided for during the year
Utilised
Unused amounts reversed
Foreign exchange translation movement
At 30 June 2023
Year ended 30 June 2022
At 1 July 2021
Provided for during the year
Transfer
Utilised
Foreign exchange translation movement
At 30 June 2022
2023
2022
2,464
2,464
12,903
12,903
Business
restructuring(1)
Make good on
leased premises(2)
7,140
11,096
(13,930)
(1,804)
(38)
2,464
1,970
10,710
32
(5,408)
(164)
7,140
12,754
1,575
(206)
(1,259)
39
12,903
11,923
1,298
(32)
(464)
29
12,754
7,140
7,140
12,754
12,754
Total
19,894
12,671
(14,136)
(3,063)
1
15,367
13,893
12,008
-
(5,872)
(135)
19,894
(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.
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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)
2023
3,107
320
-
2022
1,661
383
332
17,114
14,339
(1) Includes council rates, taxes, insurance and other lease related payments. Outgoings are 21.2% of the
Group’s property lease payments in the financial year (2022: 18.9%).
The lease liabilities included in the Consolidated Statement of Financial Position are:
$’000
Current
Non-current
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381,577
486,007
73,770
73,117
The maturity analysis of contractual undiscounted cash flows for lease liabilities are:
-
-
-
25,176
31,735
(86,085)
$’000
Less than one year
One to five years
More than five years
Total undiscounted liabilities
2023
2022
80,747
72,022
451,614
413,985
2023
2022
83,247
74,632
287,681
255,099
454,026
384,459
824,954
714,190
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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
Property
Plant and
equipment
Total
Total
$’000
Balance as at 1 July 2022
Additions
Acquisition of subsidiaries and businesses
373,448
70,839
-
8,129
2,931
-
Depreciation expense
(55,112)
(4,406)
(59,518)
Asset write downs
Lease modification
Interest expense
Payments(1)
Foreign exchange translation movement
Balance as at 30 June 2023
Balance as at 1 July 2021
Additions
Acquisition of subsidiaries and businesses
Depreciation expense
Impairment expense
Lease modification
Interest expense
Payments
Foreign exchange translation movement
Balance as at 30 June 2022
(3,353)
24,468
-
-
2,031
412,321
363,116
43,407
8,572
-
1,185
-
-
45
9,402
2,914
-
(2,694)
14,438
-
-
801
373,448
-
151
-
-
(19)
8,129
2,076
2,411
7,884
420,205
532,361
372,518
469,944
-
(3,353)
25,653
-
-
46,321
8,572
(2,694)
14,589
-
-
782
45,567
9,441
-
-
12,795
28,256
(80,343)
347
381,577
486,007
(54,192)
(4,319)
(58,511)
(1) During the year, total lease payments included $1.7 million towards properties no longer occupied.
Annual Report 2023OverviewPerformanceGovernanceShareholder Information
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Financial Report
Notes to the Financial Statements
2.5 Leases (continued)
Impacts on financial statements (continued)
The amounts recognised in the Consolidated 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
2023
54,350
31,735
3,107
320
-
2022
52,087
28,256
1,661
383
332
16,683
13,894
(1) Of the total lease payments, 16.1% (2022: 16.6%) 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 ROU 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.
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
There have been no business acquisitions during the year ended 30 June 2023.
Prior year acquisition accounting
At 30 June 2022, the Group recognised $4.3 million as provisional goodwill arising on acquisition of Synergy
Packaging Pty Ltd. A total of $20.1 million was paid in the current period as consideration for the acquisition.
During the year, a decrease of $0.3 million has been further recognised to finalise goodwill accounting.
This includes an increase of $1.2 million in relation to fair value determination for property, plant and equipment
and net decrease of $1.5 million for other adjustments of purchase price allocation.
3.2 Controlled entities
During the year, the Group deregistered Changzhou Viscount Plastics Co. Ltd, an entity in China, and
Pascoe’s Australia LLC, an entity registered in the USA. Pact Packaging Philippines Inc. was incorporated on
17 January 2023.
Australian incorporated entities that are party to the Deed of Cross Guarantee and tax consolidated Group at
30 June 2023:(1)
Pact Group Industries (ANZ) Pty Ltd
Pact Retail Accessories (Australia) Pty Ltd
Pact Group Holdings (Australia) Pty Ltd
Pascoe’s Pty Ltd
Pact Group Finance (Australia) Pty Ltd
Plaspak Closures Pty Limited
Pact Group Industries (Asia) Pty Ltd
Plaspak Management Pty Limited
Alto Manufacturing Pty Ltd
Plaspak Pty Limited
Alto Packaging Australia Pty Ltd
Power Plastics Pty. Limited
Astron Plastics Pty Limited
Ruffgar Holdings Pty Limited
Australian Pharmaceutical Manufacturers Pty Ltd
Salient Asia Pacific Pty Ltd
Baroda Manufacturing Pty Ltd
Skyson Pty. Ltd.
Brickwood (Dandenong) Pty Ltd
Snopak Manufacturing Pty Ltd
Brickwood (NSW) Pty Ltd
Brickwood (QLD) Pty Ltd
Brickwood (VIC) Pty Ltd
Steri-Plas Pty Ltd
Sulo MGB Australia Pty Ltd
Summit Manufacturing Pty Ltd
Cinqplast Plastop Australia Pty Limited
Sunrise Plastics Pty. Ltd.
Davmar Investments Pty Ltd
Synergy Packaging Pty Ltd
Inpact Innovation Pty. Ltd.
Jalco Australia Pty. Limited
VIP Drum Reconditioners Pty. Ltd.
VIP Plastic Packaging Pty Ltd
Jalco Automotive Pty. Limited
VIP Steel Packaging Pty Ltd
Jalco Care Products Pty Limited
Viscount Logistics Services Pty Ltd
Jalco Cosmetics Pty. Limited
Viscount Plastics (Australia) Pty Ltd
Jalco Group Pty. Limited
Jalco Plastics Pty. Ltd.
Viscount Plastics (China) Pty Ltd
Viscount Plastics Pty Ltd
Jalco Powders Pty Limited
Viscount Pooling Company Pty Ltd
Jalco Promotional Packaging Pty. Limited
Viscount Pooling Systems Pty Ltd
MTWO Pty Ltd
Viscount Rotational Mouldings Pty Ltd
Packaging Employees Pty Limited
Vmax Returnable Packaging Systems Pty Ltd
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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)
New Zealand
Hong Kong
Pact Group Holdings (NZ) Limited(14)
Pact Group Holdings (Hong Kong) Limited(10)
Pact Group Finance (NZ) Limited(3)
Roots Investment Holding Private Limited(5)
Pact Group (NZ) Limited(3)
Pact Retail Accessories (Hong Kong) Limited(11)
VIP Steel Packaging (NZ) Limited(15)
Pact Retail Accessories (Asia) Limited(11)
VIP Plastic Packaging (NZ) Limited(15)
Talent Group Development Limited(11)
Alto Packaging Limited(16)
Fast Star International Holdings Limited(11)
Auckland Drum Sustainability Services Limited(15)
Viscount FCC Limited(15)
Tecpak Industries Limited(15)
Astron Plastics Limited(15)
Pacific BBA Plastics (NZ) Limited(15)
Indonesia
PT Plastop Asia Indonesia Inc(12)(10)
PT Plastop Indonesia Manufacturing Inc(12)(10)
Viscount Plastics (NZ) Limited(17)
South Korea
Stowers Containment Solutions Limited(15)
Pact Group Closure Systems Korea Ltd(5)
Sulo (N.Z.) Limited(2)
Pact Retail Accessories (New Zealand) Limited(3)
Nepal
Pact Group Closure Systems Nepal Private Limited(10)
China
Guangzhou Viscount Plastics Co., Ltd(4)
Philippines
Langfang Viscount Plastics Co., Ltd(4)
Plastop Asia, Inc.(13)
Pact Group Closure Systems (Guangzhou) Co., Ltd(5)
Pact Packaging Philippines Inc.(10)
Pact Group Closure Systems (Tianjin) Co., Ltd)(5)
Pact Closure Systems (Philippines) Inc.(10)
Pact Group Packaging Systems (Guangzhou) Co., Ltd(7)
Dongguan Top Rise Trading Co. Ltd(8)
Singapore
Regent Plastic Products Ltd(6)
Ningbo Xunxing Trade Co. Ltd(9)
Bangladesh
Asia Peak Pte. Ltd.(10)
United States Of America
Pact Retail Accessories (USA) LLC(11)
TIC Trading (Bangladesh) Limited(9)(10)
Pact Group (USA), Inc(14)
TIC Manufacturing (Bangladesh) Limited(9)(10)
TIC Industries (Bangladesh) Pty Ltd.(9)(10)
United Kingdom
Pact Retail Accessories (UK) Limited(14)
India
Pact Closure Systems (India) Private Limited(5)(10)
AMRS Business Services Private Limited(11)(18)
(1) All entities are wholly owned
(2) Owned by Sulo MGB Australia Pty Ltd
(3) Owned by Pact Group Holdings (NZ) Limited
(4) Owned by Viscount Plastics (China) Pty Ltd
(5) Owned by Pact Group Holdings (Hong Kong)
Limited
(6) Owned by Talent Group Development Limited
(7) Owned by Roots Investment Holding Private Limited
(8) Owned by Pact Retail Accessories (Asia) Limited
(9) Owned by Fast Star International Holdings Limited
(10) Owned by Pact Group Industries (Asia) Pty Ltd.
(11) Owned by Davmar Investments Pty Ltd
(12) Owned by Asia Peak Pte. Ltd.
(13) Owned by Ruffgar Holdings Pty Limited
(14) Owned by Pact Group Industries (ANZ) Pty Ltd
(15) Owned by Pact Group (NZ) Limited
(16) Owned by VIP Plastic Packaging (NZ) Ltd
(17) Owned by Pacific BBA Plastics (NZ) Limited
(18) Owned by Pact Closure Systems (India) Private
Limited
The Group owns shares in protected cell captives (cells) in White Rock Insurance Company PCC Limited and
Mangrove Insurance Guernsey PCC Limited, for reinsurance purposes. The cells were consolidated at the
reporting date. The Group is in the process of closing the cell in Mangrove Insurance Guernsey PCC Limited.
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 has significant influence or joint control over:
Entity(1)
$’000
Spraypac
Products (NZ)
Limited
Weener Plastop
Asia, Inc.
Gempack
Asia Limited
(Gempack)
PT Weener
Plastop
Indonesia Inc
Australian
Recycled Plastic
Pty Ltd
Circular Plastics
Australia (PET)
Holdings Pty Ltd
(CPAP)
Circular Plastics
Australia Pty Ltd
(CPA)
Circular Plastics
Australia (LDPE)
Pty Ltd(2)
Principal
place of
operation About
New
Zealand
Is an associate company distributing plastic bottles
and related spray products.
Pact’s
ownership
interest
Carrying
value
2023
2022
50%
711
686
Philippines A joint venture with Weener Plastik Beteiligungs
Thailand
GmbH which manufactures plastic jars and bottles
for the Personal Care, Food & Beverage and Home
Care markets.
A joint venture with Weener Plastik Beteiligungs
GmbH which manufactures plastic jars and bottles
for the Personal Care, Food & Beverage and
Home Care markets.
Indonesia A joint venture with Weener Plastik Beteiligungs
Australia
Australia
Australia
GmbH which manufactures closures and roll-on balls
for the Personal Care and Home Care markets.
A joint venture which processes kerbside collected
recyclable plastic materials to produce PET flake and
HDPE flake simultaneously.
The holding company of Circular Plastics Australia
(PET) Pty Ltd and Circular Plastics Australia (PET)
Vic Pty Ltd.
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.
Australia
A joint venture established to develop and operate
LDPE plastics recycling facility in Australia.
50% 1,623
2,189
50% 15,894 14,629
50% 3,521
3,087
50.83% 3,986 4,104
33.33% 13,382 13,118
50.0% 7,695
7,676
33.33%
-
-
46,812 45,489
(1) Ownership interest at 30 June 2023 and 30 June 2022.
(2) Circular Plastics Australia (LDPE) Pty Ltd was incorporated on 1 June 2023 as a joint venture between Pact,
Cleanaway Pty Ltd and Pro-Pac Group Pty Limited with equal shareholding of 33.33% each. The entity has
not commenced trading at reporting date.
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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
CPAP(1)
CPA(2)
Other
Total
Year ended 30 June 2023
Summarised Statement of financial position
Cash and cash equivalents
Other current assets
Non-current assets
Current liabilities
3,878
9,452
3,971
7,466
1,751
1,801
11,401
4
14,416
31,338
27,443
96,772
34,545
9,622
168,382
(4,703)
(11,511)
(2,492)
(4,279)
(22,985)
Non-current liabilities
(4,282)
(56,548)
(18,419)
(2,723)
(81,972)
Net assets
31,788
40,150
15,389
18,837
106,164
Carrying amount of the Group’s investment
15,894
13,382
7,695
9,841
46,812
Year ended 30 June 2022
Summarised Statement of financial position
Cash and Cash equivalents
5,353
7,522
3,472
1,154
17,501
Other current assets
Non-current assets
Current liabilities
10,396
3,430
-
14,154
27,980
18,786
77,056
17,676
8,570
122,088
(4,960)
(11,756)
(1,474)
(2,778)
(20,968)
Non-current liabilities
(316)
(36,894)
(4,323)
(1,797)
(43,330)
Net assets
29,259
39,358
15,351
19,303
103,271
Carrying amount of the Group’s investment
14,629
13,118
7,676
10,066
45,489
(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) Incorporates the results of Circular Plastics Australia Pty Ltd and Circular Plastics Australia (PE) Pty Ltd.
$’000
Gempack
CPAP(1)
CPA(2)
Other
Total
Year ended 30 June 2023
Summarised Statement of financial
performance
Revenue
Interest income
Interest expense
Depreciation and amortisation
Income tax expense/(benefit)
27,317
33,842
2
877
2,442
434
68
2,187
3,352
(790)
Net profit/(loss) for the year
1,697
(1,817)
Other comprehensive gain for the year
413
-
Total comprehensive income/(loss) for
the year
2,110
(1,817)
Group’s share of profit/(loss) for the year
848
(606)
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 expense/(benefit)
22
(1,049)
Net profit/(loss) for the year
2,188
(2,449)
Other comprehensive loss for the year
(123)
-
Total comprehensive income/(loss) for
the year
2,065
(2,449)
Group’s share of profit for the year
1,094
(816)
-
43
-
-
-
37
-
37
12
-
-
-
-
-
-
-
-
-
21,534
82,693
-
298
977
1,099
3,072
271
3,343
1,520
113
3,362
6,771
743
2,989
684
3,673
1,774
21,013
52,415
-
326
994
833
2,729
33
2,762
1,367
6
1,288
4,340
(194)
2,468
(90)
2,378
1,645
(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) Incorporates the results of Circular Plastics Australia Pty Ltd and Circular Plastics Australia (PE) Pty Ltd.
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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 $1.5 million (2022: $1.1 million).
Total loans and borrowings including shareholder loans provided to the joint ventures and associates
was $14.0 million (2022: $11.6 million). Guarantees and other securities provided to the joint ventures and
associates was $5.1 million (2022: $6.0 million).
The joint ventures and associates had capital commitments at 30 June 2023 of $0.7 million (2022: $3.6
million), out of which the Group’s share of capital commitments was $0.4 million (2022: $1.8 million). No
contingent liabilities were noted at 30 June 2023 (2022: 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 more than 20% of
the voting rights.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require the unanimous consent of the parties sharing control.
The Group uses the equity method to account for their investments in associates and joint ventures.
Under the equity method:
• Investments in the associates are carried at cost plus post-acquisition changes in the Group’s share
of associates’ net assets.
• Goodwill relating to an associate is included in the carrying amount of the investment and is not
tested for impairment separately.
• The Group’s share of its associates’ post-acquisition profits or losses is recognised in the
Consolidated Statement of Comprehensive Income, and its share of post-acquisition movements in
reserves is recognised in reserves.
• When the Group’s share of losses in an associate equals or exceeds its interest in the associate,
including any unsecured long-term receivables and loans, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise any
impairment loss with respect to the Group’s net investment in associates. At each reporting date, the
Group determines whether there is objective evidence that the investment in the associate is impaired.
If there is such evidence, the Group calculates the amount of impairment as the difference between the
recoverable amount of the associate and its carrying value, and then recognises the loss within ‘Share
of profit in associates’ in the Consolidated Statement of Comprehensive Income.
Financial Report
Notes to the Financial Statements
Section 4 — Our Capital Structure
This section details specifics of the Group’s capital structure. When managing capital, management’s
objective is to ensure that the entity continues as a going concern as well as to provide optimal returns
to shareholders and other stakeholders. Management also aims to maintain a capital structure that
ensures the lowest cost of capital available to the entity.
Primary responsibility for identification and control of capital and financial risks rests with the Treasury
Risk Management Committee.
4.1 Net debt
Debt profile
Pact has the following interest-bearing loans and bank borrowings as at 30 June 2023:
Current
$’000
Bank overdraft
Lease liabilities
Notes
2023
1,021
2022
2,384
2.5
80,747
72,022
Total current interest-bearing loans and bank borrowings
81,768
74,406
Non-current
$’000
Syndicated Facility Agreements(2)
Subordinated Debt Facility(2)(3)
Capitalised borrowing costs
Notes
2023
2022
589,471
589,690
78,448
(4,312)
75,411
(5,199)
Total bank borrowings (including capitalised borrowing costs)
663,607
659,902
Lease liabilities
2.5
451,614
413,985
Total non-current interest-bearing loans and bank borrowings
1,115,221
1,073,887
$’000
Notes
2023
2022
Total bank borrowings (including capitalised borrowing costs)
663,607
659,902
Bank overdraft
Cash and cash equivalents
Net debt before lease liabilities
Lease liabilities
Net debt(1)
(1) Net debt is a non-IFRS measure.
1,021
2,384
(79,061)
(101,513)
585,567
560,773
2.5
532,361
486,007
1,117,928
1,046,780
(2) The Syndicated Facility Agreements include $421.9 million of sustainability linked loans. Under this
arrangement, the Group will receive loan margin benefits if annual sustainability targets are achieved and
margin penalties if it underperforms. The sustainability performance targets are:
- An increase in the percentage of recycled content across Pact’s packaging portfolio.
- Increasing the amount of recycled material processed and distributed to the external market.
- Reducing scope 1 and 2 greenhouse gas emissions.
- Reducing the gender pay gap.
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Notes to the Financial Statements
4.1 Net debt (continued)
The Group syndicated facilities are as follows:
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
22,938
236,830
74,833
185,085
276,594
200,000
996,280
665,325
330,955
(3) The Subordinated term debt facility is denominated in USD and was converted to AUD $74.8 million of
subordinated financing which is fully hedged. The USD debt is translated to AUD using the AUD/USD spot
rate as at 30 June 2023 and disclosed as a financial liability of $78.4 million, while the foreign currency
spot component of the fair value of the hedges of $3.6 million is held in other current financial assets and
cash (2022: $0.6 million).
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:
2023
$’000
Carrying
value
Fair value(1)
Carrying
value
2022
$’000
Fair value
Syndicated Facility Agreements
589,471
589,471
589,690
589,690
Subordinated Debt Facility
78,448
78,448
75,411
75,411
Total bank borrowings
667,919
667,919
665,101
665,101
(1) The fair value measurement of the Group’s non-current borrowings represent Level 2 of the fair value
hierarchy. Fair value is equivalent to carrying value as the bank borrowings are at market interest rates.
Market interest rates have been used as key inputs.
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
Total interest expense on borrowings
Interest expense on unwinding of provisions
Interest expense on lease liabilities
Total finance costs
Loss on de-recognition of financial assets
Total finance costs and loss on de-recognition of financial assets
2023
2022
42,407
22,959
2,077
402
128
2,987
297
90
45,014
26,333
610
31,735
77,359
6,524
83,883
481
28,256
55,070
2,072
57,142
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 bank 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 2023 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.
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Financial Report
Notes to the Financial Statements
4.1 Net debt (continued)
Reconciliation of net profit after tax to net cash flows from operations
$’000
Net (loss)/profit for the year
Non cash flows in operating profit:
Depreciation and amortisation
Loss/(profit) 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:
(Increase)/decrease in trade and other receivables
Decrease/(increase) in inventory
(Increase) in net deferred tax assets and liabilities
Increase in trade and other payables
(Decrease)/increase in employee entitlement provisions
(Decrease)/increase in other provisions
Decrease in current tax liabilities
Net cash flow provided by operating activities
2023
(6,605)
2022
12,178
131,769
133,657
572
(20,504)
(1,774)
(1,645)
495
52,586
-
(92)
1,371
72,256
17,775
427
(29,642)
5,565
31,677
(53,065)
(7,668)
(10,246)
20,093
20,692
(171)
(2,259)
2,298
6,126
(2,583)
(12,271)
186,398
174,614
Financial Report
Notes to the Financial Statements
4.1 Net debt (continued)
Reconciliation to cash at the end of the year
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
Cash and cash equivalents
Bank overdraft
Balance per Consolidated Statement of Cash Flows
Notes
2023
2022
79,061
101,513
(1,021)
(2,384)
78,040
99,129
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.
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Financial Report
Notes to the Financial Statements
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.
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.
Movements in contributed equity
Ordinary shares:
Beginning of the year
Issued during the period(1)
Number of
shares
2023
$’000
Number of
shares
2022
$’000
344,290,053
1,751,706 343,993,595
1,750,476
-
-
296,458
1,230
End of the year
344,290,053
1,751,706 344,290,053
1,751,706
(1) In the prior year, 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
2023
23,519
4,881
2022
26,250
6,071
(928,385)
(928,385)
5,282
4,787
(894,703)
(891,277)
(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 share rights.
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 2023(1)
At 30 June 2023, the Group hedge cover is 20% (2022: 37%) of
its variable debt facilities drawn excluding the Group exposure
to the sale of receivables under securitisation facilities.
Based on average debt during the year, a sensitivity analysis
performed by the Group showed that a +1 percent movement
in AUD interest rates would reduce net profit after tax in FY24
by $4.1 million and reduce equity by $3.9 million (2022: $3.1
million reduction in net profit after tax and reduce equity by $2.4
million), including the impact on discount on sale of receivables.
Based on average debt in FY23, a sensitivity analysis performed
by the Group showed that a +1 percent movement in NZD
interest rates would reduce net profit after tax by $1.2 million
and reduce equity by $1.2 million (2022: $1.2 million reduction in
net profit after tax and reduce equity by $1.1 million), including
the impact on the discount on sale of receivables.
Sensitivity analysis performed by the Group showed that a +1
percent movement in USD interest rates would reduce net profit
after tax and equity by $0.4 million (2022: $0.4 million).
The total impact on net profit after tax from a +1 percentage
point movement in interest rates is a reduction of $5.7 million
and reduction of $5.5 million in equity (2022: $4.7 million
reduction in net profit after tax and reduce equity by
$4.0 million).
(1) The impact of a +/- 1% movement in interest rates was determined based on the Group’s mix of debt, credit
standing with finance institutions, the level of debt that is expected to be renewed and economic forecasters’
expectations.
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Notes to the Financial Statements
4.3 Managing our financial risks (continued)
Managing foreign currency risk
The Group’s exposure to the risk of changes in foreign exchange rates relates to the Group’s (i) operating
activities which are denominated in a different currency from the entity’s functional currency, (ii) financing
activities, and (iii) net investments in foreign subsidiaries.
The Group currently operates in 12 countries outside of Australia, with the following functional currencies(1)
Country of domicile
New Zealand
Thailand
Singapore
China
Philippines
Indonesia
Hong Kong
Nepal
India
South Korea
Bangladesh
United Kingdom
Functional currency
NZD
THB
USD
RMB
PHP
IDR
HKD/USD
NPR
INR
KRW
BDT/USD
GBP
(1) Pact Retail Accessories (Australia) Pty Ltd is 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 2023
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
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 2023, 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 ($1.3) million to $1.6 million.
Sensitivity analysis performed by management showed that a
10% +/- movement in its major translational currencies as at
30 June 2023 would have the following impact on equity:
• AUD/NZD ($8.2) million to $10.0 million
• AUD/CNY ($12.1) million to $14.8 million
• AUD/USD ($4.7) million to $5.8 million
• AUD/PHP ($2.4) million to $3.0 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 ($1.6) million to $1.9 million
• AUD/CNY ($0.7) million to $0.8 million
• AUD/USD ($1.5) million to $1.9 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 2023
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 the Group will be able to pay its debts as and when they
fall due, and therefore it is appropriate the financial statements
are prepared on a going concern basis.
balance between
continuity of
funding and
flexibility through
the use of bank
overdrafts, loans
and debtor
securitisation.
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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 2022 Cash flows
Non-cash
changes
Foreign
exchange
movement
30 June
2023
(486,007)
54,350
(98,293)
(2,411)
(532,361)
Non-current interest-bearing loans and
bank borrowings
(659,902)
2,973
(887)
(5,791)
(663,607)
Total liabilities from financing activities
(1,145,909)
57,323
(99,180)
(8,202)
(1,195,968)
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 a number of mechanisms in place 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
occasionally manages commodity price risk using resin forward contracts in circumstances where contractual
rise and fall adjustments are not in place to minimise the variability of cash flows arising from price movements.
The exposure to resin will be partially mitigated through use of recycled content, however pricing for recycled
content will still be exposed to market indices.
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 2023
Financial assets(1)
Cash and cash equivalents
Trade and other receivables
Interest rate swaps
Foreign exchange forward contracts(2)
Total inflows
Financial liabilities(1)
Trade and other payables
Foreign exchange forward contracts(2)
Interest-bearing loans and bank
borrowings(3)(4)
79,061
146,262
2,018
193,483
420,824
(389,926)
(189,710)
-
-
1,543
683
2,226
-
(674)
-
-
817
-
817
-
-
(24,351)
(24,976)
(761,350)
-
-
-
-
-
-
-
-
79,061
146,262
4,378
194,166
423,867
(389,926)
(190,384)
(810,677)
Total outflows
Net outflow
(603,987)
(25,650)
(761,350)
- (1,390,987)
(183,163)
(23,424)
(760,533)
-
(967,120)
Year ended 30 June 2022
Financial assets(1)
Cash and cash equivalents
Trade and other receivables
Interest rate swaps
Foreign exchange forward contracts(2)
Total inflows
Financial liabilities(1)
101,513
125,085
1,054
145,601
373,253
-
-
2,376
7,920
10,296
-
-
5,555
333
5,888
Trade and other payables
(397,029)
-
-
Foreign exchange forward contracts(2)
(142,792)
(8,025)
(341)
-
-
-
-
-
-
-
101,513
125,085
8,985
153,854
389,437
(397,029)
(151,158)
Interest-bearing loans and bank
borrowings(3)(4)
Total outflows
Net outflow
(14,137)
(13,907)
(544,256)
(205,275)
(777,575)
(553,958)
(21,932)
(544,597)
(205,275)
(1,325,762)
(180,705)
(11,636)
(538,709)
(205,275)
(936,325)
(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 recognised at fair value on a net balance in the Consolidated
Statement of Financial Position, where in this table the contractual maturities are the gross undiscounted
cash flows.
(3) When the Group is committed to make amounts available in instalments, each instalment is allocated to
the earliest period in which the Group is required to pay. These commitments include cash flows associated
with the cross currency swap.
(4) Refer Note 2.5 for details on lease maturity analysis.
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Notes to the Financial Statements
4.4 Financial instruments
Utilising hedging contracts to manage risk
As discussed above, the Group utilises interest rate swaps and foreign exchange forward contracts to hedge
its risks associated with fluctuations in interest rates and foreign currency. All of Pact’s hedging instruments
are designated in cash flow hedging relationships, providing increased certainty over future cash flows
associated with foreign currency purchases or interest payments on variable interest rate debt facilities.
How Pact accounts for derivative financial instruments in a cash flow hedge relationship
At the inception of a hedge relationship, the Group formally designates and documents the hedge
relationship to which the Group wishes to apply hedge accounting and the risk management objective
and strategy for undertaking the hedge. The documentation includes:
• identification of the hedging instruments;
• the hedged items or transactions;
• the nature of the risks being hedged; and
• how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to
changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges
are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are
assessed on an ongoing basis to determine that they have actually been highly effective throughout
the financial reporting period for which they were designated.
Derivative financial instruments are:
• Recorded at fair value at inception and every subsequent reporting date.
• Classified as assets when their fair value is positive and as liabilities when their fair value is negative.
The fair value of:
• Forward currency contracts are calculated by using valuation techniques such as present value
techniques, comparison to similar instruments for which market observable prices exist and other
relevant models used by market participants. These valuation techniques use 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 2023
Foreign exchange
forward contracts(5)
FX debt forwards(5)
Interest rate swaps(5)
Year ended 30 June 2022
Foreign exchange
forward contracts(5)
Cross currency swaps(5)
Interest rate swaps(5)
Hedged
item
Notional
amount
Change in
fair value(4)
Carrying
amount
asset/
(liability)
Cash flow
hedge
reserve
Effective
proportion
reclassified to
profit or loss
Committed
purchases
FX
component
of debt
Floating
component
of debt
Committed
purchases
& FX
component
of Debt
FX
component
of debt
Floating
component
of debt
113,200
2,666(1)
(91)(2)
(128)
502
1,853(7)
77,184
1,207(6)
761
6
1,199(6)
95,927
4,375(8) (3)
(4,574)
4,492
116
151,209
3,581
(879)
1,251
(24)
2,574
50,287
446
4,592
(15)
578
245,098
8,949
13,121
6,311
68
(1) The carrying amount is included in other current financial assets in the Consolidated Statement of Financial
Position.
(2) The carrying amounts included in other current financial liabilities in the Consolidated Statement of Financial
Position.
(3) The carrying amount of $2.6 million is included in other non-current financial assets, $1.6 million is included in
other current financial assets in the Consolidated Statement of Financial Position.
(4) The change in fair value represents the difference between the current and previous period carrying amount
of net hedge assets and hedge liabilities.
(5) The fair value measurement of the hedging instruments represent Level 2 of the fair value hierarchy.
(6) 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 swaps or FX forwards, which
are used to hedge the USD loan. The impact from movements in foreign currency rates was a favourable
$1.0 million (with a $0.2 impact on accrued interest). The impact from movements in foreign currency rates
fully offsets the translation of the USD loan.
(7) A gain of $1.9 million (2022 $2.6 million gain) is included in other (losses)/gains — FX gains/loss in the
Consolidated Statement of Comprehensive Income, as it is taken to profit and loss to match the underlying.
The ineffective proportion taken to Consolidated Statement of Comprehensive Income was immaterial, less
than $10,000.
(8) The carrying amount of the Interest rate swaps excludes $2.2 million of cash that was received on closing an
interest rate swap, which is still considered effective and yet to be recognised in profit and loss.
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Financial Report
Notes to the Financial Statements
4.4 Financial instruments (continued)
Effect on financial position and performance — hedging instruments (continued)
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
- FX debt forwards/cross currency swaps
-
Interest rate swaps
FX impact
Tax effect
Closing balance of cash flow hedge reserve
2023
6,071
751
30
2022
(3,172)
(424)
387
(2,599)
13,189
123
505
4,881
36
(3,945)
6,071
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.
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 Pact’s objectives, 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 (KMP).
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
2023
2022
413,530
392,246
24,603
26,340
495
22,688
25,308
1,558
464,968
441,800
24,230
22,847
26,102
18,588
47,077
44,690
The Group’s non-current employee benefits provisions of $6.4 million relate to long service leave entitlements
of $4.3 million (2022: $6.6 million), and a defined benefit net liability of $2.1 million (2022: $2.2 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.
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Financial Report
Notes to the Financial Statements
5.2 Share-based payments
Long Term Incentive Plan (LTIP)
Under the 2023 LTIP scheme 651,078 performance rights were granted to the CEO (approved by resolution at
the Annual General Meeting on 16 November 2022), and 618,366 performance rights were granted to senior
executives and employees. These performance rights have performance hurdles and vesting conditions
consistent with those outlined in the 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 granted to the
CEO at the valuation date of 16 November 2022 is $0.30. The fair value of each right granted to the senior
executives and employees at the valuation date of 1 December 2022 is $0.31.
The key assumptions in the independent valuation in relation to 2023 LTIP were as follows:
Share price at valuation date
Volatility of underlying share
Annual dividend yield
Risk free rate
$1.08
45.0%
7.7%
3.2%
Expected life of performance right
36 months
Model used
Hybrid Trinomial model with Relative TSR hurdles
Under the LTIP, all participants receive an allocation of performance rights. The number of performance
rights allocated to the participants is based on their maximum LTI opportunity divided by the five-day
VWAP following public announcement of the prior year’s financial results. Each performance right entitles the
LTIP participant to one share for each right held upon vesting and automatic exercise (or to receive a cash
equivalent value, at the discretion of the Board). The performance rights carry no voting or dividend rights.
Approval for the issue of performance rights to the CEO was obtained under ASX Listing rule 10.14. Other
information regarding performance conditions attaching to these performance rights are set out in the
Company’s Notice of Annual General Meeting released to the ASX on 12 October 2022.
Total share-based payments expense recognised in the current period was $495,000 (2022: $1,558,000).
5.3 Key management personnel
Compensation of Key Management Personnel 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
Share-based payments expense
Total compensation
2023
3,130
59
477
3,666
2022
2,464
66
645
3,175
Financial Report
Notes to the Financial Statements
5.3 Key management personnel (continued)
Related party transactions with KMP
The following table provides the total amount of transactions with related parties for the year ended
30 June 2023:
$’000
Related parties — Directors' interests(1)
Year
Sales
Purchases
Other
expenses
Net amounts
receivable
2023
2022
8,167
15,094
3,184
3,364
6,339
5,853
954
1,456
(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; The Hive
(Australia) Pty Ltd; BG Wellness Holdings Pty Ltd; and Brimful Beverages Pty Ltd.
Sales to related parties
The Group has sales of $8.2 million (2022: $15.1 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; The Hive
(Australia) Pty Ltd; BG Wellness Holdings Pty Ltd; and Brimful Beverages Pty Ltd. Sales are for Packaging &
Sustainability and Contract Manufacturing.
Pro-Pac Packaging Limited (Pro-Pac)
Pro-Pac, an entity in which Raphael Geminder owns 66.52% (2022: 57.4%), 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 this arrangement is approximately $3.2 million (2022: $3.3 million). The agreement is on
commercial terms which the Board has determined are at arms’ length in accordance with section 210 of
the Act.
Property leases with related parties
The Group leased 10 properties (eight in Australia and two in New Zealand) from Centralbridge Pty Ltd
(as trustee for the Centralbridge Unit Trust), Centralbridge Two Pty Ltd, Centralbridge (NZ) Limited and
Albury Property Holdings Pty Ltd. These are controlled by entities associated with 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 2023 was $6.2 million (June 2022:
$5.9 million). The rent payable under the Centralbridge Leases was determined based on independent
valuations and market conditions at the time the leases were commercially agreed. As at 30 June 2023,
the total lease liabilities owing to Centralbridge Leases is $34.2 million (June 2022: $32.4 million). The leases
are on commercial terms which the Board has determined are at arms’ length in accordance with section
210 of the Act.
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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 Act.
6.1 Basis of preparation
Basis of preparation and compliance
This 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 (Cth)
(the Act), Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board (AASB).
• Complies with International Financial Reporting Standards (IFRS) and Interpretations as issued by the
International Accounting Standards Board.
• Has been prepared on an 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.
• Has all intercompany balances, transactions, income and expenses and profit and losses resulting from
intra-group transactions eliminated in full.
The Group is in a net current liability position 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, the Group will be able
to pay its debts as and when they fall due.
The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using
consistent accounting policies. The Group will adopt the new and amended standards and interpretations that
are issued, but not yet effective, at the date they become effective. The Group’s results and disclosures will not
be materially impacted by these standards.
Comparatives
Comparative figures can be adjusted to conform to changes in presentation for the current financial period
where required by accounting standards or as a result of changes in accounting policy.
Where necessary, comparatives have been reclassified and repositioned for consistency with current period
disclosure. No material reclassifications have been made to prior period disclosures.
6.2 Other (losses)/gains
The amounts disclosed in the table below are the amounts recognised in the Statement of Comprehensive
Income:
$’000
Underlying adjustments
2023
2022
Underlying adjustments in other losses
(13,815)
(4,916)
Other (losses)/gains
Unrealised gains on revaluation of foreign exchange forward contracts
Loss on sale of property, plant and equipment
Realised net foreign exchange losses
Total other losses
Total losses before tax
661
(572)
(2,123)
(2,034)
(15,849)
976
(1,001)
(1,552)
(1,577)
(6,493)
Financial Report
Notes to the Financial Statements
6.3 Pact Group Holdings Ltd — Parent entity financial statements summary
$’000
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Retained earnings
Profit reserve
Total equity
Loss of the Parent entity(1)
Total comprehensive loss of the Parent entity
2023
2022
74,861
79,679
1,485,945
1,671,673
1,560,806
1,751,352
3,093
3,093
3,093
3,093
1,557,713
1,748,259
1,571,706
1,571,706
5,165
4,670
(185,812)
64
166,654
171,818
1,557,713
1,748,259
(185,876)
(185,876)
-
-
(1) Loss relates to an impairment in the carrying value of investments in subsidiaries in the parent entity.
Impairment write downs at parent entity level are eliminated on consolidation and assessed at a Group level.
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 Securities Exchange (ASX) and its shares are publicly traded.
Kin Group Pty Ltd has assessed that it does have the capacity to control Pact Group Holdings Ltd as at
30 June 2023 through its share ownership of 49.76% (2022: 46.8%). Therefore, 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.
Other commitments and guarantees
At 30 June 2023, Pact had bank guarantees and other trade finance arrangements totalling $21.0 million
(2022: $17.7 million) in respect of various property leases, and other contractual obligations.
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 the Company.
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Financial Report
Notes to the Financial Statements
6.4 Deed of cross guarantee
$’000
Closed group consolidated income statement
Loss before income tax
Income tax benefit
Net loss for the year
Retained earnings at beginning of the year
Net loss for the year
Dividends paid
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 and bank borrowings
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2023
2022
(32,467)
10,064
(22,403)
(41,544)
11,077
(30,467)
(238,803)
(175,629)
(22,403)
(5,164)
(30,467)
(32,707)
(266,370)
(238,803)
29,259
73,374
136,970
14,712
58,354
-
2,970
8,708
17,405
47,172
153,721
11,680
126,899
4,624
3,154
5,076
324,347
369,731
1,157
649,165
490,010
42,580
203,445
2,628
43,543
1,910
609,073
518,686
40,734
203,757
6,393
35,639
1,432,528
1,756,875
1,416,192
1,785,923
243,451
67,480
1,437
40,572
-
55,610
77
211,728
124,068
-
37,820
1,330
48,489
832
408,627
424,267
3,814
9,056
507,907
312,640
833,417
1,242,044
514,831
1,751,706
(970,505)
(266,370)
514,831
6,143
8,907
522,018
284,940
822,008
1,246,275
539,648
1,751,706
(973,255)
(238,803)
539,648
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 Act.
The Closed Group is in a net current liability position 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 to Managing our liquidity risk at Note 4.3).
6.5 Auditor's remuneration
During the year, the following fees were paid or payable for services provided by the Company’s external auditor
Ernst & Young:
$
Fees to Ernst & Young (Australia)
2023
2022
Fees for auditing the statutory financial report of the parent covering the Group
and auditing the statutory financial reports of any controlled entities
1,915,020
1,433,500
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
93,645
84,480
126,785
186,785
213,325
435,352
-
-
279,325
971,051
2,628,100
3,111,168
Fees for auditing the financial report of any controlled entities
646,631
646,661
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
Total Fees to other overseas member firms of Ernst & Young
Total auditor’s remuneration
-
-
29,390
6,591
70,974
431,037
746,995
1,084,289
3,375,095
4,195,457
Annual Report 2023OverviewPerformanceGovernanceShareholder Information
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Financial Report
Notes to the Financial Statements
Financial Report
Notes to the Financial Statements
6.6 Segment assets and segment liabilities
6.7 Geographic revenue
Segment assets
$’000
Packaging & Sustainability
Materials Handling & Pooling
Contract Manufacturing
Total segment assets
Reconciliation to total assets(1):
Receivables included in securitisation programs
Deferred tax assets
Inter-segment eliminations
Total assets
Segment liabilities
$’000
Packaging & Sustainability
Materials Handling & Pooling
Contract Manufacturing
Total segment liabilities
Reconciliation to total liabilities(1):
Interest-bearing liabilities
Income tax payable
Deferred tax liabilities
Inter-segment eliminations
Total liabilities
2023
2022
1,452,752
1,507,092
515,164
510,400
222,300
155,087
2,190,216
2,172,579
(149,516)
(145,354)
44,380
36,268
(2,894)
(332)
2,082,186
2,063,161
2023
2022
666,301
659,176
184,279
178,481
143,505
119,951
994,085
957,608
664,629
662,286
11,096
13,105
6,579
(2,894)
6,717
(332)
1,673,495
1,639,384
(1) These reconciling items are managed centrally and not allocated to reportable segments.
The table below shows revenue recognised in each geographic region that Pact operates in.
$’000
Australia
New Zealand
Asia and others
Total
6.8 Subsequent events
2023
2022
1,312,065
1,189,943
356,828
338,754
279,705
309,000
1,948,598
1,837,697
As announced to the ASX on 24 July 2023, the Company has extended its existing contract to own, operate,
wash and store a crate pool for Woolworths Group (Woolworths Contract) for a further 10 years, upon expiry
of the existing contract term. Pact’s crate manufacturing and pooling business forms part of its Materials
Handling & Pooling segment. The current annual revenue generated by Pact in connection with the Woolworths
Contract exceeds $50 million per annum. Woolworths Group had an option under the Woolworths Contract to
purchase 50% of the shares in the Pact entity that provides services to Woolworths. Woolworths has agreed to
remove this option.
Pact has announced the sale of 50% of its Crate Pooling and Crate Manufacturing business to Morrison & Co.
a global infrastructure investment manager. Completion is expected later this calendar year and it is subject to
regulatory and other approvals. Pact will retain 50% ownership of the business via a joint venture.
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 2023 and the date of this report that have
significantly affected or may significantly affect the operations of the Group, the results of those operations
and the state of affairs of the Group in subsequent financial periods.
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Directors’ Declaration
In the Directors’ opinion:
1. The consolidated financial statements and notes, and the Remuneration Report included in the
Directors’ report are in accordance with the Corporations Act 2001 (Cth) including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2023 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 2023.
This Declaration is made in accordance with a resolution of the Directors.
Raphael Geminder
Chair
16 August 2023
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 2023, 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 2023
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.
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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 2023, the Group’s
consolidated statement of financial
position includes property, plant and
equipment of $1,048.2 million and
intangible assets and goodwill of $428.5
million, collectively representing 71% of
total assets.
The Group performs an annual
impairment test of its property, plant and
equipment, intangible assets and
goodwill for all identified Cash
Generating Units (“CGU”s). During the
financial year, an impairment expense
totalling $52.6 million was recognised
against assets in the Packaging &
Sustainability Australia and Packaging
China CGUs.
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, the complexity of the
impairment assessment process due to
the judgements in estimating future
market conditions and the profit
downgrade announced by the Group
during the financial year.
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 impairment models, including
the forecast cash flows used in the Group’s impairment
assessment.
In conjunction with our valuation specialists, 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 whether the forecast cash flows, used in
the impairment testing model, were consistent with
the most recent Board approved cash flow forecasts
Performed a comparison to the Group’s historical
trading performance when considering future
cashflow assumptions
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
Tested 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 the impairment testing of property, plant and
equipment, intangible assets and goodwill in Note
2.2.
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2023 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
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
A member firm of Ernst & Young Global Limited
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Annual Report 2023OverviewPerformanceGovernanceShareholder InformationA member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 62 Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Pact Group Holdings Ltd for the year ended 30 June 2023, 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 16 August 2023
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Shareholder
Information
Tub made with
100%
recycled plastic*
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OverviewPerformanceGovernanceFinancial Report
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Shareholder
Information
The Shareholder information set out below is based on the information in the Pact Group Holdings Ltd
share register as at 1 September 2023.
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
30/03/2021
22,519,891
6.55%
16/09/2022
171,309,594
49.76%
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
Number of
securities
3,139
3,590
1,051
1,224
115
9,119
1,602,736
9,463,567
8,049,947
33,475,557
291,698,246
344,290,053
There were 2,158 holders of less than a marketable parcel of 695 ordinary shares (minimum of $500)
based on the closing market price of PGH shares of $0.72 on 1 September 2023.
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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:
Ordinary shares
Number of shares % of total shares
Name
KIN GROUP PTY LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MANIPUR NOMINEES PTY LTD
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