PRO-PAC PACKAGING LIMITED — Investor Presentation 2016

Mar 21, 2016

Investor Presentation March 2016

Overview

• Leading manufacturer and supplier of packaging products, services and solutions
• Established 1987
• Listed on the Australian stock exchange, April 2005
• Two major divisions, Rigid Plastics and Industrial
• 16 sites across Australia, 10 distribution centers and 6 manufacturing plants
• 10,000+ customers
• 500+ staff
• Annual sales circa A$250 million

Directors

Ahmed Fahour (Chairman)

• Managing Director and CEO of Australia Post since February 2010
• held a number of senior executive positions within the finance and banking industries in Australia and overseas
• previously CEO of Citigroup (Australia and New Zealand) and National Australia Bank (Australia)
• former chairman of Rip Curl Group. Mr Fahour is currently Executive Chairman of Our Neighbourhood and Star Track, as well as Chairman of the LaunchVIC

Elliott Kaplan

• Managing Director of CVC Private Equity Limited, a non-executive director of Cellnet Limited and a director of a number of unlisted companies.
• former director of Dolomatrix Limited, The Environmental Group Limited and ASX listed Grays Ecommerce Group Limited.

Brandon Penn

• founding director of the PB Group which merged with PPG in 2007 and former CEO of PPG
• held number of business interests alongside the PB Group including the establishment of a leading software development company, Dealing Information Systems (DIS), which developed wholesale banking systems. DIS was acquired in 1996 by Sungard Data Systems NYSE.

Directors

Dr Gary Weiss

• Chairman of ClearView Wealth Ltd and Ridley Corporation Ltd
• Executive Director of Ariadne Australia Ltd and a director of several other public companies including Premier Investments Ltd, Thorney Opportunities Ltd and The Straits Trading Company Ltd

Peter Sutton (CEO)

• over 25 years' experience in senior management roles in the packaging industry
• previously Managing Director and CEO of the private equity owned company Aperio Group, the largest supplier of plastic flexible packaging in Australasia
• previously in senior management roles in Amcor and Southcorp Packaging

The Pro-Pac Packaging Group

National Reach

• Sydney, NSW 5 sites
• Melbourne, VIC 5 sites
• Brisbane, QLD 3 sites
• Adelaide, SA 2 sites
• Perth, WA 1 site

Very broad Product Range

Rigid Containersand Closures	Industrialand ProtectivePackaging	Safety and PPE	Disposable FoodPackaging	Machinery andService
BottlesJarsCaps and closuresCubesJerry cansSprays and triggersPails and cratesVials	TapesBubbleStrapping and toolsVoid fillStrappingPlastic sheetsWarehouseconsumables	GlovesHead, ear and faceprotectionHi-Visibility clothingDisposable protectiveapparelSignage	Cups and napkinsDisposable cutleryFood traysPunnetsFoil productsDisposable food paperproducts	Stretch wrapmachineryCarton sealersStrapping machinesHooding machinesShrink tunnelsBanding machinesServicing

Very broad Product Range

Washroom andJanitorial	IndustrySpecific	Flexible Films	Cartons andPaper Products	Source and Sell
Paper towelsToilet & facial tissueFacial tissuesSoaps and dispensersCleaning chemicalsBin linersMops, buckets andcleaning accessories	Body bagsBoning knives andmeat trade toolsSyringesKnivesChain mesh glovesLashing and twine	Poly bagsStretch wrapPlastic sheetsPouches and rewindBarrier filmsShrink bagsTop and bottom web	Cartons and mailersParts boxesPrinters cartonsLitho laminatedFolding cartonsEdge protectorsPaper food packaging	KitchenwareFood storagecontainersRetail linesMachinery

• PPG is primarily a distribution business. It is our intention to retain distribution as the core of what we do.
• To be successful in distribution you must "Buy Well and Sell Well". Therefore our core competencies must be procurement, logistics and selling for profit.
• Manufacturing is an important secondary activity for PPG. The focus is on smaller scale, niche operations that support our distribution businesses.
• Manufacturing provides us with make or buy options and allows us to offer customers flexibility and innovation.

Strategic Overview

• We are focused on 3 key market segments
  • Industrial
  • Food & Beverage
  • Healthcare/Pharmaceutical
• Food industry businesses within PPG are up 14.5% H1 versus H1 last year. Products include meat trays, films & produce bags.
• Pharmaceutical & Complimentary Medicine businesses within PPG are up 57.7% H1 versus H1 last year. Products include jars, bottles and closures.

BUSINESS HIGHLIGHTS

	$A millions	1H 2016	1H 2015	Movement
Solid FinancialPerformance	Sales Revenue	$126.8	$124.9	1.5%
	EBITDA	$8.6	$8.3	3.4%
	EBITDA %	6.8%	6.6%	0.1%
Consistent Earnings	EBIT	$6.9	$6.6	4.6%
	EBIT %	5.5%	5.3%	0.2%
	NPAT	$4.5	$4.2	7.4%
Excellent Cash flow	Operating cash flow	$6.3	$4.6	37.6%
	Gearing1	22.5%	23.0%	-2.2%
Good returns toshareholders	Earnings per share	1.97	1.88	4.8%
	Interim dividend - cents pershare	1.25	1.00	25.0%

1. Gearing ratio is defined as Net debt divided by Shareholder's equity

AUD/USD CURRENCY MOVEMENTS 2012 TO 2016

EBIT Growth

• 1. Cost savings are net of inflationary increases
• 1. Expenses as % of sales 20.2% 1H 2016, down from 20.7% in 1H 2015

Financial Trends

DISCIPLINED CASH MANAGEMENT

Half Year ended 31 December, $A millions	1H 2016	1H 2015	1H 2014	1H 2013
Operating cash flow	6.3	4.6	4.7	4.3
Capex	1.0	1.6	1.3	1.8
Free cash flow	5.3	3.0	3.4	2.5
Operating cash flow conversion1	74%	55%	56%	65%

1. Operating cashflow conversion is defined as Operating Cashflow divided by EBITDA

STRONG BALANCE SHEET

Half Year ended 31 December, $A millions	1H 2016	1H 2015	Target
Net Debt1	24.8	24.9
Gross Leverage ratio2	2.5	2.4	< 3.0
Interest Cover	12.3	10.7	> 4.0

Key metrics well within target levels

1. Net debt is current debt plus non current debt less cash

2. Total drawn Debt (excluding contingent liabilities) plus Crystallised Earn Outs (as recongnised in Balance Sheet) to normalised EBITDA

The Way Forward

• Focus on profit growth and ROACE
• Continue to strengthen management team
• Partner with innovative suppliers
• Continue to improve processes that increase efficiency and reduce cost
• Complete standardisation across the group. One I.T. system
• Bolt on acquisitions in Australia. Sales $5m to $50m p.a. Focus is food and health and/or highly synergistic.
• Expand into New Zealand through acquisition

Thank You