Filling in the gaps. Earnings and target price revision. Price catalyst. Action and recommendation

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1 AUSTRALIA PGH AU Price (at 06:11, 16 Jun 2015 GMT) Neutral A$4.45 Valuation - Peers' Multiples A$ month target A$ month TSR % Volatility Index Low GICS sector Materials Market cap A$m 1, day avg turnover A$m 1.6 Number shares on issue m Investment fundamentals Year end 30 Jun 2014A 2015E 2016E 2017E Revenue m 1, , , ,453.7 EBIT m Reported profit m Adjusted profit m Gross cashflow m CFPS CFPS growth % nmf PGCFPS x PGCFPS rel x EPS adj EPS adj growth % nmf PER adj x PER rel x Total DPS Total div yield % Franking % ROA % ROE % EV/EBITDA x Net debt/equity % P/BV x PGH AU vs Small Ordinaries, & rec history Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, June 2015 (all figures in AUD unless noted) 17 June 2015 Macquarie Securities (Australia) Limited Filling in the gaps Event PGH has announced an agreement to acquire Jalco Group, a supplier of outsourced manufacturing and filling in the non-food FMCG sector. The two largest segments are Homecare and Personal care. Jalco operates across 6 sites in NSW and employs ~500 people. PGH is currently a supplier to Jalco and also competes with Jalco in the plastic bottles market. Jalco has a large contract filling business (shampoos etc) and we understand is the largest contract filler in the Australian market. The total consideration (including a conditional deferred component and acquisition costs) is $80m, implying an EV/EBITDA multiple of approx 6.5x. Trailing annual sales for Jalco are $165m. PGH expect the acquisition to be immediately EPS accretive and to generate an ROI of >20% within three years. Completion is subject to customary conditions and a restructure by the sellers to retain the Health and Wellness division. Completion is expected to occur by 1 September Impact The multiple paid implies EBITDA of ~$12m, or a 7.5% EBITDA margin. This compares with PGH group EBITDA margins of 17% for FY15e. Typical profile of PGH acquisitions is the target has much lower margins (than PGH) and PGH aims to increase margins of the acquired business via overhead reduction and procurement benefits. Multiple of 6.5x EBITDA compares favourably to PGH's 8.5x FY16 EV/EBITDA although acquired business is lower margin thus justifying discount (although as with all its acquisitions, PGH plans to improve margin). We expect PGH to improve Jalco EBITDA margins from 7.5% to 12.0% over the next 3 years or from 5.0% to 9.1% in EBIT terms. This takes it close to existing PGH Australian margins (9.8% in FY14) but overall effect is to dilute group margin mix by up to 100bp (from 18.9% EBITDA to 17.9%). This is due to size of higher margin International business reducing in relative terms and initial lower margins on acquisition. Current EBIT split is 55% Australia, 45% International and this moves to 59% Aust and 41% International in FY18. Acquisition will be debt funded and still leaves PGH with reasonable debt headroom. We estimate that net debt to EBITDA increases by 25bp in FY16 to 2.64x from 2.39x prior but within 3.5x covenant levels. Earnings and target price revision We have lifted our FY16, 17, 18 eps by 3% and 1% and 2% respectively. Deal accretion estimated at 4-5% in 17/18 but our actual changes are less as we have moderated extent of prior growth assumed for Aust base business. Price catalyst 12-month price target: A$4.70 based on a Peers' Multiples methodology. Catalyst: August FY15 result and outlook. Action and recommendation Neutral, $4.70 TP based on 5% discount to global peer multiples. The stock price has run up in anticipation of the Jalco acquisition (was speculated two weeks ago). We forecast a similar 2H15 to 1H NPAT ($42m). This requires a stronger underlying 2H for Australia given slight seasonal skew to 1H and should be assisted by full period effect of Sulo acquisition. Please refer to page 6 for important disclosures and analyst certification, or on our website

2 Analysis Fig 1 Flattish earnings in FY15 with growth expected in FY16/17 partly acquisition driven $m 1H14a 2H14a FY14a 1H15a 2H15e FY15e FY16e FY17e Revenue Pact Australia growth 2% 8% 5% 4% 5% 4% 1% 3% Pact International growth 10% -11% -1% 0% 7% 3% 4% 0% Jalco Corporate growth na na na na na Pact revenue , , , ,457.9 growth 4% 2% 3% 3% 5% 4% 12% 5% Jalco EBIT Pact Australia growth -17% 31% 2% 1% 7% 4% 3% 11% Pact International growth 30% 5% 18% -1% 5% 1% 5% 11% Jalco Corporate growth na na na na na Pact EBIT growth 0% 19% 9% 0% 6% 3% 8% 14% EBIT margin Pact Australia 9.1% 10.4% 9.8% 8.9% 10.7% 9.8% 10.0% 10.8% Pact International 20.1% 17.7% 19.0% 19.8% 17.4% 18.6% 18.7% 20.7% Pact EBIT margin 12.4% 12.5% 12.4% 12.1% 12.6% 12.3% 11.9% 13.0% Source: Company data, Macquarie Research, June 2015 As a re-cap re 1H15 result, Pact Australia EBIT of $40.3m (+2.8% on pcp) was below our $47m forecast. We had assumed some growth given -$3m of resin headwinds in pcp. PGH noted integration costs re Sulo acquisition and costs incurred in transitioning to listed company structure (each around $1m pa). EBIT margin of 8.9%, down from 9.1% on pcp. Resin cost declines are expected to provide a benefit in 2H along with the Sulo acquisition. Pact International EBIT of $36.4m (+1.7% on pcp) bang in line with our $36.5m. EBIT margin of 19.8% was slightly weaker from the 20.1% in the pcp but a good result overall given what was a strong comp. FY15 outlook - guidance for growth re-iterated, efficiency review underway. PGH re-iterated its expectation for a lift in revenue and operating profit in FY15. At its Feb result, PGH also announced that it will implement a detailed review of its activities over the next 24 months with a cost of up to $30m (50% cash cost and some expenses will be incurred in 2H15). This includes elimination of excess capacity. Benefits from this review will start to be realised in FY June

3 Fig 2 Global packaging valuation comparison PGH at a slight discount to closest peers June Year End PE EV/EBIT EV/EBITDA 2015E 2016E 2017E 2015E 2016E 2017E 2015E 2016E 2017E Fibre/Cans/Glass Packaging Orora Sonoco Products Rock-Tenn (Sep yr end) Rexam Ball Corp OI Crown Flexibles Packaging Amcor Bemis Huhtamaki Sealed Air Rigid Packaging Pact Berry Plastics (Sep yr end) Aptar Silgan Greif RPC All Packaging Avg (x) Rigids Plastics Avg (x) Source: FactSet, Company data, Macquarie Research, June 2015, PGH share price as of 17 June, all other share prices as of 16 June Global packaging multiples continue to be healthy. The global packaging sector is currently trading on 18.2x FY15e PER. Within this the Rigids Plastics sector is trading on a higher multiple of 19.0x FY15e PER. We believe this reflects better earnings growth profile of rigids and flexibles names vs Fibre/Cans/Glass exposures. This is also consistent with forecast substrate growth of rigids and flexibles being higher than cans, glass and fibre. In the above table we have adjusted global peers to reflect June year end similar to PGH, Orora and AMC (only exceptions are BERY and RKT which have Sept year ends). Global peer valuation approach - We have highlighted the rigid and plastic packaging peers which we believe are most similar to PGH. Companies within this basket include Amcor, Berry Plastics, Aptar, Silgan, Sonoco, Greif and RPC. These companies have an overlap across rigid plastic packaging or industrial plastic/metal containers in the case of Greif. At the same time a number of these companies have more diverse operations than just these categories (eg Amcor in global flexibles and Silgan in food cans).we also include ORA in our basket as a domestic comp to Pact. The global rigid packaging peer group is currently trading on June Y/E adjusted 19.0x FY15e PER, 9.5x FY15e EV/EBITDA and 13.5x FY15e EV/EBIT. This compares to PGH on 15.6x FY15 PER, 9.0x EV/EBITDA and 12.4x EBIT (FY15e). It is worth noting that this rigid packaging peer group includes some much larger and geographically diversified names. Our $4.70 TP is based on ascribing a 5% discount to global rigids peers in FY15 and FY June

4 Interim results 1H14A 2H14A 1H15A 2H15E P&L (pro forma) 2013A 2014A 2015E 2016E Revenue Revenue $m % 4% 12% EBITDA $m EBITDA $m Depreciation $m Depreciation $m Amortisation $m Amortisation $m EBIT $m EBIT $m Net Interest $m Net interest $m Pre-Tax Profit $m Pre-Tax Profit $m Tax Expense $m Tax Expense $m Net Profit $m Net Profit $m OEI $m OEI $m Net Abn/Extra $m Net Abn/Extra. $m Reported profit $m Reported profit $m Adj profit $m Adj profit $m Gross Cashflow $m Gross Cashflow $m EPS (Adj/dil) c EPS (adj/dil) c EPS growth % nmf nmf nmf nmf EPS growth % nmf CFPS c PE (adj) x CFPS Growth % nmf nmf nmf nmf CFPS c EBITDA/Sales % CFPS Growth % nmf EBIT/Sales % PGCFPS x Earnings Split % DPS c Revenue Growth % nmf nmf nmf nmf Yield % EBIT Growth % nmf nmf nmf nmf Franking % P&L ratios 2013A 2014E 2015E 2016E CF Analysis 2013A 2014A 2015E 2016E Revenue Growth % nmf EBIT Growth % nmf Pre-tax Profit $m EBITDA/Sales % D&A $m EBIT/Sales % Tax Paid $m Effective tax rate % nmf Gross cashflow $m Payout ratio % nmf Chg in WC $m EV/EBIT x nmf Other $m EV/EBITDA x nmf Op Cashflow $m EV/Sales x nmf Acquisitions $m Capex $m BS ratios Asset Sales $m ROE % nmf Other $m ROA % nmf Investing CF $m ROFE % nmf Dividend ( $m Net Debt $m Equity raised $m Net Debt/Equity % nmf Borrowings $m Debt/EBITDA x Other $m Interest Cover x Financing CF $m Price/NTA x nmf NTA per share $ nmf Net Chg $m EFPOWA m nmf Historicals 2011A 2012A 2013A Balance Sheet 2013A 2014A 2015E 2016E Cash $m Revenue $m Receivables $m EBITDA $m Inventories $m D&A $m Investments $m EBIT $m PPE $m Net interest $m Intangibles $m Pre-Tax Profit $m Other Assets $m Tax Expense $m Total Assets $m Net Profit $m Payables $m Net Abn/Extra $m Short Term Debt $m Long Term Debt $m EPS (adj/dil) c nmf nmf nmf Other Liabilities $m EPS growth % nmf nmf nmf Total Liabilities $m Ordinary DPS c nmf nmf nmf Sholders Funds $m EBITDA/Sales % Minority Interests $m EBIT/Sales % Total Equity $m ROE % nmf nmf nmf ROFE % nmf nmf nmf Funds employed $m 1, , ,420.3 EFPOWA m nmf nmf nmf EBIT Split 2011A 2012A 2013A EBIT split 2013A 2014A 2015E 2016E Pact ANZ Pact ANZ Pact Other Pact Other Pact Group Pact Group Source: Company data, Macquarie Research, June 2015 Currency AUDNZD AUDUSD June

5 Macquarie Quant View The quant model currently holds a neutral view on. The strongest style exposure is Profitability, indicating this stock is efficiently converting its investments to earnings as proxied by ratios such as ROE, ROA etc. The weakest style exposure is Quality, indicating this stock is likely to have a weaker and less stable underlying earnings stream. 565/1084 Global rank in Materials % of BUY recommendations 67% (2/3) Number of Price Target downgrades 0 Number of Price Target upgrades 0 Fundamentals Attractive Quant Local market rank Global sector rank Displays where the company s ranked based on the fundamental consensus Price Target and Macquarie s Quantitative Alpha model. Two rankings: Local market (Australia & NZ) and Global sector (Materials) Macquarie Alpha Model ranking A list of comparable companies and their Macquarie Alpha model score (higher is better). Factors driving the Alpha Model For the comparable firms this chart shows the key underlying styles and their contribution to the current overall Alpha score % -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% Valuations Growth Profitability Earnings Momentum Price Momentum Quality Macquarie Earnings Sentiment Indicator The Macquarie Sentiment Indicator is an enhanced earnings revisions signal that favours analysts who have more timely and higher conviction revisions. Current score shown below. Drivers of Stock Return Breakdown of 1 year total return (local currency) into returns from dividends, changes in forward earnings estimates and the resulting change in earnings multiple % -30% -20% -10% 0% 10% 20% 30% 40% Dividend Return Multiple Return Earnings Outlook 1Yr Total Return How it looks on the Alpha model A more granular view of the underlying style scores that drive the alpha (higher is better) and the percentile rank relative to the sector and market. Alpha Model Score Valuation Growth Profitability Earnings Momentum Price Momentum Quality Capital & Funding Liquidity Risk Technicals & Trading Normalized Score Percentile relative to sector(/1084) Percentile relative to market(/415) Source (all charts): FactSet, Thomson Reuters, and Macquarie Research. For more details on the Macquarie Alpha model or for more customised analysis and screens, please contact the Macquarie Global Quantitative/Custom Products Group (cpg@macquarie.com) 17 June

6 Important disclosures: Recommendation definitions Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie First South - South Africa Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3000 index return Neutral (Hold) return within 5% of Russell 3000 index return Underperform (Sell) return >5% below Russell 3000 index return Volatility index definition* This is calculated from the volatility of historical price movements. Very high highest risk Stock should be expected to move up or down % in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 40 60% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 30 40% in a year. Low medium stock should be expected to move up or down at least 25 30% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 31 March 2015 AU/NZ Asia RSA USA CA EUR Outperform 48.99% 59.51% 49.30% 43.79% 59.59% 52.20% (for US coverage by MCUSA, 7.42% of stocks followed are investment banking clients) Neutral 34.12% 26.62% 35.21% 50.29% 34.93% 31.32% (for US coverage by MCUSA, 5.68% of stocks followed are investment banking clients) Underperform 16.89% 13.87% 15.49% 5.93% 5.48% 16.48% (for US coverage by MCUSA, 0.87% of stocks followed are investment banking clients) PGH AU vs Small Ordinaries, & rec history (all figures in AUD currency unless noted) Note: Recommendation timeline if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, June month target price methodology PGH AU: A$4.70 based on a Peers' Multiples methodology Company-specific disclosures: PGH AU: Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of Macquarie Group Limited's equity securities. Macquarie Equities Limited or one of its affiliates managed or co-managed a public offering of securities of Ltd in the past 24 months, for which it received compensation. Macquarie Capital (Australia) Limited or one of its affiliates managed or co-managed a public offering of securities of Ltd in the past 24 months, for which it received compensation. Important disclosure information regarding the subject companies covered in this report is available at Date Stock Code (BBG code) Recommendation Target Price 25-Feb-2015 PGH AU Neutral A$ Jan-2015 PGH AU Outperform A$ Aug-2014 PGH AU Outperform A$ Jan-2014 PGH AU Outperform A$4.22 Target price risk disclosures: PGH AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. Analyst certification: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd (ABN , AFSL No ) ( MGL ) and its related entities (the Macquarie Group ) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. General disclosure: This research has been issued by Macquarie Securities (Australia) Limited (ABN , AFSL No ) a Participant of the Australian Securities Exchange (ASX) and Chi-X Australia Pty Limited. This research is distributed in Australia by Macquarie Equities Limited (ABN , AFSL No ) ("MEL"), a Participant of the ASX, and in New Zealand by Macquarie Equities New Zealand Limited ( MENZ ) 17 June

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