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PRO – PAC PACKAGING LIMITED
Annual Report
FOR THE YEAR ENDED 30 JUNE 2024
Contents
CORPORATE INFORMATION .................................................................................................1
CHAIRMAN’S REPORT ...........................................................................................................2
DIRECTORS’ REPORT .............................................................................................................3
REMUNERATION REPORT .................................................................................................. 16
AUDITOR’S INDEPENDENCE DECLARATION...................................................................... 28
CORPORATE GOVERNANCE STATEMENT .......................................................................... 29
ANNUAL SUSTAINABILITY REPORT .................................................................................... 43
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME .......................................... 45
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................... 46
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .................................................... 47
CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................. 48
NOTES TO THE FINANCIAL STATEMENTS .......................................................................... 49
DIRECTORS’ DECLARATION .............................................................................................. 109
INDEPENDENT AUDITOR’S REPORT ................................................................................ 110
ADDITIONAL COMPANY INFORMATION ......................................................................... 116
Corporate Information
PRO-PAC PACKAGING LIMITED
1 | ANNUAL REPORT 2024
ACN 112 971 874
ABN 36 112 971 874
Directors
John Cerini
Rupert Harrington
Mark Blackburn
Company secretary
Kathleen Forbes
Registered office
83-85 Banbury Road,
Reservoir VIC 3073
Phone: +61 3 9474 4200
Share register
Boardroom Limited
Level 8, 210 George Street
Sydney NSW 2000
Annual General Meeting
Thursday, 21 November 2024 at 1pm
The closing date for nominations for election as a
director is 5pm Thursday 3 October 2024.
Auditors
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000
Stock exchange listing
Australian Securities Exchange (ASX: PPG)
Website
www.ppgaust.com.au
Chairman’s Report
PRO-PAC PACKAGING LIMITED
2 | ANNUAL REPORT 2024
Dear Shareholders,
On behalf of your Board of Directors of Pro-Pac
Packaging Limited (Pro-Pac or the Group), I am
pleased to present to you our 2024 Annual Report.
Year in Review
Pro-Pac has continued to build upon the groundwork
laid in recent years to become a focused Australia and
New Zealand manufacturer of Flexible film and
packaging, with accompanying distribution of our
manufactured and related products.
FY24 was a difficult trading year with revenue from
continuing operations down 13.0%. This reflected the
impact of pass through of lower material costs
(primarily resin) to customers as a result of price
adjustment mechanisms built into contracts.
Revenue was also impacted by a significant reduction
in volumes to our major customer in the Middle East.
This was a material change with an impact of more
than $17 million, of which $12 million occurred in the
second half of the year.
In addition, difficult trading conditions, and the
impacts of weather conditions negatively impacted to
agricultural volumes in both Australia and New
Zealand.
During FY24, we received the second instalment of
$4.9 million of a Modern Manufacturing Initiative
Government grant ($10.5 million received to date) to
establish a soft plastics recycling facility. $3.2 million
in deposits for equipment were made in relation to
this project.
FY24 financial summary
Pro-Pac has delivered:
Group Revenues from continuing operations of
$295.2 million (2023: $339.1 million)
Group Loss after tax of $53.8 million (2023: $10.2
million), which included non-cash items of $40.2
million for impairment losses, depreciation and
amortisation (pre-AASB 16 Leases), and
derecognition of deferred tax assets
Group EBITDA pre-AASB 16 before significant
items from continuing operations of $7.6 million
loss (2023: profit of $1.1 million)
Strategic imperatives
Our key immediate objective is to restore profitability
in the business. We are focussed on working capital
management, product and portfolio profitability, and
delivering operational efficiencies at all of our sites.
We will maintain a strong focus on reducing costs and
deliver on our promise to improve service, quality,
delivery and ease of doing business.
Pro-Pac’s focus is on profitability improvement,
organic growth from our investments in our
manufacturing footprint and our commitment to
innovation, sustainability and leadership in soft
plastics recycling.
Management and Board changes
I would like to take this opportunity to highlight
changes to your Management and Board of Directors
since our last annual report.
Mr Jonathan Ling retired from the board effective 30
June 2024. Effective 1 July 2024, in addition to his CEO
role, Mr John Cerini was appointed Executive
Chairman.
In addition, Mr Domenic Romanelli resigned as Chief
Financial Officer effective 2 July 2024. Ms Patsy Ch’ng
was appointed Chief Financial Officer effective 3 July
2024.
Once the Company has returned to profitability, we
will look to increase the number of non-executive
directors on the board and expand the diversity, skills
and experience of your Board to meet the changing
needs of the Company.
Thank you
On behalf of the Board of Directors, I would like to
thank our shareholders for their ongoing support of
Pro-Pac, and we look forward to updating you as the
year progresses.
I would also like to thank our customers and suppliers
for their continued support throughout the year, as
we have all worked to navigate challenges, ensure
continuity of supply and keep our teams safe.
Finally, I would like to thank the executive team and
every individual Pro-Pac team member for their
continued hard work, commitment, and loyalty to Pro-
Pac this year.
Thank you
John Cerini
CEO & Executive Chairman
Directors’ Report
PRO-PAC PACKAGING LIMITED
3 | ANNUAL REPORT 2024
The directors present their report on Pro-Pac Packaging Limited (the Company) and the entities it controlled (the
Group) during the year ended 30 June 2024.
Directors
The directors in office at the date of this report are set out below. Directors were in office for the entire period unless
otherwise stated.
Rupert Harrington MSc, B Tech, CDipAF, MAICD
(Non-executive Director – appointed 6 November 2017)
Rupert is an experienced company director with over 30 years’ experience as a non-executive director of companies
operating in manufacturing, industrial services, health, and technology. He has been involved in private equity since
1987 and is considered to be one of the key founders of the Australian industry.
Rupert is Non-executive Chair of Clover Corporation Limited (ASX: CLV) and was previously a director of Integral
Diagnostics Limited, Bradken Limited, Advent Partners and others.
Rupert is Chair of the Remuneration and Nomination committee and a member of the Audit, Business risk and
Compliance committee.
Previous directorships of publicly listed companies in the last 3 years: Integral Diagnostics Limited.
Mark Blackburn, Dipl of Business (Accounting), CPA and GAICD
(Non-executive Director – appointed 23 November 2022)
Mark has extensive senior finance management experience with ASX and NYSE listed corporations and has held CFO
roles at McMillan Shakespeare, iSelect, IOOF, Ausdoc Limited and the Laminex Group. Mark is currently a Non-
executive Director, and Chair of the audit committee, of Lifestyle Communities Limited and a Non-executive Director of
FleetPartners Group Limited.
Mark is Chair of the audit, business risk and compliance committee, and a member of the Remuneration and
Nomination Committee.
Previous directorships of publicly listed companies in the last 3 years: None
John Cerini, Bachelor of Science (Majoring in Applied Science and Chemical Engineering)
(CEO and Managing Director – appointed 3 October 2022, Executive Chairman appointed 1 July 2024))
John is a seasoned executive with extensive industry and management experience and is well known to the Company
having been CEO of Integrated Packaging for 12 years before it was acquired by Pro-Pac, as well as Pro-Pac’s Chief
Operating Officer (COO) for 2 years. Prior to joining Integrated Packaging, John spent 5 years as the CEO of Detmold
Industrial Packaging, and 4 years as the divisional general manager of the Metal Packaging Group at Amcor Limited.
John has also held a number of industry board positions, including a Chemistry Australia board member from 2015 -
2019, board chairman of Stratex Pty limited from 2010-2017 and board member of CRC For Polymers from 2012-2018.
In addition to his role as CEO, John was appointed Executive Chairman following the retirement of Jonathan Ling. This
appointment was made effective on 1 July 2024.
Previous directorships of publicly listed companies in the last 3 years: None
Details of directors in office during the financial year or part thereof, but not in office as at the date of this Report, are
set out below:
Jonathan Ling B Engineering (Mechanical), MBA
(Non-executive Chairman – appointed 8 April 2019, retired 30 June 2024)
Jonathan has extensive experience in complex manufacturing businesses. He was previously Managing Director and
Chief Executive Officer (CEO) of GUD Holdings Limited, a role he held for 6 years. Prior to that, Jonathan was Managing
Director and CEO of Fletcher Building Limited, a manufacturer of construction and building materials, listed on both the
ASX and NZX. He has also held senior management roles with Austrim Nylex, Visy Recycling and Pacifica.
Jonathan has previously served on the boards of Pact Group Limited, Melbourne Rebels Rugby Union as Chair, Pacific
Brands Limited and ASB Bank Limited.
Directors’ Report
PRO-PAC PACKAGING LIMITED
4 | ANNUAL REPORT 2024
Jonathan was a member of the Remuneration and Nomination Committee. Jonathan retired as director and board
Chairman effective 30 June 2024.
Previous directorships of publicly listed companies in the last 3 years: Pact Group Limited.
Geoff Cashion
(Non-executive Director – appointed 5 May 2023, resigned 10 July 2023)
Geoff has extensive industry and management experience having worked for Visy Industries for over 20 years. During
his tenure at Visy he held senior general management positions responsible for state operations, as well as specific
operational and distribution management positions.
Previous directorships of publicly listed companies in the last 3 years: None
Director Interests in the shares, rights and options of the Company
The interests of the directors in the shares, performance rights and share options of the Company are set out in the
remuneration report.
Company secretary
Kathleen Forbes B Arts, B LLB, MAICD
(Company Secretary and General Counsel - appointed 17 October 2018)
Kathleen has over 25 years of legal and company secretarial experience and has been with the Company for the last 6
years as General Counsel and Company Secretary. Her past roles include General Counsel at Salmat Limited, and
General Counsel and Company Secretarial roles with Corporate Express Australia Limited. She started her career at
national law firm Clayton Utz where she spent 5 years. Kathleen is admitted as a solicitor of the NSW Supreme Court.
Dividends
There were nil dividends paid or declared during the year and up to the date of this report.
Principal activities
The principal activities of the Group during the year were the manufacture and distribution of flexible and industrial
packaging products.
There have been no significant changes in the nature of these activities during the year ended 30 June 2024.
Operating and financial review
Non-IFRS measures
To assist in the evaluation of the financial performance of the Group, certain measures are used that are not
recognised under the Australian Accounting Standards or International Financial Reporting Standards (IFRS) and
therefore, these are considered to be non-IFRS measures.
This report includes the following non-IFRS measures:
PBT represents profit/(loss) before income taxes and significant items;
EBIT represents PBT before finance costs and interest income;
EBITDA represents EBIT before depreciation and amortisation;
Adjusted LTM EBITDA or EBITDA pre-AASB 16 means EBITDA before AASB 16 Leases for the last 12-months,
adjusted for material acquisitions or disposals.
Significant items are identified as favourable or unfavourable transactions which are outside of normal operating
activities and are excluded from the segment results presented to the chief operating decision-maker for the
purpose of resource allocation and assessment of segment performance;
Working capital represents trade and other receivables and inventories, less trade and other payables;
Net debt is calculated as borrowings, less cash and cash equivalents;
Directors’ Report
PRO-PAC PACKAGING LIMITED
5 | ANNUAL REPORT 2024
Net bank debt is calculated as borrowings, less trade finance and cash and cash equivalents; and
Net debt leverage ratio is calculated as net debt divided by Adjusted LTM EBITDA for the last 12-months.
Although the board of directors (Board) believe that these measures provide useful information about the financial
position and performance of the Group, they should be considered to be supplementary to the consolidated statement
of comprehensive income and consolidated statement of financial position presented in accordance with accounting
standards. As these non-IFRS measures are not defined in the accounting standards, the way the Group may calculate
these measures may differ from similarly titled measures used by other companies.
Non-IFRS numbers have not been audited.
Business update
Group strategy
Pro-Pac’s strategy is to continue to be a focussed Australian and New Zealand manufacturer of Film and Flexible
Packaging with accompanying distribution of our manufactured and related products. The business is focused on using
its manufacturing and investment expertise to capitalise on key industry trends including innovation and sustainability,
to provide total packaging solutions protecting and enhancing products relied on by customers.
Senior management changes
During the year Domenic Romanelli resigned his position of CFO effective 2 July 2024. He has been replaced by Patsy
Ch’ng effective 3 July 2024.
FY25 strategic priorities
During the year ahead, Pro-Pac will focus on the key strategic priorities of driving profitable revenue growth and
improving operational efficiencies. The Company will continue to prioritise the safety, health & wellbeing of its people,
the supply of essential products and services to its customers and utilise recently invested capacity to drive business
development and sales growth with new and existing customers. The Company will also focus on developing
sustainable products through investment in recycling and innovation.
Directors’ Report
PRO-PAC PACKAGING LIMITED
6 | ANNUAL REPORT 2024
Financial performance
Group results from continuing and discontinuing operations
30 June
2024
$’000
30 June
2023
$’000
Change
Revenue
295,178
341,297
(13.5)%
Expenses
(302,784)
(340,328)
(11.0)%
EBITDA pre-AASB16
(7,606)
969
>(100)%
Rental expense
12,038
10,828
11.2%
EBITDA
4,432
11,797
(62.4)%
EBITDA margin
1.5%
3.5% (200)bps
Depreciation and amortisation
(19,960)
(17,217)
15.9%
EBIT
(15,528)
(5,420)
>100%
EBIT Margin
(5.3)%
(1.6%) (370) bps
Finance costs, net
(6,604)
(5,314)
24.3%
PBT
(22,132)
(10,734)
>100%
PBT Margin
(7.5)%
(3.1)% (440)bps
Significant items
(25,753)
(2,701)
>100%
Profit/(loss) before income tax
(47,885)
(13,435)
>100%
Income tax (expense)/benefit
(5,879)
3,197 >(100)%
Profit/(loss) after income tax
(53,764)
(10,238)
>100%
Group results from continuing operations
30 June
2024
$’000
30 June
2023
$’000
Change
Revenue
295,178
339,100
(13.0)%
Expenses
(302,784)
(338,020)
(10.4)%
EBITDA pre-AASB16
(7,606)
1,080
>(100)%
Rental expense
12,038
10,828
11.2%
EBITDA from continuing operations
4,432
11,908
(62.8)%
EBITDA margin
1.5%
3.5% (200)bps
Depreciation and amortisation
(19,960)
(17,217)
15.9%
EBIT from continuing operations
(15,528)
(5,309)
>100%
EBIT Margin
(5.3)%
(1.6)% (370)bps
Finance costs, net
(6,604)
(5,314)
24.3%
PBT from continuing operations
(22,132)
(10,623)
>100%
PBT Margin
(7.5)%
(3.1)% (440)bps
Significant items
(25,753)
(310)
>100%
Profit/(loss) before income tax from continuing operations
(47,885)
(10,933)
>100%
Income tax (expense)/benefit from continuing operations
(5,879))
2,446 >(100)%
Profit/(loss) after income tax from continuing operations
(53,764)
(8,487)
>100%
Directors’ Report
PRO-PAC PACKAGING LIMITED
7 | ANNUAL REPORT 2024
Revenue from continuing operations
Revenue decreased 13.0% to $295.2 million (2023: $339.1 million) during the year reflecting the impact of:
Pass through of lower raw material costs (primarily resin) to customers as a result of price adjustment mechanisms
built into contracts.
Sales to our major customer in the Middle East have materially reduced during second half of the financial year,
principally from the continued disruption caused by the Middle East war affecting logistics and customer sentiment;
Excluding sales to our major customer in the Middle East, Flexibles volumes were impacted 0.5%;
Overall volumes were lower compared to prior period due to exit of non-core market segments in Specialty
Packaging, along with difficult trading conditions on the back of reduced consumer spending patterns and the
weather conditions in both Australia and New Zealand which have an impact on our agricultural volumes.
PBT from continuing operations
PBT declined during the year to a loss of $22.1 million (EBITDA pre-AASB 16 loss of $7.6 million) from a loss of $10.6
million (EBITDA pre-AASB 16 profit of $1.1 million), which was reflective of:
Reduced revenue volumes, including the flow through effect of lower manufacturing cost recoveries;
Increased depreciation and amortisation of $2.7 million, including the impact of assets acquired in the current and
previous financial years;
Increased finance costs of $1.3 million, including the impact of higher drawn debt in the current year and interest
on lease liabilities; partially offset by; and
Headcount reduction program which commenced in Q4 FY24, with the benefits from this and cost reduction
activities will continue to come through in the 2025 financial year.
Significant items from continuing operations
Pre-tax loss from significant items for the year increased to $25.8 million (2023: $0.3 million), which included a $22.7
million impairment loss and spend costs relating to business optimisation and disruption activities of $3 million.
Balance sheet
30 June
2024
$’000
30 June
2023
$’000
Change
Current assets
127,039
142,184
(10.7)%
Non-current assets
110,296
126,121
(12.5)%
Total assets
237,335
268,305
(11.5)%
Current liabilities
114,010
101,105
12.8%
Non-current liabilities
42,234
31,420
34.4%
Total liabilities
156,244
132,525
17.9%
Net assets
81,091
135,780
(40.3)%
Working capital
62,760
71,149
(11.8)%
Net debt(excluding government grant proceeds)
27,798
14,982
85.5%
Net bank debt
20,496
8,845
>100%
Net debt leverage ratio
4.6x
0.7x
3.9x
Working capital decreased by $8.4 million during the year:
Receivables – decrease of $4.5 million, primarily due to lower revenues in the June period compared to the prior
year;
Inventories – decrease of $1.6 million, primarily due to a $1.7 million decrease in raw material holdings as the
business continues to right size holdings based on current activity levels; and
Directors’ Report
PRO-PAC PACKAGING LIMITED
8 | ANNUAL REPORT 2024
Trade payables – increase of $2.3 million, which includes $4 million of funds received in advance with shipment to
occur in the first half of FY25. This was offset by a decrease of $1.7 million reflecting lower activities in line with
reduced revenue volumes.
Cash flows
30 June
2024
$’000
30 June
2023
$’000
Change
Net cash flows from operating activities
4,584
(3,015)
>100%
Payments for plant and equipment, net of proceeds
(8,433)
(4,089)
>100%
Payments for intangible assets
(3,382)
(3,605)
(6.2)%
Government grant received
4,882
5,579
(12.5)%
Proceeds from rights issue, net of transaction costs
-
28,300
(100)%
Proceeds from sale of business
-
1,909
(100)%
Proceeds from/(repayments) of borrowings net of transaction costs
(4,886)
(18,124)
(73.0)%
Cash flows from operating activities were an inflow of $4.6 million which included the decrease in working capital of
$8.4 million for the year.
Cash flows from investing activities was an outflow of $6.9 million:
Net capital expenditure (PPE & Intangibles) increased to $11.8 million (FY23: $7.7 million), primarily due to the
acquisition of a new printing press and investing in projects related to the establishment of a soft plastic film
recycling plant and IT development; and
During FY24 $4.9 million was received in relation to proceeds from a government grant.
Review of operating segments
Flexibles
30 June
2024
$’000
30 June
2023
$’000
Change
Revenue
230,068
265,327
(13.3)%
EBITDA pre-AASB 16 before corporate costs
1,875
13,508 >(100)%
Corporate Costs
(3,676)
(11,484) >(100)%
EBITDA – pre-AASB 16 after corporate costs
(1,801)
2,024 >(100)%
EBIT
(11,859)
(3,610)
>100%
PBT
(14,286)
(5,601)
>100%
PBT margin
(6.2)%
(2.1)% (410) bps
Revenue decreased by 13.3% to $230.1 million (2023: $265.3 million) reflecting:
Significant loss of volume to our major customer based in the Middle East, down $17.2 million, of which $12 million
occurred in the second half of the financial year
$16.8 million reduction in price as a pass through of lower raw material costs (primarily resin)
$1.2m or 0.5% impact relating to reduced volume relating to difficult trading conditions on the back of reduced
consumer spending patterns and the weather conditions in both Australia and New Zealand which impacted on our
agricultural volumes.
Directors’ Report
PRO-PAC PACKAGING LIMITED
9 | ANNUAL REPORT 2024
The lower revenue volumes also impacted the reduction in PBT during the year to a loss of $14.3 million (EBITDA pre-
AASB 16 loss of $1.8 million) from a loss of $5.6 million (EBITDA pre-AASB 16 profit of $2.0 million).
Specialty Packaging
30 June
2024
$’000
30 June
2023
$’000
Change
Revenue
65,110
73,773
(11.7)%
EBITDA pre-AASB 16 before corporate costs
4,440
4,755
(6.6)%
Corporate Costs
(8,703)
(4,043)
>100%
EBITDA – pre-AASB 16 after corporate costs
(4,263)
712 >(100)%
EBIT
(2,126)
(43)
>100%
PBT
(2,601)
(647)
>100%
PBT margin
(4.0)%
(0.9)% (310) bps
Revenue decreased by 11.7% to $65.1m (2023: $73.8m) as a result of product rationalisation, the exit of non-core
market segments to focus on the distribution of speciality packaging and the impact of reduced customer spending
patterns.
The lower revenue volumes also impacted the reduction in PBT of $2.0 million to $2.6 million loss (2023: $0.6 million
loss).
Discontinued operations
30 June
2024
$’000
30 June
2023
$’000
Change
Revenue
-
2,197
100%
EBITDA pre-AASB16
-
(111)
100%
EBIT
-
(111)
100%
PBT
-
(111)
100%
PBT margin
-
(5.1)%
100%
Discontinued operations in the prior year include the Rigid business which was divested in June 2022 and Source & Sell
business which was divested in September 2022.
Directors’ Report
PRO-PAC PACKAGING LIMITED
10 | ANNUAL REPORT 2024
Business risks
The management of the Company and the execution of its growth strategies are subject to a number of risks which
could adversely affect the Company’s future development.
The following is not an exhaustive list or explanation of all risks and uncertainties associated with the Company (and its
controlled entities), but those considered by management to be the principal material risks:
Credit risk
Trade and related party receivables are considered to be a source of credit risk; however, the Group does not have a
concentration of credit risk with respect to any single counterparty or group of counterparties, which mitigates the risk
of significant losses of default. The Group has policies in place to ensure that customers who trade on credit terms are
subject to credit verification procedures. Amounts are considered as ‘past due’ when the debt has not been settled
within the credit terms and conditions as agreed between the Group and the customer or counterparty to the
transaction. Amounts past due are assessed for impairment by ascertaining the solvency of debtors and are provided
for where there are specific circumstances indicating that the debt may not be fully repaid to the Group.
Commodity risk
The Group is exposed to pricing related risks that have the ability to impact financial and business performance.
Commodity price risk in relation to certain raw materials (specifically resin), impacts of competition from imports and
inability to recover cost increases, such as freight, energy and raw materials, may lead to margin impacts and
commodisation of products.
In managing this risk, the Group seeks to identify impacts early, focus on diversifying and innovation of products, and
pass on changes in prices to customers, including through contractual rise and fall adjustments, where possible. Given
the lag effect of contractual rise and fall mechanisms this risk requires constant management.
Foreign currency risk
The Group’s financial reports are denominated in Australian dollars. As a result of operations in New Zealand and
international activities, the Group is exposed to changes in foreign exchange rates on sales and purchases. In order to
mitigate foreign currency risk, the Group regularly determines its net exposure to the primary currencies it trades in
based on actual sales and purchases and enters into foreign currency forward contracts to hedge these exposures.
Liquidity and solvency risk
The Group’s objective is to maintain a balance between:
· -Continuity of funding and flexibility through the use of bank loans, trade finance, finance leases and hire purchase
arrangements; and
·-Investment in strategic growth opportunities.
The Group seeks to manage liquidity risk through cash flow forecasting and appropriate working capital management.
Refer to ‘Going Concern’ in the basis of preparation in the Financial Report for further information.
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11 | ANNUAL REPORT 2024
Interest rate risk
Borrowings are the main sources of interest rate risk because the interest rate is floating whereas interest payable on
trade finance, lease liabilities are fixed for the term of the arrangement. Interest earned on cash and cash equivalents is
not significant. The composition of the Group’s funding is considered regularly to ensure applicable interest rates are
competitive and reflective of the Group’s future funding requirements.
Health and safety risk
The Group has exposure to health and safety risks in the manufacturing operations and warehousing facilities, in line
with the broader manufacturing industry. A safety management system, including policies, procedures, training,
incident reporting and investigation, and injury management is in place to mitigate these risks. If controls fail to be
adequate a breach of the legislation may result in physical or psychosocial injury or harm to employees, contractors or
visitors, and an impact to operations, finances and reputation.
Product quality and safety
The Group manufactures and sources from third parties a range of packaging and other products that are required to
meet regulatory obligations, quality and food safety standards and customer specifications. Non-compliance with these
requirements may result in injuries, product recalls, customer claims, remediation costs and/or penalties. The Group
has in place externally accredited quality management and food safety systems and processes to mitigate the financial,
reputational and regulatory impacts of this risk.
Customer risks
The retention of key customers is central to maintaining demand for the Group’s products. Factors including
effectiveness of the Group’s salesforce, domestic and international competition, uncertainties in the macroeconomic
and geopolitical landscape, management of inflationary impacts and pricing, changes to market conditions, product
innovations, along with evolving customer strategies and preferences may lead to material adverse financial and
reputational impacts, The Group mitigates this risk by investing in strong customer relationships and empowering
salesforce talent with flexibility and agility to respond to changing conditions and customer preferences.
Loss of key management and technical expertise
The Company’s key technical experts are instrumental in implementing the Group’s strategies and executing business
plans which support the business operations and growth. Service agreements are in place and the risk of the loss of key
personnel is mitigated by regular reviews of remuneration packages (including short and long- term incentive schemes)
and succession planning.
Cyber security risk
IT application and data security are fundamental not only in protecting confidential and commercially sensitive
information, but also enabling day to day operations. Cyber-attacks, if successful, could have implications ranging from
reputational damage to cessation of business trading. The Group has in place a range of policies, plans, procedures,
controls and training to mitigate this risk which are regularly tested.
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12 | ANNUAL REPORT 2024
Supply risk
Continuity of supply of critical raw materials and consumables is critical to ensure an effective and efficient
manufacturing resource and demand planning. Unfavourable changes in price and availability of raw materials and
consumables are likely to impact upon financial performance. Supply arrangements are in place for key raw materials
and consumables (particularly resin) with a number of suppliers in different geographical locations, which provides the
Group with sourcing options and diversifies the risk of a localised event disrupting operations. Disruptions to the supply
chain experienced during the pandemic largely resolved, however impacts due to geopolitical uncertainty in parts of
Europe and the Middle East continue to be managed.
Regulatory changes
Changes to government policy and legislation, including those covering plastics, packaging, recycled products and data
disclosure, may have an impact on the financial performance and reputation of the Company. Working groups continue
to monitor these changes in order to remain abreast of the evolving regulatory environment and align with various
government, customer and other stakeholders’ requirements.
Major projects
The Company has committed to delivery of strategic projects which if not completed to agreed outcomes may lead to
financial, reputational and regulatory impacts and affect future opportunities. Project Steering Committees are in place
and continue to monitor and review the specific project risks, deliverables, timing and budgets.
Environmental risk
The Group’s activities have a level of environmental risk, particularly the Integrated Recycling operation, due to the
nature of the operation. Each of the manufacturing sites that hold a licence or permit work collaboratively with the
relevant environmental agencies to mitigate the risk of impacting the environment, and risk of financial and
reputational impacts.
Climate change
The Company continues to stay abreast of new and emerging risks related to climate change and regulatory
requirements for disclosures which could negatively impact our business operations, finances or reputation. This
includes the ASRS Sustainability Disclosure Standards ASRS S1 and ASRS S2. The Group has committed to setting
Science-Based Targets Initiative (“SBTi”) endorsed targets, in line with the Paris Agreement goals to reduce emissions.
Refer to the Sustainability section on page 43 for further information.
Other adverse impacts of climate change may have a progressive impact on the Company or may affect the Company
as a result of impacts on its upstream and downstream partners (customers and suppliers), in particular those in the
agricultural sector. These impacts include weather events, natural disasters, extreme heat, flooding, bushfires and
drought.
An ESG Materiality Assessment has been completed and the Company’s material ESG topics and mitigations are
disclosed in the Sustainability Report.
Directors’ Report
PRO-PAC PACKAGING LIMITED
13 | ANNUAL REPORT 2024
Outlook
The trading environment continues to remain volatile and challenging in a high inflationary market, which has created
uncertainty around consumer buying patterns. However, we will continue with the process of restoring customer
confidence through better service delivery, and we will undertake aggressive cost reduction programs to restore
profitability.
Our focus on our investment in recycling will ensure the business takes an important leadership role in the Plastics
industry around soft plastic recycling and the circular economy.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the year ended 30 June 2024.
Significant events subsequent to balance date
Domenic Romanelli resigned his position of CFO effective 2 July 2024. He has been replaced by Patsy Ch’ng effective 3
July 2024.
In August 2024, the group has reached in principle approval for a new $5.0 million Asset Finance Facility and is in the
process of finalising documentation.
There were no other matters or circumstances that have occurred subsequent to balance date that have significantly
affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs
of the Group or economic entity in subsequent years.
Likely developments and expected results
The Group is focussed on identifying higher value packaging solutions and maintaining efficient working capital and a
strong balance sheet to provide it with a solid foundation for organic and inorganic growth in the short to medium-
term. The Group continues to evaluate its operating model for further opportunities to leverage operational and cost
reductions.
Environmental regulation and performance
The Group is committed to environmental sustainability and ethical standards. This is built around the Group’s
Sustainability Policy and Ethical Sourcing Policy and provides a framework that promotes the sourcing of sustainable
products, the implementation of energy efficient workplace practices and continual improvement.
The Group is a signatory to the Australian Packaging Covenant. As a signatory, the Group is committed to providing
industry with sustainable solutions for packaging handled by its business activities. The Group’s commitment is
published on the Australian Packaging Covenant’s website (www.packagingcovenant.org.au) and is available on the
Group’s website.
In addition, the Group is a participant in the Packaging Recyclability Evaluation Portal (PREP) and Australian Recycling
Label (ARL) programs, an industry first initiative developed to provide the public with the appropriate information to
allow consumers to make better choices when recycling packaging.
The Group is a member of Sedex and Business Social Compliance Initiative (BSCI), internationally recognised programs
that assist to regulate companies to ensure they meet ethical standards and provide a high level of social responsibility
to the community and its partners.
The Group seeks to meet its social responsibility to the community and its shareholders and continues to strive to
improve its processes and performance for a sustainable future.
Directors’ Report
PRO-PAC PACKAGING LIMITED
14 | ANNUAL REPORT 2024
The directors are not aware of any material breaches of environmental regulations or site-specific licenses during the
year ended 30 June 2024 or subsequent to balance date.
Further information on the Company’s sustainability approach is found on pages 43 to 44 of the annual report.
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. 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.
Indemnification and insurance of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms
of its audit engagement agreement, against claims by third parties arising from the audit (for an unspecified amount).
No payment has been made to indemnify Ernst & Young during the year ended 30 June 2024 or subsequent to balance
date.
The Company 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 them against a liability
for the costs or expense of defending legal proceedings.
Meetings of directors
The number of meetings of directors (including meetings of committees of directors) held during the year ended 30
June 2024 and the number of meetings attended by each director were as follows:
Board
of directors
Audit, business
risk & compliance
committee
Remuneration
& nomination
committee
Note
Number of
meetings
held while in
office
Number of
meetings
attended
Number of
meetings
held while in
office
Number of
meetings
attended
Number of
meetings
held while in
office
Number of
meetings
attended
-
J. Ling
(1)
11
10
-
4
2
R. Harrington
11
11
7
7
4
4
M. Blackburn
(4)
11
11
7
7
3
3
G. Cashion
(2)
0
0
-
-
-
-
J. Cerini
(3)
11
11
-
-
-
-
(1)J. Ling retired as Non-executive Chairman effective 30 June 2024.
(2) G. Cashion resigned as Non-executive Director on 10 July 2023.
(3)In addition to his role as CEO, J. Cerini was appointed Executive Chairman effective 1 July 2024.
(4)M. Blackburn was appointed to the Remuneration and Nomination Committee effective 1 September 2023.
The directors were otherwise in office and held membership of each sub-committee shown above for the entire period.
Directors’ Report
PRO-PAC PACKAGING LIMITED
15 | ANNUAL REPORT 2024
Rounding
The amounts contained in the annual report have been rounded to the nearest $1,000 (where rounding is applicable)
where noted ($‘000) under the option available to the Company under ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191. The Company is an entity to which this Instrument applies.
Remuneration report
The directors present the Company’s remuneration report, which has been audited by Ernst & Young, on page 16 of the
annual report.
Auditor independence declaration
The auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 for the year
ended 30 June 2024 has been received and can be found on page 28 of the annual report.
Non-audit services
The following non-audit services were provided by the Company’s auditor, Ernst & Young. The directors are satisfied
that the provision of non-audit services is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor
independence was not compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:
$’000
Tax compliance services
211
Tax advisory services
90
Non-audit services
301
This directors’ report is signed in accordance with a resolution of the board of directors pursuant to Section 298(2)(a) of
the Corporations Act 2001.
Signed in Melbourne on 29 August 2024.
John Cerini
CEO and Executive Chairman
Remuneration Report
PRO-PAC PACKAGING LIMITED
16 | ANNUAL REPORT 2024
This remuneration report which forms part of the directors’ report sets out information about the remuneration
of the key management personnel of the Group for the financial year ended 30 June 2024.
Key Management Personnel (KMP)
The term ‘key management personnel’ refers to those persons having authority and responsibility for planning,
directing, and controlling the activities of the Group directly or indirectly.
The directors and other KMP of the Group during or since the end of the financial year were:
Non-executive directors
Position
Jonathan Ling (retired 30 June 2024)
Chairman, Non-executive
Rupert Harrington
Non-executive Director
Mark Blackburn
Non-executive Director
Geoff Cashion (resigned 10 July 2023)
Non-executive Director
Executive director
Position
John Cerini(1)
CEO and Executive Chairman
Senior executives
Position
Domenic Romanelli (resigned effective 2 July 2024)
Chief Financial Officer (CFO)
Patsy Ch’ng (appointed effective 3 July 2024)
Chief Financial Officer (CFO)
(1)In addition to his role as Chief Executive Officer, John Cerini was appointed Executive Chairman effective 2 July
2024.
Except as noted, the named persons held their current positions for the whole of the financial year and since the
end of the financial year.
Remuneration policy
The performance of Pro-Pac Packaging Limited (the Company) and its controlled entities (the Group) depends
upon the quality of its directors and senior executives. To prosper, the Company must attract, motivate, and
retain highly skilled directors and senior executives.
Responsibility for setting remuneration
The preparation and oversight of the remuneration policy is the responsibility of the remuneration and
nomination committee (The Committee).
The Committee’s role is to assess the appropriateness of the nature and amount of the remuneration of
directors and senior executives on a periodic basis by reference to relevant employment market conditions. The
overall objective is to ensure maximum stakeholder benefit from the retention of a high-quality board of
directors (Board) and senior executive team. It is intended that the manner of payments chosen will be optimal
for the recipient without creating undue cost for the Group.
The Committee for the year ended 30 June 2024 comprised R. Harrington (Chair), J. Ling and M. Blackburn who
are Non-executive Directors.
The Company aims to develop remuneration packages that properly reflect each person’s duties and
responsibilities and includes remuneration that is competitive in attracting, retaining, and motivating people of
the highest quality.
The Committee is responsible for:
Reviewing and providing recommendations to the Board with respect to the remuneration packages of senior
executives and executive directors; and
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 CEO.
The Committee approves the remuneration packages for the senior executives of the Company based on
recommendations from the CEO in accordance with compensation guidelines set by the Board.
Remuneration Report
PRO-PAC PACKAGING LIMITED
17 | ANNUAL REPORT 2024
Remuneration composition
In accordance with best practice corporate governance, the structure of non-executive director and executive
director and senior executives’ remuneration is separate and distinct.
Executive director and senior executives
The remuneration of executive directors and senior executives of the Company is comprised of the following
components:
Base salary, plus superannuation (fixed annual remuneration (FAR)); and
Short-term incentives (STI) and long-term incentives (LTI).
The Board may consider remuneration structures that incentivise and reward senior executives for
outperformance against targets for future years.
The remuneration structure for each executive KMP for the year ended 30 June 2024 is shown in the table
below:
KMP
Position
Term as KMP
FAR
STI
LTI
Total
Executive director
J. Cerini1
CEO and Executive Chairman
Full year
34%
17%
49%
100%
Senior executives
D. Romanelli2
CFO
Full year
52%
24%
24%
100%
1 J. Cerini was appointed Executive Chairman effective 1 July 2024.
2 D. Romanelli resigned as CFO effective 2 July 2024.
The remuneration of the CEO and executive KMP for the year ended 30 June 2024 is set out in Table 2 of this
remuneration report.
Non-executive directors
The Company seeks to set aggregate remuneration at a level which provides it with the ability to attract, retain
and motivate non-executive 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 quantum of directors’ fees (which does not include remuneration of executive
directors and other non-director services provided by directors) is $800,000 per annum.
The remuneration arrangements for the Company’s non-executive directors for the year ended 30 June 2024 is
comprised of directors’ fees and committee fees (inclusive of superannuation), and are summarised in the table
below:
Roles
Position
$
Board
Chair
190,210
Non-executive directors
80,997
Sub-committees
Chair
34,710
Member
11,566
The additional fees for service on a sub-committee or being the chair of a sub-committee recognises the
additional responsibility and time commitment of those non-executive directors who serve on those sub-
committees.
Remuneration Report
PRO-PAC PACKAGING LIMITED
18 | ANNUAL REPORT 2024
Non-executive directors are entitled to be reimbursed for their reasonable expenses incurred in connection with
the affairs of the Company. A non-executive director may also be remunerated as determined by the directors if
that non-executive director performs additional or special duties for the Company.
The non-executive directors do not participate in any incentive programs.
The remuneration of the Company’s non-executive directors for the year ended 30 June 2024 is set out in Table
2 of this remuneration report.
Remuneration policy and company performance
Table 1: The table below sets out information about the Company’s earnings and total returns attributable to
shareholders for the past five years up to and including the current financial year. These key performance
indicators form part of the assessment of the fixed and variable component of a KMP’s remuneration.
Measure
30 June
2024
30 June
2023
30 June
2022
30 June
2021
30 June
2020
Profit/(loss) after tax ($’000)*
(53,764)
(10,238)
(25,871)
7,837
6,643
Share price at balance date ($)**
0.14
0.210
0.485
2.00
1.80
Basic earnings per share (cents)**
(29.59)
(5.63)
(31.90)
9.70
8.20
Total dividends per share (cents)**
0.00
0.00
0.00
5.50
4.00
* Before accounting for AASB 16 for the years ended 30 June 2019 as AASB 16 was adopted on 1 July 2019
** for the years prior to the year ended 30 June 2022, these measures have been restated to reflect the share
consolidation which took place in the year ended 30 June 2022.
Executive service agreements
Remuneration arrangements for executives are formalised in executive service agreements. The following
outlines the details of contracts with executives:
CEO
J. Cerini’s employment agreement contains the following key terms and conditions:
Fixed remuneration is $618,000 per annum, plus superannuation capped at the statutory rate.
The target STI opportunity is 50% of fixed remuneration.
Participation in the LTI plan is on terms determined by the Board, subject to receiving any required or
appropriate shareholder approval. It is notionally 200% of fixed remuneration for the current financial year
and 150% for the 2023 financial year.
The employment of J. Cerini will continue until such date that his position is terminated by the Company or
himself. The Company or the CEO 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
misconduct.
For a period up to 12 months after the termination date, J. Cerini will be restrained from engaging in any
business in competition with or of a similar nature to the Company. Other restraints on post-employment
activities include being prevented from enticing any Company personnel or business partners away from the
Company.
All intellectual property rights created, developed, or acquired by him in the course of his employment, belong to
the Company.
Remuneration Report
PRO-PAC PACKAGING LIMITED
19 | ANNUAL REPORT 2024
Other senior executives
Employment agreements with other senior executives contain the following key terms:
Event
Company Policy
Resignation / notice period
Three months or less
Serious misconduct
Company may terminate at any time
Payouts upon resignation or termination, outside
industrial regulations (i.e., ‘golden handshakes’)
None
Financial year ended 30 June 2024
Table 2: A summary of the remuneration of KMP for the year ended 30 June 2024 is as follows:
Short-term
benefits
Long-term
benefits
Post-
employment
benefits
Share-
based
payments
KMP
Salary,
wages and
fees
$
Short-
term
incentive
$
Non-
monetary
benefits
$
Employee
entitlements
$
Super-
annuation
$
Perform-
ance
Rights
$
Total
$
Perform-
ance
based
%
Non-executive directors
J. Ling
181,784
-
-
-
19,996
-
201,780
-
R. Harrington
114,668
-
-
-
12,614
-
127,282
-
M. Blackburn4
112,931
-
-
-
12,422
-
125,353
-
G. Cashion1
1,994
-
-
-
219
-
2,213
-
Executive director
J. Cerini3,
564,777
-
-
993
27,399
(700,223)
(107,054)
>(100)%
-
Senior executives
-
D. Romanelli2,3
433,987
-
-
650
27,399
(40,059)
421,977
(9.5)%
Total
1,410,141
-
-
1,643
100,049
(740,282)
771,551
(95.9)%
1G. Cashion resigned as Non-executive Director on 10 July 2023.
2D. Romanelli resigned as CFO effective 2 July 2024.
3Refer details below of share-based payments expense.
4M. Blackburn joined the remuneration committee effective 1 September 2024.
The total fees paid to non-executive directors for the year ended 30 June 2024 were $456,628. The director fee
cap approved by shareholders is $800,000.
Remuneration Report
PRO-PAC PACKAGING LIMITED
20 | ANNUAL REPORT 2024
What are share-based payments?
The Group uses equity instruments including the performance rights plan (PRP) to retain and award its senior
executives as part of short-term and long-term bonus incentives.
These equity instruments vest upon the senior executive remaining in service with the Group and the
achievement of certain performance hurdles by the end of the vesting period.
All share-based payment arrangements are equity-settled, and the value of the performance rights granted to
KMP as part of their remuneration is calculated at grant date.
The appropriate valuation method used to determine the fair value of each award depends on whether the
vesting conditions include a market hurdle or a non-market hurdle.
The Monte Carlo simulation-based model is used to test the likelihood of attaining the market hurdle against
the comparator group of entities using the following assumptions: expected volatility, risk-free interest rate,
expected life of option, share price, dividend yield and probability of achievement. The Monte Carlo
simulation incorporates the impact of this market condition on the fair value of the awards containing a
market hurdle.
The fair value of awards which do not contain a market hurdle is based on the share price on the grant date,
less any expected dividends to be received between grant date and the vesting date.
The fair value of instruments granted are amortised on a straight-line basis over the vesting period during which
the services are rendered. The probability that performance rights containing a non-market condition will vest is
required to be updated at each reporting date. The share-based payments disclosed as part of remuneration
relates to the current period allocation of the fair value.
Share-based payments for the year ended 30 June 2024
John Cerini
The share-based payments expense for J. Cerini relates to the current period’s allocation of the amortisation of
the fair value of his PSRs remaining on foot at 30 June 2024. This amortisation expense for the current period is
calculated by incorporating the following :
a)
Performance rights modified during the period
During the current financial period the terms and conditions attached to the vesting of 3,000,000
performance rights were modified and approved by shareholders at the 2023 Annual General Meeting. The
2 key modifications were:
Alteration of the period in respect of which the vesting conditions were measured from 30 June 2024 to
30 June 2025; and
Changing the non-market vesting condition of the EBITDA target to $20 million for the FY25 financial
year
Under the guidelines of AASB 2 Share Based Payments, where there is a modification to an equity-settled
share-based payment transaction the fair value must be revalued at the modification date (21 November
2023).
The fair value of these PSRs at the modification date were determined to be $0.26 per PSR (previously
valued as $0.30 per PSR).
As this modification did not increase the fair value of the rights, AASB 2 requires that the decrease in fair
value shall not be taken into account. As a result, these PSRs will continue to be accounted for at the
original fair value of $0.30 per PSR as if the modifications had not occurred. Similarly, as the vesting period
was extended by 12 months (and not reduced) the fair value of the rights will continue to be amortised over
the period of the original terms (i.e. ending on 30 June 2024).
In addition, as the targeted performance hurdles for these PSRs are unlikely to be met, the company has
determined that the probability that they will vest is zero.
As a result, the share-based payment expense for the current period includes the reversal of the cumulative
expense as at 1 July 2023 of $382,075.
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PRO-PAC PACKAGING LIMITED
21 | ANNUAL REPORT 2024
b)
New issue of performance rights during the period
During the period a total of 2,942,857 performance rights were issued for John Cerini. This was approved by
shareholders at the 2023 Annual General Meeting and have a grant date for accounting purposes of 21
November 2023.
This equates to $927,000 or 150% of his fixed base remuneration and is determined using a reference share
price of $0.315 (being the weighted volume average share price for the 5 days after the Company’s full year
results release for the year ending 30 June 2023).
The performance targets for these PSRs, comprising EBITDA (50%) and strategic initiatives (50%) are
designated as non-market conditions and in accordance with the AASB 2 Share based payments guidelines,
the valuation process does not incorporate the probability of meeting these targets.
As a result, to determine the fair value of the rights for amortisation over the vesting period, the Black-
Scholes-Merton Model was applied resulting in a fair value at grant date of $0.26 per PSR.
As part of the review of the performance rights (containing vesting conditions designated as non-market
conditions) expected to vest it has been determined that although it is likely that the strategic initiatives will
be achieved, the Company believes that the EBITDA target will not be met.
As a result, the expectation that the vesting conditions for these PSRs will be met has been assessed 50%
and the current period share based payment expense reflects this.
c)
Performance rights (with non-market conditions) the probability of vesting has been reduced to zero at
balance date
On commencement as CEO John was granted 4,000,000 performance rights (Tranche 1 (3,000,000 PSRs) and
Tranche 3 (1,000,000 PSRs). This was approved by shareholders at the 2022 Annual General Meeting.
In accordance with AASB 2 Share based payments, at each reporting date the company is required to review
estimates of the number of performance rights (containing vesting conditions designated as non-market
conditions) with that expected to vest.
As the targeted performance hurdles for these PSRs are unlikely to be met, the company determined that
the probability that they will vest is zero.
As a result, the share-based payment expense for the current period includes the reversal of the cumulative
expense as at 1 July 2023 of $509,434.
Domenic Romanelli (CFO)
The share-based payment expense for D. Romanelli for the year ended 30 June 2024 is negative due to the
future lapsing of 1,320,635 performance rights consequent upon his resignation effective 2 July 2024, which
resulted in the reversal of the cumulative expense previously recognised of $40,059.
Remuneration Report
PRO-PAC PACKAGING LIMITED
22 | ANNUAL REPORT 2024
Financial year ended 30 June 2023
Table 3: A summary of the remuneration of KMP for the year ended 30 June 2023 is as follows:
Short-term
benefits
Long-term
benefits
Post-
employment
benefits
Share-
based
payments8
KMP
Salary,
wages and
fees
$
Short-
term
incentive
$
Non-
monetary
benefits
$
Employee
entitlements
$
Super-
annuation
$
Perform-
ance
Rights
$
Total
$
Perform-
ance
based
%
Non-executive directors
J. Ling
181,784
-
-
-
19,087
-
200,871
-
R. Harrington
114,668
-
-
-
12,040
-
126,708
-
M. Blackburn1
61,396
-
-
-
6,447
-
67,843
-
G. Cashion2
11,195
-
-
-
1,175
-
12,370
-
L. Valentine3
33,037
-
-
-
3,469
-
36,506
-
D. Brown3
39,647
-
-
-
3,626
-
43,273
-
Executive director
J. Cerini4, 8
477,874
99,000
-
676
18,970
891,509
1,488,029
66.6%
J. Ling4
91,284
-
-
-
6,205
-
97,489
-
T. Welsh5, 8
172,957
-
9,041
(4,314)
7,622
(479,254)
(293,948)
>(100)%
Senior executives
D. Romanelli6,8
275,395
65,000
-
351
18,923
40,059
399,728
26.3%
D. Brown7
146,255
-
-
-
6,323
-
152,578
-
Total
1,605,492
164,000
9,041
(3,287)
103,887
452,314
2,331,447
26.4%
1M. Blackburn was appointed Non-executive Director on 23 November 2022.
2G. Cashion was appointed Non-executive Director on 5 May 2023 and resigned on 10 July 2023.
3L. Valentine and D. Brown resigned on 22 November 2022.
4 J. Ling assumed the role of Interim Executive Chairman on 18 July 2022 until J. Cerini’s appointment as CEO on 3
October 2022.
5T. Welsh ceased to be a KMP on 18 July 2022. Remuneration disclosed includes termination benefits (contracted
notice period) of $144,679. Long-term benefits are negative as a result of the reversal of his long service leave
accrual.
6D. Romanelli was appointed CFO on 7 November 2022.
7 D. Brown ceased to be the interim CFO on 7 November 2022.
8Refer an explanation of share-based payments accounting treatment on page 20 of this report.
Although the STI targets were not met, the board resolved to provide $164,000 in discretionary bonuses to KMP
during the year ended 30 June 2023.
The total fees paid to non-executive directors for the year ended 30 June 2023 were $487,571.
Share-based payments for the year ended 30 June 2023
The share-based payments for T. Welsh for the financial year ended 30 June 2023 are negative due to the forfeit
of 961,519 performance rights consequent upon his resignation on 18 July 2022, which resulted in the reversal of
the cumulative expense previously recognised.
The share-based payments for J. Cerini for the year ended 30 June 2023 reflect the expense relating to the
extrapolated reference to 8,000,000 performance rights as part of his executive service agreement (of which
only 4,000,000 performance rights had been issued up to 30 June 2023) on commencement as CEO and
Managing Director of the Group. The rights are valued at $0.30 per share and expensed over the vesting period,
taking into account the probability of meeting the non-market conditions. The grant of 1,000,000 performance
rights as part of his STI for 2023 will not vest and are therefore not included the share-based payment expense
for this period.
Remuneration Report
PRO-PAC PACKAGING LIMITED
23 | ANNUAL REPORT 2024
Remuneration of interim executive team during the year ended 30 June 2023
On 18 July 2022, T. Welsh resigned his position of CEO and Managing Director.
On this date J. Ling assumed the role of Interim Executive Chairman and was paid a higher duties remuneration
of $2,500 per day (inclusive of superannuation). The termination notice period was one week. Higher duties
remuneration totalled $97,489.
On 3 October 2022, J. Cerini was appointed permanent CEO and Managing Director.
On 11 May 2022, D. Brown was appointed Interim CFO following the resignation of I. MacPherson. This position
was held until the permanent appointment of D. Romanelli as CFO on 7 November 2022.
During this period D. Brown was paid a higher duties remuneration of $2,450 per day (inclusive of
Superannuation) and the termination notice period was one week. Higher duties remuneration for the period 1
July 2022 to 7 November 2022 totalled $152,578.
Director fees for J. Ling and D. Brown remained unchanged during this period.
Executive director and senior executives’ incentives program
Short-term incentives (STI)
For each financial year, executive directors and senior executives are entitled to receive short-term incentives
subject to the achievement of certain key performance indicators. Board discretion may be applied.
John Cerini (CEO and Managing Director)
J. Cerini is entitled to receive a STI benefit to the value of 50% of his base salary conditional upon the
achievement of various key performance indicators (KPI).
In FY23, the STI was satisfied by the granting of performance rights which vest subject to the achievement of the
KPIs, the terms and conditions under the Company’s Performance Rights Plan (PRP) and his employment
contract. KPIs for the granting of a STI bonus are:
STI Bonus
Weighting
Overview of performance against target
FY241
100%
Group EBITDA target, which is based on the achievement of
100% of the target approved by the Board.
FY231,2,3
50%
Group EBITDA target, which is based on the achievement of
100% of the target approved by the Board.
30%
Achievement of FY23 working capital improvement target.
20%
Achievement of Group’s FY23 LTIFR target
1Vesting of performance rights for FY23 and FY24 will be over a 1-year measurement period.
2Although working capital, safety performance and EPS targets may be met there will be no vesting of
performance rights unless the target EBITDA for FY23 was achieved. These PSRs were forfeited in this period due
to the targeted performance hurdles not being achieved.
3The value of the performance rights issued as STI were based on a share price of $0.30 per share for FY23. This
equates to 1 million performance rights for FY23.
Remuneration Report
PRO-PAC PACKAGING LIMITED
24 | ANNUAL REPORT 2024
Other senior executives
All Incentive Plans operate at the discretion of the Board and retain a profit gate to activate, including the cost of
the scheme.
STIs may be awarded based on a sliding scale based on the achievement of certain KPIs such as plan or forecast
EBITDA.
Performance targets for each senior executive include both organisational and individual metrics.
Long-term incentives (LTI)
As detailed below the Company currently operates a performance rights plan (PRP) from which is currently used
to grant LTI awards. Granting of the rights is at the absolute discretion of the Company and where applicable may
require shareholder approval.
John Cerini (CEO and Managing Director)
Upon commencement as CEO on the 3rd October 2022, J. Cerini was granted performance rights to a value of
$2.1 million representing an LTI award for the FY23 and FY24 financial years. This was approved by shareholders
at the 2022 Annual General Meeting. The granting of these rights is subject to the satisfaction of key
performance hurdles, as follows:
Tranche
Financial Year
Performance
Rights ($)
Vesting Period
Tranche 1
FY23
900,000
2 years
Tranche 2
FY24
900,000
1 year
Tranche 3
FY24
300,000
1 year
The vesting of the performance share rights will be over a 2-year measurement period in respect of tranche 1,
and 1 year in respect of tranches 2 and 3. For all tranches, the key performance hurdles comprised:
1.
100% cash conversion of EBITDA for FY24; and
2.
The achievement of EPS targets for FY24.
Vesting of rights based on the EPS targets will occur linearly depending on the FY24 EBITDA result. The EBITDA
target range for Tranche 3 is higher than Tranche 1 and 2. Further details are contained in the Notice of Annual
General meeting from 22 November 2022.
As documented in the 2023 Notice of Annual General meeting Tranche 1 and Tranche 3 performance rights were
not issued during the current period, or at all. They are however treated as issued for accounting purposes in
accordance with AASB2 Share-based payments on the notional grant date of 3 October 2022. Refer page 26 for
further details of the notional grant date.
During the current financial period the terms attached to the vesting of the Tranche 2 PSRs were modified and
approved by shareholders at the 2023 Annual General Meeting. Refer page 20 for details of the modification.
In addition, during the current period John was issued 2,942,857 performance rights as part of his FY23 LTI. This
was approved by shareholders at the 2023 Annual General Meeting.
Granting and vesting of performance rights is otherwise subject to the terms and conditions of the relevant share
plans in place.
Remuneration Report
PRO-PAC PACKAGING LIMITED
25 | ANNUAL REPORT 2024
Other senior executives
Other senior executives of the Company are entitled to LTIs in the form of performance rights which are
discussed further below.
Granting and vesting of performance rights is otherwise subject to the terms and conditions of the relative share
plans in place.
Current LTI plan – performance rights plan (PRP)
The Company has established a PRP to provide eligible employees with an opportunity to share in the growth in
value of the Company and to encourage them to improve the longer-term performance of the Company and its
return to shareholders. The PRP is also intended to assist the Company to attract and retain skilled and
experienced senior executives and provide them with an incentive to have a greater involvement with, and focus
on, the longer-term goals of the Company.
The following are the key features of the PRP:
The Board may from time to time, in its absolute discretion, invite eligible employees to apply for rights
under the PRP on terms set out in the PRP and any other terms the Board considers appropriate, subject to
the grant complying with the Corporations Act 2001 and the ASX Listing Rules;
A right will vest where the eligible employee remains in service at vesting date and, in some cases, upon
satisfaction of performance hurdles and other vesting conditions determined by the Board. The key
performance hurdle which has been used is that the TSR 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);
The exercise price of a grant of rights under the PRP may be zero, although a price may be set by the Board;
A right will automatically lapse where the right has not been exercised by the expiry date; and
Shares issued on the exercise of rights under the PRP will rank equally in all respects with all existing shares
from the date of allotment, including in relation to voting rights and entitlements to distributions and
dividends.
Table 4: A summary of the PRP as at the date of this report is as follows:
Notional
Grant
Date1
Vesting
date
Expiry
date
Exercise
price
Fair
Value
Balance at
beginning
of year
Granted
Exercised
Forfeited
Balance
at end
of year
11-Dec-20
30-Jun-23
31-Dec-23
$0.00 $0.134
49,959
-
-
(49,959)
-
20-Dec-21
30-Jun-24
31-Dec-24
$0.00 $0.867
226,659
-
-
(20,663)
205,996
3-Oct-221
30-Jun-23
31-Dec-24
$0.00 $0.300
1,000,000
-
- (1,000,000)
-
3-Oct-221,2
30-Jun-24
31-Dec-24
$0.00 $0.300
3,000,000
-
-
(3,000,000)
3-Oct-221,4
30-Jun-24
31-Dec-24
$0.00 $0.300
3,000,000
-
- (3,000,000)
-
3-Oct-221,4
30-Jun-24
31-Dec-24
$0.00 $0.300
1,000,000
-
- (1,000,000)
-
31-Mar-23
30-Jun-25
31-Dec-25
$0.00 $0.247
4,041,556
-
-
(641,667)
3,399,889
21-Nov-233
30-Jun-25
31-Dec-25
$0.00 $0.260
- 2,942,857
-
-
2,942,857
23-Nov-235
30-Jun-26
31-Dec-26
$0.00 $0.190
- 3,335,126
-
-
3,335,126
Total
12,318,174 6,277,983
- (5,712,289)
12,883,868
Remuneration Report
PRO-PAC PACKAGING LIMITED
26 | ANNUAL REPORT 2024
1 This is a notional grant date. The Company could not and would not issue performance rights to a KMP until
approved by shareholders, as required by the Listing Rules. The actual grant dates are a later date, after
shareholder approval has been granted, the invitation and terms and conditions issued by the company and
accepted by the recipient, and duly registered as granted. The performance rights “issued” on the 3 October
2022 were referred to in J Cerini’s employment contract on commencement as CEO of the group. Although the
Board issued 4 million rights in FY23 and may have issued 4 million rights in FY24, accounting standards require
that the rights are treated as granted from such date that there is a shared understanding of the terms and
conditions of the award issued. Accordingly, the full 8 million rights have been treated as issued, for accounting
purposes, from John’s commencement date as CEO (as terms were agreed as part of his employment contract).
The performance conditions attached to the 8 million performance rights issued vary to those issued by the
Group in previous periods, which included a market condition of TSR. As the performance rights issued during
the year only contained non-market conditions (service conditions, EBITDA and EPS), typical share-based
payment valuation models (EG. Monte Carlo or Black Scholls) are not required to value these performance rights.
2The terms and conditions attached to the vesting of these performance rights (designated as FY24 Tranche 2
LTIs in J. Cerini’s employment contract) were modified and approved by shareholders at the 2023 Annual General
Meeting. Refer page20 of this report for further details.
3During the current financial period, 2,942,857 PSRs were granted to J. Cerini as an FY23 LTI under the PRP. This
was approved by shareholders at the 2023 Annual General Meeting.
4 As documented in the 2023 Notice of Annual General meeting Tranche 1 and Tranche 3 performance rights
were not issued during the current period, or at all. However, for accounting purposes, they were treated as
issued on the notional grant date of 23 October 2022, in accordance with AASB2 Share-based payments. As a
result, they were treated as forfeited during the period as they were not on foot at 30 June 2024.
5These PSRs granted during the current financial period to senior executives include 653,968 rights issued to D.
Romanelli as his LTI under the PRP.
Performance rights issued to KMP during the year
Table 5: A summary of performance rights granted to KMP and remaining on foot as at the date of this report is
as follows:
KMP
Grant date
Vesting
date
Expiry
date
Exercise
Price
Fair
Value
Balance
as at
1 July
2023
Granted
Forfeited
Balance as
at
30 June
2024
J.Cerini1
3-Oct-22
30-Jun-23
31-Dec-24
$0.00
$0.300
1,000,000
- (1,000,000)
-
J.Cerini2,3
3-Oct-22
30-Jun-24
31-Dec-24
$0.00
$0.300
7,000,000
- (4,000,000)
3,000,000
J. Cerini4
21-Nov-23 30-Jun-25
31-Dec-25
$0.00
$0.260
- 2,942,857
-
2,942,857
D.Romanelli5
16-Mar-23 30-Jun-25
31-Dec-25
$0.00
$0.247
666,667
-
-
666,667
D.Romanelli5
23-Nov-23 30-Jun-26
31-Dec-26
$0.00
$0.190
-
653,968
-
653,968
8,666,667 3,596,825 (5,000,000)
7,263,492
Performance rights are granted with vesting conditional upon the achievement of certain performance
conditions. Each performance right entitles the holder to subscribe for one share.
1These performance rights granted to J. Cerini as part of his FY23 STI were forfeited during the current period
due to the targeted performance hurdles not being achieved.
2These performance rights notionally granted to J. Cerini on his commencement as CEO are comprised of 3
tranches as detailed in his service agreement. Refer page 24 for further details.
3Refer Table 4 (note 4) above for details of the 4,000,000 performance rights that were forfeited during the
current period.
4During the period J. Cerini was issued 2,942,857 performance rights as part of his FY23 LTI. This was approved
by shareholders at the 2023 Annual General Meeting.
5 Upon his resignation effective 2 July 2024 D. Romanelli forfeited 1,320,635 performance rights. Although for
accounting purposes they are treated as forfeited at 30 June 2024 they remain on foot as they are not physically
cancelled until his termination date on 2 July 2024.
Remuneration Report
PRO-PAC PACKAGING LIMITED
27 | ANNUAL REPORT 2024
KMP equity holdings
Table 6: KMP Interests (directly, indirectly or beneficially) in the fully paid ordinary shares of the Company as at
the date of this report are as follows:
KMP
Balance as
at 30 June
2023
Acquired
Other
changes1
Balance as
at 30 June
2024
J. Ling
430,114
-
-
430,114
R. Harrington
1,604,934
-
-
1,604,934
J. Cerini
1,013,309
-
-
1,013,309
D.Romanelli2
33,000
-
-
33,000
Total
3,081,357
-
-
3,081,357
1Other changes refer to notional movements in equity holdings as a result of ceasing or commencing as a KMP
during the financial year.
2Domenic Romanelli ceased to be a KMP effective 2 July 2024.
The non-executive directors do not have any interests in performance rights or share options of the Company.
Other option holdings of KMP
No options were issued to KMP during the year ended 30 June 2024.
Loans to KMP
There were no loans to KMP during the year ended 30 June 2024.
This concludes the remuneration report, which has been audited.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s Independence Declaration to the Directors of Pro-Pac
Packaging Limited
As lead auditor for the audit of the financial report of Pro-Pac Packaging Limited for the financial year
ended 30 June 2024, I declare to the best of my knowledge and belief, there have been:
a.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b.
No contraventions of any applicable code of professional conduct in relation to the audit; and
c.
No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Pro-Pac Packaging Limited and the entities it controlled during the
financial year.
Ernst & Young
Kylie Bodenham
Partner
29 August 2024
Corporate Governance Statement
PRO-PAC PACKAGING LIMITED
29 | ANNUAL REPORT 2024
This Corporate Governance Statement of Pro-Pac Packaging Limited (the ‘Company’) has been prepared in accordance
with the Australian Securities Exchanges (ASX) Corporate Governance Principles and Recommendations of the ASX
Corporate Governance Council 4th Edition (ASX Principles and Recommendations) and is included in the Company’s
annual report pursuant to ASX Listing Rule 4.10.3. This listing rule requires the Company to disclose the extent to which
it has followed the recommendations during the financial year, including reasons where the Company has not followed
a recommendation and any related alternative governance practice adopted.
The Company’s ASX Appendix 4G, which is a checklist cross-referencing the ASX Principles and Recommendations to
the relevant disclosures in either this statement, its website or annual report, is contained on its website at
www.ppgaust.com.au.
Both this Corporate Governance Statement and the ASX Appendix 4G are lodged with the ASX. This statement has been
approved by the Company’s board of directors (Board) and reports on the financial year ended 30 June 2024. It is
current as at 23 August 2024.
The ASX Principles and Recommendations and the Company’s response as to how and whether it follows those
recommendations are set out below.
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1 - A listed entity should disclose:
(a)
the respective roles and responsibilities of its board and management; and
(b)
those matters expressly reserved to the board and those delegated to management.
The Company’s Board maintains the following roles and responsibilities:
providing leadership and setting the strategic objectives of the Company;
defining the Company’s purpose, approving its Statement of Values and its code of conduct;
appointing the chair and/or the ‘senior independent director’;
appointing, and when necessary, replacing, the Chief Executive Officer (CEO);
assessing the performance of the CEO and overseeing succession plans for senior executives;
overseeing management’s implementation of the Company’s strategic objectives including acquisitions and
divestitures;
approving operating budgets and major capital expenditure;
overseeing the integrity of the Company’s accounting and corporate reporting systems, including the external audit;
overseeing the Company’s process for market disclosure of all material information concerning the Company that a
reasonable person would expect to have a material effect on the price or value of the Company’s securities;
ensuring that the Company has in place an appropriate risk management framework and setting the risk parameters
within which the Board expects management to operate;
approving the Company’s framework;
monitoring the effectiveness of the Company’s governance practices; and
reporting to, and communications with, security holders.
The Board has delegated the day-to-day management of the Company to the CEO and other senior executives.
Corporate Governance Statement
PRO-PAC PACKAGING LIMITED
30 | ANNUAL REPORT 2024
The Company’s senior executives are responsible for the following, within the parameters of the delegations of
management authority set by the Board:
being accountable for the performance of the Company;
implementing the strategic objectives set by the Board;
operating within the risk parameters set by the Board;
operational and business management of the Company;
managing the Company’s reputation and operating performance in accordance with parameters set by the Board;
day-to-day running of the Company;
providing the Board with accurate, timely and clear information to enable the Board to perform its responsibilities;
and
approving capital expenditure within delegated authority levels.
Senior executives have their roles and responsibilities defined in specific position descriptions.
Recommendation 1.2 - A listed entity should:
(a) undertake appropriate checks before appointing a director or senior executive, or putting forward for election as
a director; and
(b) provide security holders with all material information in its possession relevant to a decision on whether or not to
elect or re-elect a director.
Before appointing a director or senior executive, or putting forward to shareholders a director for appointment, the
Company undertakes comprehensive reference checks that cover elements such as the person’s character, experience,
employment history, qualifications, criminal history, bankruptcy, and other appropriate checks.
An election of directors is held each year. A director that has been appointed during the year must stand for election at
the next Annual General Meeting (AGM). Directors are generally appointed for a term of three years. Retiring directors
are not automatically re-appointed.
The Company provides to shareholders for their consideration information about each candidate standing for election
or re-election as a director that the Board considers necessary for shareholders to make a fully informed decision. Such
information includes the person’s biography, experience, qualifications, details of other directorships and time
commitments, adverse information about the person that the Board is aware of including material that may affect the
person’s ability to act independently on matters before the Board, and whether the Board supports the appointment or
re-election and the reasons why.
Recommendation 1.3 - A listed entity should have a written agreement with each director and senior executive setting
out the terms of their appointment.
The terms of the appointment of a non-executive director are entered into with each director personally, set out in
writing and cover matters such as the term of appointment, time commitment envisaged, required committee work
and other special duties, requirements to disclose any interest or relationships which may affect independence or
represent a conflict, requirements to comply with corporate policies and procedures (including the Company’s Code of
Conduct, Anti-Bribery Policy and its Securities Trading Policy), indemnity, access and insurance arrangements,
confidentiality obligations and remuneration entitlements.
Executive directors and senior executives are issued with service contracts which detail the above matters as well as
the person or body to whom they report, the circumstances in which their service may be terminated (with or without
notice), and any entitlements upon termination.
A director is entitled to access independent professional advice when he or she judges it to be necessary to carry out
his or her duties, at the Company’s expense, with the chairman's consent, which may not be unreasonably withheld.
Corporate Governance Statement
PRO-PAC PACKAGING LIMITED
31 | ANNUAL REPORT 2024
Recommendation 1.4 - The Company secretary of a listed entity should be accountable directly to the board, through
the chair, on all matters to do with the proper functioning of the Board.
The company secretary reports directly to the Board through the chair and is accessible to all directors. The company
secretary’s role, in respect of matters relating to the proper functioning of the Board, includes:
advising the Board and its committees on governance matters;
monitoring compliance of the Board and associated committees with policies and procedures;
coordinating all Board business;
retaining independent professional advisors;
ensuring that the business at Board and committee meetings is accurately minuted; and
assisting with the induction and professional development of directors.
Recommendation 1.5 - A listed entity should:
a)
have and disclose a diversity policy;
b)
through its board or a committee of the board set measurable objectives for achieving gender diversity in the
composition of its board, senior executives, and workforce generally; and
c)
disclose as at the end of each reporting period:
(1)
the measurable objectives set for that period to achieve gender diversity;
(2)
the entity’s progress towards achieving those objectives; and
(3)
either:
a)
the respective proportions of men and women on the board, in senior executive positions and across
the whole workforce (including how the entity has defined “senior executive” for these purposes); or
b)
if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent
“Gender Equality Indicators”, as defined in and published under that Act.
The Company has a diversity policy that sets out its commitment to diversity, respecting people as individuals and
valuing their differences. The policy reflects the Company’s commitment to creating a working environment that is fair
and flexible, promotes personal and professional growth, and benefits from the capabilities of its diverse workforce.
The organisation employs people of various genders with varying skills, cultural backgrounds, ethnicities and
experience. The Company believes its diverse workforce is the key to its continued growth, improved productivity and
performance.
The measurable objectives set by the Company for the achievement of gender diversity are as follows:
1.
Foster an inclusive culture in order to support the development of all talent.
2.
Ensure pay equity for equal work across the workforce, with strategies in place to manage pay equity
3.
Achieve at least 33.3% female representation in non-executive directors on the Board
4.
Achieve at least 33.3% female representation in senior executive roles
These four objectives are reviewed annually by the Board, as well as the Company’s progress in achieving these
objectives. Indications of progress achieved against these objectives are outlined below:
1. Inclusive culture
The Company maintains a working policy to provide flexible working arrangements including part-time employment,
working from home, facilitating work-life balance of employees, and aiding those with family and carer commitments to
continue to work and meet their other responsibilities.
Corporate Governance Statement
PRO-PAC PACKAGING LIMITED
32 | ANNUAL REPORT 2024
In 2022, formal flexible working agreements were introduced. During 2024, 10% of workers took advantage of these
flexible working arrangements (2023: 9.5%).
2. Pay equity
In 2024, the Company measured pay equity across the top 2 managerial levels in the organisation, including the CEO.
The measurement is taken as at 30 June 2024. The gender pay gap is 11% (2023:21%) with males being paid more
favourably than females. Any apparent gaps are analysed to ensure that they can be explained with reference to
market forces which may include, for example, different rates of pay in different industries, location, the relative supply
and demand for different qualifications, individual performance and experience.
3 and 4. Non-executive directors and senior executives
The respective proportion of women and men in the Company including its controlled entities as at 30 June 2024 are as
follows:
Proportion
of women
2024
Proportion
of women
2023
Proportion
of men
2024
Proportion
of men
2023
Non-executive directors on the Board
0%
0%
100%
100%
In senior executive positions
43%
33%
57%
64%
Across the whole organisation
22%
21%
78%
79%
Senior executive positions include all executives reporting directly to the CEO and the CEO. Where an executive has
changed during the financial year, the measurement is taken as at 30 June 2024.
The remuneration and nomination committee of the Board approved an updated Diversity Policy in February
2024.Wherever possible, interview panels for senior executive and Board positions comprise both female and male
interviewers, and short-listed candidates for such roles are both male and female.
The Company is a ‘relevant employer’ for the purposes of the Workplace Gender Equality Act 2012 on the basis that
the entity employs 100 or more employees in Australia. The Company makes annual filings of Gender Equality
Indicators with the Workplace Gender Equality Agency (WGEA). This information is accessible on
https://www.wgea.gov.au and is on the Company’s website at https://www.ppgaust.com.au/people/diversity.
Recommendation 1.6 - A listed entity should:
(a)
have and disclose a process for periodically evaluating the performance of the board, its committees and
individual directors; and
(b)
disclose, in relation to each reporting period, whether a performance evaluation was undertaken in or in respect
of the reporting period in accordance with that process.
The Company has in place systems designed to fairly review and actively encourage enhanced Board and senior
executive effectiveness. The chair has the responsibility to review continually the performance of each director and the
Board as a whole, in conjunction with an annual self-assessment and feedback process. The performance of the Board
is reviewed regularly against both measurable and qualitative indicators. The performance criteria against which
directors and senior executives are assessed is aligned with the financial and non-financial objectives of the Company.
From time to time and, as considered appropriate, the chair will seek external assistance and advice to undertake these
performance reviews. The board conducted an internal performance review during 2024, and is implementing the
recommendations resulting from that process.
Recommendation 1.7 - A listed entity should:
(a)
have and disclose a process for periodically evaluating the performance of its senior executives; and
(b)
disclose, in relation to each reporting period, whether a performance evaluation was undertaken in or in respect
of the reporting period in accordance with that process.
Corporate Governance Statement
PRO-PAC PACKAGING LIMITED
33 | ANNUAL REPORT 2024
Generally, the Board conducts an annual performance assessment of the CEO against agreed performance measures
determined at the start of the year. The CEO undertakes the same assessments of senior executives. In assessing the
performance of the individual, the review includes consideration of the senior executive’s function, individual targets,
group targets, and the overall performance of the Company.
The CEO provides a report to the Board on the performance of senior executives together with remuneration
recommendations which is approved by the Board or remuneration and nomination committee. An informal review of
the CEO and senior executives was undertaken during the year.
Principle 2: Structure the board to add value
Recommendation 2.1 - The board of a listed entity should:
(a) have a nomination committee which:
(1)
has at least three members, a majority of whom are independent directors; and
(2)
is chaired by an independent director,
and disclose:
(3)
the charter of the committee;
(4)
the members of the committee; and
(5)
as at the end of each reporting period, the number of times the committee met throughout the period and
the individual attendances of the members at those meetings; or
(b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board
succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience,
independence and diversity to enable it to discharge its duties and responsibilities effectively.
The Board maintains a remuneration and nomination committee, whose members during the financial year, were as
follows:
Director’s name
Executive status
Independence status
Rupert Harrington
Non-executive Director
Independent
Mark Blackburn (1)
Non-executive Director
Independent
Jonathan Ling (2)
Non-executive Director
Independent
It is to be noted that due to director resignations and the small number of directors on the board, the remuneration
and nomination committee did not have 3 members for the whole year.
The charter of the committee is available at the Company’s website. It details the roles and responsibilities of the
committee. The charter was reviewed by the Board during the reporting period.
The number of committee meetings held and attended by each member is disclosed in the ‘Meetings of directors’
section of the directors’ report.
Notes:
(1) Mr Blackburn was appointed effective 1 September 2023.
(2) The board views Mr Ling as an independent director, notwithstanding that in 2022 he served as Executive
Chairman for an interim period of 2.5 months between the departure of one CEO and the appointment of the next.
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34 | ANNUAL REPORT 2024
Recommendation 2.2 - A listed entity should have and disclose a board skills matrix setting out the mix of skills and
diversity that the board currently has or is looking to achieve in its membership.
The Board’s skills matrix indicates the mix of skills, experience and expertise that are considered necessary at Board
level for optimal performance of the Board. It is therefore used when recruiting new directors and assessing which skills
need to be outsourced based on the attributes of the current Board members. The existence of each attribute is
assessed by the Board as either, High, Medium or Low.
Skill category
Description of attributes required
Level of
importance
Existence in
current
Board
Governance, Risk and
compliance
Identification of key risks to the Company related to each
key area of operations. Monitoring of risks, compliance
issues and knowledge of legal and regulatory
requirements.
High
High
Financial performance
Analysis and interpretation of accounting and finance
issues including assessment and resolution of audit and
financial reporting risks, contribution to budgeting and
financial management of projects and Company, assessing
and supervising capital management.
High
High
Strategy, planning and
policy development
Development of strategies to achieve business objectives,
oversee implementation and maintenance of strategies,
and identification and critical assessment of strategic
opportunities and threats to the Company.
High
High
Commercial experience
Relevant industry experience and expertise particularly in
a manufacturing and/or distribution environment.
High
High
Information technology
and Digital skills
Knowledge of IT governance including privacy, data
management and security.
Medium
Medium
HR & Executive
management
Performance assessments of senior executives, succession
planning for key executives, setting of key performance
hurdles, experience in industrial relations and
organisational change management programmes.
High
High
Geographic, age, gender
and cultural
Board aims for balanced gender representation and range
of experienced individuals to contribute towards better
Board outcomes.
Medium
Low
Sustainability
Competence in ESG metrics, key performance indicators,
ESG-related disclosure controls and procedures and
Integration of ESG in enterprise risk management
Medium
Medium
The Board currently believes that its membership adequately represents the required skills as set out in the matrix,
however it does have plans to enhance the diversity of board membership, at a point in time when the Company is in a
position to increase the size and review the structure of its board.
In addition to the specific areas that are required at Board level identified in the matrix above, all members of the
Board are assessed for the following attributes before they are considered an appropriate candidate.
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Board member attributes
Leadership
Innate leadership skills including the ability to appropriately represent the Company
positively amongst stakeholders and external parties; set appropriate Board and
organisation culture and make and take responsibility for decisions and actions.
Ethics and integrity
Awareness of social, professional and legal responsibilities at individual, Company and
community level; ability to identify independence conflicts; applies sound professional
judgement; identifies when external counsel should be sought; upholds Board
confidentiality; respectful in every situation.
Effective Communication
The ability to:
Listen to, and constructively and appropriately debate, other people’s
viewpoints;
Develop and deliver cogent arguments;
Communicate effectively with a broad range of stakeholders.
Constructive Questioner
The preparedness to ask questions and challenge Pro-Pac management and peer
Directors in a constructive and appropriate way about key issues.
Contributor and team
player
The ability to work as part of a team and demonstrate the passion and time to make a
genuine and active contribution to the Pro-Pac Board.
Commitment
A visible commitment to the purpose for which the Company has been established and
operates, and its on-going success.
Influencer and
Negotiator
The ability to negotiate outcomes and influence others to agree with those outcomes,
including an ability to gain stakeholder support for the Board’s decisions.
Critical and innovative
thinker
The ability to critically analyse complex and detailed information, readily distil key issues,
and develop innovative solutions to problems.
Recommendation 2.3 - A listed entity should disclose:
(a)
the names of the directors considered by the Board to be independent directors;
(b)
if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is
of the opinion that it does not compromise the independence of the director, the nature of the interest, position,
association or relationship in question and an explanation of why the board is of that opinion; and
(c)
the length of service of each director.
The Board assesses annually the independence of each director to ensure that those designated as independent do not
have any alliance to the interests of management, substantial shareholders or other relevant stakeholders. They must
be free of any interest, position, association or relationship that might influence, or reasonably be perceived to
influence, in a material respect, their capacity to bring an independent judgement to bear on issues before the Board
and to act in the best interests of the Company and its security holders as a whole. In its assessment of independence
as at the date of this Corporate Governance Statement, and in respect of the directors in office at the end of the
reporting period, the Board has considered the interests, positions, associations or relationships of the kind identified in
the examples listed under Recommendation 2.3 of the ASX Principles and Recommendations 4th Edition.
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36 | ANNUAL REPORT 2024
Details of the Board, their date of appointment, length of service, and independence status as at 30 June 2024 is as
follows:
Director’s name
Date of
Appointment
Length of service at
reporting date
Independence status as at
30 June 2024
Jonathan Ling (1)
8 April 2019
5 years and 3 months
Independent Non-executive
Chairman
Rupert Harrington
6 November 2017
6 years and 8 months
Independent Non-executive
Mark Blackburn
23 November 2022
1 year and 7 months
Independent Non-executive
John Cerini
3 October 2022
1 year and 8 months
CEO Not independent
(1) The board views Mr Ling as an independent director, notwithstanding that in 2022 he served as Executive
Chairman for an interim period of 2.5 months between the departure of one CEO and the appointment of the next.
Mr Ling is no longer on the board having resigned effective 30 June 2024.
As part of its independence assessment, the Board considers the length of time that the director has been on the
Board, as a prolonged service period may also be seen to impair independence. The Board concluded that no director
has been on the Board for a period which could be seen to compromise their independence.
Recommendation 2.4 - A majority of the board of a listed entity should be independent directors.
The majority of the Board was independent during the reporting period. However please refer to the notes above in
relation to recommendation 2.3 in relation to the reasons why the board considers relevant directors to be
independent.
Recommendation 2.5 - The chair of the board of a listed entity should be an independent director and, in particular,
should not be the same person as the CEO of the entity.
Mr Jonathan Ling was independent Chairman and Non-executive Director during the reporting period. However please
refer to the notes above in relation to recommendation 2.3 in relation to the reasons why the board considers Mr Ling
to be independent.
Consequent upon the resignation of Mr Ling, Mr John Cerini was appointed Executive Chairman as well as his current
role as CEO effective from 1 July 2024. From this date, albeit outside the reporting period, the board does not satisfy
Recommendation 2.5. The board considered that a director intimately familiar with the business would be best placed
to serve as Chair.
Recommendation 2.6 - A listed entity should have a program for inducting new directors and provide appropriate
professional development opportunities for directors to develop and maintain the skills and knowledge needed to
perform their role as directors effectively.
New directors undertake an induction program coordinated by the company secretary on behalf of the remuneration
and nomination committee. The program includes strategy briefings, explanations of company policies and procedures,
governance frameworks, cultures and values, company history, director and senior executive profiles and other
pertinent company information. Regular professional development sessions are held, in conjunction with regular in-
depth business briefings.
Principle 3: Act ethically and responsibly
Recommendation 3.1 - A listed entity should articulate and disclose its values.
The Company maintains a Statement of Values, which was adopted by the Board on 28 July 2020. A copy is available on
the Company’s website. Our Values underpin all our actions and are embedded in our culture. These are:
Deliver Sustainability – We seek to deliver high quality outcomes in a socially responsible and safe way.
Unite – We develop and empower high functioning, collaborative, inclusive and supportive teams. We engage
employees through fair treatment, open communication, and active collaboration with purpose.
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37 | ANNUAL REPORT 2024
Innovate & Simplify – We find smarter and more efficient ways of doing things. We seek new products and markets.
We challenge the status quo.
Win/Win Relationships – We anticipate the needs and exceed expectations of our customers, stakeholders, and
partners. We develop respectful and mutually beneficial relationships, which are critical to our business’ success
and optimizing outcomes.
Integrity & Accountability – We act honestly, ethically and with integrity. We are true to our word, and we stand by
our principles. We are accountable for our actions and treat each other and all our stakeholders authentically and
with respect.
Our values guide our behaviour and reflect our commitment to our customers, communities, and each other, and are
referenced and reinforced by our senior executive team across the organization.
Recommendation 3.2 - A listed entity should
(a)
have a code of conduct for its directors, senior executives, and employees; and
(b)
ensure that the board or a committee of the board is informed of any material breaches of that code.
The Company maintains a 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 the Company’s honesty and integrity;
responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
The overriding principle is that all business affairs of the Company must be conducted legally, ethically and with strict
observance of the highest standards of propriety and business ethics.
The code of conduct sets standards for the Board and employees in dealing with the Company’s customers, suppliers,
shareholders and other stakeholders and material breaches are reported to the Board. The code of conduct was last
reviewed and revised by the Board in February 2024. A copy of this code of conduct is available on the Company’s
website.
Recommendation 3.3 - A listed entity should
(a)
have and disclose a whistle-blower policy; and
(b)
ensure that the board or a committee of the board is informed of any material incidents reported under that
policy.
Under the whistle-blower Policy, the Company encourages employees, contractors, suppliers, and other stakeholders
to raise any concerns about activities or behaviours that may be unlawful or unethical. Senior management are
committed to protecting the dignity, well-being, career, and good name of anyone reporting wrongdoing, as well as
providing them with the necessary support. The Company does not tolerate retaliation or adverse action relating to a
whistleblowing disclosure. The whistle-blower Policy sets out how someone can raise a concern using the
whistleblowing channels, including online or by using a whistle-blower hotline. Reporting may be on an anonymous
basis.
When a whistle-blower raises a concern, they may choose to involve the whistle-blower protection officer, who is
responsible for protecting the whistle-blower against personal disadvantage as a result of making a report. The
Company investigates reported concerns in a manner that is confidential, fair, and objective. If the investigation shows
that wrongdoing has occurred, the Company is committed to changing processes and taking action in relation to those
parties who have behaved incorrectly. Outcomes may also involve reporting the matter to relevant authorities and
regulators. The audit, business risk and compliance committee are charged with overseeing the Company’s whistle-
blower program and receives a report at each meeting as to any material incidents which have been raised. A copy of
the whistle-blower policy is available on the Company’s website.
Recommendation 3.4 - A listed entity should
(c)
have and disclose an anti-bribery and corruption policy; and
(d)
ensure that the board or a committee of the board is informed of any material breaches of that policy.
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38 | ANNUAL REPORT 2024
The Company has an anti-bribery policy, a copy of which is available on its website.
Under the policy, the Company is committed to fostering a culture of ethical behaviour and good corporate governance
and is committed to doing business in an honest and ethical manner. The Company takes a zero-tolerance approach to
bribery and corruption and is committed to acting professionally, fairly and with integrity in all its business dealings and
relationships, wherever it operates, and to implementing and enforcing effective systems to counter bribery.
As part of this commitment, the Company will not tolerate any form of bribery or corruption in the Group. The
Company expects its directors, officers and employees and all of its suppliers, service providers, distributors,
consultants, agents, joint venture partners, sponsors, contractors, and any third-party representatives associated with
the Group or acting on the Company’s behalf to adopt a similar zero tolerance approach to bribery and corruption.
The audit, business risk and compliance committee receive a report at each meeting as to any policy breaches.
Principle 4: Safeguard integrity in corporate reporting
Recommendation 4.1 - The board of a listed entity should:
(a)
have an audit committee which:
(1)
has at least three members, all of whom are non-executive directors and a majority of whom are
independent directors; and
(2)
is chaired by an independent director, who is not the chair of the board,
and disclose:
(3)
the charter of the committee;
(4)
the relevant qualifications and experience of the members of the committee; and
(5)
in relation to each reporting period, the number of times the committee met throughout the period and the
individual attendances of the members at those meetings; or
(b)
if it does not have an audit committee, disclose that fact and the processes it employs that independently verify
and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of
the external auditor and the rotation of the audit engagement partner.
To assist in the execution of its responsibilities, the Board has established an audit, business risk and compliance
committee. A summary of the charter setting out the committee’s responsibilities is available on the Company’s
website. The charter is reviewed by the Board annually.
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 effectiveness 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, business risk and compliance committee.
The committee also provides the Board with additional assurance regarding the reliability of financial information for
inclusion in the financial reports.
During the reporting period, the committee comprised Mr Blackburn (chair) and Mr Rupert Harrington.. All members of
the committee are financially literate (i.e., they are able to read and understand financial statements). Mr Blackburn
has financial expertise and experience, he is a Certified Practicing Accountant and has held numerous CFO roles. All
members have an understanding of the industry in which the Company operates.
Recommendation 4.1 requires that the composition of the audit, business risk and compliance committee comprise a
majority of independent directors, that the committee have at least three members and that it is chaired by an
independent director who is not chairman of the Board. For the entirety of the reporting period the committee
comprised only 2 members and therefore did not meet the requirement to have 3 members. This is a result of the
board overall being a small board with only 4 directors in total for the majority of the reporting period. Indeed, as at 1
July 2024, there are only 3 directors on the board.
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39 | ANNUAL REPORT 2024
For additional details of directors’ attendance at audit, business risk and compliance committee meetings and to review
the qualifications of the members of the committee, please refer to the directors’ report.
Recommendation 4.2 - The board of a listed entity should, before it approves the entity’s financial statements for a
financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity
have been properly maintained and that the financial statements comply with the appropriate accounting standards
and give a true and fair view of the financial position and performance of the entity and that the opinion has been
formed on the basis of a sound system of risk management and internal control which is operating effectively.
In relation to the financial statements for the financial year ended 30 June 2024 and the half-year ended 31 December
2023, the Company’s CEO and CFO have provided the Board with declarations, that in their opinion:
the financial records of the Company have been properly maintained;
the financial statements comply with the appropriate accounting standards and give a true and fair view of the
financial position and performance of the Company; and
is based on a sound system of risk management and internal control which is operating effectively.
Recommendation 4.3 - A listed entity should disclose its process to verify the integrity of any periodic corporate report
it releases to the market that is not audited or reviewed by an external auditor.
The external auditor reviews and/ or audits all periodic corporate reports released by the Company to the market.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1 - A listed entity should have and disclose a written policy for complying with its continuous
disclosure obligations under Listing Rule 3.1
The Company has adopted a disclosure policy a copy of which is available on its website. The policy 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.
Recommendation 5.2 - A listed entity should ensure that its board receives copies of all material market
announcements promptly after they have been made.
The Board receives a copy of all material market announcements promptly after they have been released.
Recommendation 5.3- A listed entity that gives a new and substantive investor or analyst presentation should release a
copy of the presentation materials in the ASX Market Announcements Platform ahead of the presentation.
The Company releases all new and substantive investor or analyst presentations to the ASX Market Announcements
Platform ahead of the presentation.
Principle 6: Respect the rights of security holders
Recommendation 6.1 - A listed entity should provide information about itself and its governance to investors via its
website.
The Company maintains information in relation to governance documents, policies, directors and senior executives,
Board and committee charters, annual reports, ASX announcements and contact details on the Company’s website.
Recommendations 6.2 and 6.3
A listed entity should design and implement an investor relations program to facilitate effective two-way
communication with investors (6.2).
A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at
meetings of security holders (6.3).
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40 | ANNUAL REPORT 2024
The Company 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 disclosure policy, published on its
website. These practices include placing on the Company’s website relevant information, including ASX
announcements, annual and half-year reports, copies of notices of meetings, analyst briefings and presentations given
by the CEO and CFO. Annual reports are distributed to all shareholders by mail or email (unless a shareholder has
specifically requested not to receive these documents). Shareholders also send queries directly to the Company which
are responded to.
A representative from the external auditors of the Company attends the AGM and any other meeting as required 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 or ahead
of shareholder meetings, both formally and informally.
The disclosure policy also elaborates on the Company’s continuous disclosure policy.
Recommendation 6.4 - A listed entity should ensure that all substantive resolutions at a meeting of security holders are
decided on a poll rather than by a show of hands
The Company first conducted a poll in respect of all resolutions at its 2019 AGM and has done so and will continue to
do so at all shareholder meetings.
Recommendation 6.5 - A listed entity should give security holders the option to receive communications from, and
send communications to, the entity and its security registry electronically.
This option is available to security holders.
Principle 7: Recognise and manage risk
Recommendations 7.1 and 7.2
The board of a listed entity should:
(a)
have a committee or committees to oversee risk, each of which:
(1)
has at least three members, a majority of whom are independent directors; and
(2)
is chaired by an independent director,
and disclose:
(3)
the charter of the committee;
(4)
the members of the committee; and
(5)
as at the end of each reporting period, the number of times the committee met throughout the period and
the individual attendances of the members at those meetings; or
(b)
if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it
employs for overseeing the entity’s risk management framework (7.1).
The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to
satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review
has taken place (7.2).
In addition to its financial reporting obligations, the audit, business risk and compliance committee is responsible for
reviewing the risk management framework and policies of the Company. The membership and independence of the
committee are disclosed under Principle 4. The structure of the committee and its responsibilities reflect the
requirements of ASX Principle 7 and are set out in the Company’s audit, business risk and compliance committee
charter, published on its website. Details of directors’ attendance at committee meetings are disclosed in the directors’
report. The committee has reviewed the Company’s risk management framework during the reporting period.
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41 | ANNUAL REPORT 2024
In performing this function, the committee receives reports from the Group’s management risk committee (comprising
key stakeholders from management), external auditor, 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 program. In line with ASX Principle 7, the
Company adopted the policy requiring the CEO and CFO 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 29 August 2024.
Recommendation 7.3 - A listed entity should disclose:
(a)
if it has an internal audit function, how the function is structured and what role it performs; or
(b)
if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually
improving the effectiveness of its risk management and internal control processes.
The Company does not have a formal internal audit function. 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
effectiveness 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, business risk and compliance committee.
Recommendation 7.4 - A listed entity should disclose whether it has any material exposure to economic, environmental
and social sustainability risks and, if it does, how it manages or intends to manage those risks.
The management of the Company and the execution of its growth strategies are subject to a number of risks which
could adversely affect the Company’s future development.
Page 10 sets out the principal material risks faced by the Company and is incorporated herein.
Refer to commentary at Recommendations 7.1 and 7.2 for information on the Company’s risk management framework.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1 - The board of a listed entity should:
(a)
have a remuneration committee which:
(1)
has at least three members, a majority of whom are independent directors; and
(2)
is chaired by an independent director,
and disclose:
(3)
the charter of the committee;
(4)
the members of the committee; and
(5)
as at the end of each reporting period, the number of times the committee met throughout the period and
the individual attendances of the members at those meetings; or
(b)
if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level
and composition of remuneration for directors and senior executives and ensuring that such remuneration is
appropriate and not excessive.
It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high-quality Board and
senior executives by remunerating directors and key executives fairly and appropriately with reference to relevant
employment market conditions. To assist in achieving this objective, the Board links the nature and amount of
executive remuneration to the Company’s financial and operations performance.
Corporate Governance Statement
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42 | ANNUAL REPORT 2024
The Board has in place a remuneration and nomination committee to assist the Board in relation to human resources
matters affecting the Group. The structure of this committee and its responsibilities reflect the requirements of ASX
Principle 8. During the reporting period, the committee comprised of Mr Harrington (Chair), Mr Ling and Mr Blackburn
(from 1 September 2023) all of whom are independent Non-executive Directors having regard to the response to
Recommendation 2.3 and the Notes thereto.
In addition to the members, the CEO is invited to the meetings at the discretion of the committee. Details of directors’
attendance at committee meetings are disclosed in the directors’ report.
A charter setting out the responsibilities of the committee has been adopted and a copy of this charter is available on
the Company’s website.
This committee is responsible for ensuring that the recruitment and remuneration policies and practices of the
Company are consistent with its strategic goals and human resources objectives and are designed to enhance
corporate and individual performance as well as meet the appropriate recruitment and succession planning needs.
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 director’s (as approved by shareholders). The committee may
consult with remuneration advisors to the Company to assist in its role.
The committee is also responsible for determining and reviewing compensation arrangements for directors and to
ensure that the Board continues to operate within established guidelines, including where necessary, selecting
candidates for the position of director. In carrying out its functions, the 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 set within limits approved by shareholders. The Company does not have
any schemes for retirement benefits, other than statutory superannuation for non-executive directors.
Details of the directors and key executive’s remuneration are set out in the directors’ report.
Recommendation 8.2 - A listed entity should separately disclose its policies and practices regarding the remuneration
of non-executive directors and the remuneration of executive directors and other senior executives.
Non-executive directors are remunerated by way of cash fees and superannuation contributions. The level of
remuneration reflects the anticipated time commitments and responsibilities of the position. Performance-based
incentives are not available to non-executive directors as it could be perceived to impair their independence in
decision-making. For the same reason, equity-based remuneration is limited to non-performance-based instruments
such as shares.
Executive directors and senior executives are remunerated using combinations of fixed and performance-based
remuneration. Fees and salaries are set at levels reflecting market rates having regard to the individual’s performance
and responsibilities. Performance based remuneration is linked directly to specific performance targets that are aligned
to both short and long-term objectives. Share options and performance rights are aligned to longer term performance
hurdles. Termination payments are detailed in individual contracts and payable on early termination with the exclusion
of termination in the event of misconduct.
Further details in relation to the Company’s remuneration policies are contained in the remuneration report, within the
directors’ report.
Recommendation 8.3 - A listed entity which has an equity-based remuneration scheme should:
(a)
have a policy on whether participants are permitted to enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic risk of participating in the scheme; and
(b)
disclose that policy or a summary of it.
The Company operates an executive long-term Incentive plan to encourage employees to have ownership of the
Company and promote long-term success of the Company as a goal shared by the employees. Participants are not
permitted to enter into transactions which limit the economic risk of participating in the plan.
Please see the remuneration report for further details of the plan.
Sustainability
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43 | ANNUAL REPORT 2024
1.
The Company’s commitment to sustainability falls across three areas of impact – business, planet
and communities.
Within these pillars of impact, the Company has focused its efforts on the below areas for our stakeholders:
Better Products: Addressing the 2025 National Packaging Targets and preparing for the federal government’s
incoming sustainable packaging mandate.
Better Operations: Measuring the Company’s carbon emissions, setting its targets and preparing for
mandatory climate reporting.
Better Supply Chains: Reducing our modern slavery supply chain risk through improving governance,
monitoring and reporting.
Better Products: Improving the Sustainability of Our Products
The Company continues to drive efforts towards the 2025 National Packaging Targets.
Improvements for the year were primarily driven in reducing problematic materials, improved disposal labelling,
recoverability, recycled content and design & procurement.
In our 2024 Action Plan, the Company has committed to reviewing its packaging against the Sustainable Packaging
Guidelines, increasing the use of recycled content, designing packaging for recoverability and increasing on-site waste
diversion from landfill.
Better Operations: Measuring and Reducing Our Carbon Footprint
Since 2021, the Company has been measuring its carbon emissions including scope 1, 2 and 3 emissions. While the data
accuracy has incrementally improved since then, the Company recognised a step change was needed to prepare for the
incoming climate reporting mandate. As such, starting November 2023, the Company has embarked on a bold carbon data
improvement project that includes:
1.
Defining its emission boundaries including a full scope 3 analysis
2.
Recalculating its carbon baseline including scope 1, 2 and 3 emissions
3.
Establishing emission forecasts based on business growth ambitions and identifying decarbonisation levers
4.
Determining it emissions targets are based on science-based targets principles
In addition to the above data activities, the Company has also scoped, developed and launched software which will allow semi-
automated reporting of emissions.
Over the coming 18 months, our emissions reporting initiatives will focus on embedding our data capture mechanisms as well
as preparing the other 3 pillars (Governance, Strategy and Risk) of the climate reporting mandate.
The Company’s FY23 emissions baseline as well as our full FY24 emissions accounts will be available in our Annual Sustainability
Review available on the website.
Better Supply Chain: Advancing Human Rights in Our Supply Chain
Across the last 12 months, the Company has delivered an ambitious Modern Slavery action plan in line with its 3-year roadmap.
Key activities for FY24 completed include:
Semi-announced SMETA assessments on 2 Company sites.
Scoping, developing and launching a new Modern Slavery supplier platform, Ethixbase360, which provides more
thorough due diligence on our suppliers.
Adding our top 50 suppliers to Ethixbase360 and requesting self-assessment questionnaires to quantify their risk.
Reviewing and updating key policies and procedures to ensure Modern Slavery and Human Rights were adequately
addressed.
Sustainability
PRO-PAC PACKAGING LIMITED
44 | ANNUAL REPORT 2024
Set short and long-term key performance indicators for our supply chain.
Conducted a deep dive into our top 4 suppliers for Integrated Packaging New Zealand.
For FY25, the Company will focus on key person training and expanding our supplier coverage on Ethixbase360.
For further information, please refer to the Company’s Sustainability Review on its website.
CONSOLIDATED STATEMENT OF
Comprehensive Income
PRO-PAC PACKAGING LIMITED
45 | ANNUAL REPORT 2023
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Revenue from contracts with customers
3
295,178
339,100
Raw materials and consumables used
(167,188)
(192,522)
Employee benefits expense
22
(77,874)
(80,729)
Occupancy, distribution, administration and selling expenses
(49,857)
(56,676)
Allowance for expected credit losses
7
30
(507)
Impairment losses
10,11
(22,747)
-
Depreciation and amortisation expense
10,11,29
(19,960)
(17,217)
Other income
25
1,137
2,932
Interest income
21
52
Finance costs
18
(6,625)
(5,366)
Profit/(loss) before income tax from continuing operations
(47,885)
(10,933)
Income tax (expense)/benefit
4
(5,879)
2,446
Profit/(loss) after income tax from continuing operations
(53,764)
(8,487)
Discontinued operations
Profit/(loss) after income tax from discontinued operations
6
-
(1,751)
Profit/(loss) after income tax from continued and discontinued
operations
(53,764)
(10,238)
Other comprehensive income/(loss):
Items that may be reclassified to profit or loss in subsequent
years (net of income tax):
Change in fair value of cash flow hedges
(404)
(284)
Exchange differences arising on translation of foreign operations
(50)
(144)
Other comprehensive income/(loss), net of income tax
(454)
(428)
Total comprehensive income/(loss)
(54,218)
(10,666)
Earnings per share
EPS (cents) – Basic
2
(29.59)
(5.63)
EPS (cents) – Diluted
2
(29.59)
(5.63)
EPS from continuing operations (cents) – Basic
2
(29.59)
(4.67)
EPS from continuing operations (cents) – Diluted
2
(29.59)
(4.67)
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF
Financial Position
PRO-PAC PACKAGING LIMITED
46 | ANNUAL REPORT 2023
As at
Notes
30 June
2024
$’000
30 June
2023
$’000
Current assets
Cash and cash equivalents
17
1,081
8,323
Trade and other receivables
7
59,310
63,803
Inventories
8
63,741
65,328
Current tax assets
121
656
Derivative financial assets
27,28
64
499
Other assets
13
2,722
3,575
Total current assets
127,039
142,184
Non-current assets
Property, plant and equipment
10
53,990
57,384
Right-of-use assets
29
41,501
30,288
Intangible assets
11
14,805
32,296
Deferred tax assets
4
-
6,153
Total non-current assets
110,296
126,121
Total assets
237,335
268,305
Current liabilities
Trade and other payables
9
60,291
57,982
Derivative financial liabilities
27,28
76
15
Borrowings
16
21,577
17,168
Lease liabilities
29
9,836
8,727
Other liabilities
14
11,232
7,011
Employee entitlements
21
10,284
9,678
Other provisions
15
714
524
Total current liabilities
114,010
101,105
Non-current liabilities
Lease liabilities
29
38,634
28,010
Employee entitlements
21
501
331
Deferred tax liabilities
4
22
-
Other provisions
15
3,077
3,079
Total non-current liabilities
42,234
31,420
Total liabilities
156,244
132,525
Net assets
81,091
135,780
Equity
Issued capital
19
320,538
320,538
Reserves
20
1,387
2,312
Accumulated losses
(240,834)
(187,070)
Total equity
81,091
135,780
The consolidated statement of financial position should be read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF
Changes in Equity
PRO-PAC PACKAGING LIMITED
47 | ANNUAL REPORT 2024
For the year ended
Notes
Issued
Capital
$’000
Accumulated
Losses
$’000
Reserves
$’000
Total
$’000
Balances as at 1 July 2023
320,538
(187,070)
2,312
135,780
Profit/(loss) after income tax
-
(53,764)
-
(53,764)
Other comprehensive income,
net of income tax
-
-
(454)
(454)
Total comprehensive income/(loss)
-
(53,764)
(454)
(54,218)
Rights issue proceeds
-
-
-
-
Transaction cost for rights issue, net
of income tax
-
-
-
-
Share-based payments expense
22
-
-
(471)
(471)
Balances as at 30 June 2024
320,538
(240,834)
1,387
81,091
Balances as at 1 July 2022
291,678
(176,832)
1,850
116,696
Profit/(loss) after income tax
-
(10,238)
-
(10,238)
Other comprehensive income,
net of income tax
-
-
(428)
(428)
Total comprehensive income/(loss)
-
(10,238)
(428)
(10,666)
Rights issue proceeds
19
30,174
-
-
30,174
Transaction cost for rights issue, net
of income tax
19
(1,314)
-
-
(1,314)
Share-based payments expense
22
-
-
890
890
Balances as at 30 June 2023
320,538
(187,070)
2,312
135,780
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF
Cash Flows
PRO-PAC PACKAGING LIMITED
48 | ANNUAL REPORT 2024
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Cash flows from operating activities
Receipts from customers
299,746
362,631
Payments to suppliers and employees
(290,066)
(360,898)
Income tax refund/(paid)
1,031
(1)
Interest received
21
52
Interest paid
(6,148)
(4,799)
Net cash flow (used in)/from operating activities
17
4,584
(3,015)
Cash flows from investing activities
Payments for property, plant, and equipment
(8,433)
(4,104)
Proceeds from sale of property, plant, and equipment
-
15
Payments for intangible assets
(3,382)
(3,605)
Government grant received
14
4,882
5,579
Proceeds from business disposed
6
-
1,909
Net cash flows (used in)/from investing activities
(6,933)
(206)
Cash flows from financing activities
Repayment of borrowings*
(291,932)
(219,424)
Proceeds from borrowings*
296,347
211,282
Payment of transaction costs on borrowings
(50)
(1,310)
Repayment of lease liability principal
29
(9,251)
(8,672)
Proceeds from rights issue
19
-
30,174
Payment of transaction costs from rights issued
19
-
(1,874)
Net cash flows (used in)/from financing activities
(4,886)
10,176
Net increase/(decrease) in cash and cash equivalents
(7,235)
6,955
Cash and cash equivalents at the beginning of the year
8,323
1,322
Effect of foreign exchange
(7)
46
Cash and cash equivalents at the end of the year
17
1,081
8,323
The consolidated statement of cash flows should be read in conjunction with the accompanying notes
*Includes the revolving nature of the debtor finance facility (refer Note 16).
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
49 | ANNUAL REPORT 2024
Overview
This section provides context to enable readers to understand the information presented in the financial report.
CORPORATE INFORMATION
The consolidated financial statements of Pro-Pac Packaging Limited (the Company) and its controlled entities (the
Group) for the year ended 30 June 2024 were authorised for issue in accordance with a resolution of the directors on
29 August 2024
The Company is a for-profit company limited by shares incorporated and domiciled in Australia whose shares are
publicly traded on the Australian Securities Exchange. The Group is principally engaged in the manufacture and
distribution of flexible and specialty packaging products. Further information on the nature of the operations and
principal activities of the Group is provided in the directors’ report.
BASIS OF PREPARATION
This is a general-purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board (AASB). The financial report also complies with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board.
The financial report has been prepared on a historical cost basis, unless otherwise stated. The financial report is
presented in Australian dollars and all values have been rounded to the nearest one thousand dollars ($’000), unless
otherwise indicated under the option available to the Company under ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191.
The financial statements present reclassified comparative information where required for consistency with current
period presentation.
GOING CONCERN
During the year ended 30 June 2024 the Group incurred a net loss after tax from continuing and discontinued
operations of $53.8 million (2023: loss $10.2 million), which included non-cash items of $40.2 million for impairment
losses, depreciation and amortisation (pre-AASB 16 Leases), and derecognition of deferred tax assets.
Cash flow from operating activities was an inflow of $4.6 million (2023: outflow of $3.0 million).
The Directors believe the Group is a going concern which is based on the following factors;
The Directors consideration of forecast trading results and cash flows;
Operating within the limits and obligations of its Facilities and maintaining the continuing support of its financiers;
-
As at 30 June 2024 the Group had cash on hand of $1.1 million and unused financing facilities of $7.1 million.
The total unused limit of the financing facilities was $14.0 million, however this was not fully available based
on the eligible sales invoices presented against the debtor finance facility as at balance date. The unused
financing facilities comprised of:
-
$5.1 million of the $30.0 million debtor finance facility, which is subject to eligible sale invoices being
presented against the facility ($23.2 million at 30 June 2024),
-
$1.5 million of the $5.0 million bank overdraft facility, which operates on an ongoing basis subject to
compliance with financial covenants.
-
$0.5 million of the $2.75 million standby credit arrangements, which will reduce to $2.2 million on 30
September 2024 (collectively the “Facilities”)
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
50 | ANNUAL REPORT 2024
GOING CONCERN (CONT’D)
-
As at 30 June 2024, the Group received a waiver from covenant ratio compliance for the 30 June 2024
and 30 September 2024 periods. As part of the waiver the Group has agreed the overdraft facility will
decrease by $0.333 million each month till 30 September 2024 (at which point the facility would be $4.0
million) and is subject to a refinance plan to the satisfaction of ANZ by 30 September 2024,
Refer to note 16 for further details of the operation of the Facilities.
The group has reached in principle approval for a new $5.0 million Asset Finance Facility, and is in the process of
finalising documentation;
The Group is currently working with identified potential founding partners to source additional funding required
for the purchase and installation of equipment for the soft plastic film recycling plant as discussed below.
The ability of the Group to generate sufficient funds from operating activities to meet its financial obligations as
and when they fall due.
The generation of sufficient funds from operating activities is dependent upon the successful execution of the current
initiatives (including headcount and cost reduction programs) by the business to improve the operating efficiency of
the Group’s manufacturing operations and achievement of revenue volume forecasts. The generation of sufficient
funds is dependent upon stable market conditions and for the cash collection profile to be materially in line with the
Group’s cash flow forecasts.
If revenue volumes materially differ to forecast and only a minimal level of these operating efficiencies is achieved,
and the Group is not able to generate sufficient funds from operating activities to meet its financial obligations and
operate within the limits of its Facilities, a material uncertainty would exist in relation to the Group’s ability to
continue as a going concern. On this basis, the Group would need to need to consider other sources of funding, or it
would be required to realise its assets and extinguish its liabilities other than in the normal course of business and
potentially at amounts different to those stated in the financial statements.
This financial report does not include any adjustments relating to the recoverability and classification of recorded
asset amounts nor to the amounts and classification of liabilities that might be necessary should the Group not
continue as a going concern.
Cashflows associated with the establishment of a soft plastics recycling facility
The Group has received $10.5 million in Government grant proceeds through the Federal Government’s Modern
Manufacturing Initiative for the establishment of a soft plastic film recycling plant. Proceeds received in relation to
this grant are to be used in line with the terms and conditions of the grant agreement.
The Group has made $3.2 million in deposits for equipment in line with the terms and conditions of the grant
agreement. These deposits are refundable should the group not proceed with a purchase order.
The Group is currently working with identified potential founding partners to source additional funding required for
the purchase and installation of equipment for the soft plastic film recycling plant.
The Group expects to secure funding from founding partners during FY2025, at which point purchase orders will be
placed and monies spent on the purchase and installation of equipment in line with the terms and conditions of the
grant agreement.
Based on the above the Group expects to comply with the terms and conditions of the grant agreement.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
51 | ANNUAL REPORT 2024
NEW ACCOUNTING STANDARDS & INTERPRETATIONS
The Group has adopted all applicable new, revised or amended Accounting Standards and Interpretations issued by
the AASB that were mandatory for the current year.
There were no changes in material accounting policies attributable to the Group for the year ended 30 June 2024.
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES & ASSUMPTIONS
The preparation of the consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the consolidated financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue, and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other various factors,
including expectations of future events, management believes to be reasonable under the circumstances. The
resulting accounting judgements and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed in each note below as applicable.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
52 | ANNUAL REPORT 2024
Our Performance
This section highlights the results and performance of the Group and its operating segments. A key element of our
strategy is to maximise long-term shareholder value.
NOTE 1. SEGMENT & GROUP RESULTS
@
Accounting policy – segment reporting
Operating segments are presented using the 'management approach', where the information
presented is on the same basis as the internal reports regularly provided to the chief operating
decision-maker.
The chief operating decision-maker is responsible for the allocation of resources to operating
segments and assessing their financial performance.
The Group has identified its operating segments based on the internal reports that are regularly reviewed and used
by the chief operating decision-maker in assessing financial 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.
Segments
The Group is organised into the following operating segments for continuing operations:
Flexibles
Specialty
Unallocated
The Flexibles packaging segment
primarily manufactures flexible
packaging materials incorporating
products such as stretch and shrink
wrap, agricultural silage packaging,
fresh produce bags, barrier and
lidding films and Distribution
protective films.
The Specialty packaging segment
sources and distributes specialty
packaging materials and related
consumer products (previously
known as Industrial segment).
Unallocated contains interest on
external borrowings and the
elimination of intersegment
transactions within the Group and
certain Group level charges that are
not allocated to respective segments
for the purpose of evaluating
financial performance.
Segment revenues
For the year ended 30 June 2024
Flexibles
$’000
Specialty
$’000
Un-
allocated
$’000
Total
$’000
External revenues
230,068
65,110
-
295,178
Inter-segment revenues
399
-
(399)
-
Segment revenues
230,467
65,110
(399)
295,178
For the year ended 30 June 2023
Flexibles
$’000
Specialty
$’000
Un-
allocated
$’000
Total
$’000
External revenues
265,327
73,773
-
339,100
Inter-segment revenues
1,832
-
(1,832)
-
Segment revenues
267,159
73,773
(1,832)
339,100
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
53 | ANNUAL REPORT 2024
Segment results
Non-IFRS measures
To assist in the evaluation of the financial performance of the Group, certain measures are used that are not
recognised under the Accounting Standards and therefore, these are considered to be non-IFRS measures.
This financial report includes the following non-IFRS measures:
PBT represents profit/(loss) before income taxes and significant items;
EBIT represents PBT before finance costs and interest income;
EBITDA represents EBIT before depreciation and amortisation;
Working capital represents trade and other receivables and inventories, less trade and other payables;
Net debt is calculated as borrowings, less cash and cash equivalents; and
Significant items are identified as favourable or unfavourable transactions which are outside of normal operating
activities and are excluded from the segment results presented to the chief operating decision-maker for the
purpose of resource allocation and assessment of segment performance.
Although the Board believe that these measures provide useful information about the financial position and
performance of the Group, they should be considered to be supplementary to the consolidated statement of
comprehensive income and consolidated statement of financial position presented in accordance with Accounting
Standards. As these non-IFRS measures are not defined in the Accounting Standards, the way the Group may
calculate these measures may differ from similarly titled measures used by other companies.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
54 | ANNUAL REPORT 2024
NOTE 1. SEGMENT & GROUP RESULTS (CONT’D)
Significant items from continuing operations
The income tax benefit of significant items is $nil (2023: $93,000), while payments in respect of significant items were
$340,000 (2023: $1,288,000).
For the year ended 30 June 2024
Flexibles
$’000
Specialty
$’000
Un-
allocated
$’000
Total
$’000
Segment results (PBT) from continuing operations
(14,286)
(2,601)
(5,245)
(22,132)
Significant items from continuing operations
(25,753)
Profit/(loss) before income tax from continuing operations
(47,885)
Income tax (expense)/benefit from continuing operations
(5,879)
Profit/(loss) after income tax from continuing operations
(53,764)
For the year ended 30 June 2023
Flexibles
$’000
Specialty
$’000
Un-
allocated
$’000
Total
$’000
Segment results (PBT) from continuing operations
(5,601)
(647)
(4,375)
(10,623)
Significant items from continuing operations
(310)
Profit/(loss) before income tax from continuing operations
(10,933)
Income tax (expense)/benefit from continuing operations
2,446
Profit/(loss) after income tax from continuing operations
(8,487)
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Business optimisation and disruption costs
3,006
310
Impairment loss
22,747
-
Significant items
25,753
310
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
55 | ANNUAL REPORT 2024
NOTE 2. EARNINGS PER SHARE (EPS)
30 June
2024
30 June
2023
EPS (cents) – Basic
(29.59)
(5.63)
EPS (cents) – Diluted
(29.59)
(5.63)
EPS from continuing operations (cents) – Basic
(29.59)
(4.67)
EPS from continuing operations (cents) – Diluted*
(29.59)
(4.67)
Calculated using:
Profit/(loss) after income tax ($’000)
(53,764)
(10,238)
Profit/(loss) after income tax from continuing operations ($’000)
(53,764)
(8,487)
Weighted average of ordinary shares (number) – Basic
181,687,711
181,687,711
Weighted average of ordinary shares (number) – Diluted*
181,687.711
181,687,711
*Performance rights were not included in the calculation of diluted earnings per share because they are anti-dilutive
of the periods presented.
@
Accounting policy – earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit/(loss) after tax attributable to the owners
of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after-income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential ordinary shares.
Basic earnings from continuing operations per share
Basic earnings per share is calculated by dividing the profit/(loss) after tax from continuing operations
attributable to the owners of the Company, excluding any costs of servicing equity other than ordinary
shares, by the weighted average number of ordinary shares outstanding during the financial year.
Diluted earnings from continuing operations per share
Diluted earnings from continuing operations per share adjusts the figures used in the determination of
basic earnings from continuing operations per share to take into account the after-income tax effect
of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
56 | ANNUAL REPORT 2024
NOTE 3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Set out below is the disaggregation of the Group’s revenue from contracts with customers for continuing operations:
For the year ended 30 June 2024
Flexibles
$’000
Specialty
$’000
Un-
allocated
$’000
Total
$’000
Type of goods or services
Sale of manufactured goods
230,467
-
(399)
230,068
Sale of distribution goods
-
65,110
-
65,110
Revenue from contracts with customers
230,467
65,110
(399)
295,178
Geographic markets
Australia
183,114
65,110
(399)
247,825
New Zealand
47,353
-
-
47,353
Revenue from contracts with customers
230,467
65,110
(399)
295,178
Timing of revenue recognition
Goods transferred at a point in time
171,890
65,110
(399)
236,601
Services transferred over time
58,577
-
-
58,577
Revenue from contracts with customers
230,467
65,110
(399)
295,178
For the year ended 30 June 2023
Flexibles
$’000
Specialty
$’000
Un-
allocated
$’000
Total
$’000
Type of goods or services
Sale of manufactured goods
267,159
-
(1,832)
265,327
Sale of distribution goods
-
73,773
-
73,773
Revenue from contracts with customers
267,159
73,773
(1,832)
339,100
Geographic markets
Australia
209,872
73,773
(1,832)
281,813
New Zealand
57,287
-
-
57,287
Revenue from contracts with customers
267,159
73,773
(1,832)
339,100
Timing of revenue recognition
Goods transferred at a point in time
213,435
73,773
(1,832)
285,376
Services transferred over time
53,724
-
-
53,724
Revenue from contracts with customers
267,159
73,773
(1,832)
339,100
?
Key estimate and judgement – revenue recognition
A key judgement is whether the goods manufactured for customers have an alternate use to the
Group, including whether these goods can be repurposed and sold without significant economic loss to
the Group. Where the goods are manufactured for a specific customer with no alternate use and
where at all times throughout the contract the Group has the enforceable right to payment for
performance completed to date, then the performance obligation would be the service of
manufacturing of the specific goods (revenue recognised over time) rather than the sale of goods
(revenue recognised at point in time).
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
57 | ANNUAL REPORT 2024
NOTE 3. REVENUE FROM CONTRACTS WITH CUSTOMERS (CONT’D)
@
Accounting policy – revenue recognition
Sale of goods
The Group’s contracts with customers for the sale of products generally include either one
performance obligation or are bundled together with delivery services. The Group allocates the
transaction price to each performance obligation based on a stand-alone selling price basis. The
Group has concluded that revenue from sale of products should be recognised at the point in time
when control of the asset is transferred to the customer, generally on delivery of the goods.
Manufacturing of goods
For certain bespoke products where there is a right to payment and no alternative use exists for the
product, revenue is recognised at the time of manufacturing, which reflects the progress of the
completion of the manufacturing services. The transaction price recognised over time reflects the
sales invoice value and is not judgemental.
Variable consideration
Some contracts for the sale of products provide customers with volume rebates which give rise to
variable consideration. The variable consideration is estimated at contract inception using the
expected value method based on forecast volumes and is constrained until it is highly probable that a
significant revenue reversal in the amount of cumulative revenue recognised will not occur when the
associated uncertainty is subsequently resolved.
Warranty obligations
The Group generally provides warranties for general repairs of defects that existed at the time of sale,
as required by law. As such, most warranties are assurance-type warranties under AASB 15, which the
Group accounts for under AASB 137 Provisions, Contingent Liabilities and Contingent Assets.
Rendering of service
Distribution services are occasionally provided together with the sale of products to a customer. In the
case of contracts with multiple performance obligations, the transaction price is allocated to different
performance obligations based on their stand-alone selling prices. Revenue from distribution services
is recognised over time, using an input method to measure progress towards complete satisfaction of
the service.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
58 | ANNUAL REPORT 2024
NOTE 4. TAXATION
Income tax expense
For the year ended
30 June
2024
$’000
30 June
2023
$’000
Current income tax
Current income tax charge
(315)
441
Adjustments in respect of previous years
(130)
81
Deferred income tax
Relating to origination and utilisation of timing differences
6,324
(4,235)
Adjustments in respect of previous years
-
516
Income tax expense/(benefit)
5,879
(3,197)
Income tax expense/(benefit) from discontinued operations
Note 6
-
751
Income tax expense/(benefit) from continuing operations
5,879
(2,446)
Reconciliation of income tax to accounting profit at the statutory income tax rate:
For the year ended
30 June
2024
$’000
30 June
2023
$’000
Profit before income tax from continuing operations
(47,885)
(10,933)
At the statutory income tax rate of 30% (2023: 30%)
(14,366)
(3,280)
Differential income tax rates
44
(16)
Adjustments in respect of previous years
(130)
597
Derecognition of deferred tax assets*
7,334
-
Deferred tax assets not recognised during the period*
6,262
-
Non-deductible impairment losses
6,824
-
Other items
(89)
253
Income tax expense/(benefit) from continuing operations
5,879
(2,446)
Income tax expense/(benefit) from discontinued operations
-
(751)
Income tax expense/(benefit)
5,879
(3,197)
*Deferred tax assets relating to carry forward tax losses have not been recognised during the year based on the
assessment that they will not be utilised in the near term based on financial forecasts.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
59 | ANNUAL REPORT 2024
NOTE 4. TAXATION (CONT’D)
Deferred tax balances
Balance Sheet
Profit or Loss
As at
30 June
2024
$’000
30 June
2023
$’000
30 June
2024
$’000
30 June
2023
$’000
Deferred tax assets
Provisions and other accruals
10,177
9,903
274
161
Derivative financial liabilities
23
5
-
(225)
Lease liabilities
14,318
10,925
3,393
(1,524)
Carry forward tax losses*
-
7,334
(7,334)
4,749
Transaction costs
453
623
(170)
241
Deferred tax assets
24,971
28,790
(3,837)
3,402
Deferred tax liabilities
Intangibles
6,442
6,442
-
-
Property, plant and equipment
6,286
7,000
(714)
(1,761)
Derivative financial assets
19
150
-
500
Right-of-use assets
12,246
9,044
3,202
1,579
Other items
-
1
(1)
(1)
Deferred tax liabilities
24,993
22,637
2,487
317
Deferred tax assets/(liabilities), net
(22)
6,153
(6,324)
3,719
*As at 30 June 2024, the Group has approximately $16,045,000 (tax effected) of carry forward tax losses, R&D tax
offsets, and debt deductions available to be utilised against future taxable profits but have not been recognised in the
balance sheet.
Movements in the deferred tax balances during the year ended:
Notes
30 June
2024
$’000
30 June
2023
$’000
Balance as at beginning of the year
6,153
2,579
Recognised through profit or loss
(6,324)
3,719
Recognised through other comprehensive income
149
(145)
Balance as at end of the year
(22)
6,153
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
60 | ANNUAL REPORT 2024
NOTE 4. TAXATION (CONT’D)
Accounting policy – current and deferred tax
The income tax expense or benefit for the year is the tax payable or receivable on that year's taxable
income based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment
recognised for prior years, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected
to apply when the assets are recovered or liabilities are settled, based on those tax rates that are
enacted or substantively enacted, except for:
when the deferred income tax asset or liability arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business combination and that, at the time of the
transaction, affects neither the accounting nor taxable profits; or
when the taxable temporary difference is associated with interests in subsidiaries, associates or
joint ventures, and the timing of the reversal can be controlled, and it is probable that the
temporary difference will not reverse in the foreseeable future.
The initial recognition exception is not applied to deferred tax related to assets and liabilities arising
from a single transaction (e.g. leases).
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if
it is probable that future taxable income will be available to utilise those temporary differences and
losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each balance
date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future
taxable income will be available for the carrying amount to be recovered. Previously unrecognised
deferred tax assets are recognised to the extent that it is probable that there is future taxable income
available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset
current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities;
and they relate to the same taxable authority on either the same taxable entity or different taxable
entities which intend to settle simultaneously.
?
Key estimate and judgement – taxation
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is
required in determining the provision for income tax. Management periodically evaluates positions
taken in the tax returns with respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate. Where the final tax outcome of these
matters is different from the carrying amounts, such differences will impact the current and deferred
tax provisions in the year in which such determination is made.
Recovery of deferred tax assets
Significant judgement and estimation is involved in establishing internal earnings forecasts upon
which further taxable income is estimated.
Carry-forward losses
Entities acquired by the Group have unutilised carry-forward losses, which can only be utilised by the
consolidated group post-acquisition date where certain tests as prescribed in the income tax
legislation have been satisfied. The Group’s assessment that these carry-forward losses are available
to the consolidated group post-acquisition is based on independent tax advice.
Deferred tax assets relating to tax losses are recognised to the extent of expected future taxable
income against which the losses can be utilised. This assessment is reviewed at each reporting date.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
61 | ANNUAL REPORT 2024
NOTE 4. TAXATION (CONT’D)
Tax consolidation
The Company and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the
tax consolidation regime. The parent entity and each subsidiary in the tax consolidated group continue to account for
their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within
group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated
group.
In addition to its own current and deferred tax amounts, the parent entity also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each
subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that
the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting
in neither a contribution by the parent entity to the subsidiaries nor a distribution by the subsidiaries to the parent
entity.
NOTE 5. DIVIDENDS
There were no fully-franked dividends paid or declared during the current and previous financial year and up to the
date of this report.
@
Accounting policy – dividends
Dividends are recognised when declared during the financial year and are no longer at the discretion
of the Company.
Movements in the franking credit balance subsequent to balance date:
30 June
2024
$’000
30 June
2023
$’000
Franking account balance as at the end of the year
6,935
6,854
Franking credits that will arise from the payment of income tax payable for the year
-
81
Franking credits that will be utilised upon payment of dividends at the end of the year
-
-
Franking credits available for subsequent years
6,935
6,935
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
62 | ANNUAL REPORT 2024
Our Operational Footprint
This section provides details of acquisitions and other changes in the composition of the Group which have been
made in either the current or comparative year.
NOTE 6. BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS
@
Accounting policy – discontinued operations
Discontinued operations are excluded from the results of continuing operations and are presented as
a single amount as profit or loss after tax from discontinued operations in the statement of profit or
loss.
The Rigid business and Source & Sell business have been disclosed as discontinued operations in the
prior year and as a result these businesses are no longer presented in the segment note.
Discontinued operations
On 24 June 2022, the Group completed the sale of the Rigid packaging business (“Rigid”) to a subsidiary of
TricorBraun Inc.
$1.9m in final proceeds were received relating to the sale of Rigid during the year ended 30 June 2023.
On 1 September 2022, the Company entered into an agreement to transfer future sale and purchase contracts in
relation to the Source & Sell business (which was part of Industrial segment) to Rank Sharp Industries Limited. The
Company’s related employees and their entitlements were also transferred. The extended working capital cycle of the
Source and Sell business resulted in the business being considered non-core to the Group.
There were no businesses disposed of or considered non-core to the Group during the current financial period.
Results of discontinued operation
30 June
2024
$’000
30 June
2023
$’000
Revenue – Source & Sell
-
2,197
Revenue – Rigid business
-
-
Expenses – Source & Sell
-
(3,142)
Expenses – Rigid business
-
(1,462)
Profit/(loss) before tax
-
(2,407)
Income tax (expense)/benefit
-
722
Gain/(loss) on divestment after income tax
-
(66)
Profit/(loss) after tax from discontinued operation
-
(1,751)
30 June 2023
Loss on divestment
Notes
Source & Sell
$’000
Proceeds from divestment
-
Carrying value of net assets
95
Net loss on divestment before income tax
(95)
Income tax (expense)/benefit
29
Loss on divestment after tax
(66)
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
63 | ANNUAL REPORT 2024
NOTE 6. BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS (CONT’D)
Cash flows of discontinued operation
30 June
2024
$’000
30 June
2023
$’000
Net cash flows (used in)/from operating activities
-
2,130
Net cash (used in)/from investing activities
-
1,909
Net cash (used in)/from financing activities
-
-
Net cash flows for the year
-
4,039
Our Operating Assets
This section highlights the primary operating assets used and liabilities incurred to support the Group’s operating
activities.
WORKING CAPITAL
As at
Notes
30 June
2024
$’000
30 June
2023
$’000
Trade and other receivables
7
59,310
63,803
Inventories
8
63,741
65,328
Trade and other payables
9
(60,291)
(57,982)
Working capital
62,760
71,149
NOTE 7. TRADE & OTHER RECEIVABLES
As at
30 June
2024
$’000
30 June
2023
$’000
Trade receivables
42,250
46,730
Contract assets
10,885
10,246
Trade receivables from related parties
4,920
6,547
Trade and related party receivables
58,055
63,523
Allowance for expected credit losses
(337)
(1,350)
Trade and related party receivables, net of provision
57,718
62,173
Other debtors
1,592
1,630
Trade and other receivables
59,310
63,803
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
64 | ANNUAL REPORT 2024
NOTE 7. TRADE & OTHER RECEIVABLES (CONT’D)
Trade and related party receivables are non-interest bearing and are generally due for settlement within 30-90 days.
@
Accounting policy – trade and other receivables
Trade and related party receivables
Trade and related party receivables are initially recognised at the transaction price and subsequently
measured at amortised cost using the effective interest method, less any allowance for expected
credit losses.
Other receivables
Other receivables are recognised at amortised cost, less any provision for impairment.
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the
customer. If the Group transfers goods or services to a customer before the customer pays
consideration or before payment is due, a contract asset is recognised for the earned consideration
that is conditional.
Contract assets relate to revenue earned from bespoke products. As such, the balances of this
account vary and depend on the number of bespoke products produced at the end of the year.
Contract assets are subject to impairment assessment through expected credit losses.
?
Key estimate and judgement – allowance for expected credit losses
The Group recognises an allowance for expected credit losses (ECLs) for all receivables through profit
or loss. ECLs are based on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive, discounted at an approximation
of the original effective interest rate.
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is
based on its historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment.
The Group considers a financial asset to be in default when internal or external information indicates
that the Group is unlikely to receive the outstanding contractual amounts in full before taking into
account any credit enhancements held by the Group. A financial asset is written off when there is no
reasonable expectation of recovering the contractual cash flows.
Managing credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or
customer contract leading to financial loss. Trade and related party receivables are considered to be
the main source of credit risk; however, the Group does not have a concentration of credit risk with
respect to any single counterparty or group of counterparties, which mitigates the risk of significant
losses of default.
The Group has policies in place to ensure that customers who trade on credit terms are subject to
credit verification procedures. Amounts are considered as ‘past due’ when the debt has not been
settled within the credit terms and conditions as agreed between the Group and the customer or
counterparty to the transaction. Amounts past due are assessed for impairment by ascertaining the
solvency of debtors and are provided for where there are specific circumstances indicating that the
debt may not be fully repaid to the Group.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
65 | ANNUAL REPORT 2024
NOTE 7. TRADE & OTHER RECEIVABLES (CONT’D)
The ageing profile and related provisioning of trade and related party receivables as at:
Trade and related party receivables
Days past due
30 June 2024
Contract
assets
$’000
Current-
< 30
days
$’000
31-
60 days
$’000
61 –
90 days
$’000
>91
days
$’000
Total
$’000
Expected credit loss rate
-
0.13%
7.04%
0.70%
16.84%
-
Gross carrying amount of receivables
10,885
44,418
682
716
1,354
58,055
Expected credit loss
-
(56)
(48)
(5)
(228)
(337)
30 June 2023
Expected credit loss rate
-
0.06%
1.25%
0.66%
62.55%
-
Gross carrying amount of receivables
10.246
50,090
802
302
2,083
63,523
Expected credit loss
-
(35)
(10)
(2)
(1,303)
(1,350)
Movements in the allowance for expected credit losses during the year ended:
30 June
2024
$’000
30 June
2023
$’000
Balance as at beginning of the year
(1,350)
(843)
Additional amounts provided
(99)
(526)
Reversal of prior period doubtful debts
129
-
Amounts written-off as uncollectible
983
19
Balance as at end of the year
(337)
(1,350)
NOTE 8. INVENTORIES
As at
30 June
2024
$’000
30 June
2023
$’000
Raw materials*
32,772
34,468
Work-in-progress
3,935
2,620
Finished goods
33,995
33,690
Provision for obsolete inventories
(6,961)
(5,450)
Inventories
63,741
65,328
*Includes raw materials for which $4.0 million has been received in advance with shipment to occur in the first half of
FY25.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
66 | ANNUAL REPORT 2024
NOTE 8. INVENTORIES (CONT’D)
@
Accounting policy – inventories
Raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable
value. Cost in relation to work-in-progress and finished goods comprises direct materials and delivery
costs, direct labour, import duties and other taxes, and an allocation of variable and fixed overhead
expenditure based on normal operating capacity. Costs of purchased inventory are determined after
deducting rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale.
?
Key estimate and judgement – provision for obsolete inventories
The provision for obsolete inventories assessment requires a degree of estimation and judgement.
The level of the provision is assessed by taking into account recent sales experience, ageing of
inventories and other factors that affect inventory obsolescence.
Movements in the provision for obsolete inventories during the year ended:
30 June
2024
$’000
30 June
2023
$’000
Balance as at beginning of the year
(5,450)
(7,262)
Additional amounts provided
(2,910)
(2,660)
Amounts written-off as obsolete
1,399
4,391
Reversal of obsolete amounts provided, subsequently sold
-
81
Balance as at end of the year
(6,961)
(5,450)
Managing commodity risk
The Group is exposed to commodity price risk in relation to certain raw materials, specifically resin. In
managing this risk, the Group passes on changes in commodity prices to customers, including through
contractual rise and fall adjustments, where possible.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
67 | ANNUAL REPORT 2024
NOTE 9. TRADE & OTHER PAYABLES
As at
30 June
2024
$’000
30 June
2023
$’000
Trade payables
35,750
32,309
Payables to related parties
1,453
1,977
Trade and related party payables*
37,203
34,286
GST and other taxes payable**
882
1,939
Monies received in advance***
4,012
-
Other payables
18,194
21,757
Trade and other payables
60,291
57,982
*Trade and related party payables are non-interest bearing, unsecured and are generally settled on 60-day terms, or
less. Goods and Services Tax (GST) is remitted to the appropriate government body on a quarterly basis, whereas
other taxes payable are remitted on a monthly basis.
**For the year ended 30 June 2023, GST and other taxes payable includes $0.6 million relating to Government grant
proceeds received in June 2023. GST related to the Government grant of $4.9 million received in February 2024 has
been paid.
***Monies received in advance relates to payments for product that will be shipped in the first half of FY25 (refer
note 8).
@
Accounting policy – trade and other payables
Trade and related party payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of
the year and which remain unpaid. Due to their short-term nature, they are measured at amortised
cost and are not discounted.
GST and other taxes payable
Revenues, expenses and assets are recognised net of the amount of applicable GST, unless the GST
incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of
the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the tax authority is included in other receivables or
other payables in the consolidated statement of financial position.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at financial year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in profit or loss.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
68 | ANNUAL REPORT 2024
NOTE 9. TRADE & OTHER PAYABLES (CONT’D)
Managing foreign currency risk
Foreign currency risk is the risk that the fair value or future cashflows of an exposure will fluctuate
because of changes in foreign exchange rates.
As a result of its international activities, the Group is exposed to changes in foreign exchange rates on
sales and purchases. To hedge foreign currency risk, the Group regularly determines its net exposure
to the primary currencies listed below and enters into foreign exchange forward contracts to hedge
committed and highly probable forecast foreign currency transactions in accordance with its treasury
policy. Refer to Note 28: Derivate Financial Instruments and Hedge Accounting for more details of the
Group’s foreign currency risk policy.
The net carrying amount of financial assets/(liabilities) denominated in foreign currencies at balance
date were:
As at
30 June
2024
$’000
30 June
2023
$’000
United States dollars
(12,889)
(12,283)
Swedish Kronor
-
(68)
New Zealand dollars
(46)
(425)
Euros
(48)
(52)
Malaysian Ringgit
(86)
-
Great British pounds
(10)
(6)
The following table demonstrates the sensitivity to a reasonable possible change in foreign exchange
rates, with all other variables held constant. The impact on the Group’s profit/(loss) before tax is due
to changes in the fair value of monetary liabilities denominated in foreign exchange. The impact on
the Group’s pre-tax equity is due to changes in the fair value of forward exchange contracts
designated as cash flow hedges.
Effect on profit/(loss)
before tax
Effect on
pre-tax equity
As at
30 June
2024
$’000
30 June
2023
$’000
30 June
2024
$’000
30 June
2023
$’000
+/- 10% in AUD/USD
1,289
1,228
2
29
+/- 10% in AUD/NZD
5
43
-
-
+/- 10% in AUD/EUR
5
5
-
7
+/- 10% in AUD/MYR
9
-
-
-
+/- 10% in AUD/GBP
1
1
-
-
+/- 10% in USD/NZD
-
-
2
13
A 10% movement is considered reasonable movement based on historical movements in foreign
exchange rates.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
69 | ANNUAL REPORT 2024
NON-CURRENT ASSETS
?
Key estimate and judgement – estimated useful lives of non-current assets
The Group determines the estimated useful lives and related depreciation and amortisation charges
for its property, plant and equipment and finite-life intangible assets. The useful lives could change
significantly as a result of technical innovations and therefore, increase the depreciation and
amortisation charges.
NOTE 10. PROPERTY, PLANT & EQUIPMENT
Plant &
Equipment
$’000
Computer
& Office
Equipment
$’000
Motor
Vehicles
$’000
Total
$’000
Balances as at 1 July 2023
55,220
1,858
306
57,384
Additions
8,353
317
-
8,670
Disposals
(59)
-
(44)
(103)
Depreciation expense
(6,107)
(569)
(88)
(6,764)
Impairment losses
Note 11
(5,154)
-
-
(5,154)
Movement in foreign exchange rates
(25)
(18)
-
(43)
Balances as at 30 June 2024
52,228
1,588
174
53,990
Represented by:
At cost
128,698
7,500
3,420
139,618
Accumulated depreciation and impairment
(76,470)
(5,912)
(3,246)
(85,628)
Balances as at 30 June 2024
52,228
1,588
174
53,990
Balances as at 1 July 2022
56,548
2,231
60
58,839
Additions
4,536
138
391
5,065
Disposals
(75)
-
(9)
(84)
Depreciation expense
(5,909)
(505)
(136)
(6,550)
Movement in foreign exchange rates
120
(6)
-
114
Balances as at 30 June 2023
55,220
1,858
306
57,384
Represented by:
At cost
120,429
7,201
3,464
131,094
Accumulated depreciation and impairment
(65,209)
(5,343)
(3,158)
(73,710)
Balances as at 30 June 2023
55,220
1,858
306
57,384
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
70 | ANNUAL REPORT 2024
NOTE 10. PROPERTY, PLANT & EQUIPMENT (CONT’D)
@
Accounting policy – property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and
impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the
items and costs incurred to get the asset to a location and condition ready for use.
Depreciation rates and methods used for each class of assets are as follows:
Class of asset
Depreciation rates
Method
Plant and equipment
5% - 40%
Straight-line
Motor vehicles
7% - 25%
Straight-line
Computer equipment
20% - 50%
Straight-line
Office equipment
5% - 33%
Straight-line
An item of property, plant and equipment is derecognised upon disposal or when there is no future
economic benefit to the Group. Gains and losses being the difference between the carrying amount
and disposal proceeds are taken to profit or loss.
NOTE 11. INTANGIBLE ASSETS AND IMPAIRMENT TESTING
Brand
Names
$’000
Customer
Contracts
$’000
IT
development
costs
$’000
Total
$’000
Balances as at 1 July 2023
19,524
2,320
10,452
32,296
Additions
-
742
2,702
3,444
Amortisation expense
-
(925)
(2,417)
(3,342)
Impairment loss
(13,614)
(1,465)
(2,514)
(17,593)
Balances as at 30 June 2024
5,910
672
8,223
14,805
Represented by:
At cost
21,472
5,352
16,553
43,377
Accumulated amortisation and impairment
(15,562)
(4,680)
(8,330)
(28,572)
Balances as at 30 June 2024
5,910
672
8,223
14,805
Balances as at 1 July 2022
19,524
466
9,305
29,295
Additions
-
2,220
2,545
4,765
Amortisation expense
-
(366)
(1,398)
(1,764)
Impairment loss
-
-
-
-
Balances as at 30 June 2022
19,524
2,320
10,452
32,296
Represented by:
At cost
21,472
4,610
13,851
39,933
Accumulated amortisation and impairment
(1,948)
(2,290)
(3,399)
(7,637)
Balances as at 30 June 2023
19,524
2,320
10,452
32,296
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
71 | ANNUAL REPORT 2024
NOTE 11. INTANGIBLE ASSETS AND IMPAIRMENT TESTING (CONT’D)
@
Accounting policy – intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially
measured at their fair value at the date of the acquisition. Intangible assets acquired separately are
initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently
measured at cost less any impairment. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the change in useful life
from indefinite to finite is made on a prospective basis. Finite-life intangible assets are subsequently
measured at cost less amortisation and any impairment. The gains or losses recognised in profit or
loss arising from the derecognition of intangible assets are measured as the difference between net
disposal proceeds and the carrying amount of the intangible asset. Changes in the expected pattern of
consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
Brand names
Brand names are acquired in a business combination and their useful lives are assessed as being
indefinite.
Customer Contracts
Customer contracts acquired in a business combination are amortised on a straight-line basis over
their finite life, which is determined by the expected period of benefit in accordance with the
contractual terms. Customer contracts also include up-front payments paid at the commencement of
a contract, which are also amortised over the term of the contract.
IT development costs
IT development costs, including expenditure relating to the use of third-party hosted cloud computing
or Software as a Service (SaaS), are accounted for as either a lease, intangible asset or service contract
depending on the substance of the arrangement.
Where the Group determines the arrangement does not contain a lease, it assesses whether the
arrangement shall be accounted for as an intangible asset, which is controlled by the Group as a result
of past events from which future economic benefits are expected to flow to the Group.
The Group assesses whether it has control with reference to whether it has the power to obtain the
future economic benefits flowing from the underlying resource and to restrict the access of others to
those benefits. In respect of cloud computing or SaaS provided by third parties, control may be
demonstrated where the arrangement states the Group has the right to take possession of the
software for use on the Group’s infrastructure (e.g., source code being held in escrow, or the Group
has exclusive rights to use the software or ownership of the intellectual property for customised
software (e.g. vendor cannot make the software available to other customers).
Other intangibles are amortised on a straight-line basis over the period of their expected benefit,
which is between 1.5 years and 8 years.
?
Key estimate and judgement – recoverability of carrying amounts
Where the recoverable amounts of CGUs are determined based on value-in-use calculations, these
calculations require the use of assumptions, which may not be observable (e.g. earnings growth rates)
and estimated discount rates based on the current cost of capital and growth rates of the estimated
future cash flows.
The residual values, useful lives and amortisation methods are reviewed at each balance date and
adjusted where there is evidence that the expected pattern of consumption differs from the useful life
assumed.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
72 | ANNUAL REPORT 2024
NOTE 11. INTANGIBLE ASSETS AND IMPAIRMENT TESTING(CONT’D)
Impairment testing
Brand names and other intangible assets that have an indefinite useful life are not subject to amortisation and are
tested for impairment annually, or more frequently if events or changes in circumstances indicate that they might be
impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which
the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal (FVLCD) and its value-in-use (VIU). The
VIU is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific
to the asset. Assets that do not have largely independent cash flows are grouped together to form a cash-generating
unit (CGU).
The CGUs assessed at 30 June 2024 were Integrated Packaging Group Australia, Integrated Packaging Group New
Zealand, and Perfection Packaging (all comprising the Flexibles operating segment), and Specialty operating segment.
These CGUs represent the smallest group of identifiable assets that generate cash inflows that are largely
independent of the cash inflows from other assets and group of assets.
Indefinite life intangible assets for the year ended 30 June 2024 represent brand names, these brand names form
part of the Integrated Packaging Group Australia CGU, which were acquired as part of a prior period acquisition.
Following a detailed assessment under VIU, it was identified that the carrying amount of Property, Plant & Equipment
and intangible assets (Brand names, customer contracts, and IT development costs) of the Integrated Packaging
Group Australia and Perfection Packaging CGU’s was impaired by $13,688,000 and $9,058,000 respectively. On this
basis, an impairment loss of $22,747,000 was recognised during the year ended 30 June 2024.
Methodology and Testing of Recoverable Amount
Value-in-use
The recoverable amount of each CGUs is based on VIU, which has been determined using a discounted cash flow
model based on a one-year projection approved by the directors and extrapolated for a further four years based on
estimated growth rates, together with a terminal value.
The cash flow forecasts are comprised of EBITDA as a proxy for operating cash flows, less expected working capital
movements and sustainable levels of maintenance capital expenditure.
Key assumptions
The following Key assumptions have been used to determine the recoverable amounts of each group of CGUs and the
assumptions adopted are set out below.
Discount rates
Discount rates applied in determining the recoverable amounts are based on the pre-tax weighted average cost of
capital of the respective industries in which the group of CGUs operates, which is considered reflective of the
current market assessment of the risks specified to each CGU taking into consideration the time value of money.
Growth rates
The earnings forecast in the first year of the forecast period is consistent with the budget approved by the
directors. The EBITDA assumptions adopted to determine the forecast cash flows for the second year and each
subsequent year within the forecast period (EBITDA compound annual growth rates) are based on management’s
estimate for the forecast period.
Long-term growth rate
Long-term growth rates adopted to extrapolate cash flows beyond the five-year forecast period is considered in
line with, or below, external market expectations of long-term growth in these industries.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
73 | ANNUAL REPORT 2024
NOTE 11. INTANGIBLE ASSETS & IMPAIRMENT TESTING (CONT’D)
Operating segments
Impairment testing results of Flexibles operating segment and Specialty operating segment
As at balance date, the carrying amount of intangible assets and other non-financial non-current assets tested for
impairment have been allocated as per below operating segments:
Operating segments
As at 30 June 2024
Flexibles
$’000
Specialty
$’000((2)
Total
$’000
Property, plant and equipment(1)
52,424
1,566
53,990
Right-of-use assets
32,270
9,231
41,501
Brand names(1)
5,910
-
5,910
Customer contracts & other intangibles(1)
8,595
300
8,895
Total
99,199
11,097
110,296
Operating segments
As at 30 June 2023
Flexibles
$’000
Specialty
$’000
Total
$’000
Property, plant and equipment
54,567
2,817
57,384
Right-of-use assets
23,513
6,775
30,288
Brand names
19,524
-
19,524
Customer contracts & other intangibles
11,244
1,528
12,772
Total
108,848
11,120
119,968
(1)As part of the annual impairment assessment and in response to deteriorating market conditions, it was determined
that the recoverable amount of the Flexibles operating segment CGU was below its carrying amount. Consequently,
an impairment loss of $22,747,000 has been recognised for the year ended 30 June 2024 (2023: nil impairment). As
the Flexibles operating segment has been divided into 3 lower-level CGUs, the impairment loss has been allocated to
these specific CGUs as outlined on page 75. The carrying value of property, plant and equipment, brand names and
other intangibles as of 30 June 2024 reflects balances after accounting for the impairment loss.
(2)The impairment analysis of the Specialty CGU identified that the recoverable amount exceeded the carrying amount
and therefore no impairment was recorded for the year ended 30 June 2024 (2023: nil impairment).
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
74 | ANNUAL REPORT 2024
NOTE 11. INTANGIBLE ASSETS & IMPAIRMENT TESTING (CONT’D)
Operating segments (cont’d)
Sensitivity analysis
The table below outlines the differences between the recoverable amount and carrying amount (‘headroom’) of each
operating segment CGU at 30 June 2024. It also presents the value assigned to each material assumption used in
determining the recoverable amount (‘adopted assumption’) and the value at which each material assumption would
equate the recoverable amount to its carrying amount when moved in isolation (‘breakeven assumption’).
Flexibles
2024
Specialty
2024
Flexibles
2023
Specialty
2023
Headroom ($’000)
-
6,852
90,695
9,747
Discount rates
Adopted assumption (%)
13.45
12.65
12.84
12.74
Breakeven assumption (%)
13.45
17.78
19.07
18.47
EBITDA compound annual growth
rates
Adopted assumption (%)
8.67
2.35
8.54
2.98
Breakeven assumption (%)
8.67
(0.45)
(0.03)
(1.34)
Long-term growth rates
Adopted assumption (%)
2.5
2.5
2.50
2.50
Breakeven assumption (%)
2.5
>(100)
(10.02)
>(100.00)
The directors consider that a reasonably possible unfavourable movement in material assumptions used to determine
the recoverable amount may result in impairment (or further impairment).
The table below discloses the sensitivity of the recoverable amount of each group of CGUs to reasonable possible
changes in each material assumption when moved in isolation.
Flexibles
2024
Specialty
2024
Flexibles
2023
Specialty
2023
Discount rates
Revised assumption (%)
14.45
13.65
13.84
13.74
Impact on recoverable amount ($’000)
(11,077)
(1,763)
(21,068)
(2,373)
EBITDA compound annual growth rates
Revised assumption (%)
7.67
1.35
7.54
1.98
Impact on recoverable amount ($’000)
(7,386)
(2,445)
(10,583)
(2,259)
Long-term growth rates
Revised assumption (%)
1.5
1.5
1.50
1.50
Impact on recoverable amount ($’000)
(7,391)
(488)
(14,600)
(853)
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
75 | ANNUAL REPORT 2024
NOTE 11. INTANGIBLE ASSETS & IMPAIRMENT TESTING (CONT’D)
Flexibles operating segment – other Flexible’s CGUs
Impairment testing results of other Flexibles CGUs.
As at balance date, the carrying amount of intangible assets and other non-financial non-current assets tested for
impairment have been allocated to the lower-level Flexibles CGUs as detailed below. These amounts reflect balances
after accounting for the current period impairment loss:
Other Flexibles CGUs
As at 30 June 2024
Flexibles
New
Zealand
$’000
Perfection
Packaging
$’000
Integrated
Packaging
Australia
$’000
Property, plant and equipment
6,272
18,453
27,699
Right-of-use assets
7,267
7,827
17,176
Brand names
-
-
5,910
Customer contracts & other intangibles
-
-
8,595
Total
13,539
35,338
70,069
Other Flexibles CGUs
As at 30 June 2023
Flexibles
New
Zealand
$’000
Perfection
Packaging
$’000
Integrated
Packaging
Australia
$’000
Property, plant and equipment
6,396
21,751
26,420
Right-of-use assets
2,881
8,200
12,432
Brand names
-
-
19,524
Customer contracts & other intangibles
-
1,823
9,421
Total
9,277
31,744
67,797
Impairment analysis of the Flexibles lower-level CGUs revealed the following:
the recoverable amount of Flexibles New Zealand exceeded its carrying amount and therefore no impairment was
recorded for the year ended 30 June 2024 (2023: nil); and
the recoverable amounts for Integrated Packaging Australia and Perfection Packaging were below their carrying
amounts, resulting in impairment losses of $13,689,000 and $9,058,000 respectively for the year ended 30 June
2024 (2023: nil).
The Perfection Packaging impairment loss included an impairment of property, plant and equipment of
$5,154,000, with nil residual intangible assets subsequent to recognising the impairment.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
76 | ANNUAL REPORT 2024
NOTE 11. INTANGIBLE ASSETS & IMPAIRMENT TESTING (CONT’D)
Flexibles operating segment – other Flexible’s CGUs (cont’d)
Sensitivity analysis
The table below outlines the differences between the recoverable amount and carrying amount (‘headroom’) of each
lower-level flexibles CGUs at 30 June 2024. It also presents the value assigned to each material assumption used in
determining the recoverable amount (‘adopted assumption’) and the value at which each material assumption would
equate the recoverable amount to its carrying amount when moved in isolation (‘breakeven assumption’).
The directors consider that a reasonably possible unfavourable movement in material assumptions used to determine
the recoverable amount may result in impairment (or further impairment).
30 June 2024
30 June 2023
Flexibles
New
Zealand
Perfection
Packaging
Integrated
Packaging
Australia
Flexibles
New
Zealand
Perfection
Packaging
Integrated
Packaging
Australia
Headroom/impairment
($’000)
3,065
-
-
12,678
7,570
72,859
Discount rates
Adopted assumption (%)
13.62
13.32
13.47
12.85
12.51
12.95
Breakeven assumption (%)
14.94
13.32
13.47
20.34
14.27
22.42
EBITDA compound annual
growth rates
Adopted assumption (%)
8.51
23.22
4.93
12.89
42.82
3.26
Breakeven assumption (%)
6.16
23.22
4.93
3.04
36.09
(5.77)
Long-term growth rates
Adopted assumption (%)
2.5
2.5
2.5
2.50
2.50
2.50
Breakeven assumption (%)
(0.90)
2.5
2.5
>(100.0)
(1.78)
(55.28)
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
77 | ANNUAL REPORT 2024
NOTE 11. INTANGIBLE ASSETS & IMPAIRMENT TESTING (CONT’D)
Flexibles operating segment – other Flexible’s CGUs (cont’d)
The table below discloses the sensitivity of the recoverable amount of the other Flexibles CGU’s to reasonable
possible changes in each material assumption when moved in isolation.
NOTE 12. COMMITMENTS AND CONTINGENCIES
Capital expenditure commitments
As at
30 June
2024
$’000
30 June
2023
$’000
Less than one year
-
3,443
Capital expenditure commitments
-
3,443
30 June 2024
30 June 2023
Flexibles
New
Zealand
Perfection
Packaging
Integrated
Packaging
Australia
Flexibles
New
Zealand
Perfection
Packaging
Integrated
Packaging
Australia
Discount rates
Revised assumption (%)
14.62
14.32
14.47
13.85
13.51
13.95
Impact on recoverable
amount ($’000)
(2,386)
(3,276)
(5,625)
(2,609)
(4,589)
(13,198)
EBITDA compound annual
growth rates
Revised assumption (%)
7.51
22.22
3.93
11.89
41.82
2.26
Impact on recoverable
amount ($’000)
(1,304)
(1,216)
(4,685)
(1,289)
(1,123)
(7,449)
Long-term growth rates
Revised assumption (%)
1.50
1.50
1.50
1.50
1.50
1.50
Impact on recoverable
amount ($’000)
(1,079)
(1,498)
(2,592)
(1,216)
(2,294)
(7,513)
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
78 | ANNUAL REPORT 2024
NOTE 12. COMMITMENTS AND CONTINGENCIES (CONT’D)
Contingencies
As at
Notes
30 June
2024
$’000
30 Jun
2023
$’000
Security deposit guarantees given to landlords
1,764
1,056
Standby letters of credits given to overseas suppliers
453
2,031
Contingent liabilities
16
2,217
3,087
Additional contingent liabilities may exist in respect of product claims and other legal matters. By their nature, the
outcome of these cases are uncertain.
@
Accounting policy – contingencies
A contingent liability is, either:
A possible obligation that arises from past events and whose existence will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the entity; or
A present obligation that arises from past events but is not recognised because (a) it is not
probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or (b) the amount of the obligation cannot be measured with sufficient reliability.
NOTE 13. OTHER ASSETS
As at
30 June
2024
$’000
30 June
2023
$’000
Current
Deposits and prepayments
2,722
3,575
Current other assets
2,722
3,575
NOTE 14. OTHER LIABILITIES
As at
Notes
30 June
2024
$’000
30 June
2023
$’000
Current
Accrued capital expenditure
-
1,192
Government grant
(a)
10,310
5,579
Unearned income
816
240
Other
106
-
Current other liabilities
11,232
7,011
(a) The Government grant was received through the Federal Government’s Modern Manufacturing Initiative for the
establishment of a soft plastic film recycling plant. Proceeds received in relation to this grant are to be used for
capital expenditure and project management costs in line with the terms and conditions of the grant agreement
and have been classified as cashflows from investing activities in the statement of cash flows.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
79 | ANNUAL REPORT 2024
Accounting policy – government grants
Government grants are recognised where there is reasonable assurance that the grant will be
received, and all attached conditions will be complied with. When the grant relates to an expense
item, it is recognised as income on a systematic basis over the periods that the related costs, for which
it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as
income in equal amounts over the expected useful life of the related asset.
When the Group receives grants of non-monetary assets, the asset and the grant are recorded at
nominal amounts and released to profit or loss over the expected useful life of the asset, based on the
pattern of consumption of the benefits of the underlying asset by equal annual instalments.
The Group has elected to present the grant in the statement of financial position as deferred income,
which is recognised in profit or loss on a systematic and rational basis over the useful life of the asset.
NOTE 15. OTHER PROVISIONS
As at
Notes
30 June
2024
$’000
30 June
2023
$’000
Current
Business restructuring
(a)
332
79
Lease make-good
382
445
Current other provisions
714
524
Non-current
Lease make-good
3,077
3,079
Non-current other provisions
3,077
3,079
(a)Business restructuring plan relates to organisation right sizing. The restructuring plan was drawn up and announced
to its employees in June 2024. The restructuring is expected to be completed by early FY25.
Movements in other provisions during the year ended:
Business
Restructuring
$’000
Lease
Make-
Good
$’000
Total
$’000
Balances as at 1 July 2023
79
3,524
3,603
Additional amounts provided
316
-
316
Amounts utilised
(63)
(65)
(128)
Movement in foreign exchange rates
-
-
-
Balances as at 30 June 2024
332
3,459
3,791
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
80 | ANNUAL REPORT 2024
NOTE 15. OTHER PROVISIONS (CONT’D)
Business
Restructuring
$’000
Lease
Make-
Good
$’000
Total
$’000
Balances as at 1 July 2022
1,057
3,514
4,571
Additional amounts provided
-
-
-
Amounts utilised
(978)
-
(978)
Reversal of amounts provided
-
-
-
Movement in foreign exchange rates
-
10
10
Balances as at 30 June 2023
79
3,524
3,603
@
Accounting policy – other provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result
of a past event, it is probable the Group will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. The amount recognised as a provision is the
best estimate of the consideration required to settle the present obligation at the balance date, taking
into account the risks and uncertainties surrounding the obligation. If the time value of money is
material, provisions are discounted using a current pre-tax rate specific to the liability.
?
Key estimate and judgement – other provisions
A provision has been made for the present value of anticipated costs for future restoration of leased
premises (make-good). The provision includes future cost estimates associated with closure of the
premises. The calculation of this provision requires assumptions such as application of closure dates
and cost estimates. The provision recognised for each site is periodically reviewed and updated based
on the facts and circumstances available at the time.
Our Capital Structure
This section outlines the Group’s capital structure.
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern and
ensure the lowest cost of capital available to the Group, so that the Company can provide returns for shareholders
and to maintain an optimum capital structure to reduce the cost of capital.
The Group’s financing arrangements contain financial 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. In order to maintain or adjust the capital structure, the Group may adjust the quantum of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
81 | ANNUAL REPORT 2024
NET DEBT
As at
Notes
30 June
2024
$’000
30 June
2023
$’000
Borrowings
16
21,577
17,168
Less: cash and cash equivalents
17
(1,081)
(8,323)
Net debt
20,496
8,845
Less: government grant proceeds(1)
7,302
6,137
Net debt excluding government grant proceeds
27,798
14,982
(1)Proceeds received from the government grant are to be used in line with the agreement terms and conditions.
NOTE 16. BORROWINGS
As at
Interest rate %
Maturity
30 June
2024
$’000
30 June
2023
$’000
Current
Bank overdraft
BBSY + margin
Sep 24
(a)
3,518
-
Debtor finance facility
BBSW + margin
Dec 25
(b)
18,059
17,168
Current borrowings
21,577
17,168
@
Accounting policy – borrowings
Bank loans and trade finance
Loans and borrowings are recognised at the fair value of the consideration received,
Where there is an unconditional right to defer settlement of the liability for at least 12 months after
the balance date, the loans or borrowings are classified as non-current.
At balance date, the Group had access to the following lines of credit:
As at 30 June 2024
Notes
Utilised
$’000
Unutilised
$’000
Total
$’000
Debtor finance facility
(b)
18,059
11,941
30,000
Bank overdraft
(a)
3,518
1,482
5,000
Contingent funding facilities
(c)
2,217
533
2,750
Total facilities
23,794
13,956
37,750
As at 30 June 2023
Utilised
$’000
Unutilised
$’000
Total
$’000
Debtor finance facility
(b)
17,168
12,832
30,000
Bank overdraft
(a)
-
5,000
5,000
Contingent funding facilities
(c)
3,087
1,013
4,100
Total facilities
20,255
18,845
39,100
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
82 | ANNUAL REPORT 2024
NOTE 16. BORROWINGS (CONT’D)
a)
The bank overdraft facility operates on an ongoing basis subject to compliance with financial covenants. The
facility will decrease by $0.333 million each month till 30 September 2024 (at which point the facility would be
$4.0 million) and is subject to a refinance plan to the satisfaction of ANZ by 30 September 2024. As at 30 June
2024 the Group received a waiver from covenant ratio compliance for the 30 June 2024 calculation period;
b)
The debtor finance facility has a committed limit to December 2025. The drawings made under the committed
facility limit are however revolving in nature and accordingly, the debt of $18.1 million outstanding under the
facility at 30 June 2024 has been disclosed as a current liability. This facility will continue to be available to be
redrawn until December 2025, subject to eligible sale invoices being presented against the facility. As at 30 June
2024, $23.2 million ( 30 June 2023: $24.1 million) of eligible sales invoices had been presented against the
facility. The Interest rate applicable is floating and is charged monthly using the relevant bank bill swap rate
(BBSW) on the 4th day of each month as determined by the Australian Securities Exchange (ASX) plus an agreed
margin.
c)
The contingent funding facilities limit including interchangeable letters of credit and bank guarantees will reduce
to $2.2 million on the 30 September 2024.
Managing liquidity risk
The Group’s objective is to maintain a balance between:
Continuity of funding and flexibility through the use of bank loans, trade finance and lease
liabilities; and
Investment in strategic growth opportunities.
The Group manages liquidity risk through cash flow forecasting.
The contractual maturities of financial liabilities of the Group at balance date were:
30 June 2024
On
demand
$’000
Less
than 3
months
$’000
3 to 12
months
$’000
1 to
5 years
$’000
Greater
than 5
years
$’000
Gross
Total
$’000
Carrying
Amount
$’000
Trade payables
-
37,203
-
-
-
37,203
37,203
Other payables
-
19,076
-
-
-
19,076
19,076
Other liabilities
-
11,232
-
-
-
11,232
11,232
Bank overdraft
3,518
-
-
-
-
3,518
3,518
Derivatives
-
57
19
-
-
76
76
Debtor finance facility
18,059
-
-
-
-
18,059
18,059
Lease liabilities
-
3,036
9,164
39,442
1,427
53,069
48,470
Total
21,577
70,604
9,183
39,442
1,427
142,233
137,634
30 June 2023
On
demand
$’000
Less
than 3
months
$’000
3 to 12
months
$’000
1 to
5 years
$’000
Greater
than 5
years
$’000
Gross
Total
$’000
Carrying
Amount
$’000
Trade payables
-
34,286
-
-
-
34,286
34,286
Other payables
-
23,696
-
-
-
23,696
23,696
Other liabilities
-
7,011
-
-
-
7,011
7,011
Bank overdraft
-
-
-
-
-
-
-
Derivatives
-
1
14
-
-
15
15
Debtor finance facility
17,168
-
-
-
-
17,168
17,168
Lease liabilities
-
2,790
7,902
27,779
3,338
41,809
36,737
Total
17,168
67,784
7,916
27,779
3,338
123,985
118,913
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
83 | ANNUAL REPORT 2024
NOTE 16. BORROWINGS (CONT’D)
A reconciliation of changes in liabilities arising from financing activities is shown below:
1 July
2023
$’000
Cash
Flows
$’000
Foreign
exchange
movement
$’000
New
leases
$’000
Disposal
of leases
$’000
Other
$’000
30 June
2024
$’000
Current borrowings
-
3,518
-
-
-
-
3,518
Current lease liabilities
8,727
(10,692)
-
-
-
11,801
9,836
Debtor finance facility
17,168
896
(5)
-
-
- 18,059
Non-current borrowings
-
-
-
-
-
-
-
Non-current lease liabilities
28,010
(1,263)
-
21,091
(107)
(9,097) 38,634
Total
53,905
(7,541)
(5)
21,091
(107)
2,704 70,047
1 July
2022
$’000
Cash
Flows
$’000
Foreign
exchange
movement
$’000
New
leases
$’000
Disposal
of leases
$’000
Other
$’000
30 June
2023
$’000
Current borrowings
3,505
(3,272)
-
-
-
(233)
-
Current lease liabilities
7,645
(7,711)
-
-
-
8,793
8,727
Debtor finance facility
-
15,276
(5)
-
-
1,897
17,168
Non-current borrowings
21,455
(21,455)
-
-
-
-
-
Non-current lease liabilities
33,850
(961)
-
3,867
(87)
(8,659)
28,010
Total
66,455
(18,123)
(5)
3,867
(87)
1,798
53,905
NOTE 17. CASH & CASH EQUIVALENTS
As at
30 June
2024
$’000
30 June
2023
$’000
Cash on hand
35
83
Cash at bank
1,046
8,240
Cash and cash equivalents
1,081
8,323
Cash at bank earns interest based on floating daily bank deposit rates.
@
Accounting policy – cash and cash equivalents
Cash and cash equivalents include cash at bank and on hand and deposits held with short-term
original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
84 | ANNUAL REPORT 2024
NOTE 17. CASH & CASH EQUIVALENTS (CONT’D)
Reconciliation of net cash flows from operating activities to accounting profit for the year ended:
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Profit before income tax from continuing and discontinued
operations
(47,885)
(13,435)
Non-cash items:
Impairment losses
22,747
-
Depreciation and amortisation expense
19,960
17,217
Loss/(gain) on disposal of property, plant and equipment
(191)
186
Share-based payments expense
22
(471)
890
Amortisation of borrowing costs
18
477
567
Change in fair value of derivatives recognised in equity
(600)
26
Changes in assets and liabilities:
Decrease/(increase) in trade and other receivables
4,196
19,632
Decrease/(increase) in inventories
1,587
9,399
Decrease/(increase) in derivative financial instruments
496
(1,205)
Decrease/(increase) in other assets
426
(719)
Increase/(decrease) in trade and other payables
1,882
(32,071)
Increase/(decrease) in other liabilities
(35)
(1,674)
Increase/(decrease) in employee entitlements
776
(859)
Increase/(decrease) in other provisions
188
(968)
Income tax refund/(paid)
1,031
(1)
Net cash (used in)/ flows from operating activities
4,584
(3,015)
NOTE 18. FINANCE COSTS
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Interest expense
3,444
2,376
Amortisation of borrowing costs
(a)
477
567
Interest on lease liabilities
29
2,704
2,423
Finance costs
6,625
5,366
(a) During the year ended 30 June 2023, the Group incurred $1.3 million of costs as a result of establishing the new
debtors finance facility (refer Note 16. Borrowings). These costs are being amortised over the 3-year term of the
facility.
@
Accounting policy – finance costs
Finance costs are expensed in the year in which they are incurred, including interest on the bank
overdraft, interest on short-term and long-term borrowings, interest on lease liabilities and unwinding
of the discount on provisions.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
85 | ANNUAL REPORT 2024
NOTE 18. FINANCE COSTS (CONT’D)
Managing interest rate risk
Interest rate risk is the risk that the fair value or future cashflows of borrowings will fluctuate because
of changes in market interest rates. Bank loans are the main source of interest rate risk because the
interest rate is floating whereas interest payable on trade finance and lease liabilities are fixed for the
term of the arrangement.
Interest earned on cash and cash equivalents is not material.
The composition of the Group’s funding is considered annually to ensure applicable interest rates are
competitive and reflective of the Group’s future funding requirements.
The table below illustrates the sensitivity of borrowings outstanding at balance date to reasonably
possible changes in interest rates in isolation and the consequential impact on the profit or loss of the
Group:
As at
30 June
2024
$’000
30 June
2023
$’000
+/- 1% in interest rates
216
172
The assumed movement in basis points for the interest rate sensitivity analysis is based on the
currently observable market environment.
NOTE 19. ISSUED CAPITAL
Movements in the issued, authorised and fully paid ordinary shares during the year ended:
30 June 2024
30 June 2023
Number
$’000
Number
$’000
Ordinary shares as at beginning of the year
181,687,711
320,538
81,110,410
291,678
Rights issue
-
-
100,577,301
30,174
Transaction costs for rights issue, net of income tax
-
-
-
(1,314)
Ordinary shares as at end of the year
181,687,711
320,538
181,687,711
320,538
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of, and amounts paid, on the shares held. The fully paid ordinary shares have no par value
and the Company does not have a limited amount of authorised capital.
Rights issue
During the year ended 30 June 2023, the Group completed a pro-rata accelerated renounceable entitlement offer of
new ordinary shares in the Group to eligible existing shareholders, comprising an accelerated institutional rights issue
and a retail rights issue, which raised gross proceeds of $30.2 million. $1.3 million (net of income tax) in transaction
costs were incurred as part of the rights issue.
@
Accounting policy – issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are recognised in equity
as a deduction, net of tax, from the proceeds.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
86 | ANNUAL REPORT 2024
NOTE 20. RESERVES
As at
Notes
30 June
2024
$’000
30 June
2023
$’000
Share-based payments reserve
(a)
1,464
1,935
Cash flow hedge reserve
(b)
(10)
394
Foreign currency translation reserve
(c)
(67)
(17)
Reserves
1,387
2,312
(a)
The share-based payments reserve is used to recognise the fair value of performance rights granted to certain
employees over the vesting period, subject to the employee still being employed at that vesting date.
(b)
The cash flow hedge reserve is used to recognise the effective portion of the gain or loss of cash flow hedge
instruments that is determined to be an effective hedge. The ineffective portion of hedges and hedges where
the cashflows are no longer expected to be realised are taken to profit and loss.
(c)
The foreign currency translation reserve is used to accumulate differences that arise on translation of foreign
operations where the functional currency is other than Australian dollars.
@
Accounting policy – reserves
Share-based payments reserve
The fair value of equity-settled transactions determined at grant date is amortised over the vesting
period with a corresponding increase in equity. The cumulative charge to profit or loss is calculated
based on the fair value of the award, the best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount recognised in profit or loss is the
cumulative amount calculated at each balance date less amounts recognised in previous years.
Cash flow hedge reserve
The effective portion of the gain or loss on a foreign currency hedging instrument is recognised in OCI
in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the
statement of profit or loss. The cash flow hedge reserve is adjusted to the lower of the cumulative
gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
Refer to Note 28. Derivative Financial Instruments and Hedge Accounting for more details of the
accounting treatment of foreign currency forward contracts.
Foreign currency translation reserve
The consolidated financial statements are presented in Australian dollars, which is the Company’s
functional and presentation currency.
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange
rates at the balance date. The revenues and expenses of foreign operations are translated into
Australian dollars using the average exchange rates, which approximate the rate at the date of the
transaction, for the year. All resulting foreign exchange differences are recognised in other
comprehensive income through the foreign currency reserve.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
87 | ANNUAL REPORT 2024
Remunerating Our People
This section provides financial insight into employee reward and recognition designed to attract, retain, reward and
motivate high performing individuals so as to achieve the objectives of the Group in alignment with the interests of
our shareholders.
This section should be read in conjunction with the remuneration report, contained within the directors’ report,
which provides specific details on the setting of remuneration of Keyl Management Personnel.
NOTE 21. EMPLOYEE ENTITLEMENTS
As at
30 June
2024
$’000
30 June
2023
$’000
Current
Annual leave
5,714
5,062
Time off in lieu and rostered days off
62
70
Long service leave
4,508
4,546
Current employee entitlements
10,284
9,678
Non-current
Long service leave
501
331
Non-current employee entitlements
501
331
?
Key estimate and judgement – employee entitlements
The liability for employee entitlements expected to be settled more than twelve months from the
balance date is measured at the present value of the estimated future cash flows to be made in
respect of all employees at the balance date, irrespective of whether the liability is classified as
current.
In determining the present value of the liability, estimates of attrition rates and pay increases through
promotion and inflation have been taken into account.
@
Accounting policy – employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
are recognised in current liabilities in respect of employees' services up to the balance date and are
measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for long service leave that does not meet the vesting conditions within twelve months of
balance date is recognised in non-current liabilities. The liability is measured as the present value of
expected future payments to be made in respect of services provided by employees up to the balance
date. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at
the balance date on corporate bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
88 | ANNUAL REPORT 2024
NOTE 22. EMPLOYEE BENEFITS EXPENSE
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Wages and salaries
66,251
66,915
Superannuation contributions
5,602
5,370
Share-based payments expense
23, (a)
(471)
890
Other employee benefits
6,492
7,554
Employee benefits expense
77,874
80,729
a)
The share-based payments in the current period are negative due to the combined effect of the reduced
probability that they will vest and the resignation of key management personnel and senior executives. When
these events, occur any prior period cumulative expense is reversed.
NOTE 23. SHARE-BASED PAYMENTS
The Company aims to develop remuneration packages that properly reflect each person’s duties and responsibilities
and includes remuneration that is competitive in attracting, retaining and motivating people of the highest quality.
Remuneration packaging includes the awarded shares or performance rights which vest upon the eligible employee
remaining in service with the Group and the achievement of certain performance hurdles by the end of the vesting
period.
All share-based payment arrangements are equity settled. Details of movements in performance rights on foot
during the current financial period are detailed on page 89.
The fair value of awards which do not contain a market hurdle is based on the share price on the grant date, less any
expected dividends to be received between grant date and the vesting date.
Performance Rights Plan (PRP)
The Company has established a PRP to provide eligible employees with an opportunity to share in the growth in value
of the Company and to encourage them to improve the longer-term performance of the Company and its returns to
shareholders. The PRP is also intended to assist the Company to attract and retain skilled and experienced senior
executives and provide them with an incentive to have a greater involvement with, and focus on, the longer-term
goals of the Company.
The following are the key features of the PRP:
The Board may from time to time, in its absolute discretion, invite eligible employees to apply for rights under the
PRP on terms set out in the PRP and any other terms the Board considers appropriate, subject to the grant
complying with the Corporations Act 2001 and the ASX Listing Rules;
A right will vest where the eligible employee remains in service at vesting date and, in some cases, upon
satisfaction of performance hurdles and other vesting conditions determined by the Board. The key performance
hurdle which has been used is that the TSR to shareholders of the Company must exceed the rate of growth over
the same period of the S&P/ASX Small Ordinaries Accumulation Index (or equivalent or replacement of that
index);
The exercise price of a grant of rights under the PRP may be zero, although a price may be set by the Board;
A right will automatically lapse where a vesting condition has not been satisfied and exercised prior to the expiry
date; and
Shares issued on the exercise of rights under the PRP will rank equally in all respects with all existing shares from
the date of allotment, including in relation to voting rights and entitlements to distributions and dividends.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
89 | ANNUAL REPORT 2024
NOTE 23. SHARE-BASED PAYMENTS (CONT’D)
A summary of the performance share rights (PSR) granted or forfeited under the PRP during the year ended 30 June
2024 is as follows:
Grant
date
Vesting
date
Expiry
date
Exercise
price
Fair
Value
Balance at
beginning
of year
Granted
Exercised
Forfeited
Balance
at end
of year
11-Dec-201
30-Jun-23 31-Dec-23
$0.00
$0.134
49,959
-
-
(49,959)
-
20-Dec-211
30-Jun-24 31-Dec-24
$0.00
$0.867
226,659
-
-
(20,663)
205,996
3-Oct-222,b
30 Jun-23 31-Dec-24
$0.00
$0.300 1,000,000
-
- (1,000,000)
-
3-Oct-222,c
30 Jun-24 31-Dec-24
$0.00
$0.300 3,000,000
-
-
-
3,000,000
3-Oct-222,a
30 Jun-24 31-Dec-24
$0.00
$0.300 3,000,000
-
- (3,000,000)
-
3-Oct-222,a
30 Jun-24 31-Dec-24
$0.00
$0.300 1,000,000
-
- (1,000,000)
-
16 Mar-231
30 Jun-25 31-Dec-25
$0.00
$0.247 4,041,556
-
-
(641,667)
3,399,889
21-Nov-232,d
30 Jun-25 31-Dec-25
$0.00
$0.260
-
2,942,857
-
-
2,942,857
23-Nov-231
30-Jun-26 31-Dec-26
$0.00
$0.190
-
3,335,126
-
-
3,335,126
Total
12,318,174
6,277,983
- (5,712,289)
12,883.868
1Other PSR – performance share rights issued to other executives. The performance hurdles for these rights include
market conditions.
2CEO PSR – performance share rights issued to J. Cerini (CEO and Managing Director). On 3 October 2022, 8 million
performance rights were issued as part of his employment contract on commencement as CEO of the Group. The
performance hurdles for these rights only contain non-market conditions. During the current financial period:
a.
As documented in the 2023 Notice of Annual General meeting Tranche 1 and Tranche 3 performance rights
(4,000,000) were not issued during the current period, or at all. However, for accounting purposes, they were
treated as issued on the notional grant date of 23 October 2022, in accordance with AASB2 Share-based
payments. As a result, they were treated as forfeited during the period as they were not on foot at 30 June 2024.
b.
1,000,000 performance rights issued to J. Cerini as part of his FY23 STI were forfeited as the key performance
hurdles were not met.
c.
The terms attached to the vesting of these Tranche 2 performance rights (3,000,000) were modified during the
period and approved by shareholders at the 2023 Annual General Meeting. Refer Remuneration Report page 20
for details of the modification.
d.
During the period J. Cerini was issued 2,942,857 performance rights as part of his FY23 LTI. This was approved by
shareholders at the 2023 Annual General Meeting.
The following table shows the number and weighted average exercise prices (WAEP) of, and movements in,
performance rights under the PRP during the year ended:
30 June 2024
30 June 2023
Number
WAEP
Number
WAEP
Outstanding as at beginning of the year
12,318,174
$0.000
1,547,126
$0.000
Granted
6,277,983
$0.000
12,041,556
$0.000
Forfeited
(5,712,289)
$0.000
(1,270,508)
$0.000
Exercised
-
$0.000
-
$0.000
Outstanding as at end of the year
12,883,868
$0.000
12,318,174
$0.000
Exercisable
-
-
-
-
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
90 | ANNUAL REPORT 2024
NOTE 23. SHARE-BASED PAYMENTS (CONT’D)
The following table lists the inputs to the valuation models used to calculate the fair value of performance rights
issued and modified during the year ended 30 June 2024 and 30 June 2023 respectively.
1As the CEO PSR issued during the current and prior year only contain non-market vesting conditions the fair value is
determined as the share price at grant date. This is adjusted for any expected dividends between the grant date and
vesting date.
2This valuation relates to the 3,000,000 Tranche 2 performance rights modified and 2,942,857 performance rights
issued during the current financial period.
@
Accounting policy – share based payments
The fair value of equity-settled transactions determined at grant date is amortised over the vesting
period with a corresponding increase in equity. The cumulative charge to profit or loss is calculated
based on the fair value of the award, the best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount recognised in profit or loss is the
cumulative amount calculated at each balance date less amounts recognised in previous years.
Equity-settled transactions are awards of shares, or performance rights, that are provided to
employees in exchange for the rendering of services.
The fair value of equity-settled transactions is measured at grant date.
Where the performance hurdle contains market conditions the fair value is independently determined
using the Monte Carlo option pricing model. This model takes into account the exercise price, the
term of the option, the impact of dilution, the share price at grant date, the expected price volatility of
the underlying share, the expected dividend yield and the risk-free interest rate for the term of the
share right together with non-vesting conditions that do not determine whether the Group receives
the services that entitle the employees to receive payment. No account is taken of any other vesting
conditions.
Market conditions are taken into consideration in determining fair value. Therefore, any awards
subject to market conditions are considered to vest irrespective of whether or not that market
condition has been met, provided all other conditions are satisfied (e.g. continuity of service).
Where the performance hurdle only contains non-market conditions it is not appropriate to use an
option pricing model such as Monte Carlo. In this instance the valuation is based on the share price at
grant date. This is adjusted for any dividends to be received between grant date and vesting date.
30 June 2024
30 June 2023
Other PSR
CEO PS(1),(2)
Other PSR
CEO PSR(1)
Fair value at measurement date
$0.19
$0.26
$0.247
$0.300
Dividend yield (%)
Nil
n/a
0.00
n/a
Expected volatility (%)
65
n/a
64
n/a
Risk-free interest rate (%)
4.06
n/a
3.1
n/a
Expected life of PSRs (years)
2.75
n/a
2.4
n/a
Exercise price
$0.0
n/a
$0.00
n/a
Model used
Monte Carlo
(1)
Monte Carlo
(1)
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
91 | ANNUAL REPORT 2024
NOTE 24. KEY MANAGEMENT PERSONNEL
Employee benefits expense
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Short-term employee benefits
(a)
1,410
1,778
Long-term employee benefits
2
(3)
Post-employment benefits
100
104
Share-based payments
(b)
(740)
452
Compensation to key management personnel
772
2,331
(a) Employee benefits include nil termination benefits for the year ended 30 June 2024 (2023: $144,679).
(b) The share-based payments in the current period are negative due to the combined effect of the reduced
probability that they will vest and the resignation of key management personnel. When these events, occur any
prior period cumulative expense is reversed.
Other Disclosures
This section includes additional financial information that is required under the accounting standards and the
Corporations Act 2001.
NOTE 25. OTHER INCOME
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Other
1,137
2,932
Other income
(a)
1,137
2,932
(a) Other income for the year ended 30 June 2024 includes $0.8 million of sub-lease income (2023: $1.05 million) and
$0.01 million in relation to transitional services provided on the sale of the Rigid Business (2023: $1.1 million)
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
92 | ANNUAL REPORT 2024
NOTE 26. PARENT ENTITY FINANCIAL INFORMATION
Supplementary financial information for the Company is as follows:
Statement of comprehensive income
For the year ended
30 June
2024 (1)
$’000
30 June
2023(2)
$’000
Other income
1,792
3
Expenses
(53,849)
(162,100)
Profit/(loss) before income tax
(52,057)
(162,097)
Income tax (expense)/benefit
(1,906)
875
Profit/(loss) after income tax
(53,963)
(161,222)
Other comprehensive income/(loss)
-
Total comprehensive income/(loss)
(53,963)
(161,222)
Statement of financial position
As at
30 June
2024
$’000
30 June
2023
$’000
Current assets
31
573
Non-current assets
81,376
133,478
Total assets
81,407
134,051
Current liabilities
1,703
384
Non-current liabilities
-
-
Total liabilities
1,703
384
Net assets
79,704
133,667
Issued capital
320,538
320,538
Retained earnings/(accumulated losses)
(240,834)
(186,871)
Equity
79,704
133,667
(1)The current period loss before income tax includes an impairment charge of $50.7miilion with respect to the
investment in subsidiaries and intangibles.
(2)Prior period comparatives have been restated to reflect an impairment of the intercompany receivables of $159.2
million.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
93 | ANNUAL REPORT 2024
NOTE 27. FAIR VALUE MEASUREMENT
@
Accounting policy – fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or
disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date
and assumes that the transaction will take place either (a) in the principal market, or (b) in the
absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair
value measurement is based on its highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to measure fair value, are used,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial
position) when:
The rights to receive cash flows from the asset have expired
Or
The Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and
rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset
When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset
to the extent of its continuing involvement. In that case, the Group also recognises an associated
liability. The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset and the maximum amount of consideration that
the Group could be required to repay.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is recognised in the statement of
profit or loss.
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three-level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
94 | ANNUAL REPORT 2024
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3: Unobservable inputs for the asset or liability
NOTE 27. FAIR VALUE MEASUREMENT (CONT’D)
As at 30 June 2024
Notes
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Debtor finance facility
(a)
16
-
(18,059)
-
(18,059)
Bank Overdraft
(b)
16
-
(3,518)
-
(3,518)
Derivative financial assets
(c)
28
Foreign exchange forward contracts
-
AUD/USD
-
20
-
20
-
AUD/EUR
-
-
-
-
-
NZD/USD
-
44
-
44
Derivative financial liabilities
(c)
28
-
AUD/USD
-
(53)
-
(53)
-
AUD/EUR
-
-
-
-
-
NZD/USD
-
(23)
(23)
Total
-
(21,589)
-
(21.589)
As at 30 June 2023
Notes
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Debtor finance facility
(a)
16
-
(17,168)
-
(17,168)
Bank Overdraft
(b)
16
-
-
-
-
Derivative financial assets
(c)
28
Foreign exchange forward contracts
-
AUD/USD
-
303
-
303
-
AUD/EUR
-
66
-
66
-
AUD/GBP
-
-
-
-
-
NZD/USD
-
130
-
130
Derivative financial liabilities
(c)
28
-
AUD/USD
-
(11)
-
(11)
-
AUD/EUR
-
-
-
-
-
NZD/USD
-
(4)
-
(4)
Total
-
(16,684)
-
(16,684)
(a)
The Interest rate applicable to this facility is floating and is charged monthly using the relevant bank bill swap
rate (BBSY) on the 4th day of each month as determined by the Australian Stock Exchange (ASX). The debtors
finance facility is recognised at fair value of consideration received.
(b)
The Interest rate applicable to this facility is floating and is charged monthly using the relevant bank bill swap
rate (BBSY) on a daily basis as determined by the ANZ screen rate.
(c)
Derivative financial instruments relate to foreign exchange forward contracts and have been valued using
external valuations, leveraging market rates. This valuation technique maximises the use of observable market
data where it is available and relies as little as possible on entity specific estimates.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
95 | ANNUAL REPORT 2024
NOTE 28. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING
The Group uses forward currency contracts to manage its foreign currency risk.
Under the Treasury Policy approved by the Board, certain forward foreign currency cover is taken out to hedge
against unfavourable foreign exchange movements on committed purchases and highly probable forecasts
denominated in a currency other than the functional currency of the legal entities within the Group.
Such derivative financial instruments are initially measured at fair value on the date on which the derivative contract
is entered into and are remeasured at each subsequent reporting date.
As at 30 June 2024, Management has recognised a net derivative liability of $0.01m (30 June 2023: net derivative
asset of $0.5m) when assessing the fair value of open hedge instruments on foot.
Hedge Accounting
At the inception of the foreign exchange forward contract, the Group formally designates and documents the hedge
relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for
undertaking the hedge. This involves identification of the hedging instrument and the underlying hedged item, the
nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge
effectiveness. A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness
requirements:
There is ‘an economic relationship’ between the hedged item and the hedging instrument.
The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship.
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item
that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge
that quantity of the hedged item.
For the purposes of hedge accounting these forward currency contracts are designated as cash flow hedges as they
hedge the exposure to variability in cash flows attributed to the foreign currency risk of a recognised underlying asset
or liability.
Cash flow hedges that meet all the qualifying criteria for hedge accounting are accounted for as follows:
1.
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge
reserve (refer Note. 20: Reserves).
2.
The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument
and the cumulative change in the fair value of the hedged item;
3.
Any ineffective portion of the hedging instrument is recognised immediately in the statement of profit or loss;
4.
Any unrealised gains or losses on effective cash flow hedges that have been recognised in other comprehensive
income and deferred in the cash flow hedge reserve are subsequently released to profit or loss when the hedged
item affects profit and loss, in the same line as the recognised hedged item. However, when the hedged forecast
transaction results in the recognition of a non-monetary asset (namely inventory), the gains and losses previously
recognised in other comprehensive income and accumulated in equity are removed from equity and included in
the initial measurement of the cost of the non-financial asset. In the case of inventory, these gains and losses
are transferred to cost of sales when the inventory is subsequently sold.
5.
Management has assessed that the remainder of the open hedge book to be highly effective in hedging the
associated foreign currency risks implicit in the underlying hedged items and consequently, the unrealised loss of
$0.01 million at 30 June 2024 has been deferred within equity.
All realised foreign currency gains and losses arising upon closing a forward foreign currency contract during the year
ended 30 June 2024 have been included initially in the cost of inventory and then transferred to costs of sales when
the inventory was subsequently sold.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
96 | ANNUAL REPORT 2024
NOTE 28. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING (CONT’D)
The Group is holding the following foreign exchange forward contracts:
Less
than 1
month
$’000
1 to 3
months
$’000
3 to 6
months
$’000
6 to 9
months
$’000
9 to 12
months
$’000
Total
$’000
As at 30 June 2024
Foreign exchange forward contracts (highly
probable forecast net purchases)
-
Notional amount
-
5,795
8,553
1,196
- 15,544
Average forward rate (AUD/USD)
-
0.6599
0.6656 0.6691
-
-
-
Notional amount
-
-
-
-
-
-
Average forward rate (AUD/EUR)
-
-
-
-
-
-
-
Notional amount
-
3,499
3,000
894
-
7,393
Average forward rate (NZD/USD)(1)
-
0.6085
0.6101
0.6143
-
-
As at 30 June 2023
Foreign exchange forward contracts (highly
probable forecast net purchases)
-
Notional amount
6,152
11,004
1,377
-
- 18,533
Average forward rate (AUD/USD)
0.6997
0.6748
0.6821
-
-
-
-
Notional amount
1,126
1,128
358
811
-
3,423
Average forward rate (AUD/EUR)
0.6215
0.6203
0.6185
0.6164
-
-
-
Notional amount
4,531
3,716
-
-
-
8,247
Average forward rate (NZD/USD)(1)
0.6176
0.6168
-
-
-
-
(1)
The notional amount of these foreign exchange forward contracts is denominated in $NZD and have been
translated into $AUD using the spot rate at 30 June 2024 of 1.0927 (AUD/NZD). (spot rate of 1.10883 (AUD/NZD)
at 30 June 2023).
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
97 | ANNUAL REPORT 2024
NOTE 28. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING (CONT’D)
The effect of the cash flow hedge in the statement of comprehensive income is, as follows:
(1)Amounts reclassified from OCI during the period are recorded in the initial cost of the inventory acquired and
released to the profit or loss and classified as raw materials and consumables used when the inventory is
subsequently sold. For the year ended 30 June 2024, $0.36 million foreign currency gains have been recognised as
“raw materials and consumables used” in the profit and loss statement and $0.03 million remain capitalised in the
cost of inventory at period end.
The impact of the hedging instruments in the statement of financial position is as follows:
Total
hedging
gain/(loss)
recognised
in OCI
Ineffect-
Iveness
recognised
in the statement
of compre-
hensive
income
Cost of
hedging
recognised
in OCI
Amount
reclassified
from cash flow
hedge
reserve
to inventory
Line item
in the
statement
of compreh-
ensive
income
$’000
$’000
$’000
$’000
Year ended 30 June 2024
Highly probable forecast purchases
(9)
-
-
394
(1)
Year ended 30 June 2023
Highly probable forecast purchases
(284)
-
-
678
(1)
Notional
amount
Carrying
amount
Change in value of
the hypothetical
derivative used to
measure hedge
effectiveness
Line item in
the statement
of financial position
$’000
$’000
$’000
As at 30 June 2024
Foreign exchange forward contracts
10,999
64
-
Derivative financial assets
Foreign exchange forward contracts
11,937
(76)
- Derivative financial liabilities
As at 30 June 2023
Foreign exchange forward contracts
26,767
499
-
Derivative financial assets
Foreign exchange forward contracts
3,436
(15)
- Derivative financial liabilities
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
98 | ANNUAL REPORT 2024
NOTE 29. LEASES
The Group has lease contracts for various items of property, plant, and equipment used in its operations. Leases of
property, plant and machinery generally have lease terms between 3 and 15 years, while motor vehicles and other
equipment generally have lease terms between 3 and 5 years. The Group’s obligations under its leases are secured by
the lessor’s title to the leased assets. Generally, the Group is restricted from assigning and subleasing the leased
assets and some contracts require the Group to maintain certain financial ratios. There are several lease contracts
that include extension and termination options and variable lease payments, which are further discussed below.
The Group also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment
with low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for
these leases.
The movement in the carrying amount of the Group’s right-of-use assets and lease liabilities during the year are
shown below:
Right-of-use assets
Premises
$’000
Plant and
Equipment
$’000
Total
$’000
Lease
Liabilities
$’000
As at 1 July 2023
29,059
1,229
30,288
36,737
Additions
18,754
2,337
21,091
21,091
Disposals
-
(24)
(24)
(107)
Depreciation expense
(8,790)
(1,064)
(9,854)
-
Interest expense
-
-
-
2,704
Payments
-
-
-
(11,955)
As at 30 June 2024
39,023
2,478
41,501
48,470
As at 1 July 2022
33,754
1,657
35,411
41,495
Additions
3,603
264
3,867
3,867
Disposals
(38)
(49)
(87)
(220)
Depreciation expense
(8,260)
(643)
(8,903)
-
Interest expense
-
-
-
2,423
Payments
-
-
-
(10,828)
As at 30 June 2023
29,059
1,229
30,288
36,737
The Group recognised rent expense and payments for short-term leases of $250,000 (2023: 186,000), leases of low-
value assets of nil (2023: nil) and variable lease expense of $89,000 (2023: $934,000) for the year ended 30 June
2024.
The Group had total net cash outflows for leases of $9,251,000 in 2024 ($8,672,000 in 2023).
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
99 | ANNUAL REPORT 2024
NOTE 29. LEASES (CONT’D)
Amounts recognised in the consolidated statement of profit or loss from continuing operations:
The increase/(decrease) on the consolidated statement of profit or loss from continuing operations for the year ended
were:
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Occupancy, distribution, administration and selling expenses
12,038
10,828
Depreciation and amortisation expense
(9,854)
(8,903)
Finance costs
18
(2,704)
(2,423)
Profit/(loss) before income tax from continuing operations
(520)
(498)
Income tax (expense)/benefit
-
149
Profit/(loss) after income tax from continuing operations
(520)
(349)
@
Accounting policy – leases
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received.
Right-of-use assets include an estimate of costs to be incurred by the lessee in dismantling and
removing the underlying asset, restoring the site on which it is located or restoring the underlying
asset to the condition required by the terms and conditions of the lease, unless those costs are
incurred to produce inventories. Unless the Group is reasonably certain to obtain ownership of the
leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets
are subject to impairment testing.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the net
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. These payments are initially measured using the index or rate as at the commencement
date. The lease payments also include the exercise price of an extension option reasonably certain to
be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects
the Group exercising the option to terminate.
The variable lease payments that do not depend on an index or a rate are recognised as expense in
the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses lessee’s incremental borrowing
rate at the lease commencement date if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payments made. In addition, the carrying amount of
lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-
substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases
The Group applies the short-term lease recognition exemption to its short-term leases of machinery
and equipment (i.e., those leases that have a lease term of twelve months or less from the
commencement date and do not contain a purchase option).
Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease
term.
Low value leases
The Group applied practical expedient whereby low value assets less than $1,000 have not been
recognised. Lease payments on low value assets are recognised as expense on a straight-line basis
over the lease term.
Lease and non-lease components
The Group applied practical expedient whereby it does not separate the lease and non-lease
components.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
100 | ANNUAL REPORT 2024
NOTE 29. LEASES (CONT’D)
?
Key estimate and judgement – leases
Renewal options
The Group applies judgement in evaluating whether it is reasonably certain to exercise the option
to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise
the renewal. In assessing the likelihood of a lease option being exercised, the Group considers the
costs of termination, the extent of any leasehold improvements, the strategic importance of the
lease location and the current market rent for the site.
After the commencement date, the Group reassesses the lease term if there is a significant event or
change in circumstances that is within its control and affects its ability to exercise (or not to
exercise) the option to renew (e.g., a change in business strategy).
Set out below are the undiscounted potential future rental payments relating to periods following
the exercise date of extension options that are not included in the lease term:
30 June 2024
Less than
5 years
$’000
Greater
than 5
years
$’000
Total
$’000
Extension options expected not to be exercised
332
38,449
38,781
30 June 2023
Less than
5 years
$’000
Greater
than 5
years
$’000
Total
$’000
Extension options expected not to be exercised
9,907
31,007
40,914
Incremental borrowing rates
If the Group cannot readily determine the interest rate implicit in the lease contracts and therefore,
the incremental borrowing rate applied is based on the interest that the Group would be required
to pay to borrow over a similar term, the funds necessary to obtain an asset of a similar value to the
right-of-use asset.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
101 | ANNUAL REPORT 2024
NOTE 30. RELATED PARTY TRANSACTIONS
Parent entity
Pro-Pac Packaging Limited is the ultimate parent entity for the Group.
Transactions with related parties
The Group entered into the following transactions with entities considered to be related parties of the Group:
For the year ended 30 June 2024
Notes
Sales
$’000
Purchases
$’000
Receivable
$’000
Payable
$’000
Kin Group Pty Ltd
(a)
5,427
-
1,162
-
Pact Group Limited
(a)
3,847
9
846
-
Visy Industries Pty Ltd
(a)
11,055
10,462
2,912
1,453
For the year ended 30 June 2023
Notes
Sales
$’000
Purchases
$’000
Receivable
$’000
Payable
$’000
Kin Group Pty Ltd
(a)
4,337
138
1,482
-
Pact Group Limited
(a)
5,234
185
1,043
-
Visy Industries Pty Ltd
(a)
15,878
10,679
4,022
1,977
(a)
Sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length
transactions.
Kin Group Pty Ltd
Mr Raphael Geminder owns 65.8% (2023: 65.8%) of the Company through Bennamon Pty Ltd. Kin Group Pty Ltd owns
100% of the shares in Bennamon Pty Ltd and the Group supplies flexible film packaging and other food packaging
products to Kin Group Pty Ltd and its controlled entities.
Kin Group Pty Ltd is recognised as the ultimate parent entity of the Group given its capacity to control decision
making given it owns greater than a 50% interest in the Group. With that being said, the Group operates with an
independent Board of Directors and executive team and there is no intervention in the day-to-day operations or key
decision making made by Kin Group Pty Ltd.
As part of the sub-underwriting of the pro-rata accelerated renounceable entitlement offer of new ordinary shares in
the Group in FY23, Bennamon received a sub-underwriting fee of $0.109 million.
Pact Group Limited
The Group is an exclusive supplier of certain products such as flexible film packaging, plastic bags and tapes to Pact
Group Limited under an agreement through to 31 December 2021 and is now continuing on a month-on-month basis.
The Group also purchases goods from Pact Group Limited. The ultimate parent of the Group has control over Pact
Group Limited by virtue of its share ownership in, and representation on the Board of Directors of Pact Group
Limited. Consequently, Pact Group Limited is a related party of the Group.
Visy Industries Pty Ltd
Visy Industries (Visy), a related party of Pro-Pac Packaging Limited, is a supplier to, and customer of, Pro-Pac Packaging
Limited. The Group purchases products such as cardboard boxes from Visy and sells flexible packaging to Visy.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
102 | ANNUAL REPORT 2024
NOTE 31. CONTROLLED ENTITIES
The consolidated financial statements incorporate the assets, liabilities and results of the following entities, which
have the same financial year as that of the Company.
Equity Holding
As at 30 June 2024
Country of
Incorporation
Class of
Shares
30 June
2024
30 June
2023
Direct Controlled entities:
Australia
Ordinary
100%
100%
Integrated Packaging Group Pty Ltd
Australia
Ordinary
100%
100%
Pro-Pac Industrial Group Pty Limited
Australia
Ordinary
100%
100%
ACN 003 940 921 Pty Limited
Australia
Ordinary
100%
100%
PPG Services Sdn Bhd
Malaysia
Ordinary
100%
100%
Pro-Pac Finance Pty Ltd
Australia
Ordinary
100%
100%
Pro-Pac Finance (NZ) Limited
New Zealand
Ordinary
100%
100%
Controlled Entities owned 100% by Pro-Pac Industrial Group Pty Limited
Pro-Pac Packaging (Aust) Pty Ltd
Australia
Ordinary
100%
100%
Pro-Pac (GLP) Pty Ltd
Australia
Ordinary
100%
100%
Controlled Entities owned 100% by ACN 003 940 921 Pty Limited
ACN 002 431 898 Pty Limited
Australia
Ordinary
100%
100%
ACN 002 029 852 Pty Limited
Australia
Ordinary
100%
100%
ACN 108 620 506 Pty Limited
Australia
Ordinary
100%
100%
ACN 087 226 631 Pty Limited
Australia
Ordinary
100%
100%
Controlled Entities owned 100% by Pro-Pac Packaging (Aust) Pty Ltd
Creative Packaging Pty Ltd
Australia
Ordinary
100%
100%
Pro-Pac Packaging Manufacturing (Syd) Pty Ltd
Australia
Ordinary
100%
100%
Pro-Pac Packaging Manufacturing (Melb) Pty Ltd
Australia
Ordinary
100%
100%
Pro-Pac Packaging Manufacturing (Bris) Pty Ltd
Australia
Ordinary
100%
100%
Controlled Entities owned 99.99% by ACN 002 431 898 Pty Limited**
Finpact Pty Ltd
Australia
Ordinary
99.99%
99.99%
Great Lakes Moulding Pty Ltd
Australia
Ordinary
99.99%
99.99%
Controlled Entities owned 100% by Integrated Packaging Group Pty Ltd
Goodstone International Pty Ltd*
Australia
Ordinary
100%
100%
Perfection Packaging Pty Ltd
Australia
Ordinary
100%
100%
Integrated Packaging WA Pty Ltd*
Australia
Ordinary
100%
100%
Integrated Recycling Pty Ltd*
Australia
Ordinary
100%
100%
Controlled Entities owned 100% by Goodstone International Pty Ltd
Integrated Packaging Ltd (NZ)
New Zealand
Ordinary
100%
100%
Pro-Pac Group Pty Ltd*
Australia
Ordinary
100%
100%
Controlled Entities owned 100% by Pro-Pac Group Pty Ltd
Integrated Machinery Pty Ltd*
Australia
Ordinary
100%
100%
* Party to a deed of cross-guarantee with the Company, under which each entity guarantees the debts of the
entities within the closed group.
** ACN 003 940 921 Pty Limited has a 0.01% interest in the subsidiaries of ACN 002 431 898 Pty Limited
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
103 | ANNUAL REPORT 2024
NOTE 31. CONTROLLED ENTITIES (CONT’D)
@
Accounting policy – controlled entities
The consolidated financial statements incorporate the assets and liabilities of the Company and the
entities it controlled at balance date.
The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct the
relevant activities of the entity. Controlled entities are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from the date that control ceases.
Where the Group loses control over an entity, it derecognises the assets including goodwill, liabilities
and non-controlling interest in the entity together with any cumulative translation differences
recognised in equity. The Group recognises the fair value of the consideration received and the fair
value of any investment retained together with any gain or loss in profit or loss.
Intercompany transactions, balances and unrealised gains on transactions between entities in the
Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence
of the impairment of the asset transferred. Accounting policies of controlled entities have been
changed where necessary to ensure consistency with the policies adopted by the Group.
NOTE 32. DEED OF CROSS-GUARANTEE
By entering into the deed of cross-guarantee, the wholly owned entities have been relieved from the requirement to
lodge an audited financial report with ASIC under Class Order 2016/785 (as amended).
The consolidated financial statements of the closed group are set out below (includes continued and discontinued
operations):
Consolidated statement of comprehensive income
For the year ended
30 June
2022
$’000
30 June
2023
$’000
Revenue from contracts with customers
247,824
288,907
Raw materials and consumables used
(135,771)
(159,011)
Employee benefits expense
(69,935)
(73,305)
Occupancy, distribution, administration and selling expenses
(42,672)
(50,986)
Allowance for expected credit loss
30
(1.240)
Impairment losses
(22,747)
-
Depreciation and amortisation expense
(17,782)
(15,808)
Other income
1,131
2,885
Interest income
1
3
Finance costs
(2,866)
(1,884)
Profit/(loss) before income tax
(42,787)
(10,439)
Income tax (expense)/benefit
(7,221)
3,205
Profit/(loss) after income tax
(50,008)
(7,234)
Other comprehensive income/(loss):
Items that may be reclassified to profit or loss in subsequent years
(net of income tax):
Change in fair value of cash flow hedges
(404)
(294)
Movement in other reserves
23
574
Total other comprehensive income/(loss)
(381)
280
Total comprehensive income/(loss)
(50,389)
(6,954)
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
104 | ANNUAL REPORT 2024
NOTE 32. DEED OF CROSS GUARANTEE (CONT’D)
Consolidated statement of financial position
As at
30 June
2024
$’000
30 June
2023
$’000
Current assets
Cash and cash equivalents
5
50
Trade and other receivables
52,882
56,918
Inventories
49,229
51,064
Current tax assets
121
656
Derivative financial assets
64
499
Other assets
1,724
2,219
Total current assets
104,025
111,406
Non-current assets
Property, plant and equipment
47,579
49,776
Right-of-use assets
31,283
26,558
Intangible assets
16,599
34,089
Investments
3,108
3,108
Deferred tax assets
-
5,337
Other assets
10,926
19,190
Total non-current assets
109,495
138,058
Total assets
213,520
249,464
Current liabilities
Trade and other payables
52,845
49,833
Derivative financial liabilities
76
15
Lease liabilities
8,476
7,940
Current tax liability
3,488
4,560
Other liabilities
11,232
7,011
Employee entitlements
9,454
8,880
Other provisions
714
524
Total current liabilities
86,285
78,763
Non-current liabilities
Lease liabilities
28,864
24,332
Employee entitlements
501
331
Deferred tax liabilities
2,221
-
Other provisions
2,528
2,528
Total non-current liabilities
34,114
27,191
Total liabilities
120,399
105,954
Net assets
93,121
143,510
Equity
Issued capital
320,538
320,538
Reserves
4,200
4,581
Accumulated losses
(231,617)
(181,609)
Total equity
93,121
143,510
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
105 | ANNUAL REPORT 2024
NOTE 32. DEED OF CROSS GUARANTEE (CONT’D)
Summary of movements in consolidated retained earnings
For the year ended
30 June
2024
$’000
30 June
2023
$’000
Balance as at beginning of the year
(181,609)
(174,375)
Profit/(loss) after income tax
(50,008)
(7,234)
Balance as at end of the year
(231,617)
(181,609)
NOTE 33. AUDITORS’ REMUNERATION
Amounts paid or payable by the Group to its auditors are as follows:
For the year ended
Notes
30 June
2024
$’000
30 June
2023
$’000
Audit and assurance services
Audit and review of the financial statements
(a)
525
606
Other assurance related services
(b)
-
-
Total remuneration for audit and other assurance services
525
606
Other services
Tax compliance services
(c)
211
152
Tax advisory services
(c)
90
103
Total remuneration for other services
301
255
Total auditors’ remuneration
826
861
(a)
Fees for auditing the statutory financial reports of the Group and any of its controlled entities.
(b)
Fees for other assurance and agreed-upon-procedures services under other legislation or contractual
arrangements where there is discretion as to whether the service is provided by the auditor or another firm.
(c)
Fees for tax compliance and tax advisory services where there is discretion as to whether the service is provided
by the auditor or another firm.
The auditor of the Group for the years ended 30 June 2024 and 30 June 2023 was Ernst & Young.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
106 | ANNUAL REPORT 2024
NOTE 34. ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of the
issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these new and
amended standards and interpretations, if applicable, when they become effective. The Group does not expect the
impact to be material to the financial statements.
AASB 2020 – 1: Amendments to AASs : Classification of Liabilities as Current or Non-current and AASB 2022-6
Amendments to AASs - Non-current Liabilities with Covenants
The AASB issued AASB 2020-1 Amendments to AASs – Classification of Liabilities as Current or Non-current to clarify
the requirements for classifying liabilities as current or non-current, specifically:
The amendments specify that the conditions which exist at the end of the reporting period are those which will
be used to determine if a right to defer settlement of a liability exists.
Management intention or expectation does not affect the classification of liabilities.
In cases where an instrument with a conversion option is classified as a liability, the transfer of equity
instruments would constitute settlement of the liability for the purpose of classifying it as current or non-current.
A consequence of the first amendment is that a liability would be classified as current if its repayment conditions
failed their test at reporting date, despite those conditions only becoming effective in the 12 months after the end of
the reporting period.
In response to this possible outcome, in December 2022 the AASB issued AASB 2022-6 Amendments to AASs - Non-
current Liabilities with Covenants:
Clarifying that only covenants with which an entity must comply on or before the reporting date will affect a
liability’s classification as current or non-current.
Adding presentation and disclosure requirements for non-current liabilities subject to compliance with future
covenants within the next 12 months.
Clarifying specific situations in which an entity does not have a right to defer settlement for at least 12 months
after the reporting date.
These amendments are effective for annual reporting periods beginning on or after 1 January 2024 and are applied
retrospectively. Earlier application is permitted.
AASB 18: Presentation and Disclosure in Financial Statements
AASB 18 has been issued to improve how entities communicate in their financial statements, with a particular focus
on information about financial performance in the statement of profit or loss. The key presentation and disclosure
requirements established by AASB 18 are:
The presentation of newly defined subtotals in the statement of profit or loss;
The disclosure of management-defined performance measures (MPM);
Enhanced requirements for grouping information (i.e. aggregation and disaggregation).
Introduction of the classification of all income and income in the statement of profit or loss: operating, investing
and financing.
AASB 18 will replace AASB 101 Presentation of Financial Statements and is effective for annual reporting periods
beginning on or after 1 January 2027.
NOTES TO THE
Financial Statements
PRO-PAC PACKAGING LIMITED
107 | ANNUAL REPORT 2024
NOTE 35. SUBSEQUENT EVENTS
Domenic Romanelli resigned his position of CFO effective 2 July 2024. He has been replaced by Patsy Ch’ng effective
3 July 2024.
In August 2024, the group has reached in principle approval for a new $5.0 million Asset Finance Facility, and is in the
process of finalising documentation
There were no other matters or circumstances that have occurred subsequent to balance date that have significantly
affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs
of the Group or economic entity in subsequent years.
Consolidated Entity Disclosure Statement
PRO-PAC PACKAGING LIMITED
108 | ANNUAL REPORT 2024
Body corporates
Tax residency
As at 30 June 2024
Entity type
Place
formed or
incorporated
% of
share
capital
held
Australian
or foreign
Foreign
Jurisdiction
Pro-Pac Packaging Limited
Body corporate
Australia
n/a
Australian(i)
n/a
Integrated Packaging Group Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Pro-Pac Industrial Group Pty Limited
Body corporate
Australia
100%
Australian(i)
n/a
ACN 003 940 921 Pty Limited
Body corporate
Australia
100%
Australian(i)
n/a
PPG Services Sdn Bhd
Body corporate
Malaysia
100%
Foreign
Malaysia
Pro-Pac Finance Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Pro-Pac Finance (NZ) Limited
Body corporate
New Zealand
100%
Foreign
New Zealand
Pro-Pac Packaging (Aust) Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Pro-Pac (GLP) Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
ACN 002 431 898 Pty Limited
Body corporate
Australia
100%
Australian(i)
n/a
ACN 002 029 852 Pty Limited
Body corporate
Australia
100%
Australian(i)
n/a
ACN 108 620 506 Pty Limited
Body corporate
Australia
100%
Australian(i)
n/a
ACN 087 226 631 Pty Limited
Body corporate
Australia
100%
Australian(i)
n/a
Creative Packaging Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Pro-Pac Packaging Manufacturing (Syd) Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Pro-Pac Packaging Manufacturing (Melb) Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Pro-Pac Packaging Manufacturing (Bris) Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Finpact Pty Ltd
Body corporate
Australia
100%(ii)
Australian(i)
n/a
Great Lakes Moulding Pty Ltd
Body corporate
Australia
100%(ii)
Australian(i)
n/a
Goodstone International Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Integrated Packaging WA Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Integrated Recycling Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Perfection Packaging Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Integrated Packaging Ltd (NZ)
Body corporate
New Zealand
100%
Foreign
New Zealand
Pro-Pac Group Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
Integrated Machinery Pty Ltd
Body corporate
Australia
100%
Australian(i)
n/a
There are no trusts, partnerships or joint ventures within the consolidated entity. Accordingly, none of the above
entities was a trustee of a trust within the consolidated entity, a partner in a partnership within the consolidated
entity, or a participant in a joint venture within the consolidated entity.
(i)This entity is part of a tax-consolidated group under Australian taxation law, for which Pro-Pac Packaging Limited is
the head entity.
(ii)ACN 003 940 921 Pty Limited has a 0.01% interest in these entities who are subsidiaries of ACN 002 431 898 Pty
Limited.
Directors’ Declaration
PRO-PAC PACKAGING LIMITED
109 | ANNUAL REPORT 2023
The directors of the Pro-Pac Packaging Limited (the Company) declare that:
1.
The consolidated financial statements and notes are in accordance with the Corporations Act 2001 and:
(a) comply with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
(b) give a true and fair view of the Group’s financial position at 30 June 2024 and of its performance for the year
ended on that date; and
(c) comply with International Financial Reporting Standards as disclosed in the notes to the consolidated
financial statements.
2.
The Chief Executive Officer 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 consolidated financial statements and notes for the financial year comply with the accounting standards;
and
(c) the consolidated financial statements and notes for the financial year give a true and fair view.
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. Refer to ‘Going Concern’ in the basis of preparation of the financial
statements for details of assumptions made.
4.
In the opinion of the directors, the consolidated entity statement required by section 295(3A) of the
Corporations Act on page 108 is true and correct.
5.
At the date of this declaration, there are reasonable grounds to believe that the entities that are party to the
deed of cross-guarantee as described in Note 32 of the consolidated financial statements will be able to meet
any obligation or liabilities to which they are, or may become, subject by virtue of the deed of cross-guarantee.
Signed in accordance with a resolution of the Board of Directors pursuant to Section 295(5)(a) of the Corporations Act
2001.
On behalf of the Board on 29 August 2024.
John Cerini
CEO and Executive Chairman
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent Auditor’s Report to the Members of Pro-Pac Packaging
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Pro-Pac Packaging Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2024, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including material accounting policy information, the consolidated entity
disclosure statement and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a.
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2024
and of its consolidated financial performance for the year ended on that date; and
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to the Going Concern section on page 49 in the financial report, which outlines the
factors relevant to the Group’s assessment of its ability to continue as a going concern. These events
or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. In addition to the matter described in Material
uncertainty relating to going concern, these matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the
matter is provided in that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 2
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
Impairment assessment of non-current assets, including brand names
Why significant
How our audit addressed the key audit matter
At 30 June 2024 the Group’s non-current assets
balance was $110.3 million which represents
46% of total assets.
Australian Accounting Standards require an
impairment test to be performed at least
annually for cash generating units (“CGUs”) to
which goodwill or intangibles with an indefinite
useful life have been allocated and when there
are indicators of impairment.
Impairment assessments are complex and
judgmental as they include the modelling of a
range of assumptions and estimates which will
be impacted by future performance and market
conditions. As a result, this matter was
considered to be a key audit matter.
The Group has recognised impairment losses
totalling $22.7 million for the period. Details of
the Group’s impairment assessment, are set out
in Note 11 to the financial report.
Our audit procedures included the following:
Assessed whether the impairment testing
methodology met the requirements of
Australian Accounting Standards, including
the Group’s identification of its CGUs.
In conjunction with our valuation specialists,
we:
Tested the mathematical accuracy of
the impairment testing model.
Assessed whether the forecast cash
flows, used in the impairment testing
model, were consistent with the most
recent Board approved cash flow
forecasts.
Assessed the historical accuracy of the
Group’s previous forecasts by
performing a comparison of historical
forecasts to actual results.
Assessed the appropriateness of key
assumptions, such as the discount rates
and long-term growth rates, including
performing our own sensitivity analyses
around these key assumptions.
Considered earnings multiples of
comparable businesses as a valuation
cross check to the Group’s
determination of recoverable amount of
its CGUs where impairment testing was
performed.
Assessed whether the allocation of the
impairment charge met the requirements of
Australian Accounting Standards.
Assessed the adequacy of the financial
report disclosures regarding the impairment
testing approach and key assumptions as
disclosed in Note 11.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 3
Inventory existence and valuation
Why significant
How our audit addressed the key audit matter
At 30 June 2024, the Group held inventories of
$63.7 million which were recorded at the lower
of cost and net realisable value.
At each reporting date, the Group assesses
whether net realisable value adjustments and
provisions for slow-moving and obsolete stock
are required to be recognised for all components
of inventories, including raw materials, work in
progress and finished goods.
Inventory existence and valuation was a key
audit matter due to the size of the recorded
asset, which represents 25% of the Group’s total
assets and the judgement required in estimating
the net realisable value of inventory at period
end.
The key judgements include estimating future
sales prices based on prevailing market
conditions and historical experience.
The Group’s disclosures with respect to
inventories are included in Note 8 to the
financial report.
Our audit procedures included the following:
► Understood the Group’s process for
inventory management and associated
controls at the key operations across the
business.
► Attended inventory stock-takes conducted
close to the year-end at locations with
significant inventory holdings.
► Selected a sample of inventory items and
agreed the cost price of purchased
inventory to supplier invoices.
► Tested the standard costing of
manufactured inventory, including assessing
the accuracy of the standard cost of a
sample of inventory items.
► Assessed the basis for inventory provisions
recorded by the Group for slow moving and
obsolete stock. In doing so, we examined the
Group’s process for identifying slow moving
inventories, negative margin and expected
costs to sell.
► Considered the impact of sales subsequent
to year end on the value of inventories at
balance date by comparing the actual selling
prices to the carrying value for a sample of
inventory items.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2024 Annual Report but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 4
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of:
►
The financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001; and
►
The consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001; and
for such internal control as the directors determine is necessary to enable the preparation of:
►
The financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
►
The consolidated entity disclosure statement that is true and correct and is free of misstatement,
whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
►
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
►
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 5
►
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
►
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
►
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 6
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 27 of the directors’ report for the
year ended 30 June 2024.
In our opinion, the Remuneration Report of Pro-Pac Packaging Limited for the year ended
30 June 2024, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Kylie Bodenham
Partner
Melbourne
29 August 2024
ADDITIONAL
Company Information
PRO-PAC PACKAGING LIMITED
116 | ANNUAL REPORT 2024
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 22 July 2024.
Twenty largest holders
Table 1: The names of the twenty largest holders of ordinary shares are:
Rank
Holder
Number
%
1
BENNAMON PTY LTD
119,455,738
65.748%
2
CITICORP NOMINEES PTY LIMITED
22,736,445
12.514%
3
TORRI PTY LTD
3,700,000
2.036%
4
ZACHARY INVESTMENTS PTY LTD
3,177,831
1.749%
5
MR CHRISTIAN JAMES HAUSTEAD
3,125,000
1.720%
6
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,665,638
0.917%
7
EQUITY TRUSTEES LIMITED
1,579,107
0.869%
8
LSND PTY LTD
1,251,337
0.689%
9
MOGGS CREEK PTY LTD
1,051,567
0.579%
10
MR JOHN JOSEPH CERINI
1,013,309
0.558%
11
WILBOW GROUP PTY LTD
988,929
0.544%
12
MALCOLM & JUNE ROSS INVESTMENTS PTY LTD
900,837
0.496%
13
DOLDORY PTY LTD
845,208
0.465%
14
MR KADURUWANE INDIKA RANASINGHE
722,660
0.398%
15
MR JOSEPH SCARDINO
472,000
0.260%
16
AKAT INVESTMENTS PTY LTD
448,000
0.247%
17
TAG FAMILY FOUNDATION PTY LTD
448,000
0.247%
18
LING FAMILY SUPER PTY LTD
430,114
0.237%
19
BNP PARIBAS NOMINEES PTY LTD
335,397
0.185%
20
AGO PTY LTD
329,290
0.181%
Total Securities of Top 20 Holdings
164,676,407
90.637%
Total of Securities
181,687,711
100.000%
Distribution of equity securities
Table 2: The number of holders, by size of holding, of ordinary shares are:
Holdings Ranges
Holders
Total Units
%
1-1,000
474
209,777
0.120
1,001-5,000
454
1,227,375
0.680
5,001-10,000
179
1,340,085
0.740
10,001-100,000
254
8,078,178
4.450
100,001-9,999,999,999
54
170,832,296
94.030
Totals
1,415
181,687,711
100.000
Based on a market share price of $0.10 as at 22 July 2024, there are 894 holders of unmarketable parcels of ordinary
shares totalling 1267152 shares representing 0.70% of the Company’s issued capital.
ADDITIONAL
Company Information
PRO-PAC PACKAGING LIMITED
117 | ANNUAL REPORT 2024
Table 3: The number of holders, by size of holding, of performance share rights are:
Holdings Ranges
Holders
Total Units
%
1-500,000
8
2,329,047
20.510
500,001-1,000,000
1
609,143
5.360
1,000,001-5,000,000
2
2,476,190
21.800
5,000,001-10,000,000
1
5,942,857
52.330
10,000,001-9,999,999,999
0
0
0.000
Totals
12
11,357,237
100.000
Substantial shareholders
Table 4: The names of substantial shareholders who have notified the Company in accordance with Section 671B of the
Corporations Act 2001, and the number of shares and percentage interest declared in the notice, are set out below:
Holder and Date
Number
% of voting
power
Bennamon Pty Limited, Kin Group Pty Limited, Salvage Pty Limited (16 September
2022)
106,246,915
66.52%
Investors Mutual Limited (17 July 2024)
16,744,048
9.22%
Voting rights
All ordinary shares carry one vote per share without restriction. Performance share rights carry no voting rights.
Restricted securities
There are no restricted securities subject to voluntary escrow.
On market buy-back
There is no current on market buy-back. No securities were purchased on-market during the financial year ending 30
June 2024.