PRO-PAC PACKAGING LIMITED — Annual Report 2015

Aug 26, 2015

Pro-Pac Packaging Limited

Appendix 4E – 30 June 2015

PRO-PAC PACKAGING LIMITED (ASX: PPG)

Appendix 4E

Preliminary Final Report

Company details

Name of entity: Pro-Pac Packaging Limited ABN: 36 112 971 874 Reporting period: For the year ended 30 June 2015 Previous period: For the year ended 30 June 2014

Results for announcement to the market

				$000’s
Revenue from ordinary activities	up	12%	to	243,457
Profit before income tax, relocation and business combination costs from ordinary activities	up	12%	to	9,946
Profit from ordinary operations after tax attributable to
the owners of Pro-Pac Packaging Limited	up	1%	to	5,842
Profit for the year attributable to the owners of Pro-Pac
Packaging Limited	up	1%	to	5,842

	Amount per	Franked amount per
Dividends	security	security
	cents	cents
Final dividend for the year ended 30 Jun 2014 paid on 4 Nov 2014	1.0	1.0
Interim dividend the year ended 30 Jun 2015 paid on 20 May 2015	1.0	1.0

On 27 August 2015, the directors declared a fully franked final dividend of 1.5 cent per ordinary share with a record date of 9 September 2015 to be paid on 24 September 2015.

The Company’s Dividend Reinvestment Plan will apply to this final dividend. No discount will apply to the issue price. Under the Plan, shareholders can acquire shares in the Company at the volume weighted sale price during the four trading days up to and including the Record Date for determining entitlements. The last date for elections to participate in the Dividend Reinvestment Plan is 11 September 2015.

During the year, 2,454,499 shares were issued under the Dividend Reinvestment Plan.

Commentary

During the 2015 Financial Year, the Company continued to achieve good top line growth, both organically and through acquisitions. Revenue grew 12% (or $25 million) to $243 million of which organic growth accounted for approximately three quarters of the total increase in sales. Cross selling benefits continue to be realised between the various businesses acquired and integrated into the Company in recent years.

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Pro-Pac Packaging Limited

Appendix 4E – 30 June 2015

The volatile trading conditions experienced in H1 continued during H2 with the AUD declining even further and the resultant unfavourable exchange rate impost on our imported products and margins was circa $6 million for the financial year relative to the prior 12 month period. The latter was however partly mitigated by price increases to customers, predominantly during H2.

Cost out strategies and related costs savings continued during the year with administration, distribution and selling expenses (before acquisition, rationalisation and relocation expenses) reducing further during the year from 22.0% to 21.3% as a percentage of sales. Further ongoing cost saving initiatives are planned for FY16. In particular savings are expected from more efficient use of overheads across the expanded Group and supply chain improvements.

Acquisition, rationalisation and relocation expenses of circa $1.5 million were incurred during the period. The latter arose mainly from the relocation of the Company’s Industrial distribution businesses in Corio, Melbourne and in Adelaide to more cost effective facilities. Relocation and integration costs of the Nelson Joyce business acquired in October 2014 also form part of this abnormal cost impost.

Accordingly, EBITDA before accounting for the above once off costs of $1.5 million was up 6% at $14.7 million while underlying PBT calculated on the same basis was up 12% at $ 9.9 million.

The Industrial Division finished the year with encouraging sales growth of 10% (6% organic) and EBITDA grew 7% - a particularly pleasing result given the divisions’ heavy reliance on imports and the adverse effects experienced from a declining AUD.

The strong performance of the Rigid Division during H1 continued for the remainder of FY15 with 10% growth on the top line for FY15 while EBITDA grew by 17% as a result of the increased volumes, resulting economies of scale and effective cost control.

Profit after tax has risen 1% on last year and absorbed many one off costs noted above.

In line with its ambitious growth plans, the Company continues to evaluate a healthy pipeline of potentially accretive acquisitions.

Based on the underlying performance of the Company and factoring in its future projections, the Company has today declared a fully franked final dividend of one and a half cents per share, up half a cent for the comparative prior period. The record date for determining entitlement to the dividend will be 9 September 2015 and the dividend will be paid on 24 September 2015. The Company’s Dividend Reinvestment Plan will apply to this dividend. No discount will apply to the issue price.

Net tangible assets

et tangible assets
			Restated
		Consolidated	Consolidated
		Year Ended	Year Ended
		30 June 15	30 June 14
		Cents	Cents
Net tangible assets per	ordinary security	15.68	15.02
		═══════	═══════

Control gained over entities

During the year, there is one immaterial acquisition by Pro-Pac Packaging (Aust) Pty Limited, a wholly owned subsidiary of Pro-Pac Packaging Limited.

Loss of control over entities

Not applicable.

Details of associates and joint venture entities

Not applicable.

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Pro-Pac Packaging Limited Appendix 4E – 30 June 2015

Foreign entities

Details of origin of accounting standards used in compiling the report: Pro-Pac Packaging Limited has a wholly owned subsidiary, PPG Services SDN BHD, which is a company incorporated in Malaysia. This company provides support services for all Group companies. The financial statements for this company are prepared under Malaysian Financial Reporting Standards, which are compliant with International Financial Reporting Standards.

Audit qualification or review

This report is based on financial statements which are in the process of being audited.

Enquiries

For further information please contact Mr. Peter Sutton, CEO, Pro-Pac Packaging Limited on Tel (03) 8710 6200.

About PPG

Pro-Pac Packaging Limited is a diversified manufacturing and distribution company, providing innovative, flexible and rigid packaging solutions for a broad group of clients. PPG is headquartered in Sydney with operations in Adelaide, Brisbane, Melbourne and Perth. PPG’s securities are listed and quoted on the ASX. For further information on PPG visit www.ppgaust.com.au

Attachments

Details of attachments (if any):

The consolidated preliminary financial statements of Pro-Pac Packaging Limited for the year ended 30 June 2015 are attached.

Signed

==> picture [188 x 32] intentionally omitted <==

---

Date: 27 August 2015

Ahmed Fahour Director Sydney

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Pro-Pac Packaging Limited

Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR TO 30 JUNE 2015

Notes Revenue Sales of goods Other income Interest income Total Revenue Expenses Raw materials and consumables used Employee benefits expense Other expenses from ordinary activities Distribution costs Occupancy costs Depreciation expense Acquisition, rationalisation and relocation expenses Finance costs Amortisation of prepaid royalty Total Expenses Profit before income tax from continuing operations Income tax expense 4 Profit after income tax expense for the year 12 Other comprehensive income Items that will be reclassified to profit & loss Movements in reserves Total comprehensive income for the year Earnings per share (cents per share) - Basic earnings per share 1 - Diluted earnings per share 1	Consolidated 2015 $ 000 243,457 340 83 243,880 164,813 33,814 12,867 9,636 8,002 3,261 1,519 1,219 322 235,453 8,427 (2,585) 5,842 710 6,552 2.60 2.56	Restated Consolidated 2014 $ 000
		218,273 415 74
		218,762
		144,686 33,558 11,025 8,067 7,531 3,311 600 1,372 322
		210,472 8,290 (2,483)
		5,807 -
		5,807
		2.75 2.73

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Pro-Pac Packaging Limited Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2015

			Restated
	Notes	Consolidated	Consolidated
		2015	2014
		$000’s	$000’s
ASSETS
CURRENT ASSETS
Cash and cash equivalents	13	6,120	3,580
Trade and other receivables	5	38,500	35,592
Inventories	6	32,393	34,235
Current tax assets	4	15	‐
Other assets		4,551	3,402
		────────	────────
Total Current Assets		81,579	76,809
		────────	────────
NON‐CURRENT ASSETS
Property, plant and equipment	7	17,366	17,382
Intangible assets	8	70,337	68,793
Deferred tax assets	4	2,520	2,376
Other assets		‐	28
		────────	────────
Total Non‐Current Assets		90,223	88,579
		────────	────────
TOTAL ASSETS		171,802	165,388
		────────	────────
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	9	26,628	30,666
Interest bearing trade finance		2,551	2,559
Interest bearing borrowings		1,183	1,550
Provisions	10	3,973	3,705
Current tax liabilities	4	‐	564
		────────	────────
Total Current Liabilities		34,335	39,044
		────────	────────
NON‐CURRENT LIABILITIES
Provisions	10	1,801	1,376
Interest bearing borrowings		27,271	19,791
		────────	────────
Total Non‐Current Liabilities		29,072	21,167
		────────	────────
TOTAL LIABILITIES		63,407	60,211
		────────	────────
NET ASSETS		108,395	105,177
		════════	════════
EQUITY
Issued capital	11	92,726	91,548
Other reserves		830	99
Retained earnings	12	14,839	13,530
		────────	────────
TOTAL EQUITY		108,395	105,177
		════════	════════

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Pro-Pac Packaging Limited Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR TO 30 JUNE 2015

			Restated
	Notes	Consolidated	Consolidated
		2015	2014
		$000’s	$000’s
Cash flows from operating activities
Receipts from customers (inclusive of GST)		241,220	217,434
Payments to suppliers and employees (inclusive of GST)		(229,852)	(208,256)
Interest received		83	74
Finance costs		(1,219)	(1,448)
Income tax paid		(3,309)	(2,766)
Relocation, restructuring and business combination costs		(1,519)	(600)
		────────	────────
Net cash flows from operating activities	13	5,404	4,438
		────────	────────
Cash flows from investing activities
Payments for property, plant and equipment		(3,666)	(2,872)
Proceeds from sale of property, plant and equipment		799	377
Payment for unincorporated business net of cash acquired		(2,150)	(1,051)
Working capital for business acquired		(1,597)	(3,062)
		────────	────────
Net cash flows used in investing activities		(6,614)	(6,608)
		────────	────────
Cash flows from financing activities
Payment of hire purchase and finance lease liabilities		(1,976)	(2,091)
Finance leases raised		1,683	1,803
Proceeds from borrowings		7,397	1,783
Proceeds from issue of shares		‐	4,515
Proceeds from vesting of ESPP shares		‐	368
Dividends paid		(3,354)	(2,875)
		────────	────────
Net cash flows provided by financing activities		3,750	3,503
		────────	────────
Net increase / (decrease) in cash and cash equivalents		2,540	1,333
Cash and cash equivalents at beginning of financial year		3,580	2,247
		────────	────────
Cash and cash equivalents at end of financial year	13	6,120	3,580
		════════	════════
Non cash financing transactions
Hire purchase and finance lease liabilities raised		1,683	1,803
Issue of shares for dividend re‐investment plan		1,178	1,380

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Pro-Pac Packaging Limited

Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR TO 30 JUNE 2015

	Issued	Retained	Reserves	Total
	capital	earnings		equity
	$ 000	$ 000	$ 000	$ 000
Restated Consolidated
Balance as at 1 July 2013	85,285	11,977	71	97,333
Profit after income tax expense for the year	-	5,807	-	5,807
Other comprehensive income for the year, net of
tax	-	-	-	-
Total comprehensive income for the year	-	5,807	-	5,807
Transactions with owners in their capacity as
owners:
Issue of shares for dividend re-investment plan	1,380	-	-	1,380
Recognition of share based payment	-	-	28	28
Vesting of ESPP shares	368	-	-	368
Shares issued under share placement	4,515	-	-	4,515
Dividends paid	-	(4,254)	-	(4,254)
At 30 June 2014	91,548	13,530	99	105,177
	Issued	Retained	Reserves	Total
	capital	earnings		equity
	$ 000	$ 000	$ 000	$ 000
Consolidated
Balance as at 1 July 2014	91,548	13,530	99	105,177
Profit after income tax expense for the year	-	5,842	-	5,842
Other comprehensive income for the year, net of
tax	-	-	710	710
Total comprehensive income for the year	-	5,842	710	6,552
Transactions with owners in their capacity as
owners:
Issue of shares for dividend re-investment plan	1,178	-	-	1,178
Recognition of share based payment	-	-	21	21
Dividends paid	-	(4,533)	-	(4,533)
At 30 June 2015	92,726	14,839	830	108,395

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Pro-Pac Packaging Limited Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

NOTES TO THE PRELIMINARY FINAL REPORT

NOTE 1: EARNINGS PER SHARE

OTE 1: EARNINGS PER SHARE
		Restated
	Consolidated	Consolidated
	Year Ended	Year Ended
	30 June 15	30 June 14
	Cents	Cents
Basic earnings per share *	2.60	2.75
Diluted earnings per share *	2.56	2.73
Reconciliation of earnings used in calculation of earnings per share:
	$000’s	$000’s
Profit after income tax	5,842	5,807
	═════	═════
	No. of Shares	No. of Shares
Weighted average number of ordinary shares used in the calculation of basic earnings per share	224,290,226	210,854,244
Weighted average number of ordinary shares used in the calculation of basic diluted earnings per share	228,125,721	212,967,211
	═════	═════
Number of ordinary shares on issue at year end (including ESPP shares)	229,073,257	226,693,758
	═════	═════

• The difference between basic and diluted shares on issue represents the PPG Executive Long Term Incentive Plan (ESPP) shares on issue which are treated as an option grant as well as options issued.

NOTE 2: DIVIDENDS

The Directors of Pro‐Pac Packaging Limited have declared a final fully franked dividend of one and a half cents (1.5 c) per share in respect of the financial year ended 30 June 2015. When combined with the interim dividend of one cent (1.0 c) per share paid on 20 May 2015, this represents fully franked dividends of two cents (2.5 c) per share for the 2014/15 financial year.

NOTE 3: NET TANGIBLE ASSETS PER SECURITY

OTE 3: NET TANGIBLE ASSETS PER SECURITY
		Restated
	Consolidated	Consolidated
	Year Ended	Year Ended
	30 June 15	30 June 14
	Cents	Cents
Net tangible assets per security – basic	15.68	15.02
	═══════	═══════
Net assets per security – basic	47.86	46.95
	═══════	═══════

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Pro-Pac Packaging Limited

Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

NOTES TO THE PRELIMINARY FINAL REPORT

		Restated
	Consolidated	Consolidated
	Year Ended	Year Ended
	30 June 2015	30 June 2014
	$000’s	$000’s
NOTE 4: TAXATION
a) Income Tax Expense:	2,585	2,483
Income tax expense:
Prima facie income tax expense calculated at 30% on the profit from ordinary activities	2,528	2,487
Increase / (decrease) in income tax expense due to:
Difference in income tax rate of overseas entity and Australia	(2)	‐
Other income not subject to tax net of expenditure not allowable for tax purposes	59	(4)
	────────	────────
Income tax expense attributable to profit from ordinary activities	2,585	2,483
	════════	════════
b) Current Tax Liabilities:
Income tax payable	‐	564
	════════	════════
c) Current Tax Assets:
Current tax asset	15	‐
	════════	════════
d) Non‐Current Tax Assets:
Deferred tax asset	2,520	2,376
	════════	════════
NOTE 5: TRADE AND OTHER RECEIVABLES
Current
Trade receivables	37,626	34,784
Provision for impairment of receivables	(602)	(510)
	────────	────────
	37,024	34,274
Other debtors	1,476	1,318
	────────	────────
Total Current Receivables	38,500	35,592
	════════	════════
NOTE 6: INVENTORIES
Current
Raw materials and work in progress (lower of cost and net realisable value)	1,225	985
Finished goods (lower of cost and net realisable value)	31,168	33,250
	────────	────────
Total Inventories	32,393	34,235
	════════	════════

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Pro-Pac Packaging Limited

Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

NOTES TO THE PRELIMINARY FINAL REPORT

		Restated
	Consolidated	Consolidated
	Year Ended	Year Ended
	30 June 2015	30 June 2014
	$000’s	$000’s
Note 7: PROPERTY, PLANT AND EQUIPMENT
Plant and Equipment
At cost	31,749	29,273
Accumulated depreciation	(14,383)	(11,891)
	────────	────────
Total plant and equipment	17,366	17,382
	════════	════════
Note 8: INTANGIBLE ASSETS
Goodwill	70,337	68,793
	════════	════════
Reconciliation
Carrying amount at beginning of the year	68,793	67,867
Acquisition of businesses	1,544	926
	────────	────────
Total goodwill	70,337	68,793
	════════	════════
NOTE 9: PAYABLES
Current
Unsecured
Trade payables	18,202	18,222
GST payable	716	741
Other tax payable	524	672
Sundry creditors and accruals	7,131	7,041
Contingent deferred payments to vendors for acquisitions	55	3,990
	────────	────────
	26,628	30,666
	════════	════════
NOTE 10: PROVISIONS
Current
Employee entitlements	3,973	3,705
	════════	════════
Non‐Current
Make good provision	889	603
Employee entitlements	912	773
	────────	────────
	1,801	1,376
	════════	════════

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Pro-Pac Packaging Limited

Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

NOTES TO THE PRELIMINARY FINAL REPORT

NOTE 11: ISSUED CAPITAL	Consolidated	Restated Consolidated
2015	Number	$000’s
Issued and Paid‐Up Share Capital
Fully paid ordinary shares:	229,073,257	92,726
	════════	════════
Movements during the year:
Balance at beginning of year	226,693,758	91,548
Cancellation of shares for Executive Long Term Incentive Plan	(75,000)	‐
Issue of shares for dividend re‐investment plan	2,454,499	1,178
	────────	────────
	229,073,257	92,726
2014
Issued and Paid‐Up Share Capital
Fully paid ordinary shares:	226,693,758	91,548
	════════	════════
Movements during the year:
Balance at beginning of year	211,257,804	85,285
Vesting of ESPP shares	‐	368
Issue of shares for Executive Long Term Incentive Plan	2,150,000	‐
Cancellation of shares for Executive Long Term Incentive Plan	(150,000)	‐
Issue of shares	10,500,000	4,515
Issue of shares for dividend re‐investment plan	2,935,954	1,380
	────────	────────
	226,693,758	91,548
		Restated
	Consolidated	Consolidated
	Year Ended	Year Ended
	30 June 2015	30 June 2014
	$000’s	$000’s
NOTE 12: RETAINED PROFITS
Retained profits at the beginning of the year	13,530	11,977
Net profit attributable to members of the company	5,842	5,807
Dividends paid	(4,533)	(4,254)
	────────	────────
Retained profits at the end of the year	14,839	13,530
	════════	════════

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Pro-Pac Packaging Limited Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED NOTES TO THE PRELIMINARY FINAL REPORT

NOTE 13: NOTES TO THE STATEMENT OF CASH FLOWS

a) Reconciliation of Cash

For the purposes of the statements of cash flows, cash includes cash on hand and at bank and short‐term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:

Cash Assets	6,120	3,580
	════════	════════
b) Reconciliation of profit from ordinary activities after income tax to the net cash provided by operating activities:
Profit from ordinary activities after income tax	5,842	5,807
Add/(Less) non‐cash items:
Depreciation and amortisation of plant and equipment	3,261	3,311
Amortisation of prepaid royalty	322	322
(Profit) / loss on disposal of assets	63	108
Movement in income tax provision	(579)	(62)
Movement in deferred tax assets & liabilities	(144)	(221)
Movement in provision for bad debts	92	183
Other non‐cash movements	21	34
Changes in Assets and Liabilities:
Receivables	(1,546)	(3,831)
Inventories	2,884	(4,450)
Payables	(4,276)	3,418
Provisions	201	92
Prepayments	(737)	(273)
	────────	────────
Net cash flows from operating activities	5,404	4,438
	════════	════════

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Pro-Pac Packaging Limited Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

NOTES TO THE PRELIMINARY FINAL REPORT

NOTE 14: CONTROLLED ENTITIES

a) Particulars in Relation to Controlled Entities

The consolidated entity includes the following controlled entities. The financial years of all controlled entities are the same as that of the parent entity. All companies are incorporated in Australia except for PPG Services SDN BHD which is incorporated in Malaysia.

	Parent Company
	Interest Held
Direct Controlled Entities:
Pro‐Pac Group Pty Ltd	100%
Plastic Bottles Pty Ltd	100%
PPG Services SDN BHD	100%
Controlled Entities owned 100% by Pro‐Pac Group Pty Ltd
Pro‐Pac Packaging (Aust) Pty Ltd	100%
Pro‐Pac (GLP) Pty Ltd	100%
Controlled Entities owned 100% by Pro‐Pac Packaging (Aust) Pty Ltd
Pro‐Pac Packaging Manufacturing (Syd) Pty Ltd	100%
Pro‐Pac Packaging Manufacturing (Melb) Pty Ltd	100%
Pro‐Pac Packaging Manufacturing (Bris) Pty Ltd	100%
Creative Packaging Pty Ltd	100%
Controlled Entities owned 100% by Plastic Bottles Pty Ltd
Speciality Products and Dispensers Pty Ltd	100%
Australian Bottle Manufacturers Pty Ltd	100%
Ctech Closures Pty Ltd	100%
Bev‐Cap Pty Ltd	100%
Controlled Entities owned 100% by Bev‐Cap Pty Ltd
Great Lakes Moulding Pty Ltd	100%
Finpact Pty Ltd	100%

NOTE 15: OPERATING SEGMENTS

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The Group is managed primarily on the basis of product category and service offerings since the diversification of the Group’s operations inherently have notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

• the products sold and/or services provided by the segment;

• the manufacturing process;

Types of products and services by segment

Industrial packaging

The Industrial packaging division manufactures, sources and distributes industrial packaging materials and related products and services. All products produced or distributed are aggregated as one reportable segment as the products are similar in nature and are distributed to similar types of customers. The industrial packaging segment also installs, supports and maintains packaging machines.

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Pro-Pac Packaging Limited Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED NOTES TO THE PRELIMINARY FINAL REPORT

NOTE 15: OPERATING SEGMENTS (CONTINUED)

Rigid packaging

The Rigid packaging division manufactures, sources and distributes containers and closures and related products and services. All products produced or distributed are aggregated as one reportable segment as the products are similar in nature and are manufactured and distributed to similar types of customers.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Inter‐segment transactions

An internally determined transfer price is set for all inter‐entity sales. This price is re‐set regularly and is usually based on what would be realised in the event the sale was made to an external party at arm’s length. All such transactions are eliminated on consolidation for the Group’s financial statements.

Inter‐segment loans payable and receivable are initially recognised at the consideration received net of transaction costs. If inter‐segment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates.

Segment Assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances segment assets are clearly identifiable on the basis of their nature and physical location.

Unless indicated otherwise in the assets role, investments in financial assets, deferred tax assets and intangible assets have not been allocated to operating segments.

Segment Liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain borrowings.

Unallocated items

The following items of revenue, expenses, asset and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment: impairment of assets and other non‐recurring revenue or expenses; income tax expense; deferred tax asset and liabilities; current tax liabilities; other financial liabilities; intangible assets.

14

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Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED

NOTES TO THE PRELIMINARY FINAL REPORT

NOTE 15: OPERATING SEGMENTS (CONTINUED)

	Rigid packaging Industrial packaging Intersegment eliminations / unallocated Total $ 000 $ 000 $ 000 $ 000	Rigid packaging Industrial packaging Intersegment eliminations / unallocated Total $ 000 $ 000 $ 000 $ 000	Rigid packaging Industrial packaging Intersegment eliminations / unallocated Total $ 000 $ 000 $ 000 $ 000	Rigid packaging Industrial packaging Intersegment eliminations / unallocated Total $ 000 $ 000 $ 000 $ 000	Rigid packaging Industrial packaging Intersegment eliminations / unallocated Total $ 000 $ 000 $ 000 $ 000
(i) Segment performance 12 month ended 30 June Revenue External sales	2015 2015 2015 2015 60,441 183,016 - 243,457			2014 2014 2014 2014 53,653 164,620 - 218,273
Inter-segment sales	8,594 7,648 (16,242) -			9,247 8,989 (18,236) -
Total segment revenue	69,035 190,664 (16,242) 243,457			62,900 173,609 (18,236) 218,273
EBITDA	7,454 10,077 (4,385) 13,146			6,372 9,424 (2,575) 13,221
Depreciation and amortisation	(1,618) (1,736) (229) (3,583)			(1,577) (1,883) (173) (3,633)
Interest revenue Finance costs Profit before income tax Income tax expense Profit after income tax (ii) Segment assets As at 30 June		83 (1,219) 8,427 (2,585) 5,842			74 (1,372)
					8,290 (2,483)
					5,807
Segment assets Reconciliation of segment assets to group assets Inter -segment eliminations Unallocated assets * Deferred tax assets	47,437 117,297 -	164,734 (1,634) 8,702		46,601 113,308 -	159,909 (1,463) 6,942
		2,520			2,379
* Other		6,182			4,563
Total group assets from continuing operations		171,802
					165,388
(iii) Segment liabilities As at 30 June Segment liablities Reconciliation of segment liablities to group liabilities Inter -segment eliminations Unallocated liabilities	12,948 26,331 -	39,279 (1,722) 25,850		11,525 28,642 -	40,167 (1,538) 21,582
* Deferred tax liabilities * Other liabilities		- 25,850			- 21,582
Total group liabilities from continuing operations		63,407			60,211
(iv)Pro-Pac Packaging Limited have an operation, PPG Services SDN BHD, which is a company incorporated in Malaysia. This company provides support services for all Group companies. The financial statements for this company are prepared under Malaysian Financial Reporting Standards, which are compliant with International Financial Reporting Standards

NOTE 16: AUDIT STATUS

This report is based on financial reports that are in the process of being audited.

NOTE 17: LONG TERM EXECUTIVE INCENTIVE PLAN

Under AIFRS, shares issued to executives under the Long Term Executive Incentive Plan are considered to be options granted. As such, the contributed equity (share capital) as well as the related receivable are not recognised on the statement of financial position and do not form part of the asset base in the calculation of the basic net assets and basic net tangible assets per security.

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Pro-Pac Packaging Limited Appendix 4E – 30 June 2015

PRO‐PAC PACKAGING LIMITED NOTES TO THE PRELIMINARY FINAL REPORT

NOTE 18: CONTINGENT LIABILITIES

As at balance sheet date, the company issued security deposit guarantees and standby letters of credits to the value of $2,418,092 to the landlords of rented premises and overseas suppliers.

NOTE 19: CAPITAL EXPENDITURE COMMITMENTS

As at reporting date the company had no commitments for future capital expenditure.

NOTE 20: EVENTS SUBSEQUENT TO YEAR END

There were no events subsequent to year end.

NOTE 21: RESTATEMENT OF ACCOUNTS

The consolidated entity’s financial statements for the year ended 30 June 2014 were restated to account for the understatement of duty payable on imported products and the make good provision for leased premises. The profit after income tax expense for the year ended 30 June 2014 was overstated by $324,000. The comparative figures in the financial statements for the year ended 30 June 2015 and accompanying notes have been restated.

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