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Brambles Industries (BI.)

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Thursday 23 February, 2006

Brambles Industries

Interim Results - Part 3 of 4

Brambles Industries PLC
22 February 2006


Brambles 

Consolidated income statement
for the half-year ended 31 December 2005

                                     First half                     First half                  Full year
                                       2006                           2005                          2005
                            Before                Result     Before             Result    Before              Result
                           special   Special    for the     special   Special  for the    special  Special    for the
                            items1    items1     period     items 1   items 1   period    items 1  items 1       year
                                     US$ million                    US$ million                   US$ million        
                        ---------------------------------------------------------------------------------------------
Continuing operations
Sales revenue              1,707.6        -     1,707.6     1,601.1        -    1,601.1   3,274.8       -    3,274.8
Other income                  60.0        -        60.0        60.0        -       60.0     121.8       -      121.8
Operating expenses        (1,427.0)   (22.7)   (1,449.7)   (1,377.5)    (0.4)  (1,377.9) (2,799.5)    6.2   (2,793.3)
Share of results of joint
ventures and associates        1.7        -         1.7         1.4        -        1.4       2.7       -         2.7
                              ---------------------------    ---------------------------     ------------------------
Operating profit             342.3    (22.7)      319.6       285.0     (0.4)     284.6     599.8     6.2      606.0
                            ---------------------------      ---------------------------    ------------------------

Finance revenue                4.0        -         4.0         3.0        -        3.0       7.2       -        7.2
Finance costs                 (65.7)      -       (65.7)      (72.4)       -      (72.4)   (137.3)      -     (137.3)
                              --------------------------     ---------------------------   ---------------------------
Net finance costs            (61.7)       -       (61.7)      (69.4)       -      (69.4)   (130.1)      -     (130.1)
                             ---------------------------      ---------------------------  ------------------------
Profit before tax            280.6    (22.7)      257.9       215.6     (0.4)     215.2     469.7     6.2      475.9

Tax                         (100.5)     0.4      (100.1)      (74.2)     0.1      (74.1)   (160.4)   (2.4)    (162.8)
                            ----------------------------      ---------------------------  --------------------------
Profit from
continuing operations        180.1    (22.3)      157.8       141.4     (0.3)      141.1    309.3     3.8      313.1

Profit from discontinued
operations                    85.8      8.3        94.1        64.9     (9.5)       55.4    145.2    (9.5)     135.7

                              -------------------------       ----------------    ---------------------------------
Profit for the period        265.9    (14.0)      251.9       206.3     (9.8)      196.5    454.5    (5.7)     448.8
                             ---------------------------      ---------------------------   ------------------------

Profit attributable to:
Minority interest             0.4         -         0.4         0.4        -         0.4      1.8       -        1.8
Members of the
parent entities             265.5     (14.0)      251.5       205.9     (9.8)      196.1    452.7    (5.7)     447.0
                            ---------------------------       ---------------------------   -------------------------


Earnings per share (cents)
Total
- basic                     15.7                   14.8        12.2               11.6       26.8              26.4
- diluted                   15.5                   14.7        12.2               11.6       26.5              26.2
Continuing operations
- basic                     10.6                    9.3         8.4                8.3       18.3              18.5
- diluted                   10.5                    9.2         8.3                8.3       18.1              18.4
                           ----------------------------        ------------------------      -----------------------

The above consolidated income statement should be read in conjunction with the accompanying notes.

1  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 to the relevant business segment. Refer to notes
   5 and 6.


                                    Page 14

Brambles 

Consolidated balance sheet as at 31 December 2005

                                          December  December      June
                                              2005      2004      2005
                                              US$m      US$m      US$m
                                            --------------------------
ASSETS 
Current assets
Cash and cash equivalents                   133.0      64.8     188.1
Trade and other receivables                 650.5   1,111.4   1,098.0
Inventories                                  30.8      66.7      66.0
Derivative financial instruments              8.9         -         -
Other assets                                 42.1     105.5      66.8
                                            -------------------------
                                            865.3   1,348.4   1,418.9
Assets classified as held for sale        2,007.8      10.0       9.3
                                          ---------------------------
Total current assets                      2,873.1   1,358.4   1,428.2
                                          ---------------------------

Non-current assets
Trade and other receivables                  5.9      16.1      29.9
Equity-accounted  investments               17.7     133.7     126.6
Property, plant and equipment            2,821.8   4,144.5   3,934.2
Goodwill                                   559.9     991.0     938.5
Other intangible assets                    154.3     147.0     127.4
Deferred tax assets                         48.0     168.2     151.5
Other assets                                 6.4      36.8      21.2
                                         ---------------------------
Total non-current assets                 3,614.0   5,637.3   5,329.3
                                         ---------------------------
Total assets                             6,487.1   6,995.7   6,757.5
                                          ---------------------------

LIABILITIES
Current liabilities
Trade and other payables                    573.3     997.4   1,029.2
Borrowings                                   91.7      73.9      25.9
Derivative financial instruments              3.0         -         -
Tax payable                                  70.8      70.8      94.3
Provisions                                   83.9     161.5     177.7
                                         ----------------------------
                                            822.7   1,303.6   1,327.1
Liabilities directly associated with assets
classified as held for sale                 779.8         -         -
                                          ---------------------------
Total current liabilities                 1,602.5   1,303.6   1,327.1

Non-current liabilities
Borrowings                               2,064.4   2,559.9   2,370.5
Retirement benefit obligations              85.1     187.0     241.5
Provisions                                   9.6     102.8      99.0
Deferred tax liabilities                   282.5     409.6     358.5
Other liabilities                            0.3      13.3       7.2
                                        ----------------------------
Total non-current liabilities            2,441.9   3,272.6   3,076.7
                                        ----------------------------
Total liabilities                        4,044.4   4,576.2   4,403.8
                                        ----------------------------
Net assets                               2,442.7   2,419.5   2,353.7
                                        ----------------------------

EQUITY
Contributed equity                       1,111.9   1,117.8   1,106.5
Reserves                                   387.8     577.1     404.0
Retained profits                           935.1     717.4     835.5
                                        ----------------------------
Parent entities interest                 2,434.8   2,412.3   2,346.0
Minority interest                            7.9       7.2       7.7
                                          --------------------------
Total equity                             2,442.7   2,419.5   2,353.7
                                        ----------------------------

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

                                     Page 15
Brambles

Consolidated statement of recognised income and expense
for the half-year ended 31 December 2005


                                                    First half    First half  Full year
                                                          2006           2005      2005
                                                          US$m           US$m      US$m
                                              -----------------------------------------

Adjustment on initial adoption of IAS 32 / AASB 132 and
IAS 39 / AASB 139:
  Retained profits                                           (2.2)         -         -
  Reserves                                                    2.0          -         -

Actuarial losses on defined benefit plans                   (26.8)         -     (61.6)

Exchange differences on translation of foreign operations:
  Translation of foreign  operations                        (45.5)      222.4     65.2
  Entities disposed taken to profit or loss                   3.1          -         -

Cash flow hedges:
  Gains taken to equity                                       3.5          -         -
  Transferred to profit or loss                              (0.8)         -         -

Income tax:
  Taken directly to or transferred directly from equity       5.5          -      17.5
  Transferred to profit or loss                               0.3          -         -
                                                            --------------------------

Net (loss)/income recognised directly in equity             (60.9)     222.4      21.1

Profit for the period                                       251.9      196.5     448.8
                                                            --------------------------

Total recognised income and expense for the period          191.0     418.9      469.9
                                                            ---------------------------

Attributable to:
Minority interest                                            0.4       0.4         1.8
Members of the parent entities                             190.6     418.5       468.1
                                                           ----------------------------



The above consolidated statement of recognised income and expense should be read in 
conjunction with the accompanying notes.

                                    Page 16

Brambles 

Consolidated cash flow statement 
for the half-year ended 31 December 2005

                                                        First half    First half  Full year
                                                              2006           2005      2005
                                                              US$m           US$m      US$m
                                                      -------------------------------------

Cash flows from operating activities
Receipts from customers                                    3,436.2       3,259.8    6,640.1
Payments to suppliers and employees                      (2,755.6)      (2,559.1)  (5,080.7)
Cash generated from operations                              680.6          700.7    1,559.4
Dividends received from joint ventures and associates         9.4            5.6       13.5
Interest received                                             4.2            3.0        6.3
Interest paid                                               (69.9)         (50.7)    (118.9)
Income taxes paid                                          (114.2)         (84.5)    (169.1)
                                                       -------------------------------------
Net cash inflow from operating activities                   510.1           574.1   1,291.2
                                                            -------------------------------

Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired          (192.8)         (28.2)    (33.6)
Proceeds from disposal of businesses                        344.8            6.5      11.6
Acquisition of investments in joint ventures and associates     -          (16.7)    (16.7)
Disposals of investments in joint ventures and associates       -              -       0.4
Increase in other investments                                (0.1)             -     (11.6)
Disposals of other investments                                2.0            0.5      20.2
Purchases of property, plant and equipment                 (413.8)        (382.3)   (785.6)
Proceeds from sale of property, plant and equipment          62.8           48.0     119.9
Purchases of intangible assets                              (16.3)          (5.9)     (7.8)
Loan outflows with joint ventures and associates             (1.2)          (0.5)     (7.1)
Loan inflows with joint ventures and associates              13.8            2.6       3.0
                                                          ---------------------------------
Net cash used in investing activities                      (200.8)        (376.0)   (707.3)
                                                           --------------------------------

Cash flows from financing activities
Proceeds from borrowings                                  1,681.7        1,438.6    2,507.5
Repayments of borrowings                                 (1,941.3)      (1,524.8)  (2,711.9)
Net proceeds from hedge borrowings                          (5.8)          (2.3)       1.0
Proceeds from issue of ordinary shares                       33.7            2.4       10.9
Dividends paid to Brambles' shareholders                   (142.8)        (124.4)    (256.5)
Dividends paid to minority interests                         (0.2)          (0.3)      (0.7)
                                                          ----------------------------------
Net cash used in financing activities                      (374.7)        (210.8)    (449.7)
                                                         -----------------------------------


Net (decrease)/increase in cash and cash equivalents       (65.4)          (12.7)     134.2
Cash and cash equivalents at beginning of the period       188.1            50.6       50.6
Effect of exchange rate changes                             (7.3)            8.6        3.2
                                                          ---------------------------------
Cash and cash equivalents at end of the period             115.4            46.5      188.0
                                                          ---------------------------------


The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

                                    Page 17


Brambles

Notes to and forming part of the consolidated financial statements 
for the half-year ended 31 December 2005


Note 1. Basis of preparation
----------------------------

These financial statements present the consolidated results of Brambles
Industries Limited  (ABN 22 000 129 868) (BIL) and Brambles Industries plc (registered number 4134697) (BIP).

BIL and BIP, each a Company, are referred to collectively throughout these
financial statements as Brambles.

Key features of the DLC structure
-----------------------------
The dual-listed companies (DLC) structure is essentially a contractual
arrangement between BIL and BIP under which they operate as if they were a single economic enterprise, 
while retaining their separate legal identities, tax residencies and stock exchange listings. 
The arrangement, which was implemented in 2001, did not involve the acquisition of one company by the other 
or any transfer of shares or other assets between BIL and BIP.

As at the date of implementation of the DLC Structure, BIL and BIP shareholders
collectively held 57% and 43% respectively of the economic and voting interests
in Brambles. Additional shares may be issued by either Company independently of
the other so long as all shareholders benefit equally from the issue.

BIL and BIP have identical Boards and unified management, with Brambles' global 
headquarters operating in Sydney, Australia. The Boards have regard to the
interests of all shareholders in Brambles.

BIL remains incorporated and domiciled in Australia with its shares listed on
the Australian Stock Exchange. BIP remains incorporated and domiciled in the UK
with its shares listed on the London Stock Exchange.

Each BIL share and BIP share has equivalent economic and voting interests in
Brambles which is controlled by the Sharing Agreement. Under the Sharing
Agreement, the Equalisation Ratio governs the proportion in which distributions
of income and capital are made to BIL and BIP shareholders (on a per share
basis) and the relative voting rights.

The Equalisation Ratio is presently one to one and all shareholders, as far as
practicable, receive equivalent economic returns by way of dividends.

Dividends are paid by each Company on an equalised per-share basis (having
regard to the Equalisation Ratio). This means that neither BIL nor BIP declare
or pay any dividend unless the other Company is permitted to and does pay a
matching dividend.

If either BIL or BIP is prohibited by law or is otherwise unable to declare or
pay all or any portion of such a matching dividend because of lack of retained
profits, distributable reserves or otherwise, then the Companies enter into such
transactions with each other as the Boards agree to be necessary so as to enable
both Companies to pay equivalent dividends as nearly as practicable at the same
time. Alternatively, the Boards may agree that the Companies pay a reduced
dividend, which each Company is capable of paying without entering into such
transactions, or that neither company pays a dividend for that year.

There have been no such transactions entered into between BIL or BIP either during the half-year 
or up to the date of the Directors' Report.

The shareholders of BIL and BIP effectively vote together as a single
decision-making body on matters affecting them in similar ways, such as the
approval of appointment of Directors. These matters are known as Joint
Electorate Actions. In the case of certain matters in relation to which the two
bodies of shareholders may have divergent interests, the Company wishing to
carry out the relevant action requires the approval of the shareholders in the
other Company (voting separately) as well as the approval of its own
shareholders (voting separately). These matters are known as Class Rights Actions.

                                    Page 18

Brambles
Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies
---------------------------------------

Basis of accounting
-------------------
These financial statements, which have been prepared in accordance with IAS 34 /AASB 134: Interim Financial 
Reporting, are a general purpose financial report.

The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the European Union
and Australian Equivalents to International Financial Reporting Standards
(AIFRS), and in accordance with the requirements of the Corporations Act 2001
and with those parts of the Companies Act 1985 applicable to companies reporting
under IFRS. They comply with applicable accounting standards and other
authoritative pronouncements of the International Accounting Standards Board
(IASB), the Australian Accounting Standards Board (AASB), the International
Financial Reporting Interpretations Committee (IFRIC) and the Urgent Issues
Group (UIG).

Generally AIFRS are identical to IFRS except that in certain instances AIFRS
require additional disclosures to be made or prohibit accounting treatments
permitted by IFRS. Throughout the financial statements reference is made to IFRS
which should be read to include AIFRS. Accounting policies have been selected to
ensure concurrent compliance with both IFRS and AIFRS.

The financial statements are drawn up in accordance with the conventions of
historical cost accounting, except for available-for-sale investments,
derivative financial instruments and financial assets and liabilities at fair
value through profit or loss.

Rounding of amounts
-------------------
As Brambles is a company of a kind referred to in ASIC Class Order 98/0100,
relevant amounts in the financial statements and Directors' Report have been
rounded to the nearest hundred thousand US dollars or, in certain cases, to the
nearest thousand US dollars.

References to 2006 and 2005 are to the financial years ended 30 June 2006 and 30 June 2005 respectively.

Statement of compliance
-----------------------
These interim financial statements comply with IFRS. They do not include all of
the notes that would normally be included in an annual financial report. The
interim financial statements should be read in conjunction with the Annual
Review of BIP and Annual Report of BIL for the year ended 30 June 2005.

The figures for the year ended 30 June 2005 included within the interim
financial statements (which do not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985) have been extracted from the
2005 Annual Review, which was filed with the UK Registrar of Companies, adjusted
as necessary to reflect IFRS transition changes as described below. The
auditors' opinion on those accounts was unqualified and did not contain a
statement under Section 237 of the UK Companies Act 1985. The interim financial
statements were approved by the Directors on 23 February 2006. They are
unaudited but have been reviewed by the auditors.

These are the first statements prepared under IFRS and are covered by IFRS 1:
First-time Adoption of IFRS and AASB 1: First-time Adoption of AIFRS. In the
year ended 30 June 2005, the Annual Review of BIP was prepared under UK GAAP and
the Annual Report of BIL under AGAAP. In preparing interim financial statements
under IFRS, management has amended certain accounting and valuation methods that
previously applied under UK GAAP and AGAAP. Descriptions of the changes and
reconciliations of the effect of the transition from UK GAAP and AGAAP on
Brambles' equity, net income and cash flows are provided in Notes 17 and 18
respectively.

Comparatives for the periods ended 31 December 2004 and 30 June 2005 have been restated accordingly.

The policies set out below have been consistently applied to all the years
presented except for those relating to financial instruments. Brambles has used
the exemption available under IFRS 1 and AASB 1 to apply IAS 32 / AASB 132:
Financial Instruments: Disclosure and Presentation and IAS 39 / AASB 139:
Financial Instruments: Recognition and Measurement from 1 July 2005.

                                      Page 19 

Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies - continued
---------------------------------------------------

Basis of consolidation
----------------------

The consolidated financial statements of Brambles include the financial
statements of BIL and BIP and all their subsidiaries. The consolidation process
eliminates all inter-entity accounts and transactions. The financial statements
of overseas subsidiaries have been prepared in accordance with overseas
accounting practices and, for consolidation purposes, have been adjusted to
comply with IFRS. The financial statements of all subsidiaries are prepared for
the same reporting period as BIL and BIP.

On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition. Any
excess of the cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired (i.e.
discount on acquisition) is credited to profit and loss in the period of
acquisition. The interest of minority shareholders is stated at the minority's
proportion of the fair values of the assets and liabilities recognised.

The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate.

Brambles has taken advantage of the exemption permitted by IFRS 1 / AASB 1 and
elected not to apply IFRS 3 / AASB 3: Business Combinations retrospectively to
business combinations, including the creation of the DLC structure itself, entered into 
prior to the transition to IFRS.

Fair values at the time of executing the DLC Structure Sharing Agreement between
BIL and BIP were not applied in the preparation of the combined financial
statements under UK GAAP and AGAAP. Previously, the combined financial
statements were prepared by applying accounting principles similar to those
adopted under UIG Abstract 13: The Presentation of the Financial Report of
Entities whose Securities are 'Stapled'. The continuation of this consolidation
basis under IFRS is in accordance with UIG Interpretation 1001: Consolidated
Financial Reports in relation to Pre-Date-of-Transition Dual Listed Company
Arrangements.

Investment in joint ventures and associates
-------------------------------------------
Investments in associates, where Brambles exercises significant influence, and
other joint venture entities are accounted for using the equity method in the
consolidated financial statements, and include any goodwill arising on
acquisition. Under this method, Brambles' share of the profits or losses of
associates and joint ventures is recognised in the consolidated statement of
financial performance and its share of movements in reserves is recognised in
consolidated reserves. Cumulative movements are adjusted against the cost of the
investment.

If Brambles' share of losses in an associate or joint venture exceeds its
interest in the associate or joint venture, Brambles does not recognise further
losses unless it has incurred obligations or made payments on behalf of its
associate or joint venture.

Loans to equity accounted associates and joint ventures under formal loan
agreements are long term in nature and are included as investments.
Where there has been a change recognised directly in the associate's or joint
venture's equity, Brambles recognises its share of any changes as a change in
equity, as disclosed in Note 12.

Non-current assets held for sale
--------------------------------
Non-current assets and disposal groups classified as held for sale are measured
at the lower of carrying amount and fair value less costs to sell.

Non-current assets and disposal groups are classified as held for sale if their
carrying amount will be recovered through a sale transaction rather than through
continuing use. This condition is regarded as met only when the sale is highly
probable and the asset (or disposal group) is available for immediate sale in
its present condition. Management must be committed to the sale which should be
expected to qualify for recognition as a completed sale within one year from the
date of classification.
                                      Page 20
Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies - continued
---------------------------------------------------

Discontinued operations
-----------------------
The trading results for business operations disposed during the period or
classified as held for sale are disclosed separately as discontinued operations
in the income statement. The amount disclosed includes any related impairment
losses recognised and any gains or losses arising on disposal.

Comparative amounts for the prior period are restated in the income statement to
include current period discontinued operations.

Presentation currency
---------------------
The financial statements are prepared in US dollars.

Brambles has selected the US dollar as its presentation currency for the following reasons:

-  a significant portion of Brambles' activity is denominated in US dollars; and
-  it is widely understood by Australian, UK and international investors and analysts.

The parent entity financial statements of BIL and BIP continue to be prepared in
Australian dollars and sterling respectively, being their respective functional
currencies.

There is no change to the currency in which dividends are declared and paid.

Foreign currency
----------------
Items included in the financial statements of each of Brambles' entities are
measured using the functional currency of each entity. The consolidated
financial statements are presented in US dollars, which is Brambles' presentation currency.

Foreign currency transactions are translated into the functional currency of
each entity using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions, and from the translation at year-end rates of monetary assets
and liabilities denominated in foreign currencies, are recognised in the income
statement, except where deferred in equity as qualifying cash flow hedges or
qualifying net investment hedges.

Non-monetary assets and liabilities carried at fair value that are denominated
in foreign currencies are translated at the rates prevailing at the date when
the fair value was determined. Gains and losses arising on retranslation are
recognised directly in equity.

The results and cash flows of subsidiaries, joint ventures and associates are
translated into US dollars using the average exchange rates for the period.
Where this average is not a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, the exchange rate on the
transaction date is used. Assets and liabilities of subsidiaries, joint ventures
and associates are translated into US dollars at the exchange rate ruling at the
balance sheet date. All resulting exchange differences arising on the
translation of Brambles' overseas entities are recognised as a separate
component of equity.

The financial statements of foreign subsidiaries, joint ventures and associates
that report in the currency of a hyperinflationary economy are restated in terms
of the measuring unit current at the balance sheet date before they are
translated into US dollars.

Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

In its transition to IFRS, Brambles has chosen not to make use of the exemption
set out in IFRS 1 / AASB 1 that permits cumulative translation differences that
existed at the date of transition to IFRS to be transferred to retained earnings
and the foreign currency translation reserve at 1 July 2004 deemed to be zero.
Instead, the foreign currency translation reserve has been recalculated in US
dollars from the date of establishment of the DLC. Any gain or loss on the
subsequent disposal of a foreign operation will include the deferred cumulative
exchange differences recognised in equity in respect of that entity from the
date of establishment of the DLC.

                                    Page 21

Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005


Note 2. Significant accounting policies - continued
---------------------------------------------------

The principal exchange rates affecting Brambles were:

                                     US$:A$    US$:euro     US$:£ 
---------------------------------------------------------------------
Average     First half 2006          0.7500     1.2043     1.7680     
            Full year  2005          0.7532     1.2686     1.8557     
            First half 2005          0.7374     1.2664     1.8435     
----------------------------------------------------------------------
Period end 31 December 2005          0.7316     1.1846     1.7263     
           30 June 2005              0.7615     1.2116     1.7960       
           31 December 2004          0.7766     1.3485     1.9100     
----------------------------------------------------------------------


Revenue
-------

Revenue is recognised to the extent that it is probable that the economic
benefits will flow to Brambles and the revenue can be reliably measured. Revenue
is measured at the fair value of the consideration received or receivable.
Amounts disclosed as revenue are net of duties and taxes paid (Value Added Tax,
Goods and Services Tax and local equivalents), except for UK landfill tax.

Revenue is recognised as follows:

-   For services, when invoicing the customer following the provision of
    the service and/or under the terms of agreed contracts in accordance with agreed
    contractual terms in the period in which the service is provided;

-   Where services are provided under long term contracts, the
    percentage of completion method is used to determine applicable revenue. Where
    the outcome of a contract cannot be reliably estimated but the applicable costs
    are expected to be recovered, revenue is recognised only to the extent of costs
    incurred; and

-   On disposal of property, plant and equipment in the ordinary course
    of business, when control of the property has passed to the buyer.

Amounts arising from compensation for irrecoverable pooling equipment are
recognised only when it is probable that they will be received.

Interest
Interest revenue is recognised as the interest accrues (using the effective interest
method, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial instrument) to the net carrying
amount of the financial asset.

Dividends
Dividend revenue is recognised when the shareholders' right to receive the payment is
established.

Borrowing costs
---------------

Borrowing costs are recognised as expenses in the year in which they are
incurred, except where they are included in the cost of qualifying assets.
The capitalisation rate used to determine the amount of borrowing costs to be
capitalised is the weighted average interest rate applicable to the entity's
outstanding borrowings during the year. No borrowing costs were capitalised in
first half 2006 or full year 2005.

Pensions and other post-employment benefits
-------------------------------------------
Payments to defined contribution pension schemes are charged as an expense as
they fall due. Payments made to state-managed retirement benefit schemes are
dealt with as payments to defined contribution schemes where Brambles'
obligations under the schemes are equivalent to those arising in a defined
contribution pension scheme.

Brambles has elected to early adopt the amendment to IAS 19 / AASB 119: Employee
Benefits in order to recognise actuarial gains and losses in the statement of
recognised income and expense.

                                    Page 22


Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies - continued
--------------------------------------------------

A liability in respect of defined benefit pension schemes is recognised in the
balance sheet, measured as the present value of the defined benefit obligation
at the reporting date less the fair value of the pension scheme's assets at that
date. Pension obligations are measured as the present value of estimated future
cash flows discounted at rates reflecting the yields of high quality corporate
bonds.

The costs of providing pensions under defined benefit schemes are calculated
using the projected unit credit method, with actuarial valuations being carried
out at each balance sheet date. Past service cost is recognised immediately to
the extent that the benefits are already vested, and otherwise is amortised on a
straight-line basis over the average period until the benefits become vested.

Actuarial gains and losses arising from differences between expected and actual
returns, and the effect of changes in actuarial assumptions are recognised in
full immediately through the statement of recognised income and expense in the
period in which they arise.

The costs of other post-employment liabilities are calculated in a similar way
to defined benefit pension schemes and spread over the period during which
benefit is expected to be derived from the employees' services, in accordance
with the advice of qualified actuaries.

Executive and employee option plans
-----------------------------------
Incentives in the form of share-based compensation benefits are provided to
executives and employees under share option and performance share schemes
approved by shareholders.

Options and share awards are fair valued by qualified actuaries at their grant
dates in accordance with the requirements of IFRS 2 / AASB 2: Share-based
Payments, using a binomial model. The cost of equity-settled transactions is
recognised, together with a corresponding increase in equity, on a straight-line
basis over the period in which the performance conditions are fulfilled, ending
on the date on which the relevant employees become fully entitled to the award
(vesting date).

Executives and employees in certain jurisdictions are provided cash incentives
 calculated by reference to the options and awards under the share option schemes (phantom shares). 
These phantom shares are fair valued on initial grant and at each subsequent reporting date. 
The cost of such phantom shares is charged to the income statement over the relevant vesting periods, 
with a corresponding increase in provisions.

The fair value calculation of options granted excludes the impact of any
non-market vesting conditions. Non-market vesting conditions are included in
assumptions about the number of options that are expected to become exercisable.
At each balance sheet date, Brambles revises its estimate of the number of
options that are expected to become exercisable. The employee benefit expense
recognised each period takes into account the most recent estimate.

On its transition to IFRS, Brambles has elected to make use of the exemption set
out in IFRS 1 / AASB 1 in relation to share options granted before 7 November
2002 or which vested before 1 January 2005. No expense is recognised in respect
of these options. Such exempted share options are recognised when the options
are exercised, with the proceeds received being allocated to share capital.

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 to the relevant business
segment. Such items are likely to include, but are not restricted to, gains or
losses on the sale or termination of operations, the cost of significant
reorganisations or restructuring, and impairment charges on tangible or
intangible assets.

Assets
------

Cash and cash equivalents
-------------------------
For purposes of the statement of cash flows, cash includes deposits at call with
financial institutions and other highly liquid investments which are readily
convertible to cash on hand and are subject to an insignificant risk of changes
in value, net of outstanding bank overdrafts. Bank overdrafts are presented
within borrowings in the balance sheet.

                                    Page 23

Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies - continued
---------------------------------------------------

Receivables
-----------
Trade receivables do not carry any interest and are recognised at amounts
receivable less an allowance for any uncollectible amounts. Trade receivables
are recognised when services are provided and settlement is expected within normal credit terms.

Bad debts are written-off when identified. A provision for doubtful receivables is established when there is 
a level of uncertainty as to the full recoverability of the receivable, based on objective evidence.

Inventories
------------
Stock and stores on hand are valued at the lower of cost and net realisable
value and, where appropriate, provision is made for possible obsolescence. Work
in progress, which represents partly-completed work undertaken at pre-arranged
rates but not invoiced at the balance sheet date, is recorded at the lower of
cost or net realisable value.

Cost is determined on a first-in, first-out basis and, where relevant, includes
an appropriate portion of overhead expenditure. Net realisable value is the
estimated selling price in the ordinary course of business, less estimated costs
of completion and costs to make the sale.

Recoverable amount of non-current assets
----------------------------------------
At each reporting date, Brambles assesses whether there is any indication that
an asset, or cash generating unit to which the asset belongs, may be impaired.
Where an indicator of impairment exists, Brambles makes a formal estimate of
recoverable amount. The recoverable amount of an asset is the greater of its
fair value less costs to sell and its value in use.

Where the carrying value of an asset exceeds its recoverable amount, the asset
is considered to be impaired and is written down to its recoverable amount. The
impairment loss is recognised as a special item of expense in the income statement in the
reporting period in which the write-down occurs.

The expected net cash flows included in determining recoverable amounts of
non-current assets are discounted to their present values using a market risk
adjusted discount rate. The discount rates range from 9% to 33% depending
on the nature and location of the assets.

Investments
-----------
Other investments, where Brambles does not exert significant influence, are
initially recognised at cost, being the fair value of the consideration given
plus any acquisition charges associated with the investment. Dividends are brought to account when received.

From 1 July 2005, investments are classified as held for trading or available-for-sale.

After initial recognition, other investments, which are classified as held for
trading or available-for-sale, are measured at fair value. Gains or losses on
investments held for trading are recognised in the income statement. Gains or
losses on available-for-sale investments are recognised as a separate component
of equity until the investment is sold, collected or otherwise disposed of, or
until the investment is determined to be impaired, at which time the cumulative
gain or loss previously reported in equity is included in the income statement.

Property, plant and equipment
-----------------------------
Property, plant and equipment (PPE) is stated at cost, net of depreciation and
any provision for impairment, except land which is shown at cost less
impairment. Cost includes expenditure that is directly attributable to the
acquisition of assets, and, where applicable, an initial estimate of the cost of
dismantling and removing the item and restoring the site on which it is located.

Subsequent expenditure is capitalised only when it is probable that future
economic benefits associated with the expenditure will flow to Brambles. Repairs
and maintenance are expensed in the income statement in the period they are
incurred.

Depreciation is charged in the financial statements so as to write-off the cost
of all PPE, including landfill sites, but excluding other freehold land, to
their residual value on a straight-line or reducing balance basis over their
expected useful lives to Brambles. Residual values and useful lives are
reviewed, and adjusted if appropriate, at each balance sheet date.

                                    Page 24
Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies - continued
---------------------------------------------------

Predominantly, the straight-line basis has been used except for landfill sites
where depreciation is based on the capacity used as a proportion of the total capacity available.

The expected useful lives of PPE are generally:
- Buildings                                        50 years
- Pooling equipment                                5 - 10 years
- Other plant and equipment (owned and leased)     3 - 20 years

The cost of improvements to leasehold properties is amortised over the unexpired
portion of the lease, or the estimated useful life of the improvement to Brambles, whichever is the shorter.

Provision is made for irrecoverable pooling equipment based on experience in
each market. The provision is presented within accumulated depreciation.

The carrying values of PPE are reviewed for impairment when circumstances
indicate their carrying values may not be recoverable. Assets are assessed
within the cash generating unit to which they belong. Any impairment losses are
recognised in the income statement.

The recoverable amount of PPE is the greater of its fair value less costs to
sell and its value in use. Value in use is determined as estimated future cash
flows discounted to their present value using a pre-tax discount rate reflecting
current market assessments of the time value of money and the risk specific to
the asset.

PPE is derecognised upon disposal or when no future economic benefits are
expected to arise from continued use of the asset. Any gain or loss arising on
derecognition of the asset is included in the income statement in the period in
which the asset is derecognised.

Goodwill
--------
Goodwill is carried at cost less accumulated impairment losses. Goodwill is not amortised.

Goodwill represents the excess of the cost of an acquisition over the fair value
of Brambles' share of the net identifiable assets of the acquired subsidiary or
associate at the date of acquisition. Goodwill on acquisitions of subsidiaries
is included in intangible assets. Goodwill on acquisitions of associates is
included in investments in associates.

Upon acquisition, any goodwill arising is allocated to each cash generating unit
expected to benefit from the acquisition. Goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate
that it might be impaired. An impairment loss is recognised when the recoverable
amount of the cash generating unit is less than its carrying amount.

On disposal of an operation, goodwill associated with the disposed operation is
included in the carrying amount of the operation when determining the gain or loss on disposal.

In its transition to IFRS, Brambles has elected to make use of the exemption set
out in IFRS 1 / AASB 1 in relation to business combinations and has not applied
IFRS 3 / AASB 3: Business Combinations to combinations that occurred before 1
July 2004. The carrying amount of goodwill under AGAAP at 1 July 2004 has been
deemed to be the carrying amount of goodwill under IFRS at that date, as further described in Note 17.

Other intangible assets
-----------------
Other intangible assets acquired are capitalised at cost, unless acquired as part of a
business combination in which case they are capitalised at fair value as at the
date of acquisition. Following initial recognition, intangible assets are
carried at cost less provisions for amortisation and impairment.

The costs of acquiring and developing computer software for internal use are
capitalised as intangible non-current assets where it is used to support a
significant business system and the expenditure leads to the creation of a
durable asset.

Useful lives have been established for all non-goodwill intangible assets. Amortisation
charges are expensed in the income statement over those useful lives. Estimated useful lives are reviewed annually.

                                    Page 25

Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies - continued
---------------------------------------------------

The expected useful lives of intangible assets are generally:

-        Customer lists and relationships         3 - 20 years
-        Computer software                        3 - 7  years

There are no non-goodwill intangible assets with indefinite lives.

Intangible assets are tested for impairment where an indicator of impairment
exists, either individually or at the cash generating unit level.

Gains or losses arising from derecognition of an intangible asset are measured
as the difference between the net disposal proceeds and the carrying amount of
the asset and are recognised in the income statement when the asset is derecognised.

Deferred expenditure
--------------------
Expenditure incurred on projects that will give rise to financial benefits in
future years is deferred and amortised over the period in which the benefits are
expected to be obtained. Current amortisation is over three to five years.

Liabilities
-----------

Payables
--------
Trade and other creditors represent liabilities for goods and services provided
to Brambles prior to the end of the financial year which remain unpaid at the
reporting date. The amounts are unsecured and are paid within normal credit terms.

Provisions
----------
Provisions for liabilities are made on the basis that, due to a past event, the
business has a constructive or legal obligation to transfer economic benefits
that are of uncertain timing or amount. Provisions are measured at the present
value of management's best estimate at the balance sheet date of the expenditure
required to settle the obligation. The discount rate used is a pre-tax rate that
reflects current market assessments of the time value of money and the risks appropriate to the liability.

Provisions for environmental and landfill costs include provisions associated
with the closure and post closure costs of landfill sites. Brambles estimates
its total future requirements for closure costs and for post closure monitoring
and maintenance of each site after the anticipated closure.

Full provision for site restoration is made for the net present value (NPV) of
Brambles' minimum unavoidable costs in relation to restoration liabilities at
its landfill sites and this value is capitalised in fixed assets. Brambles
provides for the NPV of restoration costs over the life of its landfill sites,
based upon the amount of airspace consumed.

Provision for aftercare is made for the NPV of post closure costs based on the
amount of airspace consumed in the period. The dates of payment of aftercare
costs are uncertain but are anticipated to be up to 60 years from closing of the
relevant landfill site.

Where discounting is used, the increase in the provision due to the passage of
time is recognised as a finance cost in the income statement.

Interest bearing liabilities
----------------------------
Borrowings are initially recognised at fair value, net of transaction costs
incurred. Borrowings are subsequently measured at amortised cost. Any difference
between the borrowing proceeds (net of transaction costs) and the redemption
amount is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless Brambles has an
unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.


                                    Page 26

Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies - continued
---------------------------------------------------- 

Employee entitlements
---------------------
Employee entitlements are provided by Brambles in accordance with the legal and
social requirements of the country of employment. Principal entitlements are for
annual leave, long service leave and contract entitlements which, when vested,
are classified as current liabilities.

Liabilities for annual leave, as well as those employee entitlements which are
expected to be settled within one year, are measured at the amounts expected to
be paid when they are settled. All other employee entitlement liabilities are
measured at the estimated present value of the future cash outflows to be made
in respect of services provided by employees up to the reporting date.

Dividends
---------
A provision for dividends is only recognised where the dividends have been declared prior to the reporting date.

Leases
------
Leases are classified at their inception as either operating or finance leases
based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases
The minimum lease payments under operating leases, where the lessor effectively
retains substantially all of the risks and benefits of ownership of the leased
item, are recognised as an expense on a straight-line basis over the term of the lease.

Finance leases
Finance leases, which effectively transfer substantially all of the risks and
benefits incidental to ownership of the leased item to Brambles, are capitalised
at the inception of the lease at the fair value of the leased asset or, if
lower, present value of the minimum lease payments, and disclosed as property,
plant and equipment held under lease. A lease liability of equal value is also recognised.

Lease payments are allocated between finance charges and a reduction of the
lease liability so as to achieve a constant period rate of interest on the lease
liability outstanding each period. The finance charge is recognised as a finance cost in the income statement.

Capitalised lease assets are depreciated over the shorter of the estimated
useful life of the assets and the lease term.

Income tax
----------
The income tax expense or benefit for the year is the tax payable or receivable
on the current year's taxable income based on the national income tax rate for
each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements and to unused tax losses.

Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax basis used in
the computation of taxable profit, calculated using tax rates which are enacted
or substantively enacted by the balance sheet date.

Deferred tax assets are recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses. The carrying amount
of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilised.

                                    Page 27
Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies - continued
---------------------------------------------------

Deferred tax assets and liabilities are not recognised:

-   where the deferred tax arises from the initial recognition of an
    asset or liability in a transaction that is not a business combination and, at
    the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

-   in respect of temporary differences associated with investments in subsidiaries, 
    joint ventures and associates where the timing of the reversal of the temporary differences can be
    controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Current and deferred tax attributable to amounts recognised directly in equity are also recognised 
directly in equity.


Financial instruments
---------------------
Financial assets and financial liabilities are recognised on Brambles' balance
sheet when Brambles becomes a party to the contractual provisions of the
instrument. Derecognition takes place when Brambles no longer controls the
contractual rights that comprise the financial instrument, which is normally the case
when the instrument is sold, or all the cash flows attributable to the
instrument are passed through to an independent third party.

Derivative instruments used by Brambles, which are used solely for hedging
purposes (ie to offset foreign exchange and interest rate risks), comprise
interest rate swaps, caps, collars, forward rate agreements and forward foreign
exchange contracts. Such derivative instruments are used to alter the risk
profile of Brambles' existing underlying exposure in line with Brambles' risk
management policies.

To 30 June 2005
---------------
Since all derivative instruments employed by Brambles are used solely for
hedging purposes, they are all designated as hedging instruments. Brambles
defers the impact of the derivative instruments on profit until it recognises
the underlying hedged item in the income statement.

Interest differentials under interest rate swaps, caps and collars are
recognised by adjustment of the underlying interest receivable or payable over
the term of the agreement and as such are accrued to profit or loss on a time apportioned basis.

Currency swap agreements and forward foreign exchange contracts are valued at closing exchange rates.

Resulting gains and losses are offset against foreign exchange gains or losses on the related borrowings 
or, where the instrument is used to hedge a committed future transaction, are deferred 
until the transaction occurs and shown within debtors or creditors as appropriate.

From 1 July 2005 (when IAS 32 / AASB 132 and IAS 39 / AASB 139 apply)
-----------------
Derivative financial instruments are stated at fair value. The fair value of
forward exchange contracts is calculated by reference to current forward
exchange rates for contracts with similar maturities at the balance sheet date.
The fair value of interest rate swap contracts is calculated as the present
value of the forward cash flows of the instrument after applying market rates
and standard valuation techniques.

For the purposes of hedge accounting, hedges are classified as either fair value hedges or cash flow hedges.

Fair value hedges
Fair value hedges are derivatives that hedge exposure to changes in the fair
value of a recognised asset or liability, or an unrecognised firm commitment. In
relation to fair value hedges which meet the conditions for hedge accounting,
any gain or loss from remeasuring the hedging instrument at fair value is
recognised immediately in the income statement.

Any gain or loss attributable to the hedged risk on remeasurement of the hedged
item is adjusted against the carrying amount of the hedged item and recognised
in the income statement. Where the adjustment is to the carrying amount of a
hedged interest-bearing financial instrument, the adjustment is amortised to the
income statement such that it is fully amortised by maturity.

                                    Page 28
Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 2. Significant accounting policies - continued
---------------------------------------------------

Hedge accounting is discontinued prospectively if the hedge is terminated or no
longer meets the hedge accounting criteria. In this case, any adjustment to the
carrying amounts of the hedged item for the designated risk for interest-bearing
financial instruments is amortised to the income statement following termination
of the hedge.

Cash flow hedges
Cash flow hedges are derivatives that hedge exposure to variability in cash
flows that is either attributable to a particular risk associated with a
recognised asset or liability, or a highly probable forecast transaction.

In relation to cash flow hedges to hedge forecasted transactions which meet the
conditions for hedge accounting, the portion of the gain or loss on the hedging
instrument that is determined to be an effective hedge is recognised directly in
equity and the ineffective portion is recognised in the income statement.

Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated or exercised, or no longer qualifies for hedge accounting.

At that point in time, any cumulative gain or loss on the hedging instrument
recognised in equity is kept in equity until the forecasted transaction occurs.

If a hedged transaction is no longer expected to occur, the net cumulative gain
or loss recognised in equity is transferred to net profit or loss for the year.

For all other cash flow hedges, the gains or losses that are recognised in
equity are transferred to the income statement in the same year in which the
hedged firm commitment affects the net profit and loss, for example when the
future sale actually occurs.

When the hedged firm commitment results in the recognition of an asset or a
liability, then, at the time the asset or liability is recognised, the
associated gains or losses that had previously been recognised in equity are
included in the initial measurement of the acquisition cost or other carrying
amount of the asset or liability.

Derivatives that do not qualify for hedge accounting
For derivatives that do not qualify for hedge accounting, any gains or losses
arising from changes in fair value are taken directly to net profit or loss for the year.

Earnings per share (EPS)
------------------------
Basic EPS is calculated as net profit attributable to members of the parent
entities, adjusted to exclude costs of servicing equity (other than dividends),
divided by the weighted average number of ordinary shares, adjusted for any
bonus element.

Diluted EPS is calculated as net profit attributable to members of the parent entities, adjusted for:

-   Costs of servicing equity (other than dividends) and preference share dividends;

-   The after-tax effect of dividends and interest associated with dilutive potential ordinary shares 
    that have been recognised as expenses;

-   Other non-discretionary changes in revenues or expenses during the year that would result 
    from the dilution of potential ordinary shares;

and divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, 
adjusted for any bonus element.

                                    Page 29



Brambles 

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 3. Segmental analysis
--------------------------

Brambles' material business segments are CHEP (pallet and container pooling), Recall (information management);
Cleanaway (waste management), Brambles Industrial Services and Regional Businesses.

Brambles has announced its intention to focus on growing the CHEP and Recall
businesses and that it intends to divest all its other businesses. Accordingly,
Cleanaway, Brambles Industrial Services and the Regional Businesses are presented
as discontinued operations. Other discontinued operations comprise Recall's Italian operations, 
which are being marketed for sale.
    
                                         Total revenue                          Sales revenue            
                               ----------------------------------      ----------------------------------
                             First half   First  half    Full year     First half First half  Full year
                                  2006          2005        2005            2006       2005        2005
                                  US$m          US$m        US$m            US$m       US$m        US$m
                              -----------------------------------     ---------------------------------
By business segment
CHEP                          1,504.5        1,410.4     2,874.6         1,445.0    1,351.4     2,762.6
Recall                          263.1          250.7       522.0           262.6      249.7       512.2
                              ----------------------------------       ---------------------------------
Continuing operations         1,767.6        1,661.1     3,396.6         1,707.6    1,601.1     3,274.8
                             ------------------------------------       -------------------------------
Cleanaway                       953.6          943.1     1,912.3           947.3      937.8     1,895.3
Brambles Industrial Services    274.8          273.9       573.8           272.5      269.6       559.2
Regional Businesses              94.5          104.2       217.1            94.0      103.7       216.1
Oher                              9.4            8.9        18.6             9.4        8.8        18.4
                                ---------------------------------        ------------------------------
Discontinued operations       1,332.3        1,330.1     2,721.8         1,323.2    1,319.9     2,689.0
                              -----------------------------------        ------------------------------
Total                         3,099.9        2,991.2     6,118.4         3,030.8    2,921.0     5,963.8

By geographic origin
Europe                        1,571.9        1,570.7     3,180.5         1,559.8    1,558.0     3,153.8
Americas                        932.1          856.5     1,756.8           883.1      810.7     1,662.8
Australia/New Zealand           520.3          497.8     1,036.6           514.5      487.7     1,006.4
Rest of World                    75.6           66.2       144.5            73.4       64.6       140.8
                              -----------------------------------        ------------------------------
Total                         3,099.9        2,991.2     6,118.4         3,030.8    2,921.0     5,963.8
                             ------------------------------------        ------------------------------

                                    Page 30
Brambles 

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 3. Segmental analysis - continued
--------------------------------------

                                 Operating profit 1              Comparable operating profit 2
                           ----------------------------------   ------------------------------
                           First half  First half   Full year  First half  First half Full year
                                 2006        2005       2005         2006        2005      2005
                                 US$m        US$m       US$m         US$m        US$m      US$m
                          ----------------------------------    -------------------------------
By business segment
CHEP                            317.8        252.7      534.3      317.8         252.7     534.3
Recall                           24.8         41.1       90.6       38.1          41.5      84.4
Corporate                       (23.0)        (9.2)     (18.9)     (13.6)         (9.2)    (18.9)
                              ---------------------------------    ------------------------------
Continuing operations           319.6        284.6      606.0      342.3         285.0     599.8
                              ---------------------------------    -----------------------------
Cleanaway                        84.4         62.4      135.2       92.8          62.4     135.2
Brambles Industrial Services     36.9         31.2       68.0       32.0          31.2      68.0
Regional Businesses              52.5          6.1       14.2        3.3           6.1      14.2
Other                           (13.9)        (2.2)      (1.4)       0.1          (2.2)     (1.4)
                                -------------------------------     -----------------------------
Discontinued operations         159.9         97.5      216.0      128.2          97.5     216.0
                                ------------------------------     -----------------------------
Total                           479.5        382.1      822.0      470.5         382.5     815.8
                             ---------------------------------     -----------------------------
                                                                  Special items, before tax    
                                                              ---------------------------------
                                                              First half   First half  Full year
                                                                    2006         2005       2005
                                                                    US$m         US$m       US$m
                                                            ------------------------------------
By business segment
CHEP                                                                  -            -          -
Recall                                                            (13.3)        (0.4)       6.2
Corporate                                                          (9.4)           -          -
                                                                  -----------------------------
Continuing operations                                             (22.7)        (0.4)       6.2
                                                                 ------------------------------
Cleanaway                                                          (8.4)           -          -
Brambles Industrial Services                                        4.9            -          -
Regional Businesses                                                49.2            -          -
Other                                                             (14.0)           -          -
                                                                  -----------------------------
Discontinued operations                                            31.7            -          -
                                                                  -----------------------------
Total                                                               9.0         (0.4)       6.2
                                                                  -----------------------------

1 Operating profit is segment revenue less segment expense. It excludes net finance costs.

2 Comparable operating profit is profit before special items, finance costs and tax
  which the Directors consider to be a useful measure of underlying business
  performance. The difference between comparable operating profit and operating
  profit is due to special items.

                                    Page 31
Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 3. Segmental analysis - continued
--------------------------------------

                                      Capital expenditure
                                    (including acquisitions)            Depreciation and amortisation
                                --------------------------------- -------------------------------------
                               First half  First half  Full year   First half  First half  Full year
                                     2006        2005       2005         2006        2005       2005
                                     US$m        US$m       US$m         US$m        US$m       US$m
                                 --------------------------------   --------------------------------
By business segment
CHEP                                291.9       251.0      484.1        177.4       179.1      361.3
Recall                              131.4        27.9       50.6         27.6        15.3       30.4
Corporate                             0.3        (0.1)       0.2          0.5         0.6        1.3
                                    -----------------------------       ----------------------------
Continuing operations               423.6       278.8      534.9        205.5       195.0      393.0
                                    -----------------------------       ----------------------------
Cleanaway                            54.2        66.4      165.6         54.9        71.6      145.6
Brambles Industrial Services         39.7        31.2       86.7         20.9        23.9       48.5
Regional Businesses                   7.1         6.8       14.7          4.4         7.9       16.0
Other                                 0.3         0.8        1.6          0.4         1.1        2.3
                                    ----------------------------        -----------------------------
Discontinued operations             101.3       105.2      268.6         80.6       104.5      212.4
                                    ----------------------------        ----------------------------
Total                               524.9       384.0      803.5        286.1       299.5      605.4
                                    ----------------------------        ----------------------------

By geographic origin
Europe                              153.9      163.4      311.1
Americas                            187.3      132.8      280.2
Australia/New Zealand               171.1       76.9      181.2
Rest of World                        12.6       10.9       31.0
                                    ----------------------------
Total                               524.9      384.0      803.5
                                    ---------------------------

                                   Segment assets                 Segment liabilities         
                                -----------------------------   ------------------------------
                                 December  December     June     December   December      June
                                     2005      2004     2005         2005       2004      2005
                                    US$m       US$m     US$m         US$m       US$m      US$m
                                 ---------------------------      ----------------------------
By business segment
CHEP                             3,370.8    3,554.1   3,364.9       585.0      578.6    607.0
Recall                             918.1      745.6     722.2       103.8       90.8    110.4
Corporate                           28.0       28.8      24.5        66.4       91.6     94.6
                                 ----------------------------       --------------------------
Continuing operations            4,316.9    4,328.5   4,111.6       755.2      761.0    812.0
                                 ----------------------------       -------------------------
Cleanaway                        1,508.1    1,658.3   1,564.4       552.5      545.4    571.1
Brambles Industrial Services       278.4      534.5     527.3        74.5      100.1    108.3
Regional Businesses                100.6      170.7     166.0        37.6       36.1     45.2
Other                               16.8       36.1      31.9        15.6       19.4     18.0
                                -----------------------------       -------------------------
Discontinued operations          1,903.9    2,399.6   2,289.6       680.2      701.0    742.6
                                -----------------------------       -------------------------
Segment assets and liabilities   6,220.8    6,728.1   6,401.2     1,435.4    1,462.0  1,554.6
                                 -----------------------------    ---------------------------
Cash and borrowings                133.0       64.8     188.1     2,156.1    2,633.8  2,396.4
Current tax balances                 6.0       34.6      16.7       116.0       70.8     94.3
Deferred tax balances              127.3      168.2     151.5       336.9      409.6    358.5
                                  ---------------------------      --------------------------
Total assets and liabilities     6,487.1    6,995.7   6,757.5     4,044.4    4,576.2  4,403.8
                                 ----------------------------     ---------------------------

By geographic origin
Europe                           2,977.9    3,745.3    3,382.8
Americas                         2,026.7    1,948.3    1,977.0
Australia/New Zealand            1,042.6      873.3      881.2
Rest of World                      173.6      161.2      160.2
                                 -----------------------------
Total                            6,220.8    6,728.1    6,401.2
                                 ------------------------------

                                     Page 32
Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 4. Profit from ordinary activities - continuing operations
---------------------------------------------------------------

                                                                     First half    First half    Full year
                                                                           2006          2005         2005
                                                                           US$m          US$m         US$m
                                                                  ----------------------------------------
The following items have been recognised in the consolidated
income statement:

Revenue
Sales revenue                                                            1,707.6       1,601.1      3,274.8
Other income                                                                60.0          60.0        121.8
                                                                         ----------------------------------
Total revenue from continuing operations                                 1,767.6       1,661.1      3,396.6
                                                                         -----------------------------------
Operating expenses
Employment costs                                                           345.5         322.1        663.2
Service suppliers:
- Transport                                                                308.7         276.2        560.1
- Repairs and maintenance                                                  114.7         111.6        227.0
- Subcontractors and other service suppliers                               201.9         205.4        428.8
Raw materials and consumables                                              85.8          83.6        184.1
Occupancy                                                                   69.0          65.7        136.3
Depreciation of property, plant and equipment                              177.4         177.9        358.5
Irrecoverable pooling equipment provision expense                           53.1          54.0        114.7
Amortisation of software                                                    15.2          15.5         31.5
Amortisation of acquired non-goodwill intangible assets
(other than software)                                                       12.3           0.4          1.3

Amortisation of deferred expenditure                                         0.6           1.2          1.7
Other                                                                       65.5          64.3         86.1
                                                                        ------------------------------------
Operating expenses from continuing operations                            1,449.7       1,377.9      2,793.3
                                                                         ----------------------------------

                                    Page 33
Brambles

Notes to and forming part of the consolidated financial statements - continued
for the half-year ended 31 December 2005

Note 5. Special items - continuing operations
---------------------------------------------
                                                                      First half    First half    Full year
                                                                           2006          2005          2005
                                                                           US$m          US$m          US$m
                                                                    --------------------------------------
Amortisation of acquired non-goodwill intangible assets
(other than software)                                                      (1.1)         (0.4)        (1.3)

Exceptional items:
  Restructuring and unification costs 1                                  (9.4)            -             -
  AUSDOC integration costs 2                                              (12.2)            -             -
  Gain on disposal of investment 3                                            -             -           7.5
                                                                        -----------------------------------
Special items from continuing operations                                  (22.7)         (0.4)          6.2

Tax on special items:
  On amortisation of acquired non-goodwill intangible assets
  (other than software)                                                      0.3          0.1            0.4
  On exceptional items                                                       0.1            -           (2.8)
                                                                            ---------------------------------
Tax on special items from continuing operations                              0.4          0.1           (2.4)
                                                                            ---------------------------------
Special items from continuing operations after tax                        (22.3)        (0.3)           3.8
                                                                           ----------------------------------

1 During first half 2006, Brambles incurred advisers fees and related expenses of US$9.4 million (US$9.3 million
  after tax) in connection with the restructuring; future direction for the restructed group; and the DLC
  unification that was announced on 29 November 2005.

2 The majority of the brands and software acquired as part of the AUSDOC acquisition during first half 2006 will
  not be required under Recall ownership, as the AUSDOC operation is being immediately integrated with Recall's
  existing operations. In accordance with the requirements of IFRS 3 / AASB 3: Business Combinations, 
  the brands and software acquired were fair valued at acquisition date without regard to 
  the acquirer's intentions for those assets. The intangible assets are being amortised
  over their effective life to Recall, which varies between one month and seven months. The accelerated
  amortisation expense in first half 2006 amounts to US$11.5 million, of which US$0.3 million relates to
  software. Other restructuring and integration costs of  US$0.7 million were also incurred.

3 In March 2005, Recall sold its investment in Hyland Software for net proceeds of US$19.6 million, resulting
  in a profit on sale of US$7.5 million (US$4.7 million after tax).

                                     Page 34




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