Pact restructure a boon for Geminder

The analysis provides a peek at the operations of the intensely private operation.

THE Pact private packaging empire run by the Geminder offshoot of the Pratt family made a profit of at least $37.7 million from its operations in the 2012 financial year, a BusinessDay analysis shows.

The analysis also shows that $74 million of a $280 million dividend paid last year has so far flowed upwards through the group structure to the private company of the chairman and owner, Raphael Geminder.

Those dividend payments appear to be part of a restructure of the entire group that had it declare vastly greater profits than usual.

While the analysis provides a peek through the keyhole at the operations of the intensely private operation, BusinessDay's profit estimate is likely to be lower than actual earnings.

The figure was calculated by adding together the profits and losses declared by eight entities headed by Mr Geminder that file annual accounts with the corporate regulator.

These companies - Brickwood Holdings, Plaspak Peterson, VIP Steel Packaging, Snopak Manufacturing, Baroda Manufacturing, Logan Moulders, Alto Manufacturing and VIP Plastic Packaging - are described in their accounts as operational companies.

A $44.2 million profit was declared by the same entities in 2011.

The 2012 result was achieved on revenue of $588 million, down from $649 million in 2011.

However, the results do not include several other entities, including the group's overseas businesses, which are not required to file financial results with the Australian Securities and Investments Commission.

There are no consolidated accounts, with companies within the group instead retaining profits or losses on their individual balance sheets.

A set of accounts filed by a holding company within the group, Pact Group Industries, values its Australian and New Zealand subsidiaries at $1.2 billion, which is broadly in line with numbers provided earlier this year when Mr Geminder tested the market for a sale to private equity players.

It was the second time Pact has considered a float or sale, a 2010 effort declared dead by Mr Geminder in November 2011.

Mr Geminder acquired the business from his father-in-law, Richard Pratt, in 2002, and has built it into a powerful Australian packaging empire that employs 3200 people and makes everything from steel drums to plastic laundry detergent bottles under the Pact and VIP Packaging brands.

Pact has also expanded offshore through one of the group's companies, Skyson, which owns a plastic packaging operation in Thailand.

Mr Geminder's empire is supported by a $515 million line of credit provided to main holding company Pact Group by a syndicate of banks, believed to be headed by Westpac.

The accounts show it was drawn down by $255 million as of June 30, falls due in July 2014 and is secured against the assets of at least 15 group companies.

As part of its 2011 restructure, Pact Group reaped a $305 million gain by selling its New Zealand subsidiary, Pact Group (NZ), to another company within the group, Pact Group Holdings (NZ).

In the same year, Pact Group paid a $280 million dividend to its owner, Pact Group Industries, which, in turn, paid $100 million upwards to Pact Group Holdings.

Pact Group Holdings paid $72 million to its owner, Geminder Holdings, which paid $74 million to Mr Geminder's company Salvage.

In 2012, Pact Group Industries paid a $53 million dividend to Pact Group Holdings but the accounts do not record any payment travelling further up the chain towards Mr Geminder.

Pact Group general counsel Nick Perkins said the company would not comment on BusinessDay's analysis.

"On a positive note, we are very proud that we continue to invest in Australian manufacturing, that we lead innovation in packaging and are committed to Australian industry, which differentiates us from many of our peers," he said.