2011
A n n uAl R e p oR t
P a c k a g i n g L i m i t e d
ACN: 112 971 874
For personal use only Contents
02 Chairman’s Report
03 Directors’ Report
11 Auditors’ Independence Declaration
12 Corporate Governance Statement
18
Consolidated Statement of Comprehensive Income
19
Consolidated Statement of Financial position
20
Consolidated Statement of Cash Flows
21
Consolidated Statement of Changes in equity
22 notes to the Financial Statements
50 Directors’ Declaration
51
Independent Auditor’s Report
52 Additional Company Information
For personal use only Pro-Pac Packaging Limited and Controlled Entities
Corporate Information
Directors
Elliott Kaplan (Chairman)
Hadrian Morrall
Brandon Penn
Company Secretary
Mark Saus
Registered Office
148 Newton Road
Wetherill Park NSW 2164
Principal Place of Business
148 Newton Road
Wetherill Park NSW 2164
Share Register
Boardroom Pty Limited
Level 7 / 207 Kent Street
Sydney NSW 2000
Solicitors
Thomsons Lawyers
Australia Square Tower
Sydney NSW 2000
Bankers
Commonwealth Bank of Australia
Premium Business Services
Level 1, 430 Forest Road
Hurstville NSW 2220
Auditors
UHY Haines Norton
Level 11, 1 York Street
Sydney NSW 2000
Pro-Pac Packaging Limited
ACN: 112 971 874 ABN: 36 112 971 874
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011 1
For personal use only Chairman’s Report
on behalf of the Board of Directors and the management it is my pleasure to present Pro-Pac’s annual report for the year
ended 30 June 2011.
Subdued consumer spending and sentiment and the challenging non-resource related economic environment resulted in
difficult trading conditions particularly in the last quarter of the financial year. Despite this, the Company grew revenue by
27% to $115.2 million. EBiTDA increased 8% to $10.8 million and profit after tax was marginally lower at $5 million.
The 2011 result includes $403,000 of one off relocation and rationalisation costs relating predominantly to the
consolidation of the industrial Division’s sites and operations in NSW and Victoria and while these costs impact on reported
earnings, they do provide the essential infrastructure to support the Company’s continued growth. The Company has now
secured a new site in Brisbane and consolidation of the industrial Division’s Queensland operations will commence in
Q1 of the 2012 calendar year.
The strong top line growth necessitated increased investment in inventory and receivables with a resultant increase of
$3.3 million in net working capital. Despite this and the cash acquisitions of goodman Packaging and SPD international
during the financial year, the Company’s gearing (net debt/equity plus debt) remained conservative at approximately
20% at financial year end.
Subsequent to the end of the financial year, the Company expanded its footprint in the disposable safety products sector
with the acquisition of the business of Medirite Australia Pty Ltd. There remains a strong pipeline of both organic and
acquisitive growth opportunities which management is continuing to assess.
Following the payment of a fully franked interim dividend of 1 cent in April 2011, the Board has declared a fully franked
final dividend of 1 cent per share with a record date of 21 october 2011.
on 4 october 2011, shareholders approved the acquisition by Bennamon Pty Ltd of 42,189,497 shares in Pro-Pac from
the CVC group resulting in Bennamon owning approximately 48.3% of the shares on issue. The Board and management
view this as exciting and positive for the Company given Bennamon’s extensive industry knowledge and experience and
extensive global contacts and relationships.
During the financial year, former Chairman David Herlihy resigned from the Board and i would like to thank David for
his contribution during his tenure. i firmly believe that the key to success of any business is its people and in this regard,
Pro-Pac is fortunate in having a strong and capable management team and dedicated and loyal staff. i would like to
acknowledge our executive directors, Brandon Penn and Hadrian Morrall, our divisional managing director, Wendy Penn
and our CFo, Mark Saus for their leadership and contribution and on behalf of the Board, i thank all of our managers and
staff for their ongoing commitment and dedication to the continuing growth and success of the Company.
Elliott Kaplan
Chairman
2 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
2 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only Directors’ Report
The Directors present the Financial Report of Pro-Pac
Packaging Limited (“the Company”) and the Consolidated
Entity (“PPg”) being the company and its controlled entities,
for the year ended 30 June 2011, together with the Auditors’
report thereon.
DIRECTORS
The Directors in office at the date of this report and during the
year are as follows:
ELLiott KaPLan
BAcc, CA
(Chairman and Non-Executive Director – appointed Director
16 February 2005 and Chairman 25 February 2011)
Mr Kaplan is a Chartered Accountant with extensive
experience in senior financial and chief executive officer roles
in both private and public listed companies. His experience,
from both an investor and investee perspective, spans a diverse
range of industries including manufacturing, environmental,
distribution and services. Mr Kaplan is Managing Director
of CVC Private Equity Limited, a non-executive director of
DoloMatrix Limited (ASX code: DMX) and a director of a
number of unlisted companies. Mr Kaplan is also a former
director of The Environmental group Limited (ASX Code: EgL).
Mr Kaplan is Chairman of the Audit and Remuneration
Committees.
Hadrian MorraLL
(Executive Director – appointed 16 August 2007)
Mr Morrall has over 25 years experience in the plastics
industry. He is a founding director of Plastic Bottles Pty Ltd (PB
group) and has held the position of Managing Director of the
PB group for the last 17 years. He oversaw the growth of that
company from its start in Sydney to a National group and its
diversification into manufacturing through various acquisitions.
Prior to the PB group, Mr Morrall spent 3 years in Plastic
distribution with Edwards Durapak as Sales Manager. He is the
President of the BMiA (Blowmolders industry Association) and
is a qualified Automotive Engineer.
Brandon PEnn
B. Com
(Executive Director – appointed 16 August 2007)
Mr Penn is the founding director of the PB group. He has had
extensive experience in start up businesses.
Mr Penn has had a number of business interests alongside the
PB group including the establishment of a dominant software
development company, Dealing information Systems (DiS),
which developed wholesale banking systems. DiS was acquired
in 1996 by Sungard Data Systems NYSE. Mr Penn assumed
Pro-Pac Packaging Limited and Controlled Entities
Asia-Pacific responsibility for the Sungard companies and
offices throughout the Asia Pacific region.
in 2001 Mr Penn left Sungard to concentrate on his interest
in the PB group as a non-executive Director. He has been
instrumental in negotiating and integrating a number of
acquisitions growing the PB group into a rapid growth multi-
state importation, manufacturing and distribution business.
david HErLiHy
BA (UNSW)
(Chairman and Non-Executive Director – appointed
Director 8 February 2010; Chairman 1 March 2010;
resigned 25 February 2011)
Mr Herlihy was Chairman of the Board and of the
Remuneration Committee and a member of the Audit
Committee.
COMPANY SECRETARY
MarK SauS
B.Com, B. Compt (Hons), CPA
(Company Secretary and Chief Financial officer –
appointed 2 September 2005)
Mr Saus has more than 25 years experience in commercial
and financial management roles in private and public listed
companies both in Australia and overseas. His experience
spans a diverse range of industries including manufacturing,
distribution and retail. Recent roles include head of finance
positions in high growth SME environments. Mr Saus is also
the Chief Financial officer of the group.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
3
For personal use only Directors’ Report
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
As at the date of this report, the relevant interests of the directors in the shares and options of Pro-Pac Packaging Limited are
shown in the table below:
ordinary Shares
1,546,357
13,237,492
20,875,398
interest in ordinary Shares
through directorships of
Corporate Shareholders
8,629,487
-
-
Elliott Kaplan
Hadrian Morrall
Brandon Penn
MEETINGS OF DIRECTORS
Attendances by each director during the year were:
Board
audit committee
remuneration committee
number of
meetings held
while in office
Meetings
attended
number of
meetings held
while in office
Meetings
attended
number of
meetings held
while in office
Meetings
attended
David Herlihy
Elliott Kaplan
Hadrian Morrall
Brandon Penn
7
13
13
13
6
13
13
13
3
3
-
-
2
3
-
-
-
1
-
-
-
1
-
-
PRINCIPAL ACTIVITIES
Pro-Pac Packaging Limited is a company limited by shares
that is incorporated and domiciled in Australia. The principal
activities of the consolidated entity during the year were the
manufacture and distribution of industrial, protective and rigid
packaging products.
There have been no significant changes in the nature of these
activities during the year.
revenue by 27% to $115.2m. EBiTDA was up 8% to $10.8m
and profit after tax was marginally lower at $5.0m.
The 2011 result included $403,000 of one off relocation
and rationalisation costs relating predominantly to the
consolidation of the industrial Division’s sites and operations in
both NSW and Victoria and, adjusting for these costs, EBiTDA
was $11.2m (2010: $10.1m) and after tax profit was $5.3m
(2010: $5.1m).
OVERVIEW OF THE COMPANY’S BUSINESS
Pro-Pac Packaging Limited is a diversified manufacturing
and distribution company, providing innovative, flexible and
rigid packaging solutions for a broad group of customers.
PPg is headquartered in Sydney with operations in Adelaide,
Brisbane, Melbourne and Perth.
OPERATING AND FINANCIAL REVIEW
results for the year ended 30 June 2011
Subdued consumer spending and sentiment and the
challenging non-resource related economic environment
resulted in difficult trading conditions particularly in the last
quarter of the financial year. Despite this, the Company grew
Although these costs impact on earnings in the short term,
as highlighted in the Half Yearly report, they provide the
necessary infrastructure to support continued growth.
Revenue in the industrial Division grew 55% to $71.9m and
revenue growth excluding the impact of acquisitions was
17%. Pre-tax earnings for the industrial Division were $5.2m
(2010: $3.9m). The Rigid Division’s sales were marginally
higher at $54.9m (2010: $53.8m) but margin and cost
pressures resulted in reduced pre-tax divisional earnings of
$5.0m (2010: $5.7m).
Financial position
The group’s balance sheet continues to strengthen as a
consequence of its earnings performance with shareholders’
4 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
equity of the consolidated group increasing by $4.3m to
$62.2m. The group’s organic and acquisitive growth required
additional investment in working capital and together with debt
raised to partly fund acquisitions made during the year, resulted
in increased borrowings. Despite this, the group’s gearing ratio
(net interest bearing debt/shareholders’ equity plus interest
bearing debt) remains reasonably conservative at 20%.
Capital structure
During the year 5,932,564 shares were issued under
the Dividend Reinvestment. At 30 June 2011 there were
139,735,576 shares on issue.
operating activities
Effective 1 July 2010, Pro-Pac Packaging (Aust) Pty Ltd, a
wholly owned subsidiary, acquired the business and assets of
Dysher Pty Ltd trading as goodman Packaging, a Sydney and
Perth based distributor of industrial packaging products and
effective 1 April 2011, acquired the business and assets of
SPD international Pty Ltd, a Melbourne based distributor of
industrial packaging products.
These complementary and synergistic businesses where
successfully integrated into the industrial division’s core
operations during the year.
The company also completed the consolidation of the
industrial Division’s sites and operations in both NSW and
Victoria which will have a favourable effect on the division’s
operational efficiencies in future trading periods.
outlook
The Company has a strong pipeline of organic growth
opportunities and continues to assess a number of new
business initiatives and synergistic acquisitions. Following the
industrial Division’s site consolidations in Victoria and NSW, a
similar exercise is scheduled for Queensland in the first quarter
of calendar 2012.
DIVIDENDS
A fully franked interim dividend of one cent per share was
paid on 12 April 2011. in August 2011, the Company declared
a fully franked final dividend of one cent per share. The record
date for determining entitlement to the dividend is 21 october
2011 and the dividend will be paid on 2 November 2011.
The Company’s Dividend Reinvestment Plan will apply to this
dividend with a zero discount.
SIGNIFICANT CHANGES IN THE STATE OF
AFFAIRS
There were no significant changes in the state of affairs of the
Company during the year under review.
SIGNIFICANT EVENTS SUBSEQUENT TO
BALANCE DATE
on 4 July 2011 the Company announced it had been informed
that Bennamon Pty Limited (a substantial shareholder) had
entered into a conditional agreement with CVC Limited
(another substantial shareholder) and certain of its associated
companies to acquire a total of 42,189,497 fully paid ordinary
shares in the Company which represented approximately
30.17% of all the Company’s shares in issue at the time.
Completion of the proposed share acquisition is conditional
on, amongst other things, shareholders approving the
proposed transaction at a shareholders’ meeting to be held
on 4 october 2011. if approved, Bennamon Pty Ltd will have
approximately 48.27% of the Company’s shares on issue.
on 23 September 2011, Pro-Pac Packaging (Aust) Pty Ltd, a
wholly owned subsidiary company, purchased the business
and assets of Medirite Australia Pty Ltd. Medirite is a long
established Sydney based importer and distributor of personal
protection equipment (PPE) and safety products with an
annualised turnover of approximately $6m.
LIKELY DEVELOPMENTS
Apart from the commentary outlined above, the directors
have excluded from this report any further information on the
likely developments in the operations of the company and the
expected results of those operations in future financial years,
as the directors consider that it would be likely to result in
unreasonable prejudice to the Company.
ENVIRONMENTAL REGULATION AND
PERFORMANCE
The consolidated entity’s operations are not regulated by
any significant environmental regulation under a law of the
Commonwealth or of a State or Territory.
INDEMNIFICATION AND INSURANCE OF
DIRECTORS AND OFFICERS
The Company has entered into a deed of access, indemnity
and insurance with each of the Directors, under which the
Company has agreed to:
• continue to provide the Directors with access to certain
relevant information after they cease to be Directors;
• to the extent permitted by law, indemnify the Directors
against liabilities incurred in their capacity as directors of the
Company and its subsidiaries; and
• maintain certain Directors’ liability insurance in respect
of Directors, both during and after the period they are
Directors.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
5
For personal use only Directors’ Report
The Company has paid insurance premiums in respect of
Directors’ and officers’ liability and legal expense insurance for
the Directors of the Company.
These contracts of insurance prohibit the disclosure of the
nature of the liabilities covered and amount of the premium
paid. The Corporations Act 2001 does not require disclosure of
the information in these circumstances.
The group has not, during the year or since the end of the
financial year, in respect of any person who is or has been
an auditor of the group, paid or agreed to pay a premium in
respect of a contract insuring against a liability for the costs or
expense of defending legal proceedings.
REMUNERATION REPORT
remuneration policy
The performance of the group depends upon the quality of its
directors and executives. To prosper, the group must attract,
motivate and retain highly skilled directors and executives.
The Remuneration Committee comprises Elliott Kaplan who is
a Non-Executive Director.
David Herlihy (former Chairman of the Remuneration
Committee; resigned 25 February 2011)
The Remuneration Committee assesses the appropriateness
of the nature and amount of remuneration of directors on a
periodic basis by reference to relevant employment market
conditions with the overall objective of ensuring maximum
stakeholder benefit from the retention of a high quality
Board and executive team. it is intended that the manner of
payments chosen will be optimal for the recipient without
creating undue cost for the group. Further details on the
remuneration of Directors and executives are set out in this
Remuneration Report.
in accordance with best practice corporate governance, the
structure of non-executive Director and executive remuneration
is separate and distinct.
non-Executive director remuneration
The Company seeks to set aggregate remuneration at a level
which provides the Company with the ability to attract, retain
and motivate directors of the highest quality, whilst incurring a
cost which is acceptable to shareholders.
The Constitution of the Company and the ASX Listing Rules
specify that non-executive directors are entitled to receive
remuneration for their services as determined by the Company
in a general Meeting. The Company has resolved that the
maximum aggregate amount of directors’ fees (which does
not include remuneration of executive directors and other
non-director services provided by directors) is $200,000 per
6 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
annum. Non-executive directors are entitled to be reimbursed
for their reasonable expenses incurred in connection with the
affairs of the Company. A director may also be remunerated as
determined by the directors if that director performs additional
or special duties for the Company.
The remuneration of the Company’s Non-Executive Directors
for the period ending 30 June 2011 is detailed in Table 1 of
this Remuneration Report.
Executive director and Senior Management
remuneration
The group aims to develop remuneration packages properly
reflecting each person’s duties and responsibilities and the
remuneration is competitive in attracting, retaining and
motivating people of the highest quality.
The Remuneration Committee is responsible for reviewing and
providing recommendations to the Board with respect to the
remuneration packages of senior management and executive
directors.
The Remuneration Committee is responsible for providing
advice to the Board with respect to non-executive directors’
remuneration.
The Board is responsible for determining remuneration
packages applicable to the Board members and the Chief
Executive officer. The Chief Executive officer determines
the remuneration packages for the senior executives of the
Company in accordance with compensation guidelines set by
the Board.
The remuneration of the Chief Executive officer and senior
management for the year ending 30 June 2011 is set out in
Table 1 of this report.
Employment contracts
Chief Executive Officer
The Company has entered into an executive service
agreement with Mr Brandon Penn in relation to his role as
Chief Executive officer of the group. in his executive service
agreement, Mr Penn agrees that all intellectual property rights
created, developed or acquired by him in the course of his
employment, belong to the Company.
The Company or the executive may terminate the service
agreement by giving the other party three months notice.
The Company may terminate the agreement at any time with
immediate effect in the event of non-performance of duties
or in the event of dishonesty, a willful breach, non-observance
or neglect in the discharge of duties. The agreement provides
that for a period of twenty four months after termination
of his employment contract (less any served notice period)
Mr Penn will not compete with Pro-Pac in Australia.
For personal use only Senior Management
Employment agreements entered into with senior
management contain the following key terms:
Event
Company Policy
Resignation/notice period
3 months or less
Serious misconduct
Company may terminate at
any time
Payouts upon resignation or
termination, outside industrial
regulations (ie ‘golden handshakes’) None
Executive Long term incentive Plan (ESPP)
The Company has established an ESPP to encourage
employees to share in the ownership of the Company and
promote the long-term success of the Company as a goal
shared by the employees. The ESPP has been approved
by members of the Company for the purposes of sections
260C(4)(a), 259B(2)(a), 257B(1) and paragraph (b) of the
definition of employee share scheme buy-back in section 9 of
the Corporations Act. There are currently 1,335,000 shares
issued to employees under the Plan.
The following are the key terms and conditions of the ESPP:
• No Shares under the ESPP will be allotted unless the
requirements of the Corporations Act 2001 and the
ASX Listing Rules have been complied with.
• Performance hurdles apply to the ESPP. The key
performance hurdle is that the total shareholder return
to shareholders of the Company must exceed the rate
of growth over the same period for the S&P/ASX Small
ordinaries Accumulation index (or any equivalent or
replacement of that index).
• Shares are allocated to employees at either the value of
shares as detailed in the latest disclosure document issued
by the Company or the 5-day weighted average price
immediately prior to the offer being made to the employee.
• The Company may provide loans to participants to acquire
shares under the ESPP. As security for the loans, Participants
will pledge the shares acquired under the ESPP to the
Company at the time the loans are provided and will grant
a charge over any benefits attributable to the Shares,
including bonus shares, rights, and dividends. Any dividends
paid on the shares by Pro-Pac Packaging Limited are treated
as interest on the loan.
• The term of the loans and the vesting period for the shares
from the date of issue of shares is 3 years.
Pro-Pac Packaging Limited and Controlled Entities
• The Shares will be registered in the names of the
Participants from allotment, but will remain subject to
restrictions on dealing while they are pledged as security for
a loan or subject to performance hurdles specified.
• if the employee leaves the employment of the group,
the loan balance must be repaid in full or the shares
surrendered in full settlement of the outstanding loan
balance.
Key Management Personnel at 30 June 2011
Elliott Kaplan
– Non-executive Chairman
Hadrian Morrall – Executive Director
Brandon Penn
– Executive Director
Wendy Penn
– Divisional Managing Director
Mark Saus
–
Chief Financial officer and
Company Secretary
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
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For personal use only Directors’ Report
remuneration of Key Management Personnel
Excluding the Directors, there are only two staff members of the Company who qualify as a “Key Management Personnel” for
the purposes of this report. The executive key management personnel are also the most highly paid executive officers of the
consolidated entity for the year under review.
Table 1
Short-term benefits
Post
employment
benefits
other
long term
benefits
Share
based
payment
total
Cash, salary and
commissions
David Herlihy
John Read
Elliott Kaplan
Hadrian Morrall
Brandon Penn
Wendy Penn
Mark Saus
total
remuneration
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
$
40,000
22,500
-
36,667
46,667
40,000
206,324
197,003
228,652
224,185
180,000
55,000
175,687
171,739
877,330
747,094
Cash profit
share and non-
cash benefit
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Super-
annuation
other
Equity and
options
Performance
based
$
-
-
-
3,300
-
-
18,267
17,861
20,579
19,816
16,138
-
16,355
15,350
71,339
56,327
$
-
-
-
-
-
-
20,824
22,980
-
-
-
-
-
-
20,824
22,980
$
-
-
-
-
-
-
-
-
-
-
-
-
2,402
1,218
2,402
1,218
$
40,000
22,500
-
39,967
46,667
40,000
245,415
237,844
249,231
244,001
196,138
55,000
194,444
188,307
971,895
827,619
-
-
-
-
-
-
-
-
-
-
-
-
-
6.0%
-
-
8 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
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Pro-Pac Packaging Limited and Controlled Entities
options issued as part of remuneration for the year ended 30 June 2011
No options were granted as remuneration during the year ended 30 June 2011.
Shares and Loans issued under the ESPP during the year ended 30 June 2011
1,335,000 shares and related loans with a total value of $433,875 were issued under the ESPP during the year ended
30 June 2011.
ESPP Shares of Key Management Personnel as at the date of this report
2009
Mark Saus
total
ESPP Shares
(number)
ESPP Shares
$
300,000
300,000
97,500
97,500
ESPP Loans
outstanding
$
97,500
97,500
option Holdings of Key Management Personnel
There have been no options held by the Key Management Personnel during the year.
Loans to Key Management Personnel
ESPP issue Price
$
ESPP Expiry date
$
0.325
30 August 2013
other than loans issued in relation to the Company’s ESPP shares detailed above, there were no loans to Key Management
Personnel during the year.
other transactions with Key Management Personnel
During the year the Company paid $790,680 (inc. gST) to entities associated with directors Hadrian Morrall and Brandon Penn for
property rental and outgoings, based on normal commercial terms and conditions.
SHARE OPTIONS
in a prior year 400,000 options in the Company’s unissued ordinary shares were issued for services rendered by a consultant.
The options were issued at an exercise price of 32.8 cents per share exercisable at any time prior to 30 September 2011. As at the
date of this report (and at the balance date) there were 400,000 unissued ordinary shares under options.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or 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 any part of those proceedings.
The Company was not a party to any such proceedings during the year.
ROUNDING OF ACCOUNTS
The company is of a kind referred to in Class order 98/100, issued by the Australian Securities and investments Commission,
relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Class order to the nearest
thousand dollars, or in certain cases, the nearest dollar.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
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Directors’ Report
AUDITORS’ INDEPENDENCE DECLARATION AND NON-AUDIT SERVICES
other than as disclosed in Note 30, there were no non-audit services provided by the entity’s auditors UHY Haines Norton.
The Auditor’s independence declaration as required under S307C of the Corporations Act 2001 for the year end
30 June 2011 has been received and can be found on page 11 of the Directors’ report.
This Directors’ Report is signed in accordance with a resolution of the Board of Directors.
Signed at Sydney on 28 September 2011.
Elliott Kaplan
Chairman
Brandon Penn
Director
10 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
AUDITORS’ INDEPENDENCE DECLARATION
to the directors of Pro-Pac Packaging Limited
As auditor for the audit of Pro-Pac Packaging Ltd for the year ended 30 June 2011, i declare that, to the best of my knowledge
and belief, there have been:
(i) no contraventions of the independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
Franco Giannuzzi
Partner
uHy Haines norton
Chartered Accountants
Signed at Sydney on 28 September 2011.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
11
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Corporate Governance Statement
The Board of Directors of Pro-Pac Packaging Limited is
responsible for the corporate governance of the Company
and its controlled entities (Pro-Pac) and to ensure that
Pro-Pac is directed and managed appropriately. in this regard,
the Board is committed to ensuring accountability and that
control systems are commensurate with the risks involved to
enable Pro-Pac to create value and optimise its performance.
During August 2007, the ASX Corporate governance
Council released its Corporate governance Principles and
Recommendations – 2nd edition (ASX Principles). The ASX
Listing Rules require Pro-Pac to provide a statement in its
Annual Report disclosing the extent to which they have
followed the best practice recommendations during the
reporting period, and if any recommendations are not
followed, an explanation is provided.
The Company’s Corporate governance Statement is
structured with reference to the Australian Securities Exchange
(“ASX”) Corporate governance Council’s (the “Council”)
“Corporate governance Principles and Recommendations”,
which are as follows:
Principle 1 –
Lay solid foundations for management
and oversight
Principle 2 –
Structure the Board to add value
Principle 3 –
Promote ethical and responsible
decision-making
Principle 4 –
Safeguard integrity in financial reporting
Principle 5 – Make timely and balanced disclosure
Principle 6 – Respect the rights of shareholders
Principle 7 – Recognise and manage risk
Principle 8 – Remunerate fairly and responsibly
A copy of the “Corporate governance Principles and
Recommendations” can be found on the ASX’s website at
www.asx.com.au
However, the ASX Corporate governance Council
acknowledged that “a one size fits all” approach is
inappropriate and that it is unwise to require all companies
to apply the same rules because different companies face
different circumstances hence some recommendations are
unnecessary or may even be counter-productive. in particular
it acknowledged that it may be inappropriate or uneconomic
for smaller companies, such as Pro-Pac, to follow the same
rules as Australia’s largest listed companies. instead the
Council chose to issue a full suite of recommendations and
require companies to adopt an ‘if not why not’ approach to
reporting compliance with the recommendations. Companies
are at liberty to determine whether each recommendation
is appropriate to them. They are required to disclose in the
Corporate governance Statement of their annual reports those
12 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
recommendations which they have not adopted during each
reporting period and provide explanations for their decisions.
A number of the best practice recommendations require
the formal documentation of policies and procedures that
Pro-Pac already substantially performs. Pro-Pac considers that
to create such further documentation independently and
specifically for Pro-Pac would have minimal additional benefit
but substantial additional expense. Pro-Pac is also mindful to
not adopt such procedures solely for the sake of adoption
or where they could actually inhibit the proper function or
opportunities of Pro-Pac. However it recognises that it has
to put in place a compliance program which includes the
documentation of its compliance policies and procedures
and a Risk Management Statement which considers the
major risks to Pro-Pac operations, the rating and ranking
of these risks to set priorities in the treatment of the risks.
The Board has determined that the adoption of such formal
policies and procedures must be tailored to Pro-Pac at minimal
expense and must be appropriate for Pro-Pac, taking into
account the size and complexity of its operations.
This statement summarises the corporate governance practices
currently in place at Pro-Pac. The Board recognises that in a
changing world, it is important to review these practices and
policies from time to time to ensure they continue to reflect
local and international developments and assist Pro-Pac in
optimising its corporate performance and accountability.
Pro-Pac will continue to keep its corporate governance
practices under review. Key summaries of the corporate
governance practices and policies and other key documents
can be found on Pro-Pac’s website at www.ppgaust.com.au
ASX PRINCIPLE 1 - LAY SOLID FOUNDATIONS
FOR MANAGEMENT AND OVERSIGHT
Companies should establish and disclose the
respective roles and responsibilities of board and
management.
• Recommendation 1.1: Companies should establish the
functions reserved to the board and those delegated to
senior executives and disclose those functions.
• Recommendation 1.2: Companies should disclose the
process for evaluating the performance of senior executives.
• Recommendation 1.3: Companies should provide the
information indicated in the guide to reporting on
Principle 1.
role of the Board
The Board has adopted a charter that establishes the role
of the Board and its relationship with management. The
primary role of the Board is the protection and enhancement
of long-term shareholder value. its responsibilities include
For personal use only Pro-Pac Packaging Limited and Controlled Entities
the overall strategic direction of Pro-Pac, establishing goals
for management and monitoring the achievement of these
goals. The functions and responsibilities of the Board and
management are consistent with ASX Principle 1. A summary
of the matters reserved for the Board can be found in the
corporate governance section of the Pro-Pac website.
(www.ppgaust.com.au)
Pro-Pac has in place systems designed to fairly review and
actively encourage enhanced Board and management
effectiveness. The Chairman has the responsibility to review
continually the performance of each director and the Board as
a whole. The performance of the Board is reviewed regularly
against both measurable and qualitative indicators. The
performance criteria against which Directors and Executives
are assessed is aligned with the financial and non-financial
objectives of Pro-Pac. From time to time and, as considered
appropriate, the Chairman will seek external assistance and
advice to undertake these performance reviews.
A performance evaluation for senior executives was
undertaken during the reporting period. This entails an
evaluation of the executive against a pre-determined set of
objectives and key performance areas.
ASX PRINCIPLE 2 - STRUCTURE THE BOARD
TO ADD VALUE
Companies should have a board of an effective
composition, size and commitment to adequately
discharge its responsibilities and duties.
• Recommendation 2.1: A majority of the board should be
independent directors.
• Recommendation 2.2: The chair should be an independent
director.
• Recommendation 2.3: The roles of chair and chief executive
officer should not be exercised by the same individual.
• Recommendation 2.4: The board should establish a
nomination committee.
• Recommendation 2.5: Companies should disclose the
process for evaluating the performance of the board, its
committees and individual directors.
• Recommendation 2.6: Companies should provide the
information indicated in the guide to reporting on
Principle 2.
Structure of the Board
The skills, experience and expertise relevant to the position
of director held by each Director in office at the date of
this Report is included in the Directors’ Report. Corporate
governance Council Recommendation 2.1 recommends that
a majority of the Board to be independent Directors. The
Corporate governance Council defines independence as
being free from any business or other relationship that could
materially interfere with – or could reasonably be perceived
to materially interfere with – the independent exercise of
their judgement.
When determining the independent status of a director the
Board would consider whether the Director is, inter alia:
• a substantial shareholder of the company or an officer of,
or otherwise associated directly with, a substantial
shareholder of the company
• employed, or has previously been employed in an executive
capacity by the company or another group member, and
there has not been a period of at least three years between
ceasing such employment and serving on the board
in accordance with the above criteria, the following Directors
are not considered to be independent:
name
reason for non-compliance
Elliott Kaplan
Chairman and
Non-Executive Director
Mr Kaplan is a director of
CVC Private Equity Limited,
a substantial shareholder.
Hadrian Morrall
Executive Director
Brandon Penn
Executive Director
Mr Morrall is employed by
the Company in an executive capacity,
is a substantial shareholder and a
supplier of leasehold premises.
Mr Penn is employed by the
Company in an executive capacity, is a
substantial shareholder and a supplier
of leasehold premises.
The Company does not satisfy Corporate governance Council
Recommendation 2.1 as it does not have a majority of
independent directors. given the size of the Company and
the Board, the Company does not consider compliance with
Recommendation 2.1 would necessarily enhance shareholder
value.
The Board distinguishes between the concept of independence
and the issues of conflict of interest or material personal
interests which may arise from time to time.
Wherever there is an actual or potential conflict of interest or
material personal interest, the Board’s policies and procedures
ensure that the directors:
• fully and frankly inform the Board about the circumstances
giving rise to the conflict; and
• abstain from voting on any motion relating to the matter
and absenting himself or herself from Board deliberations
relating to the matter including receipt of Board papers
bearing on the matter.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
13
For personal use only Corporate Governance Statement
if the Board resolves to permit a Director to have any
involvement in a matter involving possible circumstances of
conflicting interests, the Board will minute full details of the
basis of the determination and the nature of the conflict
including a formal resolution concerning the matter.
if a Director believes that he or she may have a conflict of
interest or duty in relation to a particular matter, the Director
should immediately consult with the Chairman. The Company
Secretary will maintain a register of all possible conflict of
interest situations.
The Company also has a Director’s Code of Conduct which
sets out standards to which each director will adhere whilst
conducting his duties. The code requires a Director, amongst
other things, to:
• act honestly, in good faith and in the best interests of the
Company as a whole;
• perform the functions of office and exercise the powers
attached to that office with a degree of care and diligence
that a reasonable person would exercise if he were a
Director in the same circumstances; and
• consider matters before the Board having regard to any
possible personal interests, the amount of information
appropriate to properly consider the subject matter and
what is in the best interests of the Company.
The Company considers industry experience and specific
expertise, as well as general corporate experience, to be
important attributes of its Board members. The Directors
noted above have been appointed to the Board due to their
considerable industry and corporate experience.
There are procedures in place, agreed by the Board, to enable
Directors, in furtherance of their duties, to seek independent
professional advice at the Company’s expense.
The term in office held by each Director in office at the date
of this report is listed below. Note that the Company was
incorporated in February 2005.
name
term in office
Elliott Kaplan
6 years and 8 months
Hadrian Morrall
4 years and 1month
Brandon Penn
4 years and 1 month
The Board believes that a Board of three Directors operates
effectively, generally allows the Board to collectively exercise
its authority without the need for many sub-committees and
is appropriate for the size of the Company. Further, the Board
has considered the competencies and experience of each
of the Directors and believes that it is not in the interests
of shareholders to seek to replace any of the current Board
members. For these reasons, the Company did not adopt the
following best practice recommendations throughout the
financial year ended 30 June 2011:
• having a majority of independent Directors;
• having an independent Chairman for its Board and
Audit Committee; and
• having a Nomination Committee of the Board.
An evaluation of the Board, its committees and directors was
undertaken by the Chairman during the year.
nomination and appointment of new directors
The Board has elected not to establish a formal Nominations
Committee to oversee the appointment and induction process
for Directors. The Board has determined that it may deal
more effectively with such matters as a single body. The ASX
guidelines contemplate that a Nomination Committee may
not always be appropriate for Company’s with smaller boards
of directors.
ASX PRINCIPLE 3 - PROMOTE ETHICAL AND
RESPONSIBLE DECISION-MAKING
Companies should actively promote ethical and
responsible decision-making.
• Recommendation 3.1: Companies should establish a code
of conduct and disclose the code or a summary of the code
as to:
- the practices necessary to maintain confidence in the
company’s integrity;
- the practices necessary to take into account their legal
obligations and the reasonable expectations of their
stakeholders; and
- the responsibility and accountability of individuals
for reporting and investigating reports of unethical
practices.
• Recommendation 3.2: Companies should establish a policy
concerning trading in company securities by directors, senior
executives and employees, and disclose the policy or a
summary of that policy.
• Recommendation 3.3: Companies should provide the
information indicated in the guide to reporting on
Principle 3.
in line with ASX Principle 3, the Board has established a Code
of Conduct and Securities Trading Policy.
14 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
Code of Conduct
The purpose of the Code of Conduct is to guide all employees,
including Directors as to:
• the practices necessary to maintain confidence in Pro-Pac’s
honesty and integrity;
• the responsibility and accountability of individuals for
reporting and investigating reports of unethical practices.
The overriding principle is that all business affairs of Pro-Pac
must be conducted legally, ethically and with strict observance
of the highest standards of propriety and business ethics. if
there are any doubts as to how to respond to a particular
circumstance, Directors and employees are encouraged to
consult with the Chairman or Company Secretary and, if
necessary, seek external professional advice.
Pro-Pac has in place a code of conduct which sets standards
for the Board and employees in dealing with Pro-Pac’s
customers, suppliers, shareholders and other stakeholders.
A copy of this code of conduct is available on the Pro-Pac
website.
Securities trading Policy
A securities trading policy has been adopted and is binding
on all Directors, officers and employees of Pro-Pac. This policy
imposes trading restrictions on all Directors, officers and
employees of Pro-Pac in possession of ‘inside information’.
A copy of the Securities Trading Policy is posted on the
Pro-Pac website.
Directors are required to comply with the requirements of the
ASX Listing Rules and their letter of appointment and promptly
advise Pro-Pac of any dealing in Pro-Pac shares to allow
Pro-Pac to make the necessary disclosures to the ASX.
ASX PRINCIPLE 4 - SAFEGUARD INTEGRITY IN
FINANCIAL REPORTING
Companies should have a structure to independently
verify and safeguard the integrity of their financial
reporting.
• Recommendation 4.1: The board should establish an audit
committee.
• Recommendation 4.2: The audit committee should be
structured so that it:
- consists only of non-executive directors
- consists of a majority of independent directors
- is chaired by an independent chair, who is not chair of
the board
- has at least three members.
• Recommendation 4.3: The audit committee should have a
formal charter.
• Recommendation 4.4: Companies should provide the
information indicated in the guide to reporting on
Principle 4.
ASX Principle 4 requires Pro-Pac to “have a structure to
independently verify and safeguard the integrity of the
company’s financial reporting”. The Board believes its practices
are in accordance with this principle.
audit Committee
To assist in the execution of its responsibilities, the Board has
established an Audit Committee.
The structure of the Audit Committee and its responsibilities
reflect in part the requirements of ASX Principle 4. A summary
of the Charter setting out the Committee’s responsibilities is
posted on the Pro-Pac website.
it is the Board’s responsibility to ensure that an effective
internal control framework exists within the Company.
This includes internal controls to deal with both the effective-
ness and efficiency of significant business processes, the
safeguarding of assets, the maintenance of proper accounting
records, and the reliability of financial information as well
as non-financial considerations such as the benchmarking
of operational key performance indicators. The Board has
delegated the responsibility for the establishment and
maintenance of a framework of internal control and ethical
standards for the management of the Company to the Audit
Committee.
The Committee also provides the Board with additional
assurance regarding the reliability of financial information for
inclusion in the financial reports.
The Committee comprises Mr Kaplan and Mr Herlihy (resigned
25 February 2011). Each member is financially literate (i.e.
they are able to read and understand financial statements)
and Mr Kaplan has financial expertise (i.e. he is a Chartered
Accountant). All members have some understanding of the
industry in which the Company operates.
Recommendation 4.2 requires that the composition of Audit
Committee comprises a majority of independent Directors
and that the committee have at least three members. The
Company does not, given its size and the size of its Board,
satisfy this requirement.
For additional details of Directors’ attendance at Audit
Committee meetings and to review the qualifications of
the members of the Audit Committee, please refer to the
Directors’ Report.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
15
For personal use only
Corporate Governance Statement
ASX PRINCIPLE 5 - MAKE TIMELY AND
BALANCED DISCLOSURE
Companies should promote timely and balanced
disclosure of all material matters concerning the
company.
• Recommendation 5.1: Companies should establish written
policies designed to ensure compliance with ASX Listing
Rule disclosure requirements and to ensure accountability
at a senior executive level for that compliance and disclose
those policies or a summary of those policies.
• Recommendation 5.2: Companies should provide the
information indicated in the guide to reporting on
Principle 5.
Consistent with ASX Principle 5, the Board aims to ensure
that all investors have equal and timely access to material
information concerning the Company, that there is
compliance with continuous disclosure requirements and
that announcements made by the Company are factual and
presented in a clear and balanced way.
The Company has adopted an External Communications Policy
reflecting the principles set out in ASX Principle 5. This policy
has been placed on the Pro-Pac website.
ASX PRINCIPLE 6 - RESPECT THE RIGHTS OF
SHAREHOLDERS
Companies should respect the rights of shareholders
and facilitate the effective exercise of those rights.
• Recommendation 6.1: Companies should design
a communications policy for promoting effective
communication with shareholders and encouraging their
participation at general meetings and disclose their policy
or a summary of that policy.
• Recommendation 6.2: Companies should provide the
information indicated in the guide to reporting on
Principle 6.
Pro-Pac has adopted a number of different practices designed
to promote effective communication with shareholders as
recommended by ASX Principle 6 and as reflected in the
Company’s External communications policy, published on
its website. These practices include placing on the Pro-Pac
website relevant information, including ASX announcements,
annual and half-year reports, copies of notices of meetings,
analyst briefings and presentations given by the Chairman
or Chief Executive officer. Annual reports are distributed to
all shareholders by mail or email (unless a shareholder has
specifically requested not to receive these documents).
A representative from the auditors of Pro-Pac attends the
annual general meeting and any other meeting as required
16 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
by the Board and is available to answer shareholder questions
about the conduct of the audit and preparation and content
of the auditor’s report. Shareholders are given the opportunity
to raise questions with any of the Directors at shareholder
meetings, both formally and informally.
The External communications policy also elaborates on the
Company’s continuous disclosure policy.
ASX PRINCIPLE 7 - RECOGNISE AND
MANAGE RISK
Companies should establish a sound system of risk
oversight and management and internal control.
• Recommendation 7.1: Companies should establish policies
for the oversight and management of material business risks
and disclose a summary of those policies.
• Recommendation 7.2: The board should require manage-
ment to design and implement the risk management and
internal control system to manage the company’s material
business risks and report to it on whether those risks are
being managed effectively. The board should disclose that
management has reported to it as to the effectiveness of
the company’s management of its material business risks.
• Recommendation 7.3: The board should disclose whether it
has received assurance from the chief executive officer (or
equivalent) and the chief financial officer (or equivalent) that
the declaration provided in accordance with section 295A
of the Corporations Act is founded on a sound system of
risk management and internal control and that the system
is operating effectively in all material respects in relation to
financial reporting risks.
• Recommendation 7.4: Companies should provide the
information indicated in the guide to reporting on
Principle 7.
ASX Principle 7 recommends that a company “establish a
sound system of risk and oversight and management and
internal control.”
in addition to its financial reporting obligations, the Audit
Committee is responsible for reviewing the risk management
framework and policies of Pro-Pac. The structure of the
Audit Committee and its responsibilities reflect in part the
requirements of ASX Principle 7 and are set out in the
Company’s Audit committee charter, published on its website.
in performing this function, the Committee receives periodic
reports from the external auditor, senior management and,
in some instances, external consultants detailing compliance
with statutory requirements and the adequacy of the risk
management programs and systems in place. in addition, the
Committee reviews the adequacy of the group’s insurance
For personal use only Pro-Pac Packaging Limited and Controlled Entities
resources objectives and are designed to enhance corporate
and individual performance as well as meet the appropriate
recruitment and succession planning needs.
To do this the Committee, among other things, is responsible
for reviewing and monitoring executive performance,
remuneration and incentive policies and the manner in which
they should operate, the introduction and operation of
share plans, executive succession planning and development
programs to ensure that they are appropriate to the group’s
needs and the remuneration framework for Directors (as
approved by shareholders). The Committee may consult with
remuneration advisors to Pro-Pac to assist in its role.
The remuneration committee is also responsible to determine
and review compensation arrangements for the directors
and to ensure that the Board continues to operate within
the established guidelines, including when necessary,
selecting candidates for the position of director. in carrying
out its functions the Remuneration Committee considers
remuneration issues annually and otherwise as required
in conjunction with the regular meetings of the Board.
Compensation arrangements are determined subject to the
Company’s constitution and prior shareholder approvals.
Remuneration of non-executive Directors is in accordance
with resolutions of shareholders in the general meeting. The
Company does not have any schemes for retirement benefits,
other than statutory superannuation for non-executive
Directors.
Details of the directors and key executives remuneration are
set out in the Directors’ Report.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
17
program. in line with ASX Principle 7, Pro-Pac adopted
the policy requiring the Chief Executive officer and Chief
Financial officer to confirm in writing that, to the best of
their knowledge, the integrity of the financial statements
is founded on a sound system of risk management and
internal compliance and control which operates efficiently and
effectively in all material respects. The board has received the
relevant declarations on 23 September 2011.
Note 21 details the policies set in place by the Board to
manage the risks arising from the Company’s financial
instruments.
ASX PRINCIPLE 8 - REMUNERATE FAIRLY AND
RESPONSIBLY
Companies should ensure that the level and
composition of remuneration is sufficient and
reasonable and that its relationship to performance
is clear.
• Recommendation 8.1: The board should establish a
remuneration committee.
• Recommendation 8.2: Companies should clearly distinguish
the structure of non-executive directors’ remuneration from
that of executive directors and senior executives.
• Recommendation 8.3: Companies should provide the
information indicated in the guide to reporting on
Principle 8.
it is the Company’s objective to provide maximum stakeholder
benefit from the retention of a high quality Board and
Executive team by remunerating directors and key executives
fairly and appropriately with reference to relevant and
employment market conditions. To assist in achieving this
objective, the Board will link the nature and amount directors’
emoluments to the Company’s financial and operations
performance.
The Board has in place a Remuneration Committee to assist
the Board in relation to human resources issues affecting
the Pro-Pac group. The structure of this Committee and its
responsibilities reflect in part the requirements of ASX Principle
8. The Committee comprises Mr Herlihy (resigned 25 February
2011) and Mr Kaplan. in addition to the members, the Chief
Executive is invited to the meetings at the discretion of the
Committee. Refer schedule of meetings of directors on
page 4.
A charter setting out the responsibilities of the Committee has
been adopted and a summary of this charter is posted on the
Pro-Pac website.
This Committee is responsible for ensuring that the
recruitment and remuneration policies and practices of
Pro-Pac are consistent with its strategic goals and human
For personal use only Consolidated Statement of Comprehensive Income
FoR the yeAR to 30 June 2011
notes
Consolidated
2011
$000’s
Consolidated
2010
$000’s
90,944
72
-
91,016
322
1,959
3,389
16,189
695
2,992
5,594
52,714
-
83,854
7,162
(2,085)
5,077
-
5,077
115,238
93
247
115,578
322
2,315
4,029
21,071
1,287
4,083
6,871
68,186
403
108,567
7,011
(1,964)
5,047
-
5,047
3.74
3.74
4.11
4.11
revenue
Sale of goods
interest income
Reversal of deferred acquisition consideration
total revenue
Expenses
Amortisation of prepaid royalty
Depreciation expense
Distribution costs
Employee benefits expense
Finance costs
occupancy costs
other expenses from ordinary activities
Raw materials and consumables used
Rationalisation and relocation expenses
total Expenses
Profit before income tax from continuing operations
income tax expense
Profit after income tax expense for the year
other comprehensive income
total comprehensive income for the year
Earnings per share (cents per share)
- Basic earnings per share
- Diluted earnings per share
15
4
5
6
6
The above statement should be read in conjunction with the accompanying notes.
18 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
Consolidated Statement of Financial Position
AS At 30 June 2011
assets
Current assets
Cash and cash equivalents
Trade and other receivables
inventories
Prepayments
total current assets
non-current assets
Property, plant and equipment
intangible assets
Deferred tax assets
Prepayments
total non-current assets
totaL aSSEtS
Liabilities
Current liabilities
Trade and other payables
Borrowings
Provisions
Current tax liabilities
total current liabilities
non-current liabilities
Provisions
Borrowings
total non-current liabilities
totaL LiaBiLitiES
nEt aSSEtS
EQuity
issued capital
Reserves
Retained earnings
totaL EQuity
notes
Consolidated
2011
$000’s
Consolidated
2010
$000’s
8
10
11
15
12
13
14
15
17
18
19
5
19
18
20
1,461
19,852
13,057
1,172
35,542
13,099
46,758
962
994
61,813
97,355
14,344
1,670
2,212
918
2,071
15,301
11,074
1,095
29,541
11,930
44,477
805
1,317
58,529
88,070
11,717
1,503
1,837
1,536
19,144
16,593
395
15,657
16,052
35,196
62,159
54,005
44
8,110
62,159
437
13,186
13,623
30,216
57,854
52,057
30
5,767
57,854
The above statement should be read in conjunction with the accompanying notes.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
19
For personal use only
Consolidated Statement of Cash Flows
FoR the yeAR to 30 June 2011
Cash flows from operating activities
Receipts from customers (inclusive of gST)
Payments to suppliers and employees (inclusive of gST)
interest received
Finance costs
income tax paid
notes
Consolidated
2011
$000’s
Consolidated
2010
$000’s
112,462
(104,435)
93
(1,241)
(2,741)
90,509
(85,433)
72
(673)
(984)
net cash flows provided by/(used in) operating activities
9 4,138
3,491
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for controlled entities net of cash
Payments for unincorporated businesses net of cash acquired
(3,676)
91
-
(3,049)
(3,038)
232
(4,945)
(1,373)
net cash flows used in investing activities
(6,634)
(9,124)
Cash flows from financing activities
Payment of hire purchase and finance lease liabilities
Finance leases raised
Proceeds from borrowing
Proceeds from issue of shares
Dividend paid
(1,549)
1,691
2,500
-
(756)
(1,853)
2,079
3,230
2,533
(459)
net cash flows provided by/(used in) financing activities
1,886
5,530
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
(610)
2,071
(103)
2,174
Cash and cash equivalents at end of financial year
8
1,461
2,071
Non-cash financing transactions
Hire purchase and finance lease liabilities raised
issue of shares for dividend re-investment plan
1,691
1,948
2,079
1,370
The above statement should be read in conjunction with the accompanying notes.
20 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
Consolidated Statement of Changes in Equity
FoR the yeAR to 30 June 2011
issued
capital
$000’s
retained
earnings
$000’s
option
reserve
$000’s
total
equity
$000’s
Consolidated
Balance as at 30 June 2009
48,154
2,520
issue of shares for dividend re-investment plan
Dividend paid
Shares issued to Creative Packaging vendors
Recognition of share based payments
Total comprehensive income for the year
Balance as at 30 June 2010
issue of shares for dividend re-investment plan
Dividend paid
Recognition of share based payments
Total comprehensive income for the year
Balance as at 30 June 2011
1,371
-
2,532
-
-
52,057
1,948
-
-
-
54,005
-
(1,830)
-
-
5,077
5,767
-
(2,704)
-
5,047
8,110
The above statement should be read in conjunction with the accompanying notes.
20
-
-
-
10
-
30
-
-
14
-
44
50,694
1,371
(1,830)
2,532
10
5,077
57,854
1,948
(2,704)
14
5,047
62,159
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
21
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 1: CORPORATE INFORMATION
The financial report of Pro-Pac Packaging Limited and its
subsidiaries (“the group”) for the year ended 30 June 2011
was approved for issue in accordance with a resolution of
the Directors on 28 September 2011.
Pro-Pac Packaging Limited is a company limited by shares
incorporated in Australia whose shares are publicly traded
on the Australian Securities Exchange.
The nature of the operations and principal activities of the
group are described in the Directors’ Report.
Comparatives
Comparative figures have been adjusted where necessary
to conform to changes in the presentation for the current
financial year where required by accounting standards or
as a result of changes in accounting policies.
NOTE 2: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(a) new, revised or amending Standards and
interpretations
The consolidated entity has adopted all of the new, revised or
amending Accounting Standards and interpretations issued by
the Australian Accounting Standards Board (‘AASB’) that are
relevant and effective for the current reporting period.
Any significant impact on the accounting policies of the
consolidated entity from the adoption of these Accounting
Standards and interpretations are disclosed in the relevant
accounting policy.
The adoption of these Standards and interpretations did not
have any impact on the financial performance or position of
the consolidated entity. The following Accounting Standards
and interpretations are most relevant to the consolidated entity:
AASB 2 Share-based Payment Transactions –
amendments for Group Cash-settled Share-based
Payment Transactions
The consolidated entity has applied the amendments to
AASB 2 from 1 July 2010. The amendments clarified the
scope of AASB 2 by requiring an entity that receives goods
or services in a share-based payment arrangement to account
for those goods or services no matter which entity settles the
transaction, and no matter whether the transactions is settle in
shares or cash.
AASB 2009-5 Amendments to Australian Accounting
Standards arising from the Annual Improvements Project
The consolidated entity has applied AASB 2009-5 amendments
22 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
from 1 July 2010. The amendments result in some accounting
changes for presentation, recognition or measurement
purposes, while some amendments that relate to terminology
changes had no or minimal effect on accounting. The main
changes were:
AASB 101 ‘Presentation of Financial Statements’ –
classification is not affected by the terms of a liability that
could be settle by the issuance of equity instruments at the
option of the counterparty;
AASB 107 ‘Statements of Cash Flows’ – only expenditure that
results in a recognised asset can be classified as a cash flow
from investing activities.
AASB 117 ‘Leases’ – removal of specific guidance on
classifying land as a lease.
AASB 118 ‘Revenue’ – provides additional guidance to
determine whether an entity is acting as a principal or agent;
and
AASB 136 ‘impairment of Assets’ – clarifies that the largest
unit permitted for allocating goodwill, acquired in a business
combination, is the operating segment as defined in AASB 8
‘operating Segment’ before aggregation for reporting purposes.
AASB 2010-3 Amendments to Australian Accounting
Standards arising from the Annual Improvements Project
The consolidated entity has applied AASB 2010-3 amendments
from 1 July 2010. The amendments result in some accounting
changes for presentation, recognition or measurement purposes,
while some amendments that relate to terminology had no or
minimal effect on accounting. The main changes were:
AASB 127 ‘Consolidated and Separate Financial Statements’
and AASB 3 Business Combinations – clarifies that contingent
consideration from a business combination that occurred
before the effective date of revised AASB 3 is not restated; the
scope of the measurement choices of non-controlling interest
is limited to when the rights acquired include entitlement to a
proportionate share of net assets in the event of liquidation;
requires an entity in a business combination to account for the
replacement of acquiree’s share-based payment transactions,
unreplaced and voluntarily replaced, by splitting between
consideration and post combination expenses.
(b) Basis of preparation
The financial report is a general purpose financial report,
which has been prepared in accordance with Australian
Accounting Standards, Australian Accounting interpretations,
other authoritative pronouncements of the Australian
Accounting Standards Board and the requirements of the
Corporations Act 2001. The financial report has also been
For personal use only Pro-Pac Packaging Limited and Controlled Entities
prepared on an accruals basis and is based on historical costs.
The financial report is presented in Australian dollars.
in accordance with the Corporations Act 2001, these financial
statements present the results of the consolidated entity
only, supplementary information about the parent entity are
disclosed in note 28.
(c) Statement of compliance
The financial report complies with Australian Accounting
Standards. This ensures that the financial report, comprising
the financial statements and notes thereto, complies with
international Financial Reporting Standards.
(d) Basis of consolidation
The consolidated financial statements comprise the financial
statements of Pro-Pac Packaging Limited and its subsidiaries as
at 30 June 2011.
A list of controlled entities is contained in Note 23 to the
Financial Statements.
The financial statements of subsidiaries are prepared for the
reporting year ended 30 June 2011 using accounting policies
consistent with the parent entity.
Adjustments are made to bring into line any dissimilar
accounting policies that may exist. All inter-company balances
and transactions, including unrealised profits or losses arising
from intra-group transactions, have been eliminated in full.
Subsidiaries are consolidated from the date on which control is
transferred to the group and cease to be consolidated from the
date on which control is transferred out of the group. Where
there is loss of control of a subsidiary, the consolidated financial
statements include the results for the part of the reporting
period during which Pro-Pac Packaging Limited had control.
(e) Business combinations
The acquisition method of accounting is used to account
for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-
date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners
of the acquiree and the amount of any non-controlling
interest in the acquiree. For each business combination, the
non-controlling interest in the acquiree is measured at either
fair value or at the proportionate share of the acquiree’s
identifiable net assets. All acquisition costs are expensed as
incurred.
Where the business combination is achieved in stages, the
consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and
the difference between the fair value and the previous carrying
amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer
is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of contingent consideration classified
as an asset or liability is recognised in profit or loss. Contingent
consideration classified as equity is not remeasured and its
subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of
assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration
transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. if the consideration
transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain
purchase to the acquirer, the difference is recognised as a gain
directly in profit or loss by the acquirer on the acquisition-
date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling
interest in the acquiree, if any, the consideration transferred
and the acquirer’s previously held equity interest in the acquirer.
Business combinations are initially accounted for on a
provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional
assets or liabilities during the measurement period, based on
new information obtained about the facts and circumstances
that existed at the acquisition-date. The measurement period
ends on either the earlier of (i) 12 months from the date
of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
goodwill is recognised initially at the excess of cost over the
acquirer’s interest in net fair value of the identifiable assets,
liabilities and contingent liabilities recognised. if the fair value
of the acquirer’s interest is greater than cost, the surplus is
immediately recognised in profit or loss.
(f) Property, plant and equipment
Plant and equipment is stated at cost less accumulated
depreciation. Plant and equipment is depreciated using the
straight line and diminishing value methods over the estimated
useful lives.
The current depreciation rates are over 1 to 25 years.
An item of property, plant and equipment is de-recognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any
gain or loss arising on de-recognition of the asset (calculated
as the difference between the net disposal proceeds and the
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
23
For personal use only Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 2: SUMMARY OF SIGNIFICANT
(i) recoverable amount of assets
ACCOUNTING POLICIES (CONT.)
carrying amount of the item) is included in the statement of
comprehensive income in the year the item is de-recognised.
Impairment
The carrying values of plant and equipment are reviewed for
impairment when events or changes in circumstances indicate
the carrying value may not be recoverable. For an asset that
does not generate largely independent cash inflows, the
recoverable amount is determined for the cash-generating unit
to which the asset belongs.
if any such indication exists and where the carrying values
exceed the estimated recoverable amount, the assets or cash-
generating units are written down to their recoverable amount.
The recoverable amount of plant and equipment is the greater
of fair value less costs to sell and value in use. 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.
(g) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
(h) Goodwill
goodwill on acquisition is initially measured at cost being
the excess of the cost of the business combination over the
acquirer’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses. goodwill is not amortised.
goodwill is 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 cash generating unit to which the goodwill
relates. Where the recoverable amount of the cash generating
unit is less than the carrying amount, an impairment loss is
recognised.
Where goodwill forms part of a cash-generating unit and part
of the 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 circumstance is measured on the basis of the relative
values of the operation disposed of and the portion of the
cash generating unit retained.
24 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
At each reporting date, the group assesses whether there
is any indication that an asset may be impaired. Where an
indicator of impairment exists, the group makes a formal
estimate of recoverable amount. Where the carrying amount
of an asset exceeds its recoverable amount the asset is
considered impaired and is written down to its recoverable
amount.
Recoverable amount is the greater of fair value less costs to
sell and value in use. it is determined for an individual asset,
unless the asset’s value in use cannot be estimated to be close
to its fair value less costs to sell and it does not generate cash
inflows that are largely independent of those from other assets
or groups of assets, in which case the recoverable amount is
determined for the cash-generating unit to which the asset
belongs.
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.
(j) inventories
inventories are valued at the lower of cost and net realisable
value.
Costs incurred in bringing each product to its present location
and condition are accounted for as follows:
• Raw materials – purchase cost on a first-in, first-out basis.
• Finished goods and work-in-progress – cost of direct
materials and direct labour and a proportion of
manufacturing overheads based on normal operating
capacity.
(k) trade and other receivables
Trade receivables, which generally have 30-90 day terms,
are recognised and carried at original invoice amount less an
allowance for any uncollectible amounts.
An estimate for doubtful debts is made when collection of the
full amount is no longer probable. Bad debts are written off
when identified.
(l) Cash and cash equivalents
Cash and short-term deposits in the statement of financial
position comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less.
For the purposes of the Statement of cash flow, cash and cash
equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
For personal use only Pro-Pac Packaging Limited and Controlled Entities
(m) interest bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being
the fair value of the consideration received net of issue costs
associated with the borrowing.
After initial recognition, interest bearing loans and borrowings
are subsequently measured at amortised cost using the
effective interest method. Amortised cost is calculated by
taking into account any issue costs, and any discount or
premium on settlement.
(n) Provisions
Provisions are recognised when the group has a present
obligation (legal or constructive) as a result of a past event, for
which it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
if the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks
specific to the liability.
Where discounting is used, the increase in the provision due to
the passage of time is recognised as a finance cost.
(o) Equity-settled compensation
The group operates equity-settled share-based payment
employee share and option schemes. The fair value of the
equity to which employees become entitled is measured at
grant date and recognised as an expense over the vesting
period, with a corresponding increase in an equity account.
The fair value of shares is ascertained as the market bid price.
The fair value of options is ascertained using a Black-Scholes
model which incorporates all market vesting conditions. The
number of shares and options expected to vest is reviewed
and adjusted at each reporting date such that the amount
recognised for services received as consideration for the equity
instruments granted shall be based on the number of equity
instruments that eventually vest.
(p) Leases
A distinction is made between finance leases which effectively
transfer from the lessor to the lessee substantially all the risks
and benefits incidental to ownership of the leased property,
without transferring the legal ownership, and operating leases
under which the lessor effectively retains substantially all the
risks and benefits.
Where assets are acquired by means of finance leases, the
present value of minimum lease payments is established as an
asset at the beginning of the lease term and amortised
on a straight line basis over the expected economic life.
A corresponding liability is also established and each lease
payment is allocated between such liability and interest
expense. operating lease payments are charged to expense
on a basis which is representative of the pattern of benefits
derived from the leased property.
(q) revenue
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the group and the revenue can
be reliably measured. The following specific recognition criteria
must also be met before revenue is recognised:
Sale of goods
Revenue is recognised when the significant risks and rewards
of ownership of the goods have passed to the buyer and
can be measured reliably. Risks and rewards are considered
passed to the buyer at the time of delivery of the goods to
the customer.
Interest
Revenue is recognised as the interest accrues (using the
effective interest method, which is the rate that exactly
discounts estimated future cash receipts through the expected
life of the financial instrument) to the net carrying amount of
the financial asset.
Dividends
Revenue is recognised when the shareholders’ right to receive
the payment is established.
(r) income tax
The income tax expense (revenue) for the year comprises
current income tax (income) and deferred tax expense
(income).
Current income tax expense charged to the profit or loss is
the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at
reporting date. Current tax liabilities (assets) are therefore
measured at the amounts expected to be paid to (recovered
from) the relevant taxation authority.
Deferred income tax expense reflects movements in the
deferred tax asset and deferred tax liability balances during the
year as well as unused tax losses.
Current and deferred income tax expense (income) is charged
or credited directly to equity instead of the profit or loss when
the tax relates to items that are credited or charged directly to
equity.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
25
For personal use only Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 2: SUMMARY OF SIGNIFICANT
(s) other taxes
ACCOUNTING POLICIES (CONT.)
Deferred tax assets and liabilities are ascertained based on
temporary differences arising between the tax base of assets
and liabilities and their carrying amounts in the financial
statements. Deferred tax assets also result where amounts
have been fully expensed but future tax deductions are
available. No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or
taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates
that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates enacted or
substantially enacted at reporting date. Their measurement also
reflects the manner in which management expects to recover
or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and
unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against
which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in
subsidiaries, branches, associates and joint ventures, deferred
tax assets and liabilities are not recognised where the timing of
the reversal of the temporary difference can be controlled and
it is not probable that the reversal will occur in the foreseeable
future.
Current tax assets and liabilities are offset where a legally
enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the
respective asset and liability will occur. Deferred tax assets and
liabilities are offset where a legally enforceable right of set-off
exists, the deferred tax assets and liabilities relate to income
taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where it is intended
that net settlement or simultaneous realisation and settlement
of the respective asset and liability will occur in future periods
in which significant amounts of deferred tax assets are
expected to be recovered or settled.
Pro-Pac Packaging Ltd (the “head entity”) and its wholly
owned Australian controlled entities have formed a tax
consolidated group under the tax consolidated regime. Each
entity in the group recognises its own current and deferred
tax liabilities, except for any deferred tax liabilities resulting
from unused tax losses and tax credits which are immediately
assumed by the parent entity. The current tax liability of each
group entity is then subsequently assumed by the parent entity
26 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
Revenues, expenses and assets are recognised net of the
amount of gST except:
• where the gST incurred on a purchase of goods and
services is not recoverable from the taxation authority, in
which case the gST is recognised as part of the cost of
acquisition of the asset or as part of the expense item as
applicable; and
• receivables and payables are stated with the amount of
gST included.
The net amount of gST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the statement of financial position. Cash flows are included
in the Statement of cash flow 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.
Commitments and contingencies are disclosed net of the
amount of gST recoverable from, or payable to, the taxation
authority.
(t) 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. Liabilities arising in respect of wages
and salaries, annual leave and any other employee benefits
expected to be settled within 12 months of the reporting
date are measured at the amounts expected to be paid when
the liability is settled. All other employee benefit liabilities
are measured at the present value of the estimated future
cash outflow to be made in respect of services provided by
employees up to the reporting date.
(u) Financial instruments
Recognition
Financial instruments are initially measured at cost on trade
date, which includes transactions costs, when the related
contractual rights or obligations exist. Subsequent to initial
recognition these instruments are measured as set out below.
Loans and receivables
Loans and receivables are non-derivate financial assets with
fixed or determinable payments that are not quoted in an
active market and are stated at amortised cost using the
effective interest rate method.
For personal use only Pro-Pac Packaging Limited and Controlled Entities
Financial liabilities
Non-derivate financial liabilities are recognised at amortised
cost, comprising original debt less principal payments and
amortisation.
(v) Foreign currency transactions and balances
Foreign currency transactions are translated into functional
currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated
at the year-end exchange rate. Exchange differences arising
on the translation of monetary items are recognised in the
statement of comprehensive income.
(w) Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated
into the financial report based on historical knowledge
and best available current information. Estimates assume a
reasonable expectation of future events and are based on
current trends and economic data, obtained both externally
and within the group.
Key estimates
impairment
The group assesses impairment at each reporting date by
evaluating conditions and events specific to the group that
may be indicative of impairment triggers. Recoverable amounts
of relevant assets are reassessed using value in-use calculations
which incorporate various key assumptions.
No impairment is considered necessary in respect of goodwill
based on key estimates used in assessing recoverable amounts.
Key judgements
Provision for impairment of receivables
Current trade and term receivables are non-interest bearing
loans and generally on 30-60 days terms. Non-current trade
and term receivables are assessed for recoverability based
on the underlying terms of the contract. A provision for
impairment is recognised when there is objective evidence
that an individual trade or term receivable is impaired. These
amounts have been included in the other expenses from
ordinary activities item.
NOTE 3: OPERATING SEGMENTS
The group has identified its operating segments based on
the internal reports that are reviewed and used by the Board
of Directors (chief operating decision makers) in assessing
performance and determining the allocation of resources.
The group is managed primarily on the basis of product
category and service offerings since the diversification of
the group’s operations inherently have notably different
risk profiles and performance assessment criteria. operating
segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating
operating segments where the segments are considered to
have similar economic characteristics and are also similar with
respect to the following:
• The products sold and/or services provided by the segment;
• The manufacturing process.
types of products and services by segment
Industrial packaging
The industrial packaging division manufactures, sources
and distributes industrial packaging materials and related
products and services. All products produced or distributed
are aggregated as one reportable segment as the products
are similar in nature and are distributed to similar types of
customers. The industrial packaging segment also installs,
supports and maintains packaging machines.
Rigid packaging
The Rigid packaging division manufactures, sources and
distributes containers and closures and related products and
services. All products produced or distributed are aggregated
as one reportable segment as the products are similar in
nature and are manufactured and distributed to similar types
of customers.
Basis of accounting for purposes of reporting by
operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of
Directors as the chief decision maker with respect to operating
segments are determined in accordance with accounting
policies that are consistent to those adopted in the annual
financial statements of the group.
Inter-segment transactions
An internally determined transfer price is set for all inter-entity
sales. This price is re-set quarterly and is based on what would
be realised in the event the sale was made to an external
party at arm’s length. All such transactions are eliminated on
consolidation for the group’s financial statements.
inter-segment loans payable and receivable are initially
recognised at the consideration received net of transaction
costs. if inter-segment loans receivable and payable are not on
commercial terms, these are not adjusted to fair value based
on market interest rates. This policy represents a departure
from that applied to the statutory financial statements.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
27
For personal use only Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 3: SEGMENT INFORMATION (CONT.)
Segment assets
Where an asset is used across multiple segments, the asset
is allocated to the segment that receives the majority of
economic value from the asset. in the majority of instances
segment assets are clearly identifiable on the basis of their
nature and physical location.
Unless indicated otherwise in the assets role, investments in
financial assets, deferred tax assets and intangible assets have
not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus
between the incurrence of the liability and the operations
of the segment. Borrowings and tax liabilities are generally
considered to relate to the group as a whole and are not
allocated. Segment liabilities include trade and other payables
and certain borrowings.
Unallocated items
The following items of revenue, expenses, asset and liabilities
are not allocated to operating segments as they are not
considered part of the core operations of any segment:
• impairment of assets and other non-recurring revenue or
expenses;
• income tax expense;
• deferred tax assets and liabilities;
• current tax liabilities;
• other financial liabilities; and
• intangible assets.
28 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only Pro-Pac Packaging Limited and Controlled Entities
NOTE 3: SEGMENT INFORMATION (CONT.)
rigid
industrial
packaging packaging
$ 000’s
$ 000’s
total
$ 000’s
rigid
packaging
$ 000’s
industrial
packaging
$ 000’s
2011
2011
2011
2010
2010
total
$ 000’s
2010
(i) Segment performance
Twelve months ended 30 June
revenue
External sales
inter-segment sales
48,235 67,003
4,895
6,618
115,238
11,513
46,917
6,910
44,027
2,458
90,944
9,368
total segment revenue
54,853
71,898
126,751
53,827
46,485
100,312
Reconciliation of segment revenue
to group revenue
interest income
other income
inter-segment elimination
total group revenue
93
247
(11,513)
115,578
72
-
(9,368)
91,016
Segment net profit before tax
5,020 5,244
10,264
5,658
3,870
9,528
Reconciliation of segment result to
group net profit before tax
Amounts not included in segment
result but reviewed by the Board:
Unallocated items:
• Corporate and finance charges
• Head office costs
• inter-segment elimination
net profit before tax from continuing operations
(1,417)
(1,775)
(61)
7,011
(994)
(1,286)
(86)
7,162
(ii) Segment assets
As at 30 June
Segment assets
20,680 27,749
48,429
20,732
20,449
41,181
Reconciliation of segment assets to
group assets
inter-segment eliminations
Unallocated assets
• Deferred tax assets
• intangibles
• other
total group assets from continuing operations
(1,253)
50,179
962
46,758
2,459
97,355
(1,786)
48,675
805
44,477
3,393
88,070
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
29
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 3: SEGMENT INFORMATION (CONT.)
rigid
industrial
packaging packaging
$ 000’s
$ 000’s
total
$ 000’s
rigid
packaging
$ 000’s
industrial
packaging
$ 000’s
2011
2011
2011
2010
2010
total
$ 000’s
2010
(iii) Segment liabilities
As at 30 June
Segment liabilities
10,740 11,376
22,116
10,663
9,012
19,675
Reconciliation of segment liabilities
to group liabilities
inter-segment eliminations
Unallocated liabilities
• Deferred tax liabilities
• other liabilities
total group liabilities from continuing operations
(1,038)
14,118
-
14,118
35,196
(1,630)
12,171
-
12,171
30,216
(iv) the Group operates solely within australia. as such there is only one geographical segment.
NOTE 4: EXPENSES
Bad and doubtful debt – trade
Rental expense on operating leases:
- minimum lease payments
Write down of inventories to net realisable value
Consolidated
2011
$000’s
Consolidated
2010
$000’s
143
3,842
98
99
2,769
313
30 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
Consolidated
2011
$000’s
Consolidated
2010
$000’s
2,205
(87)
(154)
1,964
2,255
-
(170)
2,085
NOTE 5: INCOME TAX
Major components of income tax for the year ended 30 June are:
Statement of comprehensive income
Current income tax
Current income tax charge/(refund)
Adjustments in respect of previous years
Deferred income tax
Relating to temporary differences
income tax expense/(refund) in statement of comprehensive income
A reconciliation of income tax expense applicable to accounting profit before
income tax at the statutory income tax rate to income tax expense at the
group’s effective income tax rate for the year ended 30 June 2011 is as follows:
Accounting profit before tax
At the statutory income tax rate of 30%
Special tax allowances net of expenditure not allowable for tax purposes
Adjustments in respect of previous years
At effective income tax rate of 28.0% (2010: 29.1%)
income tax expense reported in statement of comprehensive income
7,011
7,162
2,103
(52)
(87)
2,149
(64)
-
1,964
1,964
2,085
2,085
Tax consolidation
The Financial report has been prepared on the basis that the group has adopted the provisions of the tax consolidation
regime for the years ended 30 June 2011 and 30 June 2010.
NOTE 6: EARNINGS PER SHARE
Basic and diluted earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the period.
The following reflects the income and share data used in the total operations basic and diluted earnings per share computations:
Net profit attributable to equity holders ($000’s)
Weighted average number of ordinary shares for basic earnings per share
Basic earnings per share (cents per share) *
Diluted earnings per share (cents per share) *
Consolidated
2011
5,047
135,092,131
3.74
3.74
Consolidated
2010
5,077
123,505,913
4.11
4.11
* The difference between basic and diluted shares on issue represents the PPg Executive Long Term incentive Plan shares on issue
which are treated as an option grant. As the average exercise price of the options was higher than the average market price per
share during both the current and prior years, the options would not have been exercised and therefore no dilution has occurred.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
31
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 7: DIVIDENDS PAID AND PROPOSED
on 19 August 2011, the Company declared a fully franked final dividend of 1.0 cent per share. The record date for determining
entitlements to the dividend is 21 october 2011 and the dividend will be paid on 2 November 2011. The Company’s Dividend
Reinvestment Plan was applied to the final dividend. When combined with PPg’s interim dividend of 1.0 cent, paid on 12 April
2011, this brings total fully franked dividends for the 2010/11 financial year to 2.0 cents per share.
declared and paid during the year:
Final dividend for 2010 – 1 cent per ordinary share
(2009 – 0.5 cents per ordinary share)
interim dividend for 2011 – 1 cents per ordinary share
(2010 – 1 cent per ordinary share)
Proposed for approval at the Annual general Meeting
(not recognised as a liability as at 30 June):
Final dividend for 2011 – 1 cent per ordinary share
(2010 – 1 cent per ordinary share)
2011
$000’s
1,338
1,366
2,704
2010
$000’s
601
1,229
1,830
1,397
1,338
Franking credit balance
As indicated in note 5, the financial report has been prepared on the basis that the
group has adopted the provisions of the tax consolidation regime for the years ended
30 June 2011 and 30 June 2010. As such franking credits arising from the other group
companies totalling $10,599,156 (2010: $9,016,823) will be available to the parent entity.
Franking credits available at the reporting date based on a tax rate of 30%
Franking credits that will arise from the payment of the amount of the provision
for income tax at the reporting date based on a tax rate of 30%
Franking credits available for subsequent financial years based on a tax rate of 30%
Franking debits that will arise from the payment of dividends declared subsequent to
the reporting date based on a tax rate of 30%
Net franking credits available based on a tax rate of 30%
9,016
2,742
11,758
(1,159)
10,599
8,585
1,215
9,800
(784)
9,016
32 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
Consolidated
2011
$000’s
Consolidated
2010
$000’s
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates
The fair value of cash and cash equivalents
reconciliation of cash
For the purposes of the Statement of cash flow, cash and cash equivalents
comprise the following at 30 June:
1,461
1,461
2,071
2,071
Cash at bank and in hand
1,461
2,071
NOTE 9: CASH FLOW INFORMATION
a) reconciliation from the net profit after tax to the net cash flows from operations
Net profit after tax
add/(Less) non-cash items:
Depreciation and amortisation of plant and equipment
Amortisation of prepaid royalty
(Profit)/Loss on disposal of assets
Movement in income tax provision
Movement in deferred tax assets and liabilities
Movement in provision for bad debts
other non-cash movements
Changes in assets and liabilities:
Receivables
inventories
Payables
Provisions
Prepayments
net cash flows from operating activities
5,047
2,315
322
156
(618)
(157)
28
6
(4,457)
(1,299)
2,614
257
(76)
4,138
b) non-cash financing and investing activities
1. During the year, the company issued shares to the value of $1,948,514 (2010: $1,370,250)
in accordance with the dividend reinvestment plan.
2. During the year, the consolidated group acquired plant with an aggregate value of $1,690,580
(2010:$2,079,290) by means of finance leases. These acquisitions are not reflected in the statement of cash flow.
c) Credit standby arrangements with banks
Credit facility
Amount utilised
Loan facilities
Amount utilised
on 30 August 2011 the loan facilities were increased by $5 million to $25.1 million.
1,000
-
20,100
13,077
5,077
1,959
322
31
1,272
(170)
(60)
10
(1,152)
(2,927)
(861)
231
(241)
3,491
1,300
-
16,000
10,532
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
33
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 10: TRADE AND OTHER RECEIVABLES
Current:
Trade receivables
Provision for impairment of receivables
opening balance
Additional provision recognised
Receivables written off during the year as uncollectable
other debtors
total current receivables
Consolidated
2011
$000’s
Consolidated
2010
$000’s
19,463
(219)
(191)
(171)
143
608
19,852
15,044
(191)
(199)
(91)
99
448
15,301
Trade receivables are non-interest bearing and are generally on terms between 30 and 60 days.
Credit risk – trade and other receivables
The group has no significant concentration of credit risk with respect to any single counter party or group of counter parties.
The class of assets described as Trade and other Receivables is considered to be the main source of credit risk related to
the group.
The following table details the group’s trade and other receivables exposed to credit risk (prior to collateral and other credit
enhancements) with ageing analysis and impairment provided for thereon. Amounts are considered as ‘past due’ when the debt
has not been settled, with the terms and conditions as agreed between the group and the customer or counter party to the
transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided
for where there are specific circumstances indicating that the debt may not be fully repaid to the group.
The balances of receivables that remain within initial trading terms (as detailed in the table) are considered to be of high
credit quality.
Gross
amount
Past due &
impaired
$000’s
$000’s
Past due but
not impaired
> 90
$000’s
Past due but
not impaired
61 - 90
$000’s
Within initial
trade terms
$000’s
Consolidated
2011
Trade and term receivables
other receivables
19,463
608
219
-
total
20,071
219
2010
Trade and term receivables
other receivables
15,044
448
191
-
total
15,492
191
90
-
90
106
-
106
1,517
-
1,517
892
-
892
17,637
608
18,245
13,855
448
14,303
Neither the group nor parent entity holds any financial assets with terms that have been renegotiated, but which would
otherwise be past due or impaired.
34 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
Consolidated
2011
$000’s
Consolidated
2010
$000’s
797
12,260
13,057
801
10,273
11,074
19,519
(6,456)
13,063
16,627
(4,823)
11,804
106
(70)
36
217
(91)
126
NOTE 11: INVENTORIES
Raw materials (lower of cost and net realisable value)
Finished goods (lower of cost and net realisable value)
Total inventories at lower of cost and net realisable value
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
at 30 June
Plant and equipment
At cost
Accumulated depreciation
Leased plant and equipment
Capitalised leased plant and equipment
Accumulated depreciation
Total property, plant and equipment
13,099
11,930
(a) Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of
the current financial year.
Balance at the beginning of the year
Additions arising from acquisitions
Additions
Disposals
Reclassifications
Depreciation charge for the year
Carrying amount at the end of the year
Consolidated
2011
$000’s
owned
11,804
105
3,630
(251)
50
(2,275)
13,063
Consolidated
2011
$000’s
Leased
126
-
-
-
(50)
(40)
36
Consolidated
2011
$000’s
total
11,930
105
3,630
(251)
-
(2,315)
13,099
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
35
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 12: PROPERTY, PLANT AND EQUIPMENT (CONT.)
Balance at the beginning of the year
Additions arising from acquisitions
Additions
Disposals
Reclassifications
Depreciation charge for the year
Carrying amount at the end of the year
NOTE 13: INTANGIBLE ASSETS
Goodwill
Carrying amount at beginning of the year
Acquisition through business combinations
Closing value
at 30 June
gross
Accumulated impairment losses
Net carrying value
Consolidated
2010
$000’s
Consolidated
2010
$000’s
Consolidated
2010
$000’s
owned
Leased
9,611
1,358
2,888
(263)
90
(1,880)
11,804
235
-
60
-
(90)
(79)
126
total
9,846
1,358
2,948
(263)
-
(1,959)
11,930
Consolidated
2011
$000’s
Consolidated
2010
$000’s
44,477
2,281
38,195
6,282
46,758
44,477
46,758
-
46,758
44,477
-
44,477
Impairment Test for Goodwill
The group and all of its subsidiaries are divided into two major cash generating units as these are the smallest groups of
identifiable assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
goodwill acquired through business combinations has been allocated to the cash-generating-units for impairment testing.
The recoverable amount of the cash generating unit has been determined based on a value-in-use calculation. Based on the
value-in-use calculations undertaken by management, goodwill has not been impaired (see note 26).
36 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
Consolidated
2011
$000’s
Consolidated
2010
$000’s
893
69
962
805
157
962
729
-
164
893
76
-
(7)
69
729
76
805
635
170
805
552
-
177
729
83
-
(7)
76
850
322
773
322
1,172
1,095
994
994
1,317
1,317
NOTE 14: DEFERRED TAX ASSETS
deferred tax assets
Deferred tax assets comprise:
Provisions and other timing differences
Transactions costs on equity issue
reconciliation of gross movements
The overall movement in the deferred tax account is as follows:
opening balance
Charge to statement of comprehensive income
Closing balance
deferred tax assets
The movement in deferred tax assets for each temporary difference during the year is as follows:
Provisions and other timing differences at 01 July
Reclassification
Credit/(charge) to statement of comprehensive income
at 30 June
transaction cost to equity issue at 01 July
Reclassification
Charge to statement of comprehensive income
at 30 June
NOTE 15: PREPAYMENTS
(a) Current prepayments
other prepayments
Prepaid royalty
total current prepayments
(b) non-current prepayments
Prepaid royalty
total non-current prepayments
Prepayment of royalty
The prepayment of the royalty is amortised over the remaining period of the exclusive licence to manufacture and distribute
biodegradable flowable void fill products. The prepaid royalty amortised for the year ended 30 June 2011 amounted to
$322,082 (2010: $322,082).
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
37
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 16: EMPLOYEE BENEFITS
Executive Long Term Incentive Plan
in March 2005 the Company established an ESPP to encourage employees to share in the ownership of the Company and
promote the long-term success of the Company as a goal shared by the employees. The ESPP has been approved by members of
the Company for the purposes of sections 260C(4)(a), 259B(2)(a), 257B(1) and paragraph (b) of the definition of employee share
scheme buy-back in section 9 of the Corporations Act.
The following are the key terms and conditions of the ESPP:
• No Shares under the ESPP will be allotted unless the requirements of the Corporations Act 2001 and the ASX Listing Rules have
been complied with.
• Performance hurdles apply to the ESPP. The key performance hurdle is that the total shareholder return to shareholders of the
Company must exceed the rate of growth over the same period for the S&P/ASX Small ordinaries Accumulation index (or any
equivalent or replacement of that index).
• Shares are allocated to employees at either the value of shares as detailed in the latest disclosure document issued by the
Company or the 5-day weighted average price immediately prior to the offer being made to employee.
• The Company may provide loans to participants to acquire shares under the ESPP. As security for the loans, Participants will
pledge the shares acquired under the ESPP to the Company at the time the loans are provided and will grant a charge over any
benefits attributable to the Shares, including bonus shares, rights, and dividends. Any dividends paid on the shares by Pro-Pac
Packaging Limited are treated as interest on the loan.
• The term of the loans and the vesting period for the shares from the date of issue of the ESPP is 3 years.
• The Shares will be registered in the names of the Participants from allotment, but will remain subject to restrictions on dealing
while they are pledged as security for a loan or subject to performance hurdles specified.
• if the employee leaves the employment of the group, the loan balance must be repaid in full or the shares would be surrendered
in full settlement of the outstanding loan balance.
• During the year 1,335,000 shares were issued to staff and executives while 675,000 shares were cancelled under the ESPP. At
the end of the year 1,335,000 shares were in issue under the ESPP.
• No other features of the benefit provided (including vesting conditions) were incorporated into the measurement of fair value.
• The fair value of the employee benefit provided under the ESPP plan is estimated at the date of grant using the binomial model,
and the following assumptions: expected volatility, risk-free interest rate, expected life of option, share price, dividend yield and
probability of achievement.
• Under Australian Accounting Standards, shares issued to executives under the Long Term Executive incentive Plan are now
considered to be options granted. As such, the contributed equity (share capital) as well as the related receivable are not
recognised on the statement of financial position and do not form part of the asset base in the calculation of the basic net assets
and basic net tangible assets per security. Comparative figures for the prior financial year have been adjusted accordingly.
38 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only Pro-Pac Packaging Limited and Controlled Entities
Consolidated
2011
$000’s
Consolidated
2010
$000’s
11,567
579
405
1,793
14,344
9,326
423
218
1,750
11,717
NOTE 17: TRADE AND OTHER PAYABLES
Unsecured:
Trade payables
gST payable
other tax payable
Sundry creditors and accruals
All payables are non-interest bearing and are normally settled on 60 day terms. The net of gST payable and gST receivable is
remitted to the appropriate tax body on a quarterly basis.
NOTE 18: INTEREST BEARING LOANS AND BORROWINGS
Current
Finance lease and hire purchase (see note 25)
Bank loan (secured)
non-current
Finance lease and hire purchase (see note 25)
Bank loan (secured)
1,670
-
1,670
2,580
13,077
15,657
1,503
-
1,503
2,654
10,532
13,186
a) The bank loan is secured as follows:
i) first ranking registered equitable mortgage over Pro-Pac Packaging Limited and all wholly owned subsidiaries; and
ii) cross interlocking guarantees from Pro-Pac Packaging Limited and all wholly owned subsidiaries.
b) The bank loan is subject to the following covenants:
i) it will ensure that for each 2 consecutive reporting periods ending 30 June and 31 December, the ratio of EBiTDA to total
debt service will not fall below 2.00:1 and further ensure that the ratio of EBiTDA to total debt service will not fall below
1.5:1 for any 6 month reporting period;
ii) it will ensure that for each preceding 12 calendar month period the ratio of total senior debt to EBiTDA does not exceed
3.00:1; and
iii) it will ensure that for each 6 month period ending 30 June and 31 December, the ratio of total tangible assets to total
senior debt will not fall below 1.45:1.
c) The bank loan facility is subject to review on 30 November 2013.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
39
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 19: PROVISIONS
Current
Employee entitlements
opening balance
Arising on acquisition of business combinations
Additional provisions
Amount used
Closing balance
non-current
Employee entitlements
opening balance
Arising on acquisition of business combinations
Additional provisions
Amount used
Closing balance
NOTE 20: ISSUED CAPITAL
ordinary shares
issued and fully paid
Movement in ordinary shares on issue
Balance at 1 July 2009
Shares issued to Creative Packaging vendors
issue of shares for dividend re-investment plan
Balance at 30 June 2010
issue of shares for Executive Long Term incentive Plan
Cancellation of shares for Executive Long Term incentive Plan
issue of shares for dividend re-investment plan
Balance at 30 June 2011
Consolidated
2011
$000’s
Consolidated
2010
$000’s
1,837
39
1,651
(1,315)
2,212
437
37
(4)
(75)
395
1,547
71
1,184
(965)
1,837
404
21
116
(104)
437
54,005
52,057
number
120,160,300
7,235,712
5,747,000
133,143,012
1,335,000
(675,000)
5,932,564
139,735,576
$000’s
48,154
2,533
1,370
52,057
-
-
1,948
54,005
There was no par value for the shares issued. The company has an Executive Long Term incentive Plan under which the
company’s shares have been granted (refer note 16).
Share buy-back
There is no current on-market share buy-back.
40 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
NOTE 20: ISSUED CAPITAL (CONT.)
Capital risk management
The consolidated entity’s and parent entity’s objectives when managing capital are to safeguard their ability to continue as a going
concern, so that they can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
in order to maintain or adjust the capital structure, the consolidated entity and parent entity may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity and parent entity would look to raise capital when an opportunity to invest in a business or company was
seen as value adding relative to the current parent entity’s share price at the time of the investment. The consolidated entity and
parent entity are not actively pursuing additional investments in the short term as it continues to integrate and grow its existing
businesses in order to maximise synergies.
The consolidated entity and parent entity are subject to certain financing arrangements covenants and meeting these are given
priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the
financial year.
The capital risk management policy remains unchanged from the 30 June 2011 Annual Report.
NOTE 21: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The group’s principal financial instruments comprise bank loans, finance leases and hire purchase contracts, cash and short-term
deposits. The main purpose of these financial instruments is to finance the group’s operations.
The group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations.
it is, and has been throughout the period under review, the group’s policy that no trading in financial instruments shall be
undertaken.
The main risks arising from the group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk.
The board reviews and agrees policies for managing each of these risks and they are summarised below.
Interest rate risk
The group’s exposure to interest rate risk is limited to interest receivable and payable on bank accounts and drawn down bank
loans. The interest rates contained in the finance lease and hire purchase agreements are fixed for the term of those arrangements.
All cash balances are at call and the average interest rate on the deposits is 4.7%.
Foreign currency risk
The group has transactional currency exposures. Such exposure arises from purchases by the operating unit in currencies other
than the unit’s measurement currency which accounted for 13.6% of purchases of materials and capital items. Forward contracts
are used to manage foreign currency risk.
Commodity price risk
The group’s exposure to commodity price risk is relatively low although certain petrochemical based products are affected by the
oil price.
Credit risk
The group has policies in place to ensure that customers who wish to trade on credit terms are subject to credit verification
procedures. in addition, receivable balances are monitored on an ongoing basis with the result that the group’s exposure to bad
debts is not significant.
With respect to credit risk arising from the other financial assets of the group, which comprise cash and cash equivalents, the
group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount
of these instruments. There are no significant concentrations of credit risk within the group.
Liquidity risk
The group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and
finance leases and hire purchase contracts.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
41
For personal use only Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 22: FINANCIAL INSTRUMENTS
Fair values
There are no financial instruments that are carried in the financial statements at other than fair values.
Interest rate risk
The following table sets out the interest rates applicable to financial instruments that are exposed to interest rate risk:
Floating
interest rate
Fixed
interest rate
non-interest
bearing
total carrying
amount per the
statement of
financial position
Weighted
average
interest rate
2011
$000’s
2011
$000’s
2011
$000’s
2011
$000’s
Consolidated
(i) Financial assets
Cash assets
Receivables
1,452
-
-
-
9
19,852
1,461
19,852
Total financial assets
1,452
-
19,861
21,313
(ii) Financial liabilities
Finance leases (current)
Finance leases (non-current)
Bank loans (current)
Bank loans (non-current)
Payables (current)
Total financial liabilities
-
-
-
13,077
-
13,077
1,670
2,580
-
-
-
4,250
Net financial assets/(liabilities)
(11,625)
(4,250)
There is no interest rate applicable on receivables or payables.
-
-
-
-
14,344
14,344
5,517
1,670
2,580
-
13,077
14,344
31,671
(10,358)
2011
%
4.7
10.0
10.0
7.1
7.1
2010
$000’s
2010
$000’s
2010
$000’s
2010
$000’s
2010
%
Consolidated
(i) Financial assets
Cash assets
Receivables
2,062
-
-
-
9
15,301
2,071
15,301
Total financial assets
2,062
-
15,310
17,372
(ii) Financial liabilities
Finance leases (current)
Finance leases (non-current)
Bank loans (current)
Bank loans (non-current)
Payables (current)
Total financial liabilities
Net financial assets/(liabilities)
42 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
-
-
-
10,532
-
10,532
(8,470)
1,503
2,654
-
-
-
4,157
(4,157)
-
-
-
-
11,717
11,717
3,593
1,503
2,654
-
10,532
11,717
26,406
(9,034)
4.5
9.7
9.7
6.9
6.9
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
NOTE 22: FINANCIAL INSTRUMENTS (CONT.)
The following table sets out the carrying amount, by maturity, of the financial instruments that are exposed to interest rate risk:
year ended 30 June 2011
Consolidated
Cash assets
Finance leases
Bank loans
year ended 30 June 2010
Consolidated
Cash assets
Finance leases
Bank loans
< 1
year
$000’s
1,452
1,670
-
< 1
year
$000’s
2,062
1,503
-
>1 - <2
years
$000’s
-
1,207
13,077
>1 - <2
years
$000’s
-
1,218
10,532
>2 - <3
years
$000’s
>3 - <4
years
$000’s
>4 - <5
years
$000’s
> 5
years
$000’s
-
807
-
-
481
-
-
85
-
-
-
-
>2 - <3
years
$000’s
>3 - <4
years
$000’s
>4 - <5
years
$000’s
> 5
years
$000’s
-
752
-
-
442
-
-
242
-
-
-
-
total
$000’s
1,452
4,250
13,077
total
$000’s
2,062
4,157
10,532
The other financial instruments of the group and Parent that are not included in the above tables are non-interest bearing and are
therefore not subject to interest rate risk.
Sensitivity analysis
The following table illustrates sensitivities to the group’s exposures to changes in interest rates and exchange rates. The table
indicates the impact on how profit and equity values reported at reporting date would have been affected by changes in the
relevant risk variable that managers considers to be reasonably possible. These sensitivities assume that the movement in a
particular variable is independent of other variables.
2011
+/- 1% in interest rates
+/- 10% in AUD / USD
2010
+/- 1% in interest rates
+/- 10% in AUD / USD
Consolidated
Profit
$000’s
Consolidated
Equity
$000’s
+/- 130
+/- 994
+/- 88
+/- 742
+/- 130
+/- 994
+/- 88
+/- 742
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
43
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 23: CONTROLLED ENTITIES
The consolidated entity includes the following controlled entities. The financial years of all controlled entities are the same as that
of the parent entity. All companies are incorporated in Australia.
Country of
incorporation
Class of
Shares
Equity
Holding
direct Controlled Entities:
Pro-Pac group Pty Ltd
Plastic Bottles Pty Ltd
Controlled Entities owned 100% by Pro-Pac Group Pty Ltd
Pro-Pac Packaging (Aust) Pty Ltd
Pro-Pac (gLP) Pty Ltd
Controlled Entities owned 100% by Plastic Bottles Pty Ltd
Specialty Products and Dispensers Pty Ltd
Australian Bottle Manufacturers Pty Ltd
Ctech Closures Pty Ltd
Bev-Cap Pty Ltd
Controlled Entities owned 100% by Pro-Pac Packaging (aust) Pty Ltd
Pro-Pac Packaging Manufacturing (Syd) Pty Ltd
Pro-Pac Packaging Manufacturing (Melb) Pty Ltd
Pro-Pac Packaging Manufacturing (Bris) Pty Ltd
Creative Packaging Pty Ltd
Controlled Entities owned 100% by Bev-Cap Pty Ltd
great Lakes Moulding Pty Ltd
Finpact (Pty) Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
ordinary
ordinary
ordinary
ordinary
ordinary
ordinary
ordinary
ordinary
ordinary
ordinary
ordinary
ordinary
ordinary
ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Entities subject to class order relief
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:
Pro-Pac Packaging Limited
Plastic Bottles Pty Ltd
Pro-Pac group Pty Ltd
Pro-Pac Packaging (Aust) Pty Ltd
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and
directors’ report under Class order 98/1418 (as amended) issued by the Australian Securities and investments Commission (‘ASiC’).
44 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
NOTE 24: BUSINESS COMBINATIONS
acquisition of businesses
The following complimentary and synergistic businesses where acquired during the year.
Effective 1 July 2010, Pro-Pac Packaging (Aust) Pty Ltd, a wholly owned subsidiary, acquired the business and assets of Dysher Pty Ltd
trading as goodman Packaging, a Sydney and Perth based distributor of industrial packaging products and effective 1 April 2011,
acquired the business and assets of SPD international Pty Ltd, a Melbourne based distributor of industrial packaging products.
The effect of the above transactions can be summarised as follows:
assets
Current assets
Trade and other receivables
inventories
total Current assets
non-Current assets
Property, plant and equipment
total non-Current assets
total assets
Liabilities
Current Liabilities
Trade and other payables
total Current Liabilities
non-Current Liabilities
other liabilities
total non-Current Liabilities
total Liabilities
nEt aSSEtS
Consideration Paid
Cash
total
GoodWiLL
Fair value
$000’s
126
675
801
105
105
906
102
102
37
37
139
767
3,048
3,048
2,281
on 23 September 2011, Pro-Pac Packaging (Aust) Pty Ltd, a wholly owned subsidiary company, purchased the business and assets
of Medirite Australia Pty Ltd. Medirite is a long established Sydney based importer and distributor of personal protection equipment
(PPE) and safety products with an annualised turnover of approximately $6m. The purchase consideration was funded from existing
cash resources and debt facilities and 750,000 shares in Pro-Pac Packaging Limited (“PPg”) to be issued after 17 october 2011 and
in any event after the ex-dividend date for PPg shares.
Full acquisition accounting details have not been provided as the initial accounting for the business combination was incomplete at
the time the financial statements were authorised for issue.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
45
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 25: COMMITMENTS AND CONTINGENCIES
operating lease commitments – Group as lessee
The group has entered into commercial leases which are non-cancellable. The leases have varying terms, escalation clauses and
renewal rights. on renewal, the terms of the leases are renegotiated. Renewals are at the option of the specific entity that holds
the lease.
The group also leases various items of machinery under cancellable operating leases.
There are no restrictions placed upon the lessee by entering into these leases.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Within one year
After one year but not more than five years
More than five years
Figures exclude GST
Consolidated
2011
$000’s
2,664
3,717
-
6,381
Consolidated
2010
$000’s
3,180
4,556
52
7,788
Finance lease and hire purchase commitments
The group has finance leases and hire purchase contracts for various items of plant and machinery.
Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the net
minimum lease payments are as follows:
2011
Minimum
payments
$000’s
2011
Present value
of payments
$000’s
2010
Minimum
payments
$ $000’s
2010
Parent value
of payments
$000’s
Within one year
After one year but not more than five years
Total minimum lease payments
Less amounts representing future finance charges
Present value of minimum lease payments
Representing lease liabilities
Current
Non-current
1,996
2,884
4,880
(630)
4,250
2011
$000’s
1,670
2,580
4,250
1,670
2,580
4,250
-
4,250
1,806
2,973
4,779
(622)
4,157
2010
$000’s
1,503
2,654
4,157
The weighted average interest rate implicit in the leases is 10.0%.
1,503
2,654
4,157
-
4,157
46 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
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Pro-Pac Packaging Limited and Controlled Entities
NOTE 25: COMMITMENTS AND CONTINGENCIES (CONT.)
Contingent Liability
As at statement of financial position date, the Company issued security deposit guarantees and standby letters of credits to the
value of $2,116,449 to the landlords of rented premises and overseas suppliers.
Capital Expenditure Commitments
As at statement of financial position date the Company had commitments for future capital expenditure of $89,141.
Capital commitments - Property, plant and equipment
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
one to five years
NOTE 26: IMPAIRMENT TESTING OF INDEFINITE LIFE GOODWILL
Carrying amount of goodwill
Carrying amount of goodwill industrial Division
Carrying amount of goodwill Rigid Division
Total carrying amount of goodwill
Consolidated
2011
$000’s
Consolidated
2010
$000’s
89
-
89
22,660
24,098
46,758
274
-
274
22,660
21,817
44,477
The group and all of its subsidiaries are divided into two major cash generating units, the industrial and rigid divisions, as these are
the smallest groups of identifiable assets that generate cash inflows that are largely independent of the cash inflows from other
assets or groups of assets. goodwill acquired through business combinations has been allocated to the cash-generating-units for
impairment testing.
The recoverable amount of the consolidated entity’s goodwill has been determined by a value-in-use calculation using a discounted
cash flow model, based on a one year projection period approved by management and extrapolated for a further 4 years using a
steady rate, together with a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
The following key assumptions were used in the discounted cash flow model for the industrial and rigid divisions:
a) 14.5% pre-tax discount rate;
b) 8% for industrial division and 3% for rigid division per annum projected revenue growth rate;
c) 8% for industrial division and 3% for rigid division per annum increase in operating costs and overheads.
The discount rate of 14.5% pre-tax reflects management’s estimate of the time value of money and the consolidated entity’s
weighted average cost of capital, the risk free rate and the volatility of the share price relative to market movements.
Projected growth rates are based on historical performance over the last three years and current trends which management believes
are achievable during the forecasted period.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
47
For personal use only
Notes to the Financial Statements
FoR the yeAR to 30 June 2011
NOTE 27: RELATED PARTY DISCLOSURE
Parent Entity
Pro-Pac Packaging Limited is the ultimate parent entity of the group.
Subsidiaries
interests in subsidiaries are set out in note 23.
transactions with directors
The Company or members of the group have entered into the following agreements with the following directors or entities related
to them: Hadrian Morrall and Brandon Penn.
Consolidated
2011
$000’s
Consolidated
2010
$000’s
Hadrian Morrall
• Remuneration paid
• Payments to Morrall Penn Holdings Pty Ltd and The Penn Morrall Partnership
for rental related to the Sydney and Brisbane properties (inc gST)
- 9 Widemere Road, Wetherill Park, NSW
- Unit 15/129 Robinson Road, geebung, QLD
- 32 Hinkler Street, Mordialloc, ViC
Brandon Penn
• Remuneration paid
• Payments to Morrall Penn Holdings Pty Ltd and The Penn Morrall Partnership
for rental related to the Sydney and Brisbane properties (inc gST)
- 9 Widemere Road, Wetherill Park, NSW
- Unit 15/129 Robinson Road, geebung, QLD
- 32 Hinkler Street, Mordialloc, ViC
245,415
790,680
587,055
116,351
87,274
249,231
790,680
587,055
116,351
87,274
Total payments to related parties during the year ended 30 June 2011 was $1,285,326 (2010: $1,272,525).
237,844
790,680
587,055
116,351
87,274
244,001
790,680
587,055
116,351
87,274
48 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
Parent
2011
$000’s
3,010
3,010
465
55,161
1,140
1,140
54,005
-
16
54,021
Parent
2010
$000’s
1,814
1,814
1,185
52,361
246
246
52,057
-
58
52,115
NOTE 28: PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity.
Profit for the year
Total comprehensive income
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Reserves
Retained profits/(accumulated losses)
Total equity
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2,
except for the following:
• investments in subsidiaries are accounted for at cost, less any impairment.
NOTE 29: EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE
on 4 July 2011 the Company announced it had been informed that Bennamon Pty Limited (a substantial shareholder) had entered
into a conditional agreement with CVC Limited (another substantial shareholder) and certain of its associated companies to acquire
a total of 42,189,497 fully paid ordinary shares in the Company which represented approximately 30.17% of all the Company’s
shares in issue at the time. Completion of the proposed share acquisition is conditional on, amongst other things, shareholders
approving the proposed transaction at a shareholders’ meeting to be held on 4 october 2011. if approved, Bennamon Pty Ltd will
have approximately 48.27% of the voting power attaching to and the number of all the Company’s shares on issue.
on 23 September 2011, Pro-Pac Packaging (Aust) Pty Ltd, a wholly owned subsidiary company, purchased the business and assets
of Medirite Australia Pty Ltd. Medirite is a long established Sydney based importer and distributor of personal protection equipment
(PPE) and safety products with an annualised turnover of approximately $6m.
NOTE 30: AUDITORS’ REMUNERATION
Amounts received or due and receivable by UHY Haines Norton for:
- audit or review of the financial report
- due diligence relating to acquisitions
Consolidated
2011
$000’s
Consolidated
2010
$000’s
90
-
96
21
NOTE 31: ACCOUNTING STANDARDS ISSUED OR AMENDED
A number of accounting standards have either been issued or amended since year end but are not effective for the financial year
ended 30 June 2011. The group does not at this time believe these have any material impact on the 2011 financial report or for
the ensuing year.
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
49
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Directors’ Declaration
The directors of the company declare that:
1.
the financial statements and notes, as set out on pages 18 to 49, are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards; and
(b) give a true and fair view of the Company’s financial position at 30 June 2011 and of its performance for the year ended
on that date of the company and consolidated group;
2.
the Joint Chief Executive officers and Chief Financial officer have each declared that:
(a) the financial records of the company for the financial year have been properly maintained in accordance with section 286
of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the accounting standards; and
(c) the financial statements and notes for the financial year give a true and fair view; and
3.
in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
on behalf of the Board on 28 September 2011.
Elliott Kaplan
Chairman
Brandon Penn
Director
50 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Pro-Pac Packaging Limited and Controlled Entities
Independent Auditor’s Report
to the membeRS oF pRo-pAC pACkAGInG lImIteD
report on the Financial report
We have audited the accompanying financial report of
Pro-Pac Packaging Ltd, which comprises the consolidated
statement of financial position as at 30 June 2011, the
consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then
ended, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors’
declaration of the consolidated entity comprising the company
and the entities it controlled at the year’s end or from time to
time during the financial year.
Directors’ Responsibility 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 is free from material misstatement,
whether due to fraud or error.
in Note 2, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with
international Financial Reporting Standards.
Auditor’s Responsibility
our responsibility is to express an opinion on the financial
report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those
standards require that we comply with relevant ethical
requirements relating to audit engagements and plan
and perform the audit to obtain reasonable assurance
about whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or
error. in making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair
presentation of the financial report 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 entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by
the directors, as well as evaluating the overall presentation of
the financial report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Independence
in conducting our audit, we have complied with the
independence requirements of the Corporations Act 2001.
opinion
in our opinion:
(a) the financial report of Pro-Pac Packaging Ltd is in
accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s
financial position as at 30 June 2011 and of its
performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and
the Corporations Regulations 2001; and
(b) the consolidated financial report also complies with
international Financial Reporting Standards as disclosed in
Note 2.
report on the remuneration report
We have audited the Remuneration Report included in pages
6 to 9 of the report of the directors for the year ended
30 June 2011. The directors of the company are responsible
for the preparation and presentation of the Remuneration
Report in accordance with s 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.
auditor’s opinion
in our opinion the Remuneration Report of Pro-Pac Packaging
Limited for the year ended 30 June 2011, complies with
s 300A of the Corporations Act 2001.
Franco Giannuzzi
Partner
uHy Haines norton
Chartered Accountants
PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
51
For personal use only
Additional Company Information
Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows.
The information is current as at 14 September 2011.
(a) distribution of equity securities
Table 1: The number of holders, by size of holding, in each class of security are (includes ESPP shares):
Holdings ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
totals
Holders
total units
55
111
124
358
69
717
6,813
367,880
980,214
11,286,260
127,094,407
139,735,574
%
0.005
0.263
0.701
8.077
90.954
100.00
There are seventy six holders of unmarketable parcels totalling 36,196 shares representing 0.026% of the Company’s issued capital.
(b) twenty largest holders
(c) Substantial shareholders
Table 2: The names of the twenty largest holders, in each class
of security are:
rank Holder
no. ordinary Shares
%
The names of substantial shareholders who have notified
the Company in accordance with Section 671B of the
Corporations Act 2001 are:
31,360,525
25,313,632
20,875,398
13,237,492
8,629,487
2,962,662
2,199,485
22.4
18.1
14.9
9.5
6.2
2.1
1.6
CVC Limited
31,360,525 ordinary shares
Bennamon Pty Limited
25,313,632 ordinary shares
Mr Brandon Penn
20,875,398 ordinary shares
Mr Hadrian Morrall
13,237,492 ordinary shares
CVC Private Equity Limited
8,629,487 ordinary shares
1,769,695
1.3
(d) voting rights
All ordinary shares carry one vote per share without restriction.
(e) restricted securities
Restricted securities total 1,665,000. Shares are restricted in
two categories:
ESPP Shares under escrow
until 30 August 2013
ESPP Shares under escrow
until 14 April 2014
1,325,000 ESPP shares
10,000 ESPP shares
ordinary shares held as security by the
Company in terms of a sub-lease
330,000 ordinary shares
(f) Business objectives
The Company has used its cash and assets that are readily
convertible to cash in a way consistent with its business
objectives.
1 CVC LiMiTED
2 BENNAMoN PTY LTD
3 MR BRANDoN PENN
4 MR HADRiAN MoRRALL
5 CVC PRiVATE EQUiTY LiMiTED
6 NigHTiNgALE PARTNERS PTY LTD
7
8
CVC SUSTAiNABLE iNVESTMENTS LiMiTED
FoX iNVESTMENTS PTY LTD
WENDoN HoLDiNgS PTY LiMiTED
10 DERRiN BRoTHERS PRoPERTiES LTD
11 MRS NATALiE PENN
12
9
13
14
SoNHiLL iNVESTMENTS PTY LTD
MiSCHKE iNVESTMENTS PTY LTD
L J K NoMiNEES PTY LTD
MR ELLioTT gRANT KAPLAN
MiSCHKE iNVESTMENTS PTY LTD
17 CHEMiCAL TRUSTEE LiMiTED
18
16
15
SoNHiLL iNVESTMENTS PTY LTD
MR ELLioTT KAPLAN & MRS BRENDA KAPLAN
20 M J H NigHTiNgALE & Co PTY LTD
19
1,578,028
1,230,110
1,200,344
1.1
0.9
0.9
1,085,618
0.8
1,026,828
0.7
1,000,000
0.7
968,037
0.7
893,884
727,490
0.6
0.5
723,310
0.5
578,320
434,330
0.4
0.3
Top 20
total
117,794,675
84.3
139,735,574
52 PRo-PAC PACKAgiNg ANNUAL REPoRT 2011
For personal use only
Our Environment
We believe very strongly in the conservation of
our environment, its resources and the recycling
of as much product as possible. We believe in
living the practice of ‘reduce’, ‘reuse’, ‘recover’
and ‘recycle’. These four practices are at the
centre of our commitment to a better environment.
Wherever possible we endeavour to provide
environmentally friendly solutions to our customers,
whether these are in the form of biodegradable
voidfill, plastics alternatives and formulas and/or
an effort to reduce the amount or type of packaging
a customer requires. We recognise that protecting
the environment is the responsibility of us all.
Printed on Cyclus offset – 100% Recycled Paper made
from 100% Post Consumer Waste and is produced in
EMAS accredited facilities.
design : : kettle of fish design
For personal use only Pro-Pac Packaging Limited
148 newton Road
Wetherill park
nSW Australia 2164
t: (02) 8781 0500
F: (02) 8781 0599
e: sales@pro-pac.com.au
www.ppgaust.com.au
For personal use only