Ann: Appendix 4D and 2024 Half-Year Report and Accounts, page-2

I haven’t had the opportunity to review the report in detail, but based on what I have reviewed, it is positive. A few points to highlight:

• They state that net cash flows provided by operating activities decreased by $23 million compared to the PCP, but that doesn’t account for the increased costs associated with transaction and restructuring costs (see note below) and the significant reduction in payables ($51 million) relative to the considerably smaller drop in receivables ($6.2 million) and inventories ($6.6 million). When taking into account these items, the cash flows were very positive despite the challenging trading conditions.

• As expected, there was a considerable ($40.5 million) increase in tax liabilities.

• There was $64 million in capital expenditure, and the full benefits from these significant investments won’t be evident until FY25:

1. A new $50 million recycling facility came online in Dec 2023.
2. A new HDPE resin recycling facility to be commissioned in calendar year Q1 2024
3. A new Contract Manufacturing facility due to open in calendar year H1 2024

• As previously reported, there was a $204.8 million decrease in net debt compared to the PCP. H2 FY24 should see continued positive momentum, subject of course to any attempt by Pact / RG to downplay the results. We should also start to see a significant reduction in financing costs. If required, Pact has undrawn debt capacity, with $329.7 million in committed undrawn facilities.

• Pre-tax underlying adjustments for continuing operations for the half-year were an expense of $20.8 million (the prior half was an expense of $3.3 million). Underlying adjustments included net business restructuring costs of $14.3 million, including redundancy costs relating to the transformation program and other structural changes. These benefits should start to flow through in H2 FY24 and beyond.

• They also recognised an impairment loss of $3.9 million relating to the investment in Australian Recycled Plastic Pty Ltd. On January 31, 2024, the Group sold its 50.8% investment in Australian Recycled Plastic Pty Ltd. No details were provided in terms of the (positive) financial impact for H2 FY24, but the business was loss-making.

• Contract Manufacturing continues to see a positive improvement. If they eventually proceed with divestment of this segment, it would result in a considerable reduction in net debt. No doubt they’re putting off the sale/divestment in the hope that RG is able to proceed with compulsory acquisition and therefore he can reap all of the benefits.

• As commented by others, no results presentation was provided, or conference call, as Pact continues to try and downplay the results and positive future.

• In terms of the reported outlook, they once again reiterated guidance that “underlying EBIT for FY24 remains in line with consensus.” They have been providing such ambiguous statements for recent reporting as another attempt to downplay the positive outlook as opposed to publishing the actual figures for the “consensus.”

• The positive financial performance of the business and outlook is why the company was unable to identify any additional indicators of impairment despite I’m sure their best efforts.