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Brambles Industries (BI.)

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Thursday 23 February, 2006

Brambles Industries

Interim Results - Part 2 of 4

Brambles Industries PLC
22 February 2006


Brambles 

Consolidated financial report for the
half-year ended 31 December 2005

Index                                                                  Page

Summary of consolidated results

Results for announcement to the market                                   1
Trading performance                                                      4
Operational review                                                       5
Outlook                                                                 12

Directors' report                                                       13

Half-year financial report

Consolidated income statement                                           14
Consolidated balance sheet                                              15
Consolidated statement of recognised income                             16
and expense
Consolidated cash flow statement                                        17
Notes to the consolidated financial
statements:
1. Basis of preparation                                                 18
2. Significant accounting policies                                      19
3. Segmental analysis                                                   30
4. Profit from ordinary activities -                                    33
continuing operations
5. Special items - continuing operations                                34
6. Discontinued operations                                              35
7. Business combination                                                 38
8. Earnings per share                                                   39
9. Net tangible asset backing                                           39
10. Dividends                                                           40
11. Issued and quoted securities                                        40
12. Changes in equity                                                   41
13. Equity-accounted investments                                        41
14. Tax Expense                                                         42
15. Contingent liabilities                                              42
16. Events occurring after balance sheet date                           42
17. Explanation of the impact of transition from UK GAAP to IFRS        43
18. Explanation of the impact of transition from AGAAP to IFRS          54



Directors' declaration                                                  63
Independent review reports                                              64
Auditors' independence declaration                                      66




SUMMARY OF CONSOLIDATED RESULTS
for the half-year ended 31 December 2005

Results for announcement to the market
                                                    First half      First half   % change
At actual exchange rates                                  2006            2005  at actual
                                                          US$m            US$m   fx rates
--------------------------------------------------------------------------------------------
RESULTS BEFORE SPECIAL ITEMS 1
Continuing operations
Sales revenue                                          1,707.6        1,601.1         7%
Operating profit                                         342.3          285.0        20%
Profit before tax                                        280.6          215.6        30%
Profit after tax                                         180.1          141.4        27%
Profit from discontinued operations                       85.8           64.9        32%

Profit for the period                                    265.9          206.3        29%

Profit attributable to members of the parent entities    265.5          205.9        29%


Basic earnings per share (cents)                          15.7           12.2        29%
                                                                                        
----------------------------------------------------------------------------------------
STATUTORY RESULTS
Continuing operations
Sales revenue                                          1,707.6        1,601.1         7%
Operating profit                                         319.6          284.6        12%
Profit before tax                                        257.9          215.2        20%
Profit after tax                                         157.8          141.1        12%

Profit from discontinued operations                       94.1           55.4        70%

Profit for the period                                    251.9          196.5        28%

Profit attributable to members of the parent entities    251.5          196.1        28%

Basic earnings per share (cents)                          14.8           11.6        28%
                                                                                        
----------------------------------------------------------------------------------------

Net capital expenditure on property, plant
and equipment                                            351.0          334.3

Free cash flow 2                                         157.3          236.5

Free cash flow after dividends                            14.5          112.1

Net debt                                               2,023.1        2,569.0
                                                                                           
-------------------------------------------------------------------------------------------

Dividend                                    On BIL shares         On BIP shares

Interim dividend per share                    A11.5 cents           4.887 pence

Franking percentage                                  100%                     -

Interim dividend record date                17 March 2006          17 March 2006

Interim dividend payable date               13 Apirl 2006          13 April 2006
                                                                                            
--------------------------------------------------------------------------------------------
1 Special items comprise impairments, exceptional items, fair value adjustments and
  amortisation of acquired non-goodwill intangible assets (other than software).

2 Free cash flow is cash flow generated after net capital expenditure but excluding
  the net cost of acquisitions and proceeds from business disposals.

                                      Page 1

Brambles 
RESULTS BY BUSINESS SEGMENT
AT ACTUAL AND CONSTANT CURRENCY EXCHANGE RATES

                                                          First half 2006
                                        First half 2006     at prior year  First half 2005     % change
                                                 actual          fx rates           actual   at constant
Sales                                              US$m             US$m              US$m      currency
------------------------------------------------------------------------------------------------------
CHEP                                            1,445.0            1,467.5          1,351.4         9%
Recall                                            262.6              261.8            249.7         5%
                                            ---------------------------------------------------------
Continuing operations                           1,707.6            1,729.3          1,601.1         8%
                                            ---------------------------------------------------------
Cleanaway                                         947.3              979.1            937.8         4%
Brambles Industrial Services                      272.5              276.0            269.6         2%
Regional Businesses                                94.0               93.9            103.7        (9%)
Other                                               9.4                9.9              8.8        13%
                                           ---------------------------------------------------------
Discontinued operations                         1,323.2            1,358.9          1,319.9         3%
                                           ---------------------------------------------------------
Total                                           3,030.8            3,088.2          2,921.0         6%
                                           ----------------------------------------------------------

Comparable operating profit 1                                                                        
-----------------------------------------------------------------------------------------------------

CHEP                                              317.8              321.6            252.7        27%
Recall                                             38.1               38.0             41.5        (8%)
Corporate                                         (13.6)             (12.3)            (9.2)      (34%)
                                             --------------------------------------------------------
Continuing operations                             342.3              347.3            285.0        22%
                                            --------------------------------------------------------
Cleanaway                                          92.8               96.7             62.4        55%
Brambles Industrial Services                       32.0               32.2             31.2         3%
Regional Businesses                                 3.3                3.2              6.1       (48%)
Other                                               0.1                0.1             (2.2)           
                                            ---------------------------------------------------------
Discontinued operations                           128.2              132.2             97.5        36%
                                             -------------------------------------------------------
Total                                             470.5              479.5            382.5        25%
                                             -------------------------------------------------------

Reconciliation to statutory
profit after tax                                                                                        
--------------------------------------------------------------------------------------------------------

Comparable operating profit
from continuing operations                        342.3              347.3            285.0        22%
Net finance costs                                 (61.7)             (62.3)           (69.4)       10%
                                            --------------------------------------------------------
Profit before tax and special items from 
continuing operations (PBTA)                      280.6              285.0            215.6        32%

Tax expense on PBTA                              (100.5)            (103.2)           (74.2)      (39%)
                                             --------------------------------------------------------
Profit after tax, before special items(PATA),
from continuing operations                        180.1              181.8            141.4        29%

Special items from continuing
operations, after tax                             (22.3)             (23.6)            (0.3)            
                                                  ------------------------------------------------------
Profit from continuing operations, after tax      157.8               158.2            141.1        12%

Profit from discontinued operations, after tax     94.1               98.5             55.4            
                                                   ----------------------------------------------------
Profit for the period                             251.9              256.7             196.5        31%
                                                  -----------------------------------------------------

Basic earnings per share (US cents)                14.8               15.1             11.6         30%
Earnings per share on PATA (US cents)              15.7               15.9             12.2         30%
                                                -------------------------------------------------------
BVA (Brambles Value Added) 1                                           136              75
from continuing operations                                          -----------------------

1 Refer to notes on page 3

                                     Page 2 

RESULTS BY BUSINESS SEGMENT
AT ACTUAL AND CONSTANT CURRENCY EXCHANGE RATES - continued

                                                First half 2006 
                                 First half 2006  at prior year   First half 2005    % change
                                          actual       fx rates           actual  at constant
Operating profit 1                          US$m          US$m              US$m     currency
---------------------------------------------------------------------------------------------
CHEP                                       317.8          321.6          252.7           27%
Recall                                      24.8           23.9           41.1          (42%)
Corporate                                  (23.0)         (22.2)          (9.2)             
                                           -------------------------------------------------
Continuing operations                      319.6          323.3          284.6           14%
                                           ------------------------------------------------- 
Cleanaway                                   84.4           87.2           62.4           40%
Brambles Industrial Services                36.9           38.6           31.2           24%
Regional Businesses                         52.5           59.5            6.1        
Other                                      (13.9)         (15.8)          (2.2)      
                                           --------------------------------------------------
Discontinued operations                    159.9          169.5           97.5           74%
                                          --------------------------------------------------
Total                                      479.5          492.8          382.1           29%
                                           -------------------------------------------------
1. Operating profit is on a statutory basis and includes special items. 

Special items
-------------
Special items comprise impairments, exceptional items, fair value adjustments and
amortisation of acquired non-goodwill intangible assets (other than software).
Exceptional items are items of income or expense which are considered to be
outside the ordinary course of business and are, either individually or in
aggregate, material to Brambles or the relevant business segment.

Comparable operating profit
---------------------------
All references to comparable operating profit are to profit before special items, finance costs and tax, 
which the Directors consider to be a useful measure of underlying business performance.

Constant currency translation of foreign currency results
---------------------------------------------------------
In the commentary, comparative trading measures have been presented in constant currency, by translating
both current and comparable period results into US dollars at the actual monthly exchange rates applicable
for the comparable period so as to show relative performance between the periods before the translation
impact of currency fluctuations.  In the statutory financial statements, foreign currency results have been
translated at the actual monthly exchange rates ruling in each period. 

Free cash flow
--------------
Free cash flow is cash flow generated after net capital expenditure but excluding
the net cost of acquisitions and proceeds from business disposals.

                                                                         First half     First half
Free cash flow reconciles to statutory cash flow as follows:                   2006           2005
                                                                               US$m           US$m
                                                                            ----------------------
Net cash inflow from operating activities                                     510.1          574.1
Net cash used in investing activities                                        (200.8)        (376.0)
Add back: acquisitions and disposals                                         (152.0)          38.4
                                                                             ----------------------
Free cash flow                                                                 157.3         236.5
                                                                              ---------------------

Brambles Value Added (BVA)
--------------------------
Brambles Value Added (BVA) represents the value generated by a business over and
above the cost of the capital it uses to generate that value. BVA is denominated
in US dollars using Brambles' IFRS results. It is calculated as comparable
operating profit (COP) less (average capital invested (ACI), at fixed June 2005
exchange rates, multiplied by Brambles' weighted average pre-tax cost of capital (WACC)).

BVA = COP - (ACI x WACC).

                                     Page 3

Brambles 

TRADING PERFORMANCE - CONTINUING OPERATIONS
--------------------------------------------

Sales for continuing operations were US$1.7 billion, an increase of 7% (8% in
constant currency). Sales growth continued in both CHEP (up 7%) and Recall (up
5%) which in constant currency terms were 9% and 5% higher respectively.

Comparable operating profit for continuing operations was US$342.3 million
compared with US$285.0 million in the prior corresponding period, an increase of
20% (22% in constant currency).

Profit before tax and special items for continuing operations was US$280.6
million compared with US$215.6 million in the prior corresponding period, an
increase of 30% (32% in constant currency).

CHEP performed strongly in the first half with sales and profit growth in all
regions. Comparable operating profit was US$317.8 million, an increase of 26%
(27% in constant currency). CHEP Americas performed particularly well during the
period.

CHEP Americas continued its trend of strong sales growth with an increase of 12%
(up 11% in constant currency) while comparable operating profit was US$145.0
million, an increase of 51% (48% in constant currency). A combination of volume
growth, further transportation efficiencies and lower irrecoverable pooling
equipment provisioning contributed to the significant lift in profitability.

CHEP Europe's sales grew by 1% (5% in constant currency). Against a backdrop of
a subdued retailing environment, volumes were flat. Comparable operating profit
increased 11% to US$117.3 million (16% in constant currency) as the impact of
activity-based pricing was partly offset by additional customer service
headcount and higher irrecoverable pooling equipment provisioning.

CHEP Rest of World achieved a solid increase in sales which were 11% higher than
the prior corresponding period (13% in constant currency). The growth in
comparable operating profit was broadly in line with the sales growth,
increasing by 10% to US$55.5 million (12% in constant currency).

Recall had a weaker first half with comparable operating profit 8% lower at
US$38.1 million. This was primarily due to rising transportation costs and the
impact of lower recycled paper prices against a backdrop of lower organic sales
growth in North America. Recall Europe again performed well.

Recall Australia acquired the AUSDOC business for A$260 million (US$193 million)
with effect from 29 November 2005. The businesses are in the process of being
integrated.

Brambles Value Added (BVA) increased sharply by US$61 million to US$136 million,
as a result of stronger profitability and continued tight capital management.

TRADING PERFORMANCE - DISCONTINUED OPERATIONS
---------------------------------------------

Brambles announced on 29 November 2005 that it would focus on CHEP and Recall,
and in this result Cleanaway, Brambles Industrial Services and Regional
Businesses are all shown as discontinued operations. Under IFRS, depreciation,
amortisation and the recognition of the share of profits of joint ventures and
associates cease once an asset is reclassified as being held for sale.

Sales in the discontinued operations were flat at US$1.3 billion but in constant
currency rose 3%. Cleanaway achieved 1% sales growth (4% in constant currency)
while Brambles Industrial Services' sales saw modest growth of 1% (2% in
constant currency).

Comparable operating profit was US$128.2 million compared with US$97.5 million
in the prior corresponding period, an increase of 31% (36% in constant
currency). If the impact of the above accounting treatment is excluded, the
underlying improvement in comparable operating profit was 12% (14% in constant
currency).

Cleanaway achieved a 49% increase in comparable operating profit (55% in
constant currency) with strong profit growth in both the UK and Rest of World.
The underlying improvement in profit in Cleanaway UK was 68% (75% in constant
currency). Cleanaway Rest of World increased by 40% (38% in constant currency).
Cleanaway Germany was 1% lower but was 5% higher in constant currency.

                                     Page 4
Brambles 

Brambles Industrial Services' comparable operating profit increased by 3%. The
underlying profit at US$27.9 million was 11% lower than the prior corresponding
period due to the expiration of a major contract in Australia and the
non-recurrence of profits on sale of assets. Regional Businesses delivered a
comparable operating profit US$2.8 million below the prior corresponding period
primarily due to weaker demand in Interlake's business and the impact of the
sale of Eurotainer.

TRADING PERFORMANCE - GROUP
---------------------------

Profit after tax before special items at US$265.9 million was 29% higher (31% in
constant currency) than the prior corresponding period.

Profit after tax at US$251.9 million was 28% higher (31% in constant currency)
than the prior corresponding period.

Earnings per share before special items increased by 29% (30% in constant
currency) to 15.7 US cents.

Free cash flow was US$157.3 million and again exceeded dividends paid during the
half, which increased to US$142.8 million. This was after an increase in capital
expenditure of US$31.5 million in support of CHEP's growth.

OPERATIONAL REVIEW
------------------

Throughout this section, all amounts quoted in the text are at actual exchange
rates. All comparative trading measures referred to are in constant currency.
The underlying constant currency performance is shown in the table on page 2 and
a definition of constant currency is shown on page 3.

                                     Page 5

Brambles 

CHEP


                                       First half           First half          % change         
                                          2006                2005         actual      constant 
                                       actual US$m        actual US$m                  currency 
                                   -------------------------------------------------------------
Sales revenue                              1,445.0            1,351.4        7            9     
Comparable operating profit 1                317.8              252.7        26           27     
------------------------------------------------------------------------------------------------
Cash flow from operations 
(after net capital expenditure)              251.2              252.3                           
-------------------------------------------------------------------------                       


1 A definition of comparable operating profit and a reconciliation to statutory
operating profit of US$317.8 million (2005: US$252.7 million) are shown on page 31.

CHEP continued to deliver significant progress in sales (US$1,445.0 million, up
9%) and comparable operating profit (US$317.8 million, up 27%). Ongoing cost
initiatives were again a significant factor behind the strong lift in
profitability. Operating cash flow after net capital expenditure remained strong
at US$251.2 million but was marginally lower than the prior corresponding period
due mainly to an increased expenditure on pallet purchases to support growth.

CHEP is driving best practice across its businesses through initiatives within
its 'Global Councils' structure. The CHEP 'Perfect Plant' initiative is aimed at
best practice across CHEP's entire service centre network. Over the next several
years a number of new and reconfigured repair facilities will commence operation
and substantial potential cost savings have been identified. Three new
facilities became operational (Orlando - USA, Dunstable - UK and Bornem -
Belgium) in the first half of 2006. CHEP expects to make ongoing operational
improvements over the next five years with benefits commencing in the current
financial year.

CHEP AMERICAS

                                        First half         First half          % change         
                                          2006                2005         actual      constant 
                                       actual US$m        actual US$m                  currency 
                                   -------------------------------------------------------------
Sales revenue                                651.0              579.4        12           11     
Comparable operating profit                  145.0               96.3        51           48     
------------------------------------------------------------------------------------------------
Cash flow from operations 
(after net capital expenditure)              109.6               96.8                           
-------------------------------------------------------------------------                       


Sales in the Americas were US$651.0 million, an increase of 11%. Comparable
operating profit grew strongly and was 48% higher at US$145.0 million. Improved
volumes, ongoing transportation cost initiatives and improved asset control
resulting in lower irrecoverable pooling equipment provisioning contributed to
profit growth during the half. In Latin America both sales and comparable
operating profit grew strongly.

Operating cash flow after net capital expenditure was US$109.6 million, an
increase of US$12.8 million compared with the prior corresponding period.
Capital expenditure increased by US$31.4 million to US$159.1 million in support
of continued strong growth in volume, and reflecting marginally higher pallet
costs as higher lumber costs were only partly offset by operational
efficiencies.

Volume growth was the main driver of sales as CHEP continued to gain greater
penetration in all its markets. In the six month period, CHEP USA signed up a
further 210 new customers. This compared with 150 new customers in the six
months to December 2004. The continued growth in CHEP's customer base will
underpin continued sales growth in the second half of 2006.

Through continued operational improvements, unit transportation costs were again
lower (by US$7 million). Initiatives included improved positioning of pallets
across the pool, lower relocation costs and further improvements in the planning
process.

Service Centre costs were US$5 million higher than the prior corresponding
period with an increase in damage and conditioning ratios (i.e. the percentage
of pallets returned to CHEP requiring repair) being partially offset by
efficiencies from the first plant reconfiguration in Orlando.

The control ratio in CHEP USA (i.e. the number of pallets returned in a period
as a percentage of all pallets issued) improved in the period to 97.8% (first
half 2005: 96.9%). CHEP decided to sell its Reusable Plastic Container (RPC)
assets in the USA as the competitive framework in this segment is unlikely to deliver

                                     Page 6
Brambles

satisfactory returns. The sale is expected to be finalised over the next
few months. As at 30 June 2005, this business had net assets of approximately
US$23 million.
                                    

CHEP EUROPE
-----------
                                        First half         First half          % change         
                                          2006                2005         actual      constant 
                                       actual US$m        actual US$m                  currency 
                                   -------------------------------------------------------------
Sales revenue                                608.0              604.0        1            5     
Comparable operating profit                  117.3              106.0       11           16     
------------------------------------------------------------------------------------------------
Cash flow from operations 
(after net capital expenditure)              105.9              112.2                          
-------------------------------------------------------------------------                       

Sales in CHEP Europe were US$608.0 million, 5% higher than the prior
corresponding period. Volume was flat reflecting the subdued retailing
environment experienced across Europe. The growth in sales reflected pricing
revisions which have been progressively rolled-out across Europe since November
2003. Over 90 per cent of all customer accounts have now been converted to the
new pricing architecture. The remaining customer accounts will be progressively
transferred to the new pricing regime as contract terms allow, but these
accounts will have minimal incremental impact on sales in future periods.

Comparable operating profit of US$117.3 million was 16% higher than the prior
corresponding period with service centre cost savings amounting to US$4 million.
Overheads increased to support the improvements in customer satisfaction and
asset control, and the irrecoverable pooling equipment provision was higher than
the prior corresponding period.

Asset productivity in CHEP Europe improved further in the half-year and the
control ratio stood at 95.7% compared with 94.4% for the prior corresponding
period. A number of initiatives have been introduced to further improve the
control ratio over the next eighteen months.

The container businesses contributed 17% of CHEP Europe's sales. The majority of
container sales are derived from automotive crates and RPCs which both performed well.

The successful implementation of activity-based pricing was an important element
in putting the CHEP European business on a sustainable platform for profitable
growth and its completion was the last major element of the restructuring of
CHEP Europe which commenced in November 2002. There is still more to do on
customer satisfaction and costs in CHEP Europe and considerable progress is
expected in both these areas over the next two years. The combination of Perfect
Plants and Six-Sigma process improvement techniques should contribute to further improvements in BVA.

CHEP - Rest of World
--------------------

                                        First half         First half          % change         
                                          2006                2005         actual      constant 
                                       actual US$m        actual US$m                  currency 
                                   -------------------------------------------------------------
Sales revenue                                186.0              168.0        11           13     
Comparable operating profit                   55.5               50.4        10           12     
------------------------------------------------------------------------------------------------
Cash flow from operations 
(after net capital expenditure)               35.7               43.3                           
-------------------------------------------------------------------------                       


Sales in the CHEP businesses in the Rest of World remained very strong at
US$186.0 million, an increase of 13% despite the Australian pallet operations
experiencing a weaker lead up to Christmas than in the unusually strong prior
corresponding period. Automotive crate volume in Australia was affected by an
extended Christmas shutdown but this was more than offset by strong RPC volumes.
The South African business showed good volume growth in its three key segments of pallets, RPCs and automotive crates.

Comparable operating profit was US$55.5 million, 12% above the prior corresponding period.

Asia remains a very small segment of the Rest of World business. CHEP is
currently reviewing its Asian strategy to assess the potential of available opportunities.

                                     Page 7
Brambles 

RECALL
------


                                        First half         First half          % change         
                                          2006                2005         actual      constant 
                                       actual US$m        actual US$m                  currency 
                                   -------------------------------------------------------------
Sales revenue                                262.6              249.7         5           5     
Comparable operating profit 1                 38.1               41.5        (8)         (8)    
------------------------------------------------------------------------------------------------
Cash flow from operations 
(after net capital expenditure)               11.2               28.1                           
-------------------------------------------------------------------------                       
1 A definition of comparable operating profit and a reconciliation to statutory
operating profit of US$24.8 million (2005: US$41.1 million) are shown on page 31.

Sales in Recall were US$262.6 million, an increase of 5%, with good growth
occurring in most European countries, and Asia. Recall Australia grew at a
slower rate than the prior corresponding period. In North America, organic sales
growth was lower, in part due to paper prices in Secure Destruction Services
(SDS) being below the previous year and in part due to Document Management
Solutions (DMS) where sales were affected by the loss of a large customer.

Comparable operating profit was US$38.1 million, 8% lower than last year with
profits in North America adversely affected by rising transportation costs and
the impact of lower recycled paper prices. Australia was impacted by the costs
of moving to a new Mega-Centre. Europe's performance was strong and continued to
gain from operational improvement initiatives.

AUSDOC was acquired for A$260 million (US$193 million) with effect from 29
November 2005. The integration of this business is progressing well and is
expected to deliver significant operational benefits. The new Mega-Centre at
Greystanes in Sydney will be fully operational by July 2006 and will provide
opportunities to rationalise existing facilities.

During the half, an asset impairment charge of US$14.0 million was taken (as an
exceptional item) with respect to the Recall Italy business which is shown in
discontinued operations in the results.

Recall is focused on identifying opportunities to improve its overall returns
across each of its regions. Both DMS and SDS have significant potential to
generate premium growth and returns. Initiatives already in place are expected
to result in improved performance across Recall's key markets.

                                     Page 8
Brambles 


CLEANAWAY
---------

                                        First half         First half          % change         
                                          2006                2005         actual      constant 
                                       actual US$m        actual US$m                  currency 
                                   -------------------------------------------------------------
Sales revenue                                947.3             937.8        1            4     
Comparable operating profit 1                 92.8              62.4       49           55    
------------------------------------------------------------------------------------------------
Cash flow from operations 
(after net capital expenditure)               94.5              87.4                           
-------------------------------------------------------------------------                       

1 A definition of comparable operating profit and a reconciliation to statutory
operating profit of US$84.4 million (2005: US$62.4 million) are shown on page
31.

Sales in Cleanaway were US$947.3 million, an increase of 4% with growth in all regions.

Comparable operating profit was US$92.8 million, an increase of 55% over the
prior corresponding period. Under IFRS, depreciation, amortisation and the
recognition of the share of profits of joint ventures and associates cease once
an asset is reclassified as being held for sale. Even excluding these impacts,
the underlying improvement in comparable operating profit was 29%.

UK
--

In the UK, sales were US$443.0 million, an increase of 5%. Comparable operating
profit grew to US$30.7 million, an increase of 110% as management actions
continued to gain traction. The underlying improvement in profit in Cleanaway UK
was 75%.

The Municipal business continued to gain from new contracts and additional
volume over and above the contracted levels. The high temperature incinerator at
Ellesmere Port performed well in the half. In the Integrated Waste Management
business, a new 15 year contract for disposal and treatment was signed with
London Borough of Tower Hamlets in December.

In the Commercial & Industrial (C&I) business profits improved significantly,
although sales were slightly below the first half of the prior year. Selective
price rises have been implemented where appropriate and Cleanaway has also
withdrawn from areas delivering unsatisfactory returns, such as the small
business in Scotland. The UK organisation has also been streamlined, resulting
in overhead savings. The focus going forward is on improving customer service
performance and increasing the stability of the customer base.

Rest of World (Australia/New Zealand/Asia)
------------------------------------------

Sales in Rest of World were US$201.5 million, an increase of 3% over the prior
corresponding period with both Australia/New Zealand and Asia showing increases.
Comparable operating profit was up by 62% to US$23.9 million. The underlying
improvement in profit in Cleanaway Rest of World was 38%.

Australia/New Zealand showed profit improvement in each of its three key
business segments, C&I, Municipal and Landfill. Asia's profit was slightly
higher than the prior corresponding period principally due to improved treatment
and disposal volumes.

Germany
-------

In Germany, sales were US$302.8 million, an increase of 5% over the prior
corresponding period.

Comparable operating profit was 26% higher at US$38.2 million. The underlying
profit increased by 5% compared with the prior corresponding period.

On 13 October 2005, Brambles announced the sale of Cleanaway Germany to SULO,
the German-based waste management group, for €570 million (US$675 million) in
cash. The sale is subject to approval from the relevant competition authorities
in Europe, and is expected to be completed prior to the end of the 2006
financial year.

                                     Page 9

Brambles 

BRAMBLES INDUSTRIAL SERVICES
----------------------------

                                        First half         First half          % change         
                                          2006                2005         actual      constant 
                                       actual US$m        actual US$m                  currency 
                                   -------------------------------------------------------------
Sales revenue                                272.5             269.6         1            2     
Comparable operating profit 1                 32.0              31.2         3            3     
------------------------------------------------------------------------------------------------
Cash flow from operations 
(after net capital expenditure)                0.2               5.7                            
-------------------------------------------------------------------------                       

1 A definition of comparable operating profit and a reconciliation to statutory
operating profit of US$36.9 million (2005: US$31.2 million) are shown on page
31.

Sales in Brambles Industrial Services were US$272.5 million, 2% higher than the prior corresponding period.

Comparable operating profit was 3% higher than the prior corresponding period,
though the underlying profit was 11% lower due to the expiration of the Roxby
Downs contract in Australia and the non-recurrence of profits on sale of assets.

Australia
---------

Sales for the Australian operations of Brambles Industrial Services were 1%
higher than the prior corresponding period despite the expiration of a major
contract at Roxby Downs in Australia. Excluding this impact, sales grew by 4%.

The Steel Services operations performed very well during the period but exit
costs on the Roxby Downs contract adversely affected profit.

Northern Hemisphere
-------------------

On 29 December 2005, Brambles sold the Northern Hemisphere steel mill services
operations of Brambles Industrial Services for £133 million (US$242 million). A
profit of US$4.9 million on sale has been shown within special items.

Not included in this sale were the logistic operations of TMF which had sales of
US$34.1 million for the six months to December 2005. This business is expected to be sold in due course.

REGIONAL BUSINESSES
-------------------

                                        First half         First half          % change         
                                          2006                2005         actual      constant 
                                       actual US$m        actual US$m                  currency 
                                   -------------------------------------------------------------
Sales revenue                                94.0              103.7         (9)           (9)     
Comparable operating profit 1                 3.3                6.1        (46)          (48)     
------------------------------------------------------------------------------------------------
Cash flow from operations 
(after net capital expenditure)               3.3                5.4                           
-------------------------------------------------------------------------                       

1 A definition of comparable operating profit and a reconciliation to statutory
operating profit of US$52.5 million (2005: US$6.1 million) are shown on page 31.

On 21 December 2005, Brambles sold its specialised tank container assets for €89 million (US$106 million). 
This resulted in a profit of US$49.4 million on sale.

Sales for the Regional Businesses declined to US$94.0 million due to lower
volumes and lower steel surcharges at Interlake, and the impact of the sale of
the Eurotainer business which was effective from 1 October 2005.

The sale process for the two remaining businesses, Interlake and TCR, is in progress.

                                    Page 10

Brambles 

BUSINESS DISPOSALS AND SPECIAL ITEMS
------------------------------------

On 29 November 2005, Brambles announced its intention to dispose of Cleanaway,
Brambles Industrial Services and the Regional Businesses. The sales of
Eurotainer and Brambles Industrial Services' Northern Hemisphere operations were
completed during the period. The sale of Cleanaway Germany was announced in
October 2005 and completion is expected by the end of the 2006 financial year,
subject to approval by regulatory authorities.

The sale process for the other businesses has commenced and is expected to be
substantially completed in the six months ending 30 June 2006.

Special items in the first six months were US$9.0 million before tax and
principally comprised exceptional items of US$10.1 million. These comprise an
impairment of Recall Italy's assets of US$14.0 million, integration costs
(mainly accelerated brand amortisation) relating to the AUSDOC acquisition of
US$12.2 million, restructuring costs of US$9.4 million and costs incurred in
anticipation of future divestments of US$8.6 million. These were offset by the
gain on sale of Eurotainer of US$49.4 million and the gain on sale of Brambles
Industrial Services' Northern Hemisphere businesses of US$4.9 million. The
after-tax charge for special items in the period was US$14.0 million.

FINANCIAL POSITION
------------------

Cash flow from operations after net capital expenditure was strong at US$337.2
million but was below the prior corresponding period of US$368.7 million. The
strong cash flow benefited from improved trading offset by higher capital
expenditure and an increase in working capital. Free cash flow for the period
was US$157.3 million.

Net finance costs were US$61.7 million, 11% lower than the prior corresponding
period. Lower average debt levels were the key driver of the improvement.

Net debt was reduced by US$185.2 million from 30 June 2005 to US$2,023.1 million
primarily as a result of asset sales. Key financial coverage ratios continued to
improve with net debt/EBITDA at 1.4 times (first half 2005: 1.9 times) and
gearing improved to 45.3% from 51.5% at 31 December 2004.

CAPITAL EXPENDITURE
-------------------

Capital expenditure on property, plant and equipment for the half-year was
US$413.8 million, US$31.5 million higher than the prior corresponding period.
This reflected additional pallet purchases to support CHEP's growth and the
higher unit cost of wooden pallets as lumber costs rose in North America.

Capital expenditure in CHEP was US$287.3 million, an increase of US$31.6 million
compared with the prior corresponding period. CHEP America's capital expenditure
increased US$31.4 million to US$159.1 million. CHEP Europe's capital expenditure
for the six months was US$92.6 million (first half 2005: US$92.6 million) and
reflected the benefits of continued improvement in asset control. CHEP Rest of
World held its capital expenditure flat at US$35.6 million (first half 2005:
US$35.4 million) as sales continued to grow strongly.

Capital expenditure in Recall for the half-year was US$15.4 million, a decrease
of US$4.6 million compared with the prior corresponding period.

Capital expenditure within the discontinued operations increased to US$110.8
million from US$106.5 million to support the ongoing growth and market positions
of these businesses.

TAXATION
--------

Brambles' tax rate on continuing operations increased to 35.8% of profit before
tax and special items, reflecting the geographic mix of earnings and the rising
proportion of profits from Europe and the USA.

                                    Page 11

Brambles 

DIVIDEND
--------

The Board has declared an interim dividend of 11.5 Australian cents per share,
fully franked, for shareholders in Brambles Industries Limited and an interim
dividend of 4.887 pence per share for Brambles Industries plc. The dividend will
be paid on 13 April 2006 to those shareholders registered on 17 March 2006. For
Brambles Industries Limited shareholders it is expected that the final dividend
in respect of the 2006 financial year will also be fully franked.

ON-MARKET SHARE BUY BACK
------------------------

Brambles also announced on 29 November 2005 that it intended to conduct
on-market buy-backs or purchases of ordinary shares in Brambles Industries
Limited and/or Brambles Industries plc. Following this release of the results
for the half-year ended 31 December 2005, Brambles is now able to commence
on-market purchases. Unless otherwise announced to the market, any such
purchases will be of ordinary shares in Brambles Industries plc. They will be
made in accordance with the 29 November 2005 announcement entitled 'Announcement
of On-market Share Buy-backs and Purchases'.

OUTLOOK
-------

CHEP Americas is expected to show continued strong growth for the full year.
Sales growth and ongoing operational improvements are underpinning this
performance.

In CHEP Europe, the focus on operational efficiencies, improved customer service
and sales growth are expected to contribute to ongoing profit growth.

CHEP Rest of World is trading well and is expected to continue to do so.

In Recall, the focus is on growth and on the delivery of operating efficiencies.
After a weaker first half, an improved performance is expected in the six months
to June 2006. A number of initiatives have been introduced to deliver improved
returns over the next two years. The business provides an attractive long-term
opportunity with an above average growth and profitability profile.

Trading within the businesses to be divested is good. Cleanaway's performance
continues to be markedly better while Brambles Industrial Services is performing
well. The divestment programme is proceeding to plan and, subject to shareholder
approval, unification of the DLC should be completed by the end of November 2006.

Overall, the outlook for Brambles is positive. We expect good progress in profit
and solid cash generation in the second half.

                                    Page 12
Brambles 

DIRECTORS' REPORT
-----------------

Brambles Industries Limited (BIL) and Brambles Industries plc (BIP) were united
under a dual-listed companies structure (DLC) on 7 August 2001. This Directors'
Report has been prepared as a joint report of both companies, which are
collectively referred to as Brambles.

Names of Directors
------------------

The names of the Directors of Brambles in office during the half-year and up to
the date of this report are as follows:

D R Argus, AO (Non-executive Chairman)
R D Brown (Non-executive Director)
M D I Burrows (Non-executive Joint Deputy Chairman)
H-O Henkel (Non-executive Director)
M F Ihlein (Chief Financial Officer)
S P Johns (Non-executive Director)
G J Kraehe, AO (Non-executive Director) (appointed 12 December 2005)
Sir David Lees (Non-executive Joint Deputy Chairman)
C L Mayhew (Non-executive Director) (appointed 23 August 2005)
J Nasser, AO (Non-executive Director)
D J Turner (Chief Executive Officer)
F A McDonald (Non-executive Director) (retired 11 November 2005)

Review of operations
--------------------

A review of the operations of Brambles for the half-year ended 31 December 2005
and the results of those operations are covered in the Operational Review on pages 5 to 12.

Auditors' independence declaration
----------------------------------

The auditors' independence declaration, as required under section 307C of the
Australian Corporations Act 2001, is set out on page 66 and forms part of this
report.

This report is made in accordance with a resolution of the Directors.





D J Turner
Chief Executive Officer





D R Argus, AO
Chairman

Sydney
23 February 2006


                                    Page 13







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