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Brambles Industries (BI.)

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Wednesday 27 February, 2002

Brambles Industries

Interim Results Part 2

Brambles Industries PLC
27 February 2002


Brambles Industries


PART 2


COMBINED PROFIT AND LOSS ACCOUNT
As at 31 December 2001

         Unaudited                                                                              Unaudited
        Year ended                                                                         Six months ended
           30 June                                                                               31 December
              2001                                                            Notes   2001             2000
         (restated)                                                              £m               (restated)
                £m                                                                                       £m

                  TURNOVER
            3,111 Subsidiaries                                                       1,585             1,502
               70 Share of associates                                                   34                36
            3,181                                                                    1,619             1,538

                  OPERATING PROFIT
                  Subsidiaries
                  Before goodwill amortisation and operating
              439 exceptional items                                                    208               233
             (24) Goodwill amortisation                                               (15)              (11)
             (91) Operating exceptional items                                         (46)              (94)
              324                                                                      147               128
                5 Share of operating profit of associates                                4                 4
              329 TOTAL OPERATING PROFIT                                               151               132
                  EXCEPTIONAL ITEMS
               25 (Loss)/profit on disposal of businesses                             (35)                 9
                - DLC merger costs                                                    (30)                 -
              354 PROFIT BEFORE INTEREST AND TAXATION                                   86               141
                  Interest payable/receivable
            (105) - subsidiaries                                                      (51)              (50)
              (1) - associates                                                         (1)               (1)
                  PROFIT ON ORDINARY ACTIVITIES BEFORE 
              248  TAXATION                                                            34                90
            (112) Tax on profit on ordinary activities                                (45)              (63)
                5 Tax on exceptional items                                              27                11
                  PROFIT ON ORDINARY ACTIVITIES AFTER 
              141  TAXATION                                                             16                38
              (1) Minority interests                                                   (1)                 -

              140 PROFIT FOR THE PERIOD                                                 15                38
             (69) Ordinary dividends proposed                                         (59)              (34)
               71 TRANSFER TO COMBINED RESERVES                                       (44)                 4

             8.3p Basic earnings per share                                            0.9p              2.3p
             8.3p Diluted earnings per share                                          0.9p              2.3p

                  Results before goodwill amortisation and
                  exceptional items
              444 Operating profit - £m                                                212               237
              338 Profit before tax - £m                                               160               186
            13.4p Earnings per share - p (note 3)                                     6.8p              7.3p


Brambles Industries


COMBINED BALANCE SHEET
As at 31 December 2001

           Unaudited                                                                         Unaudited
             30 June                                                                          31 December
                2001                                                                  2001              2000
          (restated)                                                                 £m            (restated)
                  £m                                                                                      £m
                     FIXED ASSETS
                 470 Goodwill and intangible assets                                 483              378
               2,456 Tangible fixed assets                                        2,384            2,306
               2,926                                                              2,867            2,684
                     Investments
                  46   Associates                                                    47               37
                   9   Other investments                                             20                4
                  55                                                                 67               41
               2,981 Total fixed assets                                           2,934            2,725
                     CURRENT ASSETS
                  49 Stocks                                                          48               66
                 785 Debtors                                                        758              723
                  70 Cash at bank and in hand                                        83               64
                 904                                                                889              853
                     CREDITORS: amounts falling due within one year
               (609) Short- term borrowings                                        (83)            (451)
               (587) Creditors                                                    (510)            (511)
               (132) Taxation and dividends payable                               (142)            (121)
             (1,328)                                                              (735)          (1,083)
               (424) NET CURRENT ASSETS/(LIABILITIES)                               154            (230)
               2,557 Total assets less current liabilities                        3,088            2,495
             (1,330) CREDITORS: amounts falling due beyond one year             (1,872)          (1,264)
               (228) PROVISIONS FOR LIABILITIES AND CHARGES                       (222)            (208)
                 999 NET ASSETS                                                     994            1,023

                     CAPITAL AND RESERVES
                 450 Share capital                                                  450              421
                  50 Share premium account                                           50               50
                 103 Other reserves                                                 142              233
                 389 Profit and loss account                                        344              312
                 992 EQUITY SHAREHOLDERS' FUNDS                                     986            1,016
                   7 MINORITY INTERESTS  - EQUITY                                     8                7
                 999                                                                994            1,023



Brambles Industries


COMBINED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six months ended 31 December 2001



           Unaudited                                                                         Unaudited
          Year ended                                                                    Six months ended
             30 June                                                                      31 December
                2001                                                                               2000
           (restated)                                                             2001        (restated)
                  £m                                                                £m               £m
                 140 Profit for the period attributable to                          15               38
                     shareholders
                (68) Exchange translation differences                               27               34
                  72 Total recognised gains and losses for the
                     Period                                                         42               72


                     Note on prior period adjustment
                     Total recognised gains and losses related to the
                     period as above                                                42
                     Prior adjustment                                             (93)


                     Total recognised losses since last annual report             (51)



RECONCILIATION OF MOVEMENTS IN COMBINED SHAREHOLDERS' FUNDS

For the six months ended 31 December 2001

           Unaudited                                                                             Unaudited
          Year ended                                                                        Six months ended
             30 June                                                                           31 December
                2001                                                                                   2000
           (restated)                                                                2001         (restated)
                  £m                                                                   £m                 £m
                 140 Profit attributable to shareholders                                15                38
                (69) Ordinary dividends paid and proposed                             (59)              (34)
                  53 Issue of ordinary shares, net of expenses                          12                43
                (68) Exchange translation difference                                    27                33
                  56 Net increase in combined shareholders' funds                      (5)                80
                     Combined shareholders' funds at the beginning of
                 943 the period                                                        999               943
                     Combined shareholders' funds at the end of
                 999 the period                                                        994             1,024




MOVEMENT IN COMBINED NET FUNDS

For the six months ended 31 December 2001


           Unaudited                                                                    Unaudited
          Year ended                                                                    Six months ended
             30 June                                                                       31 December
                2001                                                                    2001            2000
                  £m                                                                      £m              £m
                  10 Increase/(decrease) in cash in the period                            30            (34)
                     Cash (inflow)/outflow from (increase)/decrease
               (318)  in debt and lease financing                                       (89)           (130)
               (308) Change in net debt resulting from cash flows                       (59)           (164)
                (61) Currency variations                                                  66             (5)
                (16) Increase in deferred consideration                                 (10)             (8)
                (12) Subsidiaries acquired and sold                                        -               -
               (397) Total inflow/(outflow)                                              (3)           (177)
             (1,472) Net borrowings at beginning of period                           (1,869)         (1,472)
             (1,869) Net borrowings at end of period                                 (1,872)         (1,649)




COMBINED CASH FLOW STATEMENT

For the six months ended 31 December 2001



 Contents
           Unaudited                                                                   Unaudited
          Year ended                                                                        Six months ended
             30 June                                                                         31 December
                2001                                                                  2001             2000
                  £m                                                                    £m               £m
                 718 Net cash inflow from operating activities                         264              325
                   1 Dividends received from associates                                  1                1
                   8 Interest received                                                   2                4
               (121) Interest paid                                                    (47)             (54)
               (113) Returns on investments and servicing of finance

                                                                                      (45)             (50)
                (87) Taxation                                                         (60)             (53)
               (721) Purchase of tangible fixed assets                               (304)            (379)
                  58 Proceeds from sale of tangible fixed assets                        36               24
                (12) Investment loans and other financial investments                  (3)                1
               (675) Capital expenditure and financial investment                    (271)            (354)
               (165) Purchase of subsidiary undertakings                              (24)             (40)
                 (6) Purchase of associates                                              -             (12)
                   - Net cash acquired with subsidiary undertakings                      -                3
                  82 Sale of businesses                                                 97               36
                   - Sale of associates                                                  -                3
                (89) Acquisitions and disposals                                         73             (10)
                     Ordinary dividends paid to shareholders of the
                (70) parent companies                                                  (35)             (58)
                     Net cash outflow before management of liquid
               (315) resources and financing                                           (73)            (199)
                  31 Net proceeds from share issues                                     13               20
                   - Capital contributions                                               -               22
                 277 Increase in borrowings                                             92              124
                 (3) Capital element of finance lease rentals                          (2)              (1)
                 305 Financing                                                         103              165
                (10) Increase/(decrease) in cash                                        30             (34)





COMBINED CASH INFLOW FROM OPERATING ACTIVITIES

For the six months ended 31 December 2001


            Unaudited                                                                      Unaudited
           Year ended                                                                 Six months ended
              30 June                                                                     31 December
                 2001                                                                  2001              2000
                  £m                                                                    £m                £m
                 324 Operating profit from subsidiary operations                        147              128
                 357 Depreciation charge                                                189              175
                  24 Goodwill amortisation                                               15               11
                (55) Increase in working capital                                      (102)             (79)
                  68 Other                                                               15               90
                 718 Net cash inflow from operating activities                          264              325



COMBINED SEGMENTAL ANALYSIS

For the six months ended 31 December 2001



Turnover

           Unaudited                                                                             Unaudited
          Year ended                                                                        Six months ended
             30 June                                                                              31 December
                2001                                                                  2001              2000
                  £m                                                                   £m                 £m
                     Business segment
               1,066 CHEP - Pallet and container pooling                               591              519
                 853 Cleanaway - Waste management                                      478              385
                 190 Recall - Information management                                   107               83
                 331 Industrial services                                               157              163
                 332 Regional businesses                                               140              167
                 409 Divestments                                                       146              220
               3,181 Total                                                           1,619            1,537
                     Geographical origin

               1,559 Europe                                                            817              737
               1,002 Americas                                                          495              483
                 575 Australia/New Zealand                                             284              295
                  45 Rest of world                                                      23               22
               3,181 Total                                                           1,619            1,537

Operating Profit

           Unaudited                                                                             Unaudited
          Year ended                                                                        Six months ended
             30 June                                                                              31 December
                2001                                                                  2001             2000
                  £m                                                                    £m                £m

                     Business segment
                 234 CHEP - Pallet and container pooling                               107              128
                  91 Cleanaway - Waste management                                       51               48
                  31 Recall - Information management                                    18               12
                  21 Industrial services                                                12               10
                  38 Regional businesses                                                13               22
                  38 Divestments                                                        15               17
                 (9) Unallocated                                                       (4)                -
                 444 Total                                                             212              237
                (24) Goodwill amortisation                                            (15)             (11)

                (91) Exceptional items                                                (46)             (94)
                 329                                                                   151              132

                     Geographical origin

                 244 Europe                                                            118              133
                 136 Americas                                                           60               77
                  59 Australia/New Zealand                                              31               22
                  14 Rest of world                                                       7                5
                 (9) Unallocated                                                       (4)                -
                 444 Total                                                             212              237
                (24) Goodwill amortisation                                            (15)             (11)

                (91) Exceptional items                                                (46)             (94)
                 329                                                                   151              132

NOTES TO THE COMBINED FINANCIAL INFORMATION

For the six months ended 31 December 2001

1.       Basis of preparation

The Brambles Industries combined financial information ('the combined financial
information') represents the combined businesses of Brambles Industries plc
(BIP) and Brambles Industries Limited (BIL) and encompasses their respective
subsidiaries, associates and joint ventures ('the combined businesses').

The merger of the support services of GKN plc with BIL was completed on 7 August
2001.  The merger involved GKN plc separating its support services activities
from its engineering operations and placing them in a new company, BIP
(described on page 37).  BIP and BIL were then combined under a dual listed
companies (DLC) structure (Combined Brambles Group).

The combined financial information has been prepared under merger accounting
principles, as set out in Financial Reporting Standard 6: Acquisitions and
Mergers (FRS6).  Under merger accounting the results and cash flows of BIP and
BIL have been combined from the beginning of the financial period.  There are no
material differences between the accounting policies of BIP and BIL.

In accordance with merger accounting principles, the pro forma comparatives for
the six months ended 31 December 2000 and the twelve months ended 30 June 2001
are presented as if the DLC merger took place on the first day of each of the
accounting periods presented.

The combined financial information for the six months ended 31 December 2001 is
unaudited but has been reviewed by the auditors and their report to the Board of
Brambles Industries plc is set out on page 38.

This interim report does not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985.

2.              Principal accounting policies

The financial information has been prepared under the historical cost
convention, and complies with UK applicable accounting standards. The following
accounting policies have been applied in preparing the financial information in
this report:

(i)       Sales

Sales shown in the profit and loss account represent the value of goods and
services invoiced to customers including UK landfill tax, but excluding any
value added taxes.

(ii)      Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost, net of depreciation and any provision
for impairment.  Depreciation is provided at rates calculated to write off the
cost less estimated residual value on a straight-line or reducing balance basis
over its expected useful life.

The carrying values of tangible fixed assets are subject to review and any
impairment charged to the profit and loss account.

Depreciation is charged in the financial statements so as to write off all
tangible fixed assets, including landfill sites but excluding other freehold
land, during their expected useful lives.  Predominantly, the straight-line
method of calculation has been used except for landfills where the depreciation
is based on capacity used of the total capacity available.

The expected useful lives are generally:

Buildings                            50 years

Leasehold improvements             5-10 years

Plant and equipment                5-20 years

The Group reviewed the depreciation policy with respect to the pallet pool
during the period.  The financial effect of these changes is described in
Appendix II.



NOTES TO THE COMBINED FINANCIAL INFORMATION

For the six months ended 31 December 2001

2.              Principal accounting policies (continued)



(iii)     Stock and work in progress

Stock and work in progress is stated at the lower of cost and net realisable
value on a first in first out basis, due allowance being made for obsolete and
slow-moving items.  Cost is taken as production cost, which includes an
appropriate proportion of attributable overheads.



(iv)      Foreign currency translation

The results and cash flows of overseas subsidiaries and associates are
translated to sterling at average exchange rates.  Where practicable,
transactions involving foreign currencies are protected by forward contracts.
Assets and liabilities in foreign currencies are translated at the appropriate
forward contract rate or, if not covered, at the exchange rate ruling at the
balance sheet date.  Differences on revenue transactions are dealt with through
the profit and loss account.

The average exchange rates for the currencies most important to the Group's
operations are:

                                                                       
                                           £: euro          £:US$          £:A$

First half average    - 31 December 2001      1.62           1.45          2.83

                      - 31 December 2000      1.64           1.47          2.66

Period end            - 31 December 2001      1.64           1.46          2.85

                      - 31 December 2000      1.65           1.47          2.68

(v)      Goodwill

Goodwill arising on consolidation represents the excess of the fair value of the
consideration for acquired businesses over the fair value of the separable net
assets acquired.  Goodwill arising on acquisitions completed prior to 1 July
1997 has been eliminated against reserves.  Goodwill arising on acquisitions
after that date has been capitalised and amortised on a straight line basis over
its estimated useful life up to a maximum of 20 years.  Where an acquired
business is sold and goodwill has been previously deducted from reserves, the
goodwill is taken into account in calculating the profit or loss on sale.  The
carrying values of goodwill are subject to review and any impairment charged to
the profit and loss account.



(vi)           Taxation

FRS 19 Deferred Tax has been adopted.  Previously, provision was made for
deferred tax to the extent that it was probable that a liability or asset would
crystallise.  The new policy is to provide for deferred tax on all timing
differences except those arising from the revaluation of fixed assets for which
there is no binding agreement to sell or on the undistributed profits of
overseas subsidiaries, associates and joint ventures.  Deferred tax is
calculated at the rates at which it is estimated the tax will arise.  The
deferred tax provision is not discounted to net present value.

The impact of this change in policy on the taxation charge for the six months to
31 December 2000 is a decrease of £8 million to £52 million and for the year
ended 30 June 2001 is an increase of £1  million to £107 million.



(vii)     Provisions

Provisions for liabilities are made on the basis that the business has a
constructive or legal obligation to transfer economic benefit due to a past
event that is of uncertain timing or amount.

Provision is made to cover the future costs of restoration and aftercare of
landfill sites.

NOTES TO THE COMBINED FINANCIAL INFORMATION

For the six months ended 31 December 2001



3.       Earnings per share

Earnings per share for 2001 is based on the earnings of the half year of £15
million (2000 - £38 million) and calculated on the weighted average number of
1,685.1 million shares in issue and ranking for dividend (2000 - 1,680.3 million
shares).  Diluted earnings per share, which takes into account options over
shares, is calculated on the weighted average number of 1,689.9 million (2000 -
1,680.3 million) shares.

Earnings per share before goodwill amortisation and exceptional items, which the
Directors consider gives a useful additional indication of underlying
performance, is calculated on the earnings of the year adjusted as follows:

                                                    Earnings                    Earnings per 
                                                                                       share
                                 Six months    Six months      Year  Six months   Six months          Year
                                      ended         ended     ended        ended       ended         ended
                                31 December   31 December   30 June  31 December 31 December       30 June
                                       2001          2000      2001        2001         2000          2001
                                         £m            £m        £m           p            p             p

Profit for the period                    15            38       140         0.9           2.3           8.3
Included in operating profit:
  Goodwill amortisation                  15            11        24         0.9           0.7           1.5
  Exceptional items                      46            94        91         2.7           5.5           5.4
Non-operating exceptional
items
                                         65           (9)      (25)         3.9         (0.5)         (1.5)
Taxation attributable to
exceptional items
                                       (27)          (11)       (5)       (1.6)         (0.7)         (0.3)
Profit after tax before
goodwill amortisation and
exceptional items

                                        114           123       225         6.8           7.3          13.4




BRAMBLES INDUSTRIES PLC FINANCIAL INFORMATION



CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the six months ended 31 December 2001


UnauditedYear                                                                                  Unaudited
ended
30 June                                                                                     Six months ended
2001                                                                                          31 December
(restated)                                                                                              
£m                                                                                                       2000
                                                                                              2001   (restated)
                                                                                                £m        £m            
Sales
1,820           Subsidiary undertakings - continuing operations                                955        863
46              Share of associates                                                             22         24
1,866                                                                                          977        887
                Operating profit
                Subsidiary undertakings - continuing operations
290             Before goodwill amortisation and exceptional items                             128        161
(11)            Goodwill amortisation                                                          (7)        (7)
-               Exceptional items                                                             (25)          -
279             Group operating profit                                                          96        154
5               Share of associates                                                              2          2
284             Total operating profit                                                          98        156
-               Exceptional items - DLC merger costs                                          (13)          -
284             Profit on ordinary activities before interest and tax                           85        156
(72)            Net interest payable                                                          (35)       (31)
212             Profit on ordinary activities before taxation                                   50        125
(74)            Tax on profit on ordinary activities                                          (16)       (44)
138             Profit on ordinary activities after taxation                                    34         81
(59)            Minority interest                                                             (27)       (33)
79              Profit attributable to the shareholders                                          7         48
(23)            Ordinary dividends paid and proposed                                          (25)       (23)
56              Retained (loss)/profit taken to reserves                                      (18)         25
10.9p           Basic earnings per share                                                      1.0p       6.6p
10.9p           Diluted earnings per share                                                    1.0p       6.6p





BRAMBLES INDUSTRIES PLC FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEET

As at 31 December 2001
Unaudited                                                                                   Unaudited

30 June                                                                                    31 December
2001                                                                                       2001       2000
(restated)                                                                                   £m   (restated)
£m                                                                                                       £m
246          Goodwill and intangible assets                                                  241        228
1,670        Tangible fixed assets and investments                                         1,752      1,515
1,916        Fixed assets                                                                  1,993      1,743
18           Stocks                                                                           18         26
491          Debtors - amounts falling due within one year                                   500        410
14           Cash at bank and in hand                                                         32         26
523          Current assets                                                                  550        462
(1,453)      Creditors: amounts falling due within one year                              (1,491)      (823)
(930)        Net current liabilities                                                       (941)      (361)
986          Total assets less current liabilities                                         1,052      1,382
(185)        Creditors: amounts falling due after more than one year                       (226)      (667)
(171)        Provisions for liabilities and charges                                        (178)      (169)
630          Net assets                                                                      648        546
36           Share capital                                                                    36         36
50           Share premium account                                                            50         50
81           Other reserves                                                                   94         61
216          Profit and loss account                                                         198        185
383          Equity shareholders' funds                                                      378        332
247          Equity minority interests                                                       270        214
630                                                                                          648        546

NOTES TO THE BRAMBLES INDUSTRIES PLC FINANCIAL INFORMATION

1.          Basis of preparation

(i)              The demerger

Brambles Industries plc was incorporated on 3 January 2001.  On 7 August 2001,
the support services activities of GKN plc were transferred to Brambles
Industries plc by way of a court approved reduction of capital of GKN plc and
the issue of 723,742,311 ordinary shares of 5p each in Brambles Industries plc
to the shareholders of GKN plc as part of the combination transaction.

The above transaction was accounted for as a Group reconstruction under merger
accounting principles.  The results of the relevant entities are combined from
the beginning of the period in which the merger occurred and their assets and
liabilities combined at the amounts at which they were previously recorded.

In preparing the financial information, the results, and assets and liabilities
of the 50 per cent joint ventures ('GBE Joint Ventures') with Brambles
Industries Limited have been included as subsidiary undertakings.  As a result
of the DLC arrangements, the GBE Joint Ventures are managed on a unified basis
and are therefore deemed to be subsidiary undertakings of BIP.  The interests of
Brambles Industries Limited in the GBE Joint Ventures have been recognised as a
minority interest.

 (ii)     Basis of proforma comparative financial information

The pro forma consolidated profit and loss account, and consolidated balance
sheet, for 31 December 2000 and 30 June 2001 have been presented as if the
merger took place on the first day of each of the accounting periods presented.

2.              Accounting policies

The accounting policies adopted by Brambles Industries plc are the same as those
used to prepare the combined businesses' results on pages 32 to 33.






INDEPENDENT REVIEW REPORT TO THE DIRECTORS OF BRAMBLES INDUSTRIES PLC



Introduction

On the instruction of the Board of Brambles Industries plc we have reviewed the
combined financial information of Brambles Industries plc and Brambles
Industries Limited and their respective subsidiaries, associates and joint
ventures (together 'the combined businesses') for the six months ended 31
December 2001 which comprises the combined profit and loss account, combined
balance sheet, combined statement of total recognised gains and losses,
reconciliation of movements in combined shareholders' funds, movement in
combined net funds, combined cash flow statement, combined cash flow from
operating activities, combined segmental analysis and the related notes 1 to 3.
We have also reviewed the financial information of Brambles Industries plc for
the six months ended 31 December 2001 which comprises the consolidated profit
and loss account, consolidated balance sheet and the related notes 1 to 3. We
have read the other information contained in the Brambles Industries Interim
Statement and considered whether it contains any apparent misstatement or
material inconsistencies with the financial information.

Directors' responsibilities

The Brambles Industries plc Interim Statement, including the financial
information contained therein, is the responsibility of, and has been approved
by, the directors of Brambles Industries plc. The directors of Brambles
Industries plc are responsible for preparing the Brambles Industries plc Interim
Statement in accordance with the Listing Rules of the UK Financial Services
Authority and Generally Accepted Accounting Principles in the UK which require
that the accounting policies and presentation applied to the interim figures
should be consistent with those applied in preparing the preceding annual
accounts except where any changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether accounting policies and presentation have
been consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2001.





Deloitte & Touche
Chartered Accountants
London
27 February 2002



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