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Brambles Industries (BI.)

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Tuesday 29 November, 2005

Brambles Industries

Restructure Proposals

Brambles Industries PLC
29 November 2005

29 November 2005


Brambles announced today that it will be taking steps to streamline the Brambles
Group and unify its dual-listed companies ('DLC') structure by the creation of a
new single holding company focused on its premium growth businesses, CHEP and

The key elements of today's announcement are:

   • a focus on growing CHEP and Recall;

   • the divestment of Brambles' other businesses - Cleanaway, Brambles
    Industrial Services ('BIS') and the Regional Businesses;

   • the simplification of Brambles' corporate structure by unifying the DLC
    under a single Australian holding company with a primary listing on the
    Australian Stock Exchange ('ASX') and a secondary listing on the London
    Stock Exchange ('LSE');

   • a review of Brambles' corporate structure in expectation of achieving
    significant annual cost savings; and

   • the release of at least £1.2 billion (A$2.8 billion) of surplus capital
    which will be used to acquire shares via on-market share buy-backs or
    purchases or via a cash alternative on unification of the DLC.

The proposed divestments and unification of the DLC are expected to be completed
within 12 months.

The Chairman of Brambles, Don Argus, said: 'The Board believes that focusing the
Brambles Group on its key businesses with premium growth potential under a
simplified corporate structure will provide a solid platform for building long
term shareholder value.

'The formation of the DLC in 2001 was essential to the integration of all the
Brambles businesses under common ownership and control. This has facilitated the
strong turnaround in Brambles over the past two years, enabling us to reposition
Brambles with a focus on CHEP and Recall.

'Following the proposed divestments, the Board has decided that it will be
appropriate to unify the DLC in a way that will leave shareholders with the same
economic interest as they now hold.

'The proposed unification will reduce complexity and costs, provide greater
strategic flexibility, enhance Brambles' position as a leading company on the
ASX and eliminate the differential between the share prices of Brambles
Industries Limited on the ASX and Brambles Industries plc on the LSE.'

The Chief Executive Officer of Brambles, David Turner, said: 'The decision to
focus on CHEP and Recall through the divestment of Cleanaway, Brambles
Industrial Services and the Regional Businesses is a significant event in the
development of Brambles which will allow us to further optimise capital
allocation and maximise value for Brambles' shareholders.

'This opportunity has been created by the strong performance of CHEP, the
improving performance of the other businesses and attractive market conditions.

'Both CHEP and Recall continue to have significant growth opportunities in their
respective markets.

'Today's announcement underpins our commitment to grow our businesses while
improving returns.'

Strategic rationale

Following a strategic review, the Board has decided that Brambles should focus
on CHEP and Recall and divest its other businesses - Cleanaway, Brambles
Industrial Services and the Regional Businesses.

Brambles will be more streamlined following the completion of the divestments
and is also expected to have substantial surplus capital. The Board has
concluded that, as a result, the DLC structure will no longer be appropriate and
it intends to unify the DLC under a new single holding company.

This will result in significant benefits for shareholders. In particular, it

   •focus Brambles' resources on its premium growth assets, with the
    objective of achieving higher returns on capital invested;

   •provide an opportunity, in strong market conditions, to realise
    attractive prices for strategically well-positioned assets;

   •enable the release of surplus capital which will be used to acquire
    shares via on-market share buy-backs or purchases or via a cash alternative
    on unification of the DLC;

   •further streamline Brambles, achieving significant annual cost savings;

   •concentrate Brambles' capital in a single market, the ASX, which should
    result in an increase in index weighting.

It will also eliminate the differential in share prices between Brambles
Industries Limited ('BIL') and Brambles Industries plc ('BIP'). At the close of
business on 25 November, the price of BIP shares was 8.9%(1) lower than the
price of BIL shares. Over the past 12 months, the differential has ranged from
6.4% to 13.0%.

Due to the cost savings resulting from unification and the proposed on-market
share buy-backs and purchases, the net impact of the divestments on earnings per
share in the year following unification of the DLC is expected to be broadly
neutral. Overall, the restructuring is expected to enhance returns on capital

CHEP and Recall

CHEP and Recall together contributed 54% of Brambles' sales and 72% of Brambles'
comparable operating profit in the 2005 financial year.

Over the three years to 30 June 2005, CHEP and Recall combined have:

   • grown sales from £1.4 billion (A$4.0 billion) to £1.8 billion (A$4.4
    billion) - compound annual growth 10%, with CHEP at 10% and Recall at 11%;
   • increased comparable operating profit from £247 million (A$678 million)
    to £337 million (A$831 million) - compound annual growth 12%, with CHEP at
    13% and Recall at 9%; and
   • improved cash flow from operations from £61 million (A$103 million) to
    £388 million (A$946 million).

CHEP is the largest business within Brambles and is positioned for further
growth and continuing operational improvements.

CHEP increased its comparable operating profit by 31% in the 2005 financial year
and was the major contributor to Brambles' 20% increase in comparable operating
profit in that year.

Every CHEP region improved profitability and cash flow during 2005, with CHEP
Americas delivering a particularly strong result. CHEP has continued to perform
strongly in the first four months of the 2006 financial year.

Recall improved sales in all regions in the 2005 financial year and delivered a
solid 14% improvement in comparable operating profit. Notwithstanding a slow
start, Recall is expected to grow sales and profits for the full 2006 financial

Recall is well positioned to capitalise on growth opportunities and industry
consolidation, as highlighted by the announcement in October 2005 of the
acquisition of AUSDOC, the Melbourne-based information management business.

Businesses to be divested

In October, Brambles announced the sale of Cleanaway Germany to SULO, the
Germany-based waste management group, for £387 million (A$893 million) in cash.

Further businesses to be divested are: Cleanaway (UK, Australia, New Zealand and
Asia); Brambles Industrial Services (Northern Hemisphere and Australia); and the
Regional Businesses (Interlake, Eurotainer and TCR).

For the year ended 30 June 2005, these further businesses generated sales of
£1,168 million (A$2,881 million) and comparable operating profit of £93 million
(A$230 million). These businesses had net assets of £618 million (A$1,458
million) as at 30 June 2005.

In the four months to 31 October 2005, these businesses have shown a marked
improvement in profitability, as is shown in the following table:

------------- ---------- ----------     ----------             ----------
              FY05       FY05           Change in Comparable   Net operating
              Sales      Comparable     operating profit year  assets as at 30
                         operating      to date (1)            June 2005 (2)
              £million   £million                              £million
------------- ---------- ----------     ----------             ----------

Australia, NZ
and Asia)          734             46          +27%                   310
------------- ----------     ----------  ----------            ----------
and                301             38          +12%                   230
------------- ----------     ----------  ----------             ----------
Businesses         133              9            +7%                    78
------------- ----------     ----------  ----------             ----------
      TOTAL      1,168             93                                  618
------------- ----------     ----------  ----------             ----------
(1) Change in comparable operating profit (defined as profit before interest, 
tax, goodwill amortisation and exceptional items) for 1 July 2005 to 
31 October 2005 compared with 1 July 2004 to 31 October 2004 based on unaudited 
management accounts
(2) Segmented net operating assets before financing and tax as shown in Note 3 
to the Combined financial information of BIP for the year ended 30 June 2005

Unification of the DLC

It is envisaged that a newly formed Australian company ('New Brambles') will
acquire all the outstanding shares in BIL and BIP on a one-for-one basis under
separate schemes of arrangement ('Schemes'). BIL and BIP shareholders will
therefore have the same economic interest in New Brambles as they currently have
under the DLC structure. The Schemes will require separate approval by BIL and
BIP shareholders, relevant regulatory authorities and courts in Australia and
the United Kingdom.

In addition, through the Schemes, shareholders in BIL and BIP will be offered a
cash alternative for part or all of their shareholdings ('Cash Alternative').
The total amount of cash available under the Cash Alternative will depend on the
amount of surplus capital released by the divestments. Shareholders will be able
to elect to participate in the Cash Alternative. If elections exceed the total
surplus capital available, participation in the Cash Alternative will be scaled
back pro rata.

The Cash Alternative is expected to be priced at or around the prevailing market
prices at the time of unification.

Following completion of the restructuring, Brambles will have a capital
structure consistent with a strong investment grade credit.

On-market share buy-backs

In recognition of the fact that share purchase opportunities may arise which are
in the best interests of Brambles' shareholders, Brambles may carry out
on-market share buy-backs and/or purchases pre- and post-unification of the DLC.

Details of the on-market share buy-backs and purchase arrangements are set out
in a separate announcement.

Dividend policy

Dividends per share in 2006 are expected to be no less than the Sterling
equivalent of A$0.215 declared in respect of 2005. Brambles will maintain its
progressive dividend policy.

This announcement of the proposed unification is made in accordance with Rule
2.4 of the UK City Code on Takeovers and Mergers ('Code') and does not amount to
a firm intention to make an offer in accordance with the Code.

All figures in this announcement are presented in UK GAAP and quoted at actual
exchange rates.
All compound annual growth rates are calculated using June 2005 fixed exchange
rates. All other percentages are calculated in Sterling constant currency.
Comparable operating profit is defined as profit before interest, tax, goodwill
amortisation and exceptional items.

For further information, contact:

Investor    Sue Scholes, Head of Investor Relations    +44 (0)20 7659 6012

Media       Richard Mountain, Financial Dynamics       +44 (0)20 7269 7291

Investor    John Hobson, Head of Investor Relations    +61 (0)2 9256 5216
                                                       +61 (0)414 239 188

Media       Michael Sharp, Vice President Corporate    +61 (0)2 9256 5255
            Affairs                                    +61 (0)439 470 145

                Brambles is globally headquartered in Australia

UBS AG and UBS Limited ('UBS Investment Bank') are acting as financial advisor
to BIL and BIP in connection with certain divestments, the unification of the
DLC, the Schemes, buy-backs and as corporate broker, and no one else and will
not be responsible to anyone other than BIL or BIP for providing the protections
afforded to customers of UBS Investment Bank or for providing advice in relation
to the divestments, the unification of the DLC, the Schemes or the buy-backs or
on any other matter referred to herein.

JPMorgan Cazenove, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting as financial advisor and corporate
broker exclusively to BIP in connection with the unification of the DLC, the
Schemes and buy-backs, and no one else and will not be responsible to anyone
other than BIP for providing the protections afforded to customers of JPMorgan
Cazenove or for providing advice in relation to the unification of the DLC or
the Schemes or the buy-backs or on any other matter referred to herein.

The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published or distributed
should inform themselves about and observe such restrictions.

This announcement does not constitute, or form part of, an offer to sell or the
solicitation of an offer to subscribe for or buy any securities, nor the
solicitation of any vote or approval in any jurisdiction, nor shall there be any
sale, issue or transfer of the securities referred to in this announcement in
any jurisdiction in contravention of applicable law.

Persons needing advice should consult their stockbroker, bank manager,
solicitor, accountant or other independent financial advisor. Certain statements
made in this announcement are forward-looking statements. These forward-looking
statements are not historical facts but rather are based on Brambles' current
expectations, estimates and projections about the industry in which Brambles
operates, and beliefs and assumptions. Words such as 'anticipates,' 'expects,'
'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These statements are not
guarantees of future performance and are subject to known and unknown risks,
uncertainties and other factors, some of which are beyond the control of
Brambles, are difficult to predict and could cause actual results to differ
materially from those expressed or forecasted in the forward-looking statements.
Brambles cautions shareholders and prospective shareholders not to place undue
reliance on these forward-looking statements, which reflect the view of Brambles
only as of the date of this announcement. The forward-looking statements made in
this announcement relate only to events as of the date on which the statements
are made. Brambles will not undertake any obligation to release publicly any
revisions or updates to these forward-looking statements to reflect events,
circumstances or unanticipated events occurring after the date of this
announcement except as required by law or by any appropriate regulatory

UK Dealing Disclosure Requirements

The announcement of the unification of the DLC triggers a UK requirement for the
inclusion of the following statement pursuant to the UK City Code on Takeovers
and Mergers ('Code'):

Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,
'interested' (directly or indirectly) in 1% or more of any class of 'relevant
securities' of BIP or BIL, all 'dealings' in any 'relevant securities' of the
relevant company (including by means of an option in respect of, or a derivative
referenced to, any such 'relevant securities') must be publicly disclosed by no
later than 3.30 pm (London time) on the London business day following the date
of the relevant transaction. This requirement will continue until the 'offer
period' otherwise ends. If two or more persons act together pursuant to an
agreement or understanding, whether formal or informal, to acquire an 'interest'
in 'relevant securities' of BIP or BIL, they will be deemed to be a single
person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant
securities' of BIP or BIL, or by any of their respective 'associates', must be
disclosed by no later than 12.00 noon (London time) on the London business day
following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Takeover Panel's website at

'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a 'dealing' under Rule 8, you should consult the Panel.

Issued share capital

As at the date of this announcement, the number of ordinary shares in BIL
(International Securities Identification Number (ISIN) AU000000BIL1) is
971,472,067 and the number of ordinary shares in BIP (ISIN GB0030616733) is
725,524,716. The combined issued share capital of Brambles is 1,696,996,783

                                   FACT SHEET

CHEP is the global leader in pallet and container pooling services. Its growth
is driven by the outsourcing of pallet ownership and management by major pallet
users throughout the world. CHEP's 300,000 customers benefit from the use of
pallet pools which allow the supply chains served by CHEP to operate more

CHEP started business in Australia in the mid 1950s and now operates in 42
different countries, owning over 265 million pallets and containers. The success
of this business model allows ongoing CHEP sales growth together with improved
operational efficiencies, leading to increased shareholder value.


Recall is a world leader in document and information management, retention and
secure destruction, operating in 23 countries. Its growth is based on an
increasing trend by businesses and the professions to 'outsource' the storage
and rapid access of data. This underpins Recall's growth and the business
continues to achieve enhanced value by operational effectiveness.


Cleanaway UK is one of the largest collectors of municipal, industrial,
commercial and trade waste in the UK. Cleanaway UK has a secure income stream
with many long-term contracts in place, providing earnings visibility and
stability. Its municipal business is the number one provider of services to UK
local authorities, with over 80 contracts.

Cleanaway Australia is the number one operator in the Australian waste
collection market. Its municipal contracts are generally long term contracts,
with the top 20 representing 60% of sales, and it also has numerous long term
Commercial and Industrial contracts.

Brambles Industrial Services

Brambles Industrial Services provides customised support services to the
resources and steel manufacturing industries, including on-site process
management, material handling, specialised logistics, heavy equipment and
environmental services.

It has a strong business base and £1 billion (A$2.2 billion) of contracted sales
with high contract renewal rates and consistent cash flows.

BIS operates mainly with the steel industry in the Northern Hemisphere - the
United Kingdom, France, the Netherlands and the USA - while in Australia it
supports a number of customers in the steel, mining, coal, oil and gas
industries, including BlueScope Steel, WMC Resources, OneSteel, Minara and

                 Year ended 30 June 2005
                                     ------------        ------------
                 Sales               Comparable          Cash flow from
                                     Operating Profit    operations
                         % of                  % of      (after net capex)
                    £m   total            £m   total          £m   % of total
---------------- ------- ------       -------  -------    ------- -------
CHEP             1,488       45         290          62      327             66
Recall             291        9          47          10       61             12
---------------- ------- -------     -------     -------  -------        -------
CHEP + RECALL    1,779       54         337          72      388             78

Germany            360        11         36           8       33              7
Cleanaway UK,
Australia, NZ
and Asia           734        22         46          10       48             10
Services           301         9         38           8       21              4
Businesses         133         4          9           2        7              1
---------------- -------     ------- -------     -------  -------        -------
BE DIVESTED      1,528         46        129         28      109             22

TOTAL (before
costs)           3,307        100        466        100      497            100
---------------- -------    -------  -------     -------  -------        -------


All figures in this fact sheet are presented in UK GAAP and quoted at actual
exchange rates.

All percentages are calculated in Sterling constant currency.

Comparable operating profit is defined as profit before interest, tax, goodwill
amortisation and exceptional items.

(1) based on an exchange rate of £1:A$2.33

                      This information is provided by RNS
            The company news service from the London Stock Exchange

a d v e r t i s e m e n t