**SECURITIES AND EXCHANGECOMMISSION**

 

**Washington, D.C. 20549**

 

**FORM 20-F**

 
| **o**                                 | **Registration Statement pursuant to Section 12(b) or (g) of the  Securities Exchange Act of 1934**                                                                                                                                                                                                                                                                                                                                                                       |
|---------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Or**                                |
| ** **                            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **ý**                            | **Annual Report pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934**                                                                                                                                                                                                                                                                                                                                                                                 |
| ** **                            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** **                            | **For the fiscal year ended June 30, 2004**                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** **                            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Or**                                |
| ** **                            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **o**                                 | **Transition Report pursuant to Section 13 or  15(d) of the Securities Exchange Act of 1934**                                                                                                                                                                                                                                                                                                                                                                             |
| ** **                            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** **                            | **For the transition period  from                                   to                                   ** |
| ** **                            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Commission file number: 0 - 18893** |

 

**AMCOR LIMITED**

**ABN 62 000 017 372**

(Exact name ofRegistrant as specified in its charter)

 

**NEW SOUTH WALES, AUSTRALIA**

(Jurisdictionof incorporation of organisation)

 

**679 VICTORIA STREET,ABBOTSFORD, VICTORIA 3067 AUSTRALIA**

(Address ofprincipal executive offices)

 

Securities registered or to be registered pursuant toSection 12(b) of the Act.

 

**None**

 

Securities registered or to be registered pursuant toSection 12(g) of the Act.

 

**Ordinary Shares**

**American Depositary Shares**

 

Securities forwhich there is a reporting obligation pursuant to Section 15(d) of the Act.

 

**None**

 

Indicate the number of outstanding shares of each of the issuer’sclasses of capital or common stock as of the close of the period covered by theAnnual Report.

 

OrdinaryShares  –  877,949,796

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

 

Yes  ý                   No  o

 

Indicate by check mark which financial statement item the registrantelected to follow:

 

Item 17  o             Item 18 ý

 

 

----

 

**TABLE OF CONTENTS**

 
|     |        | Forward-Looking Statements                             |                                           |
|----------|-------------|--------------------------------------------------------|------------------------------------------------|
|     |        |                                                   |                                           |   |
| *PART I* | **ITEM 1**  | Identity of  Directors, Senior Management and Advisers |                                           |
|     |        |                                                   |                                           |   |
|     | **ITEM 2**  | Offer Statistics  and Expected Timetable               |                                           |
|     |        |                                                   |                                           |   |
|     | **ITEM 3**  | Key  Information                                       |                                           |
|     |        | A.                                                     | Selected Financial Data                        |   |
|     |        | B.                                                     | Capitalization and  Indebtedness               |   |
|     |        | C.                                                     | Reasons  for the Offer and Use of Proceeds     |   |
|     |        | D.                                                     | Risk  Factors                                  |   |
|     |        |                                                   |                                           |   |
|     | **ITEM  4** | Information  on the Company                            |                                           |
|     |        | A.                                                     | History and  Development                       |   |
|     |        | B.                                                     | Business  Overview                             |   |
|     |        | C.                                                     | Organizational Structure                       |   |
|     |        | D.                                                     | Property,  Plant and Equipment                 |   |
|     |        |                                                   |                                           |   |
|     | **ITEM  5** | Operating  and Financial Review and Prospects          |                                           |
|     |        | A.                                                     | Operating Results                              |   |
|     |        | B.                                                     | Liquidity and  Capital Resources               |   |
|     |        | C.                                                     | Research and Technology                        |   |
|     |        | D.                                                     | Trend Information                              |   |
|     |        | E.                                                     | Off-Balance Sheet  Arrangements                |   |
|     |        | F.                                                     | Tabular  Disclosure of Contractual Obligations |   |
|     |        |                                                   |                                           |   |
|     | **ITEM 6**  | Directors,  Senior Management and Employees            |                                           |
|     |        | A.                                                     | Directors and Senior  Management               |   |
|     |        | B.                                                     | Compensation                                   |   |
|     |        | C.                                                     | Board Practices                                |   |
|     |        | D.                                                     | Employees                                      |   |
|     |        | E.                                                     | Share Ownership                                |   |
|     |        |                                                   |                                           |   |
|     | **ITEM  7** | Major  Shareholders and Related Party Transactions     |                                           |
|     |        | A.                                                     | Major Shareholders                             |   |
|     |        | B.                                                     | Related Party  Transactions                    |   |
|     |        | C.                                                     | Interests of  Experts and Counsel              |   |
|     |        |                                                   |                                           |   |
|     | **ITEM  8** | Financial  Information                                 |                                           |
|     |        | A.                                                     | Financial Statements                           |   |
|     |        | B.                                                     | Significant Changes                            |   |
|     |        |                                                   |                                           |   |
|     | **ITEM  9** | The  Offer and Listing                                 |                                           |
|     |        |                                                   |                                           |   |
|     | **ITEM 10** | Additional Information                                 |                                           |
|     |        | A.                                                     | Share Capital                                  |   |
|     |        | B.                                                     | Constitution                                   |   |
|     |        | C.                                                     | Material Contracts                             |   |
|     |        | D.                                                     | Exchange  Controls                             |   |
|     |        | E.                                                     | Taxation                                       |   |
|     |        | F.                                                     | Dividends and Paying Agents                    |   |
|     |        | G.                                                     | Statements by Experts                          |   |
|     |        | H.                                                     | Documents on Display                           |   |
|     |        | I.                                                     | Subsidiary Information                         |   |

 

2

----

 
|       | **ITEM 11**  | Quantitative  and Qualitative Disclosures about Market Risk                  |   |
|------------|--------------|------------------------------------------------------------------------------|--------|
|       | ** **   |                                                                         |   |
|       | **ITEM 12**  | Description  of Securities other than Equity Securities                      |   |
|       | ** **   |                                                                         |   |
|       | ** **   |                                                                         |   |
| *PART II*  | **ITEM 13**  | Defaults,  Dividend Arrearages and Delinquencies                             |   |
|       | ** **   |                                                                         |   |
|       | **ITEM 14**  | Material  Modifications to the Right of Security Holders and Use of Proceeds |   |
|       | ** **   |                                                                         |   |
|       | ** **   |                                                                         |   |
| *PART III* | **ITEM 15**  | Controls  and Procedures                                                     |   |
| * *   | ** **   |                                                                         |   |
|       | **ITEM 16A** | Audit  Committee Financial Expert                                            |   |
|       | **ITEM 16B** | Code  of Ethics                                                              |   |
|       | **ITEM 16C** | Principal  Accountant Fees and Services                                      |   |
|       | **ITEM 16D** | Exemption  from Listing Standards for Audit Committees                       |   |
|       | ** **   |                                                                         |   |
| *PART IV*  | **ITEM 17**  | Financial  Statements                                                        |   |
|       | **ITEM 18**  | Financial  Statements                                                        |   |
|       | ** **   |                                                                         |   |
|       | **ITEM 19**  | Exhibits                                                                     |   |

 

3

----

 

## **FORWARD-LOOKING STATEMENTS**

 

Certainstatements contained in this Annual Report constitute forward-lookingstatements. Forward-looking statements can generally be identified by the useof forward-looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”,“anticipate”, “believe”, “continue”, or similar words. These forward-lookingstatements, including economic predictions and assumptions and business andfinancial projections and statements concerning Amcor’s business, involve knownand unknown risks, uncertainties and other factors that may cause its actualresults, performance or achievements to differ materially from any futureresults, performance or achievements expressed or implied by theseforward-looking statements. These factors include, among others, risks to Amcor’sbusinesses, including changes in the legal and regulatory regimes under whichwe operate, changes in the behaviour of our major customers and competitors andgeneral changes in the economic conditions of the markets in which we operate.

 

Other factorsare discussed under Item 3 - “Risk Factors” and elsewhere in this Annual Report.This list of important factors is not exhaustive. Given these risks,uncertainties and other factors, potential investors are cautioned not to placeundue reliance on forward-looking statements.

 

Theseforward-looking statements speak only as of the date of this Annual Report, andAmcor does not undertake any obligation to update or revise any of them,whether as a result of new information, future events or otherwise.

 

4

----

 

**ITEM 3    KEYINFORMATION**

 

**A.            Selected Financial Data**

 

***Definitions***

 

“Company” or “Amcor Limited” means Amcor Limited ABN 62 000 017 372,the listed holding company of the Amcor Group. “Amcor” or “we” or “our” meansAmcor Limited and all its controlled entities.

 

Our fiscalyear ends on June 30.  The fiscal yearended June 30, 2004 is referred to herein as “2003-04” and other fiscal yearsare referred to in a corresponding manner. All other references are to calendar years.

 

 “A-GAAP” or “Australian GAAP” meansAustralian generally accepted accounting principles.

 

 “US-GAAP” or “US GAAP” meansUnited States generally accepted accounting principles.

 

 “Significant items” means items ofrevenue and expense included in the operating profit or loss which aredisclosed as significant under A-GAAP by reason of their size and effect on theoperating profit or loss.  Significantitems are not necessarily non-recurring items. See Note 4 to the Consolidated Financial Statements.

 

 “Consolidated Financial Statements” means the audited consolidated balance sheets of Amcor as of June30, 2004 and 2003 and the audited consolidated income statements and statementsof cash flows for each of the one-year periods ended June 30 for the years2004, 2003, and 2002 together with accompanying notes, included andincorporated by reference herein.

 

“PBITDA” refers to profit before interest, income tax, depreciation andamortization excluding significant items.

 

“PBITA” refers to profit before interest, income tax and amortizationexcluding significant items.

 

“PBIT” refers to profit before interest and income tax excludingsignificant items.

 

 “Segment Result” refers to profitbefore interest, income tax and amortization excluding significant items(PBITA).

 

“ACCC” refers to the Australian Competition and Consumer Commission.

 

“NZCC” refers to the New Zealand Commerce Commission.

 

The selectedfinancial data appearing below as at June 30, 2004 and 2003, and for yearsended June 30, 2004, 2003 and 2002, are set forth in Australian dollars (exceptas otherwise indicated), are derived from our audited Consolidated Financial Statementswhich are included in this Annual Report.  Certain A$ amounts have been translated intoUS$ amounts at the exchange rate specified. These translations are indicative only and do not mean that the A$ amountscould be converted to US$ at the rate indicated.   The selected financial data at June 30, 2002,2001 and 2000 and for years ended June 30, 2001 and 2000 have been derived fromour audited Consolidated Financial Statements not included in this AnnualReport. Amcor’s audited Consolidated Financial Statements are prepared inaccordance with A-GAAP, which differ in certain respects from US-GAAP.  See Note 33  to the Consolidated Financial Statements for adiscussion of the significant differences between A-GAAP and US-GAAP as theyapply to Amcor for the periods presented therein.

 

5

----

 

The followingselected financial data should be read in conjunction with, and is qualified inits entirety by reference to, the Consolidated Financial Statements, includingNotes thereto.

 

**Selected Financial Dataprepared in accordance with A-GAAP**

 
| ** **                                         | ** ** | **Year Ended June 30,**                                 | ** ** |
|----------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                         | ** ** | **2004  (1)**                                           | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** | **2000** | ** ** |
| ** **                                         | ** ** | **(In millions, except ratios and per share  amounts)** | ** ** |
| ** **                                         | ** ** | ** **                                              | ** ** |
| **Income Statement Data:**                         |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |
|                                               |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Sales  revenue                                     |       | US$                                                     | 7,173.8    |   | A$ | 10,405.9 |   | A$ | 10,709.9 |   | A$ | 7,472.4 |   | A$ | 5,667.2 |   | A$ | 5,737.2 |   |
|                                               |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Profit  from ordinary activities before income tax |       | 325.1                                                   |       | 471.5 |   | 488.6 |   | 981.2 |   | 404.0 |   | 380.1 |   |
|                                               |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Income  tax                                        |       | (76.7                                                   | )          | (111.3 | ) | (110.5 | ) | (120.2 | ) | (118.2 | ) | (83.3 | ) |
| Minority  interests                                |       | (10.0                                                   | )          | (14.5 | ) | (16.8 | ) | (9.3 | ) | (3.4 | ) | (5.9 | ) |
| Net  profit                                        |       | US$                                                     | 238.4      |   | $A | 345.7 |   | A$ | 361.3 |   | A$ | 851.7 |   | A$ | 282.4 |   | A$ | 290.9 |   |
|                                               |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Dividends  paid and payable                        |       | US$                                                     | 193.2      |   | A$ | 280.3 |   | A$ | 252.7 |   | A$ | 206.2 |   | A$ | 179.1 |   | A$ | 237.9 |   |
| Dividends  per Ordinary Share (A$)                 |       | —                                                  |       | A$ | 0.32 |   | A$ | 0.30 |   | A$ | 0.28 |   | A$ | 0.28 |   | A$ | 0.38 |   |
|                                               |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Dividends  per Ordinary Share (US$) (2)            |       | —                                                  |       | US$ | 0.22 |   | US$ | 0.18 |   | US$ | 0.15 |   | US$ | 0.14 |   | US$ | 0.23 |   |
|                                               |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Earnings  per Share                                |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |
| Basic                                              |       | US$                                                     | 0.23       |   | A$ | 0.34 |   | A$ | 0.37 |   | A$ | 1.22 |   | A$ | 0.45 |   | A$ | 0.46 |   |
| Diluted                                            |       | US$                                                     | 0.23       |   | A$ | 0.34 |   | A$ | 0.37 |   | A$ | 1.10 |   | A$ | 0.44 |   | A$ | 0.45 |   |

 
| ** **                                                               | ** ** | **Year Ended June 30,**                                             | ** ** |
|--------------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|
| ** **                                                               | ** ** | **2004  (1)**                                                       | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** | **2000** | ** ** |
| ** **                                                               | ** ** | **(In millions, except ratios, other data and per  share amounts)** | ** ** |
| **Balance Sheet Data (at period end):**                                  |       |                                                                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current  assets                                                          |       | US$                                                                 | 2,104      |   | A$ | 3,052 |   | A$ | 2,951 |   | A$ | 4,591 |   | A$ | 2,683 |   | A$ | 1,749 |   |
| Total  assets                                                            |       | 7,091                                                               |       | 10,286 |   | 9,562 |   | 8,842 |   | 7,026 |   | 4,956 |   |
| Total  long-term interest bearing liabilities (including finance leases) |       | 1,224                                                               |       | 1,776 |   | 1,004 |   | 1,145 |   | 1,559 |   | 990 |   |
| Other  capital resources (3)                                             |       | 229                                                                 |       | 332 |   | 446 |   | 543 |   | 426 |   | 426 |   |
| Shareholders’  equity/net assets                                    |       | 3,183                                                               |       | 4,617 |   | 4,440 |   | 4,395 |   | 2,361 |   | 1,773 |   |

 

Refer to page 7for notes relating to above table

 

6

----

 

**Selected Financial Dataprepared in accordance with US GAAP**

 
| ** **                                       | ** ** | **2004  (1)**                                                       | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** | **2000** | ** ** |
|--------------------------------------------------|------------|---------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| ** **                                       | ** ** | **(In millions, except ratios, other data and per  share amounts)** | ** ** |
| **Income Statement Data:**                       |       |                                                                |       |     |       |     |       |     |       |     |       |     |       |
| ** **                                       |       |                                                                |       |     |       |     |       |     |       |     |       |     |       |
| Sales  revenue                                   |       | US$                                                                 | 7,173.8    |     | A$         | 10,405.9 |       | A$       | 10,709.9   |     | A$         | 7,472.4  |       | A$ | 5,667.2 |   | A$ | 5,737.2 |   |
| Net  profit from continuing operations           |       | 263.8                                                               |       | 382.7    |       | 367.6    |       | 819.3    |       | 266.0    |       | 214.1    |       |
| Net  Profit                                      |       | 263.8                                                               |       | 382.7    |       | 367.6    |       | 819.3    |       | 266.0    |       | 303.4    |       |
|                                             |       |                                                                |       |     |       |     |       |     |       |     |       |     |       |
| Earnings  per Share (4)                          |       |                                                                |       |     |       |     |       |     |       |     |       |     |       |
| Continuing  Operations                           |       |                                                                |       |     |       |     |       |     |       |     |       |     |       |
| Basic                                            |       | US$                                                                 | 0.30       |     | A$         | 0.44     |       | A$       | 0.44       |     | A$         | 1.23     |       | A$ | 0.42 |   | A$ | 0.34 |   |
| Diluted                                          |       | US$                                                                 | 0.29       |     | A$         | 0.43     |       | A$       | 0.44       |     | A$         | 1.11     |       | A$ | 0.42 |   | A$ | 0.34 |   |
| Net  Profit                                      |       |                                                                |       |     |       |     |       |     |       |     |       |     |       |
| Basic                                            |       | US$                                                                 | 0.30       |     | A$         | 0.44     |       | A$       | 0.44       |     | A$         | 1.23     |       | A$ | 0.42 |   | A$ | 0.48 |   |
| Diluted                                          |       | US$                                                                 | 0.29       |     | A$         | 0.43     |       | A$       | 0.44       |     | A$         | 1.11     |       | A$ | 0.42 |   | A$ | 0.46 |   |
|                                             |       |                                                                |       |     |       |     |       |     |       |     |       |     |       |
| **Balance Sheet Data (at period end):**          |       |                                                                |       |     |       |     |       |     |       |     |       |     |       |
|                                             |       |                                                                |       |     |       |     |       |     |       |     |       |     |       |
| Current  assets                                  |       | US$                                                                 | 2,241      |     | A$         | 3,250    |       | A$       | 3,141      |     | A$         | 4,591    |       | A$ | 2,683 |   | A$ | 1,749 |   |
| Total  assets                                    |       | 7,396                                                               |       | 10,728   |       | 9,902    |       | 8,952    |       | 6,990    |       | 4,933    |       |
| Total  long-term debt (including finance leases) |       | 1,751                                                               |       | 2,540    |       | 1,768    |       | 2,057    |       | 1,938    |       | 990      |       |
| Other  capital resources (3)                     |       | 229                                                                 |       | 332      |       | 446      |       | 543      |       | 426      |       | 426      |       |
| Shareholders’  equity/net assets            |       | 2,939                                                               |       | 4,263    |       | 3,984    |       | 3,982    |       | 2,099    |       | 1,912    |       |
| Number  of shares (millions)                     |       | —                                                              |       | 878.0    |       | 848.2    |       | 822.6    |       | 633.2    |       | 624.1    |       |

 

----

(1)                                 Income statement data and balance sheet data have been translated atthe noon buying rate on June 30, 2004 of A$1.00 = US$0.6894.

 

(2)                                 Dividends have been translated into U.S. dollars at the noon buyingrate on the date of payment, except for the 2003-04 final dividend of A$0.16per Ordinary Share, payable on September 29, 2004, which has been translated atthe June 30, 2004 noon buying rate of A$1.00 = US$0.6894.

 

(3)                                 Includes subordinated convertible unsecured notes which have nomaturity dates.  These notes aresubordinated to all other obligations of Amcor save for issued capital.

 

(4)                                 Includes undated subordinated convertible securities, partly-paidordinary shares and Perpetual Amcor Convertible Rest Securities (PACRS).

 

7

----

 

**ExchangeRates**

 

A majority of Amcor’s revenue andearnings are derived from assets and operations outside of Australia, and thoseassets, revenue and earnings are denominated in foreign currencies. Most ofthese are denominated either in US dollars or Euros. Therefore, because Amcorpresents its financial statements in A$, appreciation of the A$ against the US$or the Euro will adversely affect the A$ amount of those assets, revenue andearnings. In addition, fluctuations in the exchange rate between A$ and US$ orEuros will affect the US$ or Euro equivalent of the A$ price of our shares onthe ASX and the US$ or Euro value of any cash distributions paid on the sharesin A$.

 

Fluctuations in the A$/US$ exchange ratewill affect the US$ equivalent of the A$ price of Ordinary Shares on the ASXand, as a result, are likely to affect the market price of the our AmericanDepositary Shares (“ADSs”) in the United States.  Such fluctuations would also affect the US$amounts received by holders of ADSs on conversion by the depositary of cashdividends paid in A$ on the Ordinary Shares underlying the ADSs (see Item 3D –Risk Factors).

 

In this AnnualReport, unless otherwise specified or the context otherwise requires,Australian dollar amounts are denoted by “A$”, Euro dollar amounts are denotedby € and United States dollar amounts are denoted by “US$”. Forconvenience, certain A$ amounts have been translated into US$ amounts at theexchange rate specified. These translations are indicative only and do not meanthat the A$ amounts could be converted to US$ at the rate indicated.

 

On December 202004, the noon buying rate was US$0.7636 = A$1.00.

 

For each ofthe periods indicated, the relevant noon buying rate for cable transfers of US$payable in Australian dollars as certified for customs purposes by the FederalReserve Bank of New York, were:

 
| **Fiscal Year:** | ** ** | **2003-04** | ** ** | **2002-03** | ** ** | **2001-02** | ** ** | **2000-01** | ** ** | **1999-00** | ** ** |
|------------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|
|             |       |        |       |        |       |        |       |        |       |        |       |
| Average  (1)     |       | .7164       |       | .5891       |       | .5242       |       | .5372       |       | .6238       |       |
|             |       |        |       |        |       |        |       |        |       |        |       |
| Period-end       |       | .6947       |       | .6714       |       | .5644       |       | .5100       |       | .5971       |       |
|             |       |        |       |        |       |        |       |        |       |        |       |
| High             |       | .8008       |       | .6738       |       | .5756       |       | .5996       |       | .6703       |       |
|             |       |        |       |        |       |        |       |        |       |        |       |
| Low              |       | .6339       |       | .5278       |       | .4842       |       | .4828       |       | .5685       |       |

 

----

(1)                                  The average of the closing buying rates on the last day of eachmonth during the year.

 

The high andlow exchange rates for the six months preceding the date of this report were:

 
| **Month:** | ** ** | **Nov 2004** | ** ** | **Oct 2004** | ** ** | **Sept 2004** | ** ** | **Aug 2004** | ** ** | **July 2004** | ** ** | **June 2004** | ** ** |
|------------|------------|--------------|------------|--------------|------------|---------------|------------|--------------|------------|---------------|------------|---------------|------------|
|       |       |         |       |         |       |          |       |         |       |          |       |          |       |
| High       |       | .7945        |       | .7510        |       | .7285         |       | .7261        |       | .7345         |       | .7171         |       |
|       |       |         |       |         |       |          |       |         |       |          |       |          |       |
| Low        |       | .7431        |       | .7184        |       | .6850         |       | .6957        |       | .6930         |       | .6785         |       |

 

**B.****                                    Capitalizationand Indebtedness**

 

Not applicable

 

**C.****                                    Reasons for the Offer and the Use of Proceeds**

 

Not applicable

 

**D.            RiskFactors**

 

# ***General Economic Conditions***

 

Amcor’s business may beaffected by general economic conditions within Australia and globally(including, for example, government fiscal, monetary and regulatory policies,interest rates, tax rates, foreign exchange rates, oil prices, inflation andthe industrial relations environment). Changes in the economic conditions inmarkets in which we operate may result in customers changing spending patternsand their level of general consumption, which may have a material adverseeffect on our operating and financial performance.

 

8

----

 

# ***Technology***

 

We operate in highlycompetitive business segments. Our industry continues to change in response totechnological innovations and other factors. We cannot predict with certaintythe changes that may affect our competitiveness. In particular, Polyethylene Terephthalate(which we will refer to as PET) product design and development may be subjectto rapid technological change. We cannot predict whether technologicalinnovations will make some of our products, production processes ordistribution techniques wholly or partially obsolete. If this were to occur, wemay be required to invest significant resources to further adapt to thechanging competitive environment. In such a case the investments couldnegatively affect our profitability and results of operations.

 

# ***Increased or New Competition***

 

While we havea strong position in each of our key market segments (both in Australia andinternationally), new competitors may emerge in the market and potential rivalsmay seek to increase market share. Price competition may have the effect ofreducing margins and profitability.

 

# ***Laws and Regulations***

 

Our operations could beaffected by government actions such as controls on prices, new forms oftaxation and increased government regulation in the countries in which we operate.We also operate in some countries that pose political risks including civilunrest, nationalisation and changes in laws and policy. These political riskscould have an adverse impact on the profitability of our operations.

 

***CompetitionLaw Investigations and Management Changes***

 

The ACCC andthe NZCC have commenced investigations of conduct by the Company that maybreach Australian and New Zealand competition laws.  These investigations and the Company’sinternal investigations of the same matters are at an early stage and maycontinue for a considerable period of time. While it is not possible at this early stage to predict the outcome ofthese investigations, the conduct being investigated could result in theimposition of substantial civil pecuniary penalties under the trade practiceslaws in Australia and New Zealand, claims by third parties, and loss ofcustomers.  Also, these matters haveresulted in the resignation of the Managing Director of the Company and theManaging Director, Amcor Australasia.  Theseresignations and the process of replacing these executives, together with theongoing investigations may result in distractions or disruptions to the ongoingoperations of the Company.   No assurancecan be given that these investigations, the related resignations of seniorexecutives, and any resulting claims by third parties will not have a materialadverse effect on our financial condition and results of operations.

 

***Exchange Rates***

 

We are exposed tomovement in exchange rates of foreign currencies – mainly the US$ and the Euro.The negative impact of a stronger Australian dollar, however, has only anotional effect as there is little repatriation of net profit from Amcor’soverseas businesses to Australia. We estimate that for each one cent change inthe US$ or the Euro exchange rate against the A$ over a full year, the translationimpact on A$ net profit would be approximately A$1.8 million or A$2.0 millionrespectively.

 

***Impactof Proposed Tax Law Changes***

 

Amcor operates in 40jurisdictions and pays tax on its income according to the specific tax laws ineach of these jurisdictions.  As with anybusiness, there are various factors, some of which are beyond our control, thatimpact the overall effective tax rate for the Amcor Group.  One such factor is changes in, orinterpretations of, tax laws that apply in any given jurisdiction.

 

Of particular relevance atthe current time are proposed changes in U.S. Federal tax laws.  The Amcor Group currently derives asignificant portion of global income from operations in the U.S.  As a result, the proposed U.S. Federallegislative and regulatory changes could, if enacted, increase the Group’seffective tax rate.

 

Specifically, suchproposals recommend measures that include (a) amending the existing earningsstripping rules to further restrict the ability to use interest payments torelated foreign parties as a means of reducing U.S. taxable income; (b) a morestringent enforcement of the arm’s length standards applying to related-partycross-border transactions, including pre-approval of certain transactions; (c)amending the rules governing cross-border reorganisations; and (d) denyingtreaty benefits for certain tax deductible payments to a foreign entity.

 

9

----

 

The enacting of any or allof these proposals could adversely impact Amcor’s U.S. Federal income taxliability and, consequently, the earnings of the Group. At this stage it is notpossible to predict either the extent to which the proposed changes might beenacted or the extent of any resulting impact on Amcor.

 

In any event, Amcoroperates a tax risk model that seeks to identify, monitor and manage tax risksas and when they occur throughout the Group.

 

At the current time Amcor considers the above proposedchanges to be the most likely to have an impact on the Amcor Group’s future effectivetax rate if enacted.

 

***Environmental***

 

Amcor’s worldwidemanufacturing operations are subject to extensive environmental regulation. Webelieve that we are currently substantially in compliance with theseregulations. However, although compliance costs in future years will depend onlegislative and technological developments which cannot be accuratelypredicted, Amcor believes the costs of compliance with environmental laws andregulations will increase as these laws and regulations become more stringent.These laws and regulations may, therefore have an unpredictable and adverseeffect on our operations and profits.

 

***LegalProceedings***

 

In June 2000, theConstruction, Forestry, Mining and Energy Union (CFMEU) filed a proceeding inthe Federal Court of Australia against Amcor. The proceeding related to a claimfor redundancy-related payments arising out of the change of employment ofCFMEU members stemming from the demerger by Amcor in April 2000 of thePaperlinX Group.

 

In May 2002, a singlejudge of the Federal Court found that Amcor employees whose employment wastransferred to PaperlinX Ltd had technically been made redundant and that Amcorhad an obligation to make redundancy severance payments to the transferredemployees. Amcor’s appeal of this decision to the Full Bench of the FederalCourt was dismissed in March 2003. Amcor subsequently filed an application forspecial leave to appeal to the High Court, which was granted in December 2003.The appeal was heard by the High Court in August 2004 and the decision on theappeal is pending. After considering legal advice, we are of the opinion thatno provision is required.

 

However, in the event weare ultimately unsuccessful in the appeal, we could be required to makeredundancy payments to former employees. Such payments, if eventually required,may have a material effect on Amcor’s results of operations in the year such ajudgement is made. It is not possible to reliably estimate the amounts whichmay be involved. See Item 8, “Financial Information – Legal Proceedings”, forfurther information relating to the CFMEU proceeding.

 

## **ITEM 4   INFORMATIONON THE COMPANY**

 

The discussionbelow contains certain forward-looking statements. Amcor’s actual results coulddiffer materially from those anticipated by those forward-looking statementsdue to a variety of factors, including those set forth under “Forward-LookingStatements”, “Risk Factors” and elsewhere in this annual report.

 

## **A.            Historyand Development**

 

# ***General***

 

Amcor Limitedwas incorporated in 1926 in the State of New South Wales, Australia under theAustralian Corporations Act (2001) and is a public company with limitedliability. We are headquartered in Australia at 679 Victoria Street Abbotsford,Victoria, 3067 and our telephone number is (61) (3) 9226 9000. Amcor hasoperations in Australia, New Zealand, Asia, Europe and the Americas.  At October 2004, our market capitalization wasapproximately A$7.1 billion, making us one of the larger public companies inAustralia, by market capitalization.

 

Amcor’shistory dates back to the 1860s and Australia’s first paper makingactivities.  Until 1980, Amcor was almostexclusively a forestry, pulp and paper company in Australia.  Since that time, however, Amcor has implementeda major program of expansion that resulted in a shift away from sole relianceon pulp and paper products in Australia and the development of a diversifiedand integrated international packaging and paper company. Amcor has grownthrough a combination of acquisitions, “greenfield” developments where suitableacquisitions could not be obtained and expansion of capacity of existingbusinesses.

 

10

----

 

After a two yearrationalization and restructuring program in 1997-98 and 1998-99, when a numberof non-core or under-performing businesses were disposed of, Amcor demerged itspaper manufacturing and fine paper distribution businesses in April 2000following shareholder and court approval. In May 2001, we announced our intentionto sell our 50% investment in Kimberly-Clark Australia Pty Ltd (KCA). Thedemerger and sale of KCA were strategic initiatives intended to enable us torealize our goal of becoming a leading global packaging company by enhancing ourability to pursue opportunities to further develop our businesses in newproducts, services and markets. The acquisition of Schmalbach-Lubeca’s PET andclosures businesses in July 2002 and Rexam’s healthcare flexibles packagingoperations in August 2003 were our latest steps in implementing this strategy.

 

**Amcor’s Strategy**

 

Amcor’s aimis to be a global leader in the packaging industry, targeting specific segmentspredominantly in the food and beverage industries.

 

In Australiaand New Zealand, Amcor has a broad product offering and is the number one ornumber two supplier in most segments in which it participates.  Over the past three years, Amcor’s Australianand New Zealand businesses have delivered a stable earnings stream.

 

Outside ofAustralia and New Zealand, Amcor’s strategy is to be a leader in specificsegments. These segments are:

 

•                  flexiblepackaging for the food, beverage, healthcare and industrial markets;

•                  PETbottles and jars for beverage and food applications;

•                  specialtyprinted cartons for tobacco, confectionery and health and beauty markets;

•                  distributionof packaging products and related goods; and

•                  plasticand metal closures.

 

Amcorbelieves that all these segments are attractive because they exhibit one ormore of the following key characteristics:

 

•                  prospectsof higher than industry average growth;

•                  theability to create value-added products and services, which provides theopportunity for Amcor to differentiate itself from its competitors; and

•                  theability to obtain a leading presence, either regionally or globally.

 

Amcor hasimplemented this strategy through a number of transactions that have reshapedit over recent years. The most significant of these include:

 

•                  thecreation in June 2001 of the leading European flexible packaging businessthrough a three way joint venture between Amcor Flexibles Europe, DaniscoFlexible and Ahlstrom and the subsequent purchase of the minority stake in July2003; and

•                  theacquisition in July 2002 of the PET Container and closures operations ofSchmalbach-Lubeca.

 

The Schmalbach-Lubeca businesses represented an attractiveopportunity that was consistent with Amcor’s strategy. In acquiring thesebusinesses, Amcor has become the leading manufacturer of PET containersglobally. Additionally, the acquisition has allowed us to expand our activitiesin segments that exhibit higher than average industry growth and given us theability to offer a greater number of value-added products.

 

# ***Capital Expenditure and Divestures***

 

Since July 1,2001 we have made the following principal capital expenditure and divestures:

 

###### ***Purchase of PET Assets in Mexico***

 

In November2003, Amcor entered into an agreement to purchase the PET injection and blowmoulding assets of Embotelladoras Arca S.A. de C.V. (Arca) with an initialsupply agreement of eight years to supply bottles to Arca. Amcor purchased thePET on site injection and blow moulding assets of Arca for around A$60 millionwhich will be paid in yearly instalments throughout the life of the contract.

 

Acquisition of Rexam’s Healthcare Flexibles PackagingOperations

 

In October2003, Amcor purchased Rexam plc’s (Rexam) healthcare flexibles business forA$327.1 million. The business, which has annual sales of approximately A$390million, has ten plants in six countries – four in the United States and oneeach in England, Ireland, France, Singapore, Brazil and Puerto Rico.

 

11

----

 

Theacquisition is consistent with Amcor’s strategy of targeting higher value addedand higher growth market segments. The four plants in the United States willincrease Amcor’s presence in that country and are expected to provide a solidbase in a high value business from which to build.

 

Purchase of Amcor Flexibles Europe Minorities

 

In August2003, Amcor purchased the 28.1% minority stake in Amcor Flexibles Europe A/Sfrom Danisco and Ahlstrom for €99.5million (A$165.1 million), effective from July 1, 2003.

 

Purchaseof Alcoa’s Latin American PET Packaging Business

 

In June 2003Amcor purchased Alcoa’s Latin American PET packaging business for A$110.0million.

 

Alcoa’s LatinAmerican PET business consisted of nine production facilities located acrossBrazil, Argentina, Columbia, Peru, Uruguay and Chile. Sales were approximatelyA$200 million in 2002.

 

A$125Million Wine Bottle Plant Expansion

 

Amcorannounced in March 2003 that it is building a second furnace on its existing wine bottle facility in Gawler, South Australia.The new furnace, which will cost A$125 million and have a capacity of 200million wine bottles per year, is expected to commence output by January 2005.

 

Thebuilding of the second furnace is expected to increase production at the Gawlersite to 400 million bottles per year. The strong customer demand for Amcor’swine bottles has enabled new long term supply contracts to be both extended andupgraded and has underpinned demand for the new furnace.

 

Saleof Joint Venture Stake in White Cap North American Closure Operations

 

31 December2002, Amcor entered into a definitive agreement to sell its 65% stake in AmcorWhite Cap LLC to Silgan Holdings Inc, its 35% joint venture partner. The jointventure, which consisted of seven plants, six in the United States and one inMexico, was sold for A$66 million – equivalent to book value. The joint venturealso had debt of approximately A$100 million which was consolidated on Amcor’sbalance sheet.

 

###### ***Acquisition of PET Container and Closure Operationsof Schmalbach-Lubeca***

 

On July 1,2002 Amcor successfully completed the acquisition of the PET container andclosure assets of Schmalbach-Lubeca for A$2.827 billion.

 

Schmalbach-Lubecawas the world’s largest manufacturer of PET containers with calendar 2001 salesof A$2.5 billion. It was also a manufacturer of food and beverage closures withcalendar 2001 sales of A$825 million.

 

Acquisition of Spanish Flexible Packaging Business

 

In May 2002Amcor acquired Tobepal SA, a flexible packaging and extrusion business,situated in Spain, for A$84.5 million.   TobepalSA operates three plants in Spain and is a strategic fit with Amcor Flexiblesexisting operations in that area.

 

UK Flexible Packaging Acquisition

 

In May 2002,Amcor completed the acquisition of two flexible packaging plants from Rexam PLCfor A$30 million. Both plants are located in the United Kingdom and in 2001 hadaggregate sales of A$115 million.  Theacquisition of these two plants continued the consolidation of Amcor’s flexiblepackaging business in Europe and followed the three way merger of AmcorFlexibles Europe, Danisco Flexible and Akerlund & Rausing in 2001.

 

**Other Recent Developments**

 

Board Changes

 

On December 2,2004 the Chairman announced that Mr J G (John) Thorn accepted an invitation tojoin the Amcor Board, effective December 8, 2004.  Mr Thorn accepted an appointment to the Auditand Compliance Committee effective December 21, 2004.

 

12

----

 

On December 7,2004, the Chairman of Amcor Limited, Mr Chris Roberts, announced theresignation of Mr R H (Russell) Jones,. Mr Roberts has been appointed Executive Chairman and Mr Louis Lachal (Executive General Manager Operations) has been appointed Acting Chief OperatingOfficer during the interim period prior to appointing a replacement ManagingDirector.

 

China****TobaccoPackaging Expansion

 

Amcorannounced on 13 December, 2004 an agreement to subscribe for 80 million newshares, representing a 16.7% equity interest, at HK$2.50 per share in VisionGrande Group Holdings Limited (Vision Grande) for a cost of HK$200 million(approximately A$34 million).

 

Amcor hasalso agreed to acquire an option to subscribe for an additional 96 millionshares, also at HK$2.50 per share, to increase its equity interest toapproximately 30.6% for an additional cost of HK$240 million (approximatelyA$41 million).  This option expires onDecember 31, 2005.  The transaction issubject to approval from Vision Grande shareholders and the regulatoryauthorities.

 

VisionGrande, which was listed on the Hong Kong Stock Exchange in March 2004, is aleading supplier of tobacco packaging in China with operations in Shenzhen,Nanjing and Kunming.

 

Anti-Trust Investigations and Related Management Changes

 

The ACCC andthe NZCC have commenced investigations of conduct by the Company that maybreach Australian and New Zealand competition laws.  These investigations and the Company’sinternal investigations of the same matters are at an early stage.  See Item 8, “Financial Information – LegalProceedings”, for further information relating to the investigations.

 

**B.            BusinessOverview**

 

***General Overview of Our Business***

 

Amcoroperates its business through six main divisions:

 

*Amcor PET Packaging*manufactures PETcontainers and preforms for consumer goods companies worldwide.

 

*Amcor Australasia* manufactures a broad range of packaging items throughoutAustralia and New Zealand.

* *

*Amcor Flexibles*is a manufacturer of flexible packaging, servicing a range of food,beverage, healthcare and industrial segments.

 

*Amcor Sunclipse* is a manufacturer and distributor of industrial packaging suppliesand related products and services.

 

*Amcor Rentsch &Closures*

•                  *Amcor Rentsch* is a producer of specialty foldingcartons for the tobacco, cosmetics and confectionery industries.

•                  *Amcor Closures* manufactures plastic andmetal closures.

 

*Amcor Asia* is a supplier of corrugated boxes, tobacco carton packaging,closures, flexible packaging and fibre sacks.

 

At August 31, 2004,Amcor had approximately 29,000 employees at 242 manufacturing plants and 37distribution facilities in 40 countries and 135,000 shareholders, includingmore than 16,000 employee shareholders.

 

Themanufacturing plants by business are as follows:

 
| Amcor PET  Packaging          |   | 83  plants in 21 countries                               | *      |
|-------------------------------|--------|----------------------------------------------------------|--------|
| Amcor  Australasia            |   | 66  plants in 2 countries                                |   |
| Amcor  Flexibles              |   | 47  plants in 18 countries                               |   |
| Amcor  Sunclipse              |   | 12  plants and 37 distribution facilities in 2 countries |   |
| Amcor  Rentsch & Closures |   | 19  plants in 15 countries                               |   |
| Amcor Asia                    |   | 15  plants in 5 countries                                |   |

 

13

----

 

----

* Includes allon-site blowing and injection facilities.

 

The tablebelow shows a breakdown of our sales revenue by geographic and industry categoryfor the last three financial years. See also Item 5 - Operating and FinancialReview and Prospects for a discussion of revenue performance during the lastthree years and Note 27 Segment Reporting on page F-69 for a break-up of salesfor each material country for the years ended June 30, 2004 and June 30, 2003.

 
| ** **                              | ** ** | **Year Ended June 30,** | ** ** |
|-----------------------------------------|------------|-------------------------|------------|
| ** **                              | ** ** | **(in A$millions)**     | ** ** |
| ** **                              | ** ** | **2004**                | ** ** | **2003** | ** ** | **2002** | ** ** |
| **Geographic Segments**                 |       |                    |       |   |   |   |   |
|                                    |       |                    |       |   |   |   |   |
| Australia  & New Zealand            |       | 2,524.3                 |       | 2,440.1 |   | 2,361.9 |   |
| Europe                                  |       | 3,852.3                 |       | 4,005.3 |   | 2,412.9 |   |
| North  America                          |       | 3,120.2                 |       | 3,519.4 |   | 2,258.2 |   |
| Latin  America                          |       | 632.0                   |       | 462.6 |   | 129.0 |   |
| Asia                                    |       | 277.1                   |       | 282.5 |   | 310.4 |   |
|                                    |       | 10,405.9                |       | 10,709.9 |   | 7,472.4 |   |
|                                    |       |                    |       |   |   |   |   |
| **Industry Segments**                   |       |                    |       |   |   |   |   |
|                                    |       |                    |       |   |   |   |   |
| Amcor  PET Packaging                    |       | 3,205.2                 |       | 3,236.2 |   | 802.5 |   |
| Amcor  Australasia                      |       | 2,537.9                 |       | 2,455.7 |   | 2,367.7 |   |
| Amcor  Flexibles Europe                 |       | 2,241.0                 |       | 2,170.3 |   | 1,976.6 |   |
| Amcor  Sunclipse                        |       | 1,158.1                 |       | 1,299.0 |   | 1,413.2 |   |
| Amcor  Rentsch & Closures           |       | 1,012.2                 |       | 1,310.6 |   | 611.3 |   |
| Amcor  Asia                             |       | 249.5                   |       | 263.4 |   | 310.4 |   |
| Inter-segment  eliminations & other |       | 2.0                     |       | (25.3 | ) | (9.3 | ) |
|                                    |       | 10,405.9                |       | 10,709.9 |   | 7,472.4 |   |

 

***Amcor PET Packaging***

 

*Products*

 

In July 2002 Amcoracquired the PET Containers business of Schmalbach-Lubeca. The Amcor PETPackaging business was formed following the integration of this PET businesswith the former Amcor Twinpak’s PET operations.

 

Amcor PETPackaging has a broad product portfolio ranging from preforms and containersfor carbonated soft drinks and water applications and custom products – ieother beverage and food segments. Products manufactured include PET bottles forcarbonated soft drinks, mineral water, juices, spirits and beer, milk and otherdairy products, PET containers for hot-filled drinks and food products, PETcontainers for household chemicals, preforms (for moulding by customers) andrecycled PET materials.

 

Headquarteredin the US and employing approximately 6,200 people, the business has 83 plants(which includes all on-site blowing and injection facilities) across 21countries including 20 operations co-located with customers.

 

PET containersare supplied primarily unlabeled, although labelling options are available forsome products.

 

Amcor’scustomers are among the leading consumer products companies around the world.

 

Significantnew products utilize evolving technologies, including barrier for increasedshelf life and heat set for increased filling and processing temperatures.  Markets impacted by these newproducts/technologies include beer and processed foods.

 

*Seasonality*

 

Amcor PET Packaging experiences some seasonality inits supply of carbonated soft drink, bottled water and isotonic productlines.  The ramp up for seasonal productsbegins in March and lasts until late August in the northern hemisphere.  It is the reverse in the southernhemisphere.  In addition there is aslight increase in demand in preparation for the major December holidays.  Offsetting these are demand patterns for otherproducts, including foods and juices, with demand sometimes heaviest in harvestseasons.

 

14

----

 

*Raw Materials*

 

PET resin is the principal raw material used withinAmcor PET Packaging and PET resin is considered a commodity by the plasticsindustry.  For North America, PET resin isavailable from 6 major domestic suppliers and can be imported from Asiansuppliers.  Amcor has establishedrelationships with all major suppliers.

 

For Europe and South America, a combination ofregionally produced and imported resins is employed.   The supply of PET resin has become morepredictable and the pricing less volatile as the resin industry hasconsolidated and as Asian resin has become scarce and expensive.

 

# ***Competitive Position***

 

Amcor PET Packaging is one of the few major PETconverters that supply a full range of products to nearly all segments of themarket.

 

In North America, the five major PET suppliers holdjust under 60% of the market. Self-manufacturers make up another 20%. The remaining 20% is comprised of small regional or niche converters,many with strong positions in their chosen markets.    The major converters as well as theself-manufacturers tend to supply the beverage market – soft drinks, waters,juices and isotonics.  The smaller competitorsare producers of food, dairy, personal care, pharmaceutical and householdproducts containers.

 

In Latin America, the competition is morefragmented.  The major converters holdover 50% of the market.  There aresmaller competitors that are very strong in specific countries, but are notpan-regional.  There is also asignificant percentage of self-manufacturing however, the trend seems to bemoving away from consumer product companies making their own packaging.  Consolidation in Latin America continues assmall competitors are acquired.

 

In Europe, the major converters make up less than 50%of the market.  Self-manufacturing isstronger in Europe than in any of the other regions and in addition there are agreater number of small, in-country suppliers. Competition from East Europe into West Europe is also increasing.

 

# ***Patentsand Licences***

 

Amcor PETPackaging holds approximately 120 patents in the U.S.  Many of these innovations are also patentedin our major markets outside the US, especially in Europe and Brazil.  The bulk of these patents are held for thecompetitive advantage of our business, and our income from licensing ismarginal.

 

Amcor PETPackaging has a significant relationship with Yoshino Kogyosho, a Japanesepackaging company from which we license heat set technology.  Over the years, this relationship has grownto a strategic partnership, with technical information and innovations sharedbetween our two companies exceeding the scope of the original contract.  This relationship has been mutually beneficial.

 

***Amcor Australasia***

 

*Products*

 

Amcor Australasiamanufactures a range of corrugated boxes, cartons, packaging papers, aluminiumbeverage cans, aluminium and steel aerosol cans, steel cans for food,  flexible and film packaging, pouches, PETplastic jars and bottles, rigid plastic containers, glass wine bottles, plasticand metal closures and multiwall paper sacks.

 

Based in Melbourne, thegroup operates from 66 facilities and employs over 6,700 people throughoutAustralia and New Zealand.  Majormanufacturing sites include 13 corrugated box plants, 12 metal packagingplants, 13 flexible and plastic packaging plants, 13 carton and sack plants,four paper mills and a glass plant.

 

Amcor Australasia had aturnover of over A$2.5 billion in 2003-04, of which 95% relates to sales withinAustralia and New Zealand.  Approximately8% of the paper manufacturing group’s sales relates to exports into South EastAsian countries and to Amcor subsidiaries in the US.  The metals, cartons and plastics businesseshave some export sales within the Pacific region and some small volumes toSouth East Asia and the US. For these businesses, however, export salesrepresent no more than 4 to 8% of the total sales of each business.  The fibre and glass businesses have nosignificant export sales.

 

15

----

 

Amcor Australasiaparticipates in most packaging segments and therefore supplies packaging tomost manufacturing sectors in Australia and New Zealand. Its main markethowever is the food and beverage industry, with approximately 70% of totalsales made to this market.

 

*Seasonality*

 

The Australasianpackaging market is not subject to large seasonal swings in demand, given thehigh dependence on the food and beverage industry.  Consumer demand does increase over the mainholiday periods of Christmas and Easter and this is reflected in increaseddemand from Amcor Australasia’s customers in the lead up to these holidayperiods.  In particular, this affectsAmcor Australasia’s Beverage Can business and the confectionery segments of theCartons and Flexibles businesses. These seasonal variations are well understoodand planned for by the food and beverage industry and as a result, AmcorAustralasia’s monthly turnover during peak periods is no more than 10% higherthan average.

 

Fresh fruit and produceis a major part of the Australasian food industry and the Corrugated Fibre Boxand Food Can businesses have significant sales into that market. Clearly,individual crops within this segment have seasonal peaks but the product rangeof the industry and Amcor Australasia’s broad customer base means thatindividual seasons do not have a significant overall impact.

 

*Raw Materials*

 

Raw Materials of thebusiness fall into three broad areas. The main raw material of the Paper,Corrugated Box and Carton business is wood fibre, either virgin or recycled.Globally the price of fibre does follow a cycle as the supply/demand balance isaffected by the large changes in supply brought on by new, high capacity papermills as opposed to more gradual, market driven changes in demand. This cycletends to run over a period of several years. In Australasia, the industry issomewhat insulated from these movements as there is a good supply of virginfibre from the domestic forest industry and a well developed recycling industryto supply recycled fibres. Fibre prices have therefore remained relativelystable in recent years. Furthermore, when increases have occurred in the past,it has generally been possible to recover them from the market.

 

The main raw materialsof the plastic packaging businesses are petroleum based and with a reasonablecorrelation to the price of crude oil, are more volatile than fibreprices.  In these businesses, the impactof changing raw material prices is passed on to customers through “rise andfall” pricing contract clauses wherever possible. This is generally achievedwith the larger and more sophisticated customers, with whom we have long termcontracts and who understand the raw material markets.  With smaller customers and commodity typeproducts, the ability to pass on price changes depends on market conditions atthe time.

 

The main raw materialsof the metal packaging businesses are steel and aluminium. Both of thesematerials are subject to world pricing movements and aluminium in particular istraded globally.   The impact of changesin these raw material prices is also passed on to customers through rise andfall clauses wherever possible.

 

16

----

 

*CompetitivePosition*

 

Australasia is a relativelysmall market in global terms with a relatively small number of majorcompetitors. These factors allow market research to provide a reasonablyaccurate picture of our market position. Such market research is conducted on aregular basis by a small central marketing team and Amcor Australasia is also amember of several industry associations.

 

Our overall share of theAustralasian packaging market is approximately 26%, which is higher than any ofour competitors.  Within each of thesegments that we compete in, we hold the number 1 or 2 position in terms ofturnover in most segments.

 

Broadly, theAustralasian packaging market is mature and has limited growth prospects.Within packaging however, some segments such as flexible packaging, winebottles and PET bottles, have growth opportunities. Others, while profitable,are either static or in decline due to substitution from other packaging andfrom the industry life cycle of products.

 

Excess capacity existsin most packaging segments and most major competitors continue to replace oldequipment with state of the art technology.  At the same time, ourcustomers continue to find attractive returns difficult to achieve as the majorsupermarket chains seek greater market power and continue to increase demandsupon their suppliers.  The concentration in the retail sector has risen,with the two major supermarket chains increasing their market share from 65% to80% in the last eight to ten years.

 

To meet thiscompetitive business environment, Amcor Australasia focuses on productleadership, growth of niche food & beverage segments, adding value forcustomers, and continually lowering of the cost base. Amcor Australasia alsohas an active reinvestment program and the total value of major new capitalprojects is consistently in excess of annual depreciation.

 

# ***Patentsand Licences***

 

AmcorAustralasia has an extensive portfolio of over 100 patents and over200 trademarks and registered designs. Many of these intellectualproperty rights are registered in both Australia and New Zealand and aselected few also have wider international registrations, reflectingtheir world-leading nature. Historically, patents and designs were held for thecompetitive advantage of our business and current income from licensing isminimal but Amcor Australasia is now actively pursuing revenue opportunities inthis area, including through collaborations with other international Amcordivisions.

 

Severalbusinesses are also party to a number of technical assistance agreements withinternational manufacturers, especially in metal packaging. These provideaccess to new technology in terms of both product design and manufacturingprocesses. In particular, Amcor Glass pays an annual fee to Heye Glass ofEurope, under a Technical Assistance Agreement that allows Amcor to use theirtechnical knowledge, including their recuperative furnace technology.

 

# ***Amcor Flexibles***

 

Amcor Flexibles wasinitially created in 2001 through the combination of all relevant flexiblepackaging assets of Amcor Limited, Danisco A/S and Ahlstrom Corporation. Thefollowing acquisitions have since been undertaken to create the currentbusiness:

 

•                                The acquisition of Tobepal the flexiblepackaging and extrusion operations of the Tobepal Spanish operations in May2002;

 

•                                The acquisition of two flexible packaging plantsin the UK from Rexam in May 2002;

 

•                                The purchase of the 28.1% minority stake inAmcor Flexibles from Danisco and Ahlstrom in July 2003; and

 

•                                The acquisition of the flexible healthcarebusiness of Rexam in October 2003.

 

AmcorFlexibles is headquartered in the United Kingdom and it operates 40manufacturing plants throughout Europe and 7 in the Americas.

 

17

----

 

*Products*

 

AmcorFlexibles is active in providing high quality flexible packaging and supplies awide range of food and beverage markets including confectionery, coffee, freshfood, dairy and healthcare applications. Its technological capabilities includegravure and flexographic printing, coating and lamination, co-extrusion,metallising, micro-perforation pouch and bag making and Die Cut lids.

 

Flexible packaging is part of the wider packaging industrywhich includes rigid and semi-rigid packaging using materials such as glass,cartonboard, tin and rigid plastic (e.g. carton boxes for cigarettes andbiscuits, tins for food, jars for coffee, cans for beer, plastic bottles formilk and other drinks, yoghurt cups, PVC sandwich packaging etc.)  Flexible packaging involves the manufacture,supply and conversion of plastic and cellulose films, aluminium foils andpapers into reels of packaging to be used for primary retail food packaging andlabelling and certain other non-food sectors.  There are thousands of different flexible packaging products, based on avariety of films, papers and foils. These materials can be used independently(as monowebs) or in combinations (laminates) for a very wide range of differentend uses.

 

Most demandfor flexible packaging is bespoke in the sense that each customer has veryspecific requirements for each product it is packaging. The customer selects abespoke product based on a number of considerations: cost, functionality, shelflife, machinability and “look and feel”. A combination of these factorsdetermined by the customer will set the parameters within which the rawmaterials and conversion processes used for the specific product supplied willbe chosen. As a result, similar products may often be packaged verydifferently, whilst different products may be packaged with similar packaging.On the demand-side, it is therefore not meaningful to sub-divide the flexiblepackaging market into narrower sub-markets.

 

*Seasonality*

 

Given the wide diversity of product offering that Amcor Flexiblesproduces it is not considered to be a seasonal business.  However elements of its product portfolio areby their nature seasonal, for example ice cream and snacks, which experience agrowth in sales during warm weather, while products such as coffee will haveslower sales during this type of weather.  In terms of fresh produce theseproducts are packed during specific crop seasons and as such show higher salesduring these periods.  Given Amcor Flexibles position as a predominantlyEuropean business, July and August are slower months as there are manufacturingshut downs and holiday periods for certain European countries such as Franceand Sweden.

 

*Raw Materials*

 

The principalraw materials used in the production of flexible packaging are as follows:polyethylene (PE), polyamide (PA-nylon), ethylvinylalcohol (EVOH), biaxiallyoriented polypropylene (BOPP), cast polypropylene (CPP), polyvinylchloride(PVC), polyvinylidene chloride (PVdC), polyester, cellulose film, aluminiumfoil and various types of paper.    Raw materials generally have a wide range of applicationsacross our products and have numerous suppliers with which Amcor hasestablished relationships.

 

# ***Competitive Position***

 

Amcor Flexibles is the number two producer of flexible packagingmaterial within Europe behind Alcan (measured in terms of sales value). Amcor Flexibles is the global leader in terms of sales and service capabilityfor medical packaging.  The Company has a European leadership position inthe following segments, Diary, Produce and Beverage. While within other key segments such as Confectionery, Snacks andProcessed Food it holds the number two position.  With 40 plants in EuropeAmcor Flexibles has a large manufacturing footprint which enables it to notonly service its Pan-European customers but also to provide local or regionalproduction for national customers.

 

There is a very high degree of supply-side substitutabilityin the sense that manufacturers of flexible packaging with one set ofcharacteristics can readily produce flexible packaging displaying a differentset of characteristics. Amcor Flexibles distinguishes itself from itscompetitors through innovation, product quality, safety, focus on customerservice and its ability to deliver global packaging solutions to its customers.

 

# ***Patentsand Licences***

 

Innovation is a keycomponent of Amcor Flexibles strategy to be an industry leader and it investssignificant resources to ensure that it meets the market needs forinnovation.  Amcor Flexibles has arigorous intellectual property development system, based on an Amcor widebusiness process of Product Leadership & Innovation

 

18

----

 

which facilitates theefficient development of new concepts and the filing of appropriate patents toensure protection.

 

Amcor Flexiblescurrently holds 103 patents.  Patents areheld for a wide variety of process improvements and new products.  Patents are held both at a national andregional level as appropriate.

 

As notedAmcor Flexibles technical capabilities include gravure and flexographic printing,coating and lamination, co-extrusion, metallising, micro-perforation pouch andbag making and Die Cut lids.

 

***AmcorSunclipse***

 

*Products*

 

The Amcor Sunclipsebusiness is made up of both manufacturing and distribution operations. Themanufacturing business produces corrugated board and boxes and consists of 3corrugated sheet operations and 9 manufactured packaging products facilities.   The distribution group, known as the Kent H.Landsberg Company, operates from 33 distribution facilities in 13 US states and4 in Mexico. There are also 4 divisions that are considered re-distributors whosell to other distributors. The distribution group sells all types ofindustrial and janitorial supplies including flexible packaging.  It services markets with heavy concentrationsof manufacturing. The company has been gradually expanding from its Californiaroots.

 

*Seasonality*

 

The overallbusiness is vulnerable to the levels of manufacturing activity in the US andMexico and benefits during periods of prosperity in manufacturing.  The shift of manufacturing from Mexico toAsia has adversely impacted the Mexican operations particularly inGuadalajara.   The strongest period forthe business is typically the September through November time frame prior tothe Christmas holidays. The quietest time is usually in January and Februaryafter the holidays.

 

*Raw Materials*

 

The threecorrugated sheet manufacturers presently rely on three major suppliers for theirpaper roll stock. However there are in excess of ten other minor supplyrelationships in place. Many of these minor suppliers have far reachingcapabilities. This creates a healthy competitive environment even in a marketthat has experienced some tightness after an extended three to four year periodof abundant supply. The distribution group has access to numerous suppliers forall its products both domestic and overseas.

 

There isexposure to typical raw material or finished goods supply price movements.These are initiated for a variety of reasons, such as supply conditionstightening and or increases in the price of oil and labour. The business hasshown an ability to pass on these costs to their customers as the priceincreases usually impact the competition in a similar manner.

 

# ***Competitive Position***

 

Business isconducted typically on an order by order basis. Sales emanating from supplyagreements with customers do not represent a significant percentage of totalsales. The company’s suppliers also work on an order by order basis althoughthere are some supply agreements in place with our major corrugated rollstocksuppliers. The company does not rely on patents, exclusive licenses orcontracts.

 

# ***Amcor Rentsch and Closures***

 

Amcor Rentsch,headquartered in Switzerland, is a producer of tobacco packaging and specialtyfolding cartons for the cosmetics and confectionery industries. It has sevenmanufacturing plants in six countries – Switzerland (2), France, Germany,Poland, Portugal and Russia. There is also a small joint venture operation inSpain, Litographia Romero, where Amcor Rentsch is a minority shareholder (40%).

 

As AmcorRentsch’s main product line is tobacco packaging the demand profile is notseasonal. There are external factors, e.g. regulatory health warnings or taxincreases, which from time to time can drive demand and activity peaks.

 

The principalraw material is fibreboard, in both roll and sheet stock. The vast majority ofcustomers control the purchase price of these raw materials and consequentlyour supply contracts have full raw material cost movement and price adjustmentmechanisms.

 

19

----

 

Business isconducted on a contractual basis, with typical terms of 1 to 4 years. InEurope, our principal market, four competitors have over 75% of the market. Thetobacco industry has extremely demanding quality requirements, which raises thebarriers to entry.

 

Amcor Closures is aglobal producer of metal and plastic closures with 12 plants in 11 countriesand is headquartered in Switzerland. This business group’s main products aremetal vacuum closures for glass jars and bottles. It also produces a range ofplastic closures for beverage and specialty applications through its Bericap jointventure in North America.

 

The Closures businesshas a significant amount of business in the beverage, fruit and vegetablesegments and volume is consequently higher during the Northern Hemispheresummer season.

 

Principal raw materialsare tinplate steel for metal closures and polypropylene resin for plasticclosures. The business has numerous suppliers of these materials.

 

Business is generallyconducted on an annual supply agreement. In the case of metal closures pricesare generally agreed for a 12 month period. For plastic closures, agreementshave full pass through of resin and foreign exchange movements on a six monthbasis. The metal closures business derives its competitive position from itsleading market share in Europe and Asia and industry leading low cost position.The plastic closure business has a number of innovative products withpredominantly its own intellectual property and some license arrangements.

 

***AmcorAsia***

 

Amcor Asia,headquartered in Singapore, supplies corrugated and tobacco packaging in theregion.  Other products supplied includeflexible packaging, paper sacks and closures.  The business has 15 manufacturing plants across five countries -Singapore, Malaysia, Indonesia, China and Thailand.

 

The business has sixcorrugated box plants and four tobacco packaging plants in the area. Its otherproducts include closures, flexible packaging and paper sacks.

 

Corrugated packagingis normally a very competitive market with excess capacity throughoutAsia.  The ability of key customers toreposition their production facilities to alternative countries as labour costsimpact on their products causes a continual shift and scramble for corrugatingwork.

 

Tobacco packagingis a market segment Amcor operates in, that has only three major internationalcigarette manufacturers together with the monopoly of the State run industry withinChina, Thailand and other Asian countries. The dominance of these threeinternational cigarette manufacturers creates strong pricing pressure as theybenchmark packaging prices around the world.

 

Flexiblespackaging is a growing segment in Asia as the cost base is so much lower thanEurope or US. However the majority of specialized Flexible packaging for Asiais still supplied by European or US manufacturing.

 

Paper sacks isa specialised market, with a relatively small market size, excluding cement sacks.It operates in an over capacity environment within Asia. Most large paper sackmanufacturers have positioned production facilities within the Asian region.There is quite a limited choice in the sourcing of sack kraft paper throughoutthe world.

 

Within thecorrugated market the demand for food andbeverage packaging is higher in the annual festive season of December throughto April.  This is offset by theelectronic segments high season of June through to November.  There are nosignificant seasonal factors influencing the tobacco segment.   Flexibles packaging is influenced by thefood and beverage segments which causes a higher level of activity in theperiod November to February.

 

Raw materials aresourced throughout the world with Amcor Asia directly affected by both worldprices (driven by supply and demand) and foreign currency exchangefluctuations.

 

20

----

 

# ***Environmental and OtherRegulations***

 

The regulatoryconstraints on Amcor’s businesses include compliance with the following:

 

•                  the provisions ofvarious jurisdictions’ corporate regulations;

•                  trade practices andconsumer protection legislation

•                  labor legislation;

•                  the provisions ofvarious jurisdictions’ Anti Trust legislation;

•                  numerous lawsrelating to workers’ compensation and rehabilitation, occupational health andsafety, dangerous goods handling; and

•                  environmentalregulations of various kinds.

 

The ACCC andthe NZCC have commenced investigations of conduct by the Company that maybreach Australian and New Zealand competition laws.  These investigations and the Company’sinternal investigations of the same matters are at an early stage.  See Item 8, “Financial Information – LegalProceedings”, for further information relating to the investigations.

 

Amcor’sworldwide manufacturing operations are subject to extensive environmentalregulation. Amcor believes it is substantially in compliance with theseregulations. There were no significant environmental incidents in 2003-04.

 

Amcor’s currentenvironmental management system is based on International Standard ISO14001. Adetailed program of environmental auditing provides feedback on theeffectiveness of the management system and includes site inspections andassessments of environmental risk. Amcor’s environmental performance ismonitored regularly by management and the Board and is a component of managementperformance appraisal and remuneration.

 

Amcor’s major environmentalobjectives are to ensure that:

 

•                  all majormanufacturing sites are certified to ISO14001;

•                  there is a reductionin energy per unit of product; and

•                  there is a reductionin waste to landfill per unit of product.

 

During 2003-04, thenumber of sites certified to ISO14001 increased with the flexibles sites in theUK achieving certification.

 

The Dow JonesSustainability Index includes the top 10% of the world’s leading “sustainability”companies. “Sustainability” encompasses a company’s activities, performance andcontribution in regard to environment, safety and the community, withoutcompromising the needs of future generations. Amcor was assessed against otherpackaging companies and was included in the Index in 2004 for the fourthconsecutive year.

 

Amcor is committed torecycling and is actively involved in recycling many of its products. AmcorAustralasia is a recycler of packaging and glass and is involved with localsupermarkets in the recycling of soft plastics, while Amcor PET Packagingoperates a recycling plant in France.

 

Amcor was a foundingmember of Australia’s National Packaging Covenant in 1999 which was establishedfor an initial period of five years. Its fourth Action Plan was published inNovember 2003 and reported on Amcor’s activities in relation to recycling,resource utilisation, product development and research, education and supportsystems. We are currently reviewing the Covenant with a view to extending itfor a further five years.

 

Amcor complieswith a number of food and medical packaging standards such as EN 868 formedical packing produced within Europe, standards published by the AgriculturalDevelopment Advisory Service (ADAS), The American Institute of Baking (AIB),the British Retail Consortium (BRC) and US Food and Drug Administration (FDA).

 

Amcor, likeall corrugated suppliers, continues to prepare for the implementation of theRadio Frequency Identification (RFID) tagging requirements. This is a mandatoryU.S. Department of Defense requirement for corrugated boxes sold to themilitary branch of the U.S. government effective January 1, 2005. The companydoes not presently do business with the U.S. government however this RFIDrequirement may lead to a more general acceptance.

 

21

----

 

**C.            Organizational Structure**

 

The chart set out belowdescribes our organizational structure as at June 30, 2004.

 

 

The Chairmanof Amcor Limited, Mr Chris Roberts, announced the resignation of Mr R H(Russell) Jones, effective December 7, 2004. Mr Roberts became Executive Chairman and Mr Louis Lachal ( ExecutiveGeneral Manager Operations) became Acting Chief Operating Officer during theinterim period prior to appointing a replacement Managing Director.  Mr Darryl Roberts, who was previously theGroup General Manager Fibre Packaging in Australasia, became the ActingManaging Director of Amcor Australasia.

 

Amcor’s Significant Subsidiaries as at December20, 2004 were:

 
| ** **                                    | ** ** | **Country of  Incorporation** | ** ** | **Percentage  Held by Parent  Entities** | ** ** |
|-----------------------------------------------|------------|-------------------------------|------------|------------------------------------------|------------|
| Amcor  Investments Pty. Ltd.                  |       | Australia                     |       | 100                                      | %          |
| Amcor  Packaging (New Zealand) Ltd.           |       | New Zealand                   |       | 100                                      | %          |
| Amcor  Packaging (U.S.A.), Inc.               |       | U.S.A.                        |       | 100                                      | %          |
| Amcor  Sunclipse – North America, Inc.   |       | U.S.A.                        |       | 100                                      | %          |
| Amcor  Europe                                 |       | United  Kingdom               |       | 100                                      | %          |
| Amcor  Packaging Asia Pty. Ltd.               |       | Australia                     |       | 100                                      | %          |
| Amcor  Packaging (Australia) Pty. Ltd.        |       | Australia                     |       | 100                                      | %          |
| Amcor  European Holdings Pty. Ltd.            |       | Australia                     |       | 100                                      | %          |
| Amcor  European Consolidated Holdings Limited |       | Cyprus                        |       | 100                                      | %          |
| Amcor  Holding                                |       | United Kingdom                |       | 100                                      | %          |
| Amcor  Flexibles A/S                          |       | Denmark                       |       | 100                                      | %          |

 

22

----

 

**D.            Property,Plant and Equipment**

 

At August 31,2004, Amcor operated manufacturing* and distribution facilities in the 40countries listed in the following table.

 
| **Geographic Region**     | ** ** | **Number of  Manufacturing  Facilities** | ** ** | **Number of  Distribution  Facilities** | ** ** |
|---------------------------|------------|------------------------------------------|------------|-----------------------------------------|------------|
| ** **                | ** ** | ** **                               | ** ** | ** **                              | ** ** |
| Argentina                 |       | 2                                        |       | —                                  |       |
| Australia                 |       | 53                                       |       | —                                  |       |
| Belgium                   |       | 3                                        |       | —                                  |       |
| Brazil                    |       | 12                                       |       | —                                  |       |
| Canada                    |       | 7                                        |       | —                                  |       |
| China                     |       | 6                                        |       | —                                  |       |
| Colombia                  |       | 6                                        |       | —                                  |       |
| Denmark                   |       | 3                                        |       | —                                  |       |
| Ecuador                   |       | 1                                        |       | —                                  |       |
| El  Salvador              |       | 1                                        |       | —                                  |       |
| Finland                   |       | 2                                        |       | —                                  |       |
| France                    |       | 6                                        |       | —                                  |       |
| Germany                   |       | 7                                        |       | —                                  |       |
| Honduras                  |       | 1                                        |       | —                                  |       |
| Hungary                   |       | 1                                        |       | —                                  |       |
| India                     |       | 1                                        |       | —                                  |       |
| Indonesia                 |       | 2                                        |       | —                                  |       |
| Ireland                   |       | 1                                        |       | —                                  |       |
| Italy                     |       | 2                                        |       | —                                  |       |
| Malaysia                  |       | 4                                        |       | —                                  |       |
| Mexico                    |       | 13                                       |       | 4                                       |       |
| Morocco                   |       | 1                                        |       | —                                  |       |
| The  Netherlands          |       | 2                                        |       | —                                  |       |
| New  Zealand              |       | 13                                       |       | —                                  |       |
| Norway                    |       | 1                                        |       | —                                  |       |
| Peru                      |       | 1                                        |       | —                                  |       |
| Philippines               |       | 2                                        |       | —                                  |       |
| Poland                    |       | 4                                        |       | —                                  |       |
| Portugal                  |       | 4                                        |       | —                                  |       |
| Puerto Rico               |       | 1                                        |       | —                                  |       |
| Russian  Federation       |       | 1                                        |       | —                                  |       |
| Singapore                 |       | 3                                        |       | —                                  |       |
| Spain                     |       | 12                                       |       | —                                  |       |
| Sweden                    |       | 1                                        |       | —                                  |       |
| Switzerland               |       | 3                                        |       | —                                  |       |
| Thailand                  |       | 1                                        |       | —                                  |       |
| Turkey                    |       | 2                                        |       | —                                  |       |
| United  Kingdom           |       | 13                                       |       | —                                  |       |
| United  States of America |       | 40                                       |       | 33                                      |       |
| Venezuela                 |       | 3                                        |       | —                                  |       |
|                      |       | 242                                      |       | 37                                      |       |

 

----

* Includes PETon-site blowing and injection facilities.

 

Amcor believesthat its facilities are suitable and adequate for its present needs and aregenerally well maintained and in good operating condition. Amcor carriesinsurance covering property, casualty and certain other risks to which itsworldwide facilities and operations may be subject.

 

108 of Amcor’sprincipal manufacturing and distribution facilities are owned. Those facilitieswhich are not owned are leased by Amcor for periods varying from one to 10years. Amcor does not believe any of its businesses is dependent on any singlefacility.

 

23

----

 

Capitalexpenditure on property, plant and equipment, excluding acquisition ofcontrolled entities and businesses is outlined in the table below. Net capitalexpenditure is arrived at after deducting proceeds on disposal of property,plant and equipment and does not include proceeds on disposal of controlledentities, businesses and investments.

 

 
| ** **                                             | ** ** | **Year Ended June 30** | ** ** |
|--------------------------------------------------------|------------|------------------------|------------|
| ** **                                             | ** ** | **2004**               | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                                             | ** ** | **A$m**                | ** ** | **A$m** | ** ** | **A$m** | ** ** |
| Gross  capital expenditure                             |       | 605                    |       | 890 |   | 351 |   |
| Proceeds  on disposal on property, plant and equipment |       | 98                     |       | 58 |   | 207 |   |
| Net  Capital expenditure                               |       | 507                    |       | 832 |   | 144 |   |

 

In 2003-04 themajor items of capital expenditure included the PET injection and blow mouldingassets of Arca in Mexico, upgrade of the paper mill in Queensland, Australiaand additional printing presses at Rentsch’s plant in Russia.

 

In 2002-03 themajor items of capital expenditure included the expansion of PET Packaging’sinjection moulding and blow moulding capacity, upgrade of paper mill inQueensland, Australia to improve board quality and expansion of plastic closurecapacity in Poland.

 

In 2001-02 the major items of capitalexpenditure included the expansion of the PET businessin Canada, purchase and installation of a flexograph press for AmcorAustralasia at Scoresby Preprint, Victoria, Australia; and purchase of blowmouldmachines for CNC Containers at Arizona and Washington, USA.

 

## **ITEM 5   OPERATING ANDFINANCIAL REVIEW AND PROSPECTS**

 

**A.            OperatingResults**

 

The discussionbelow contains certain forward-looking statements. Amcor’s actual results coulddiffer materially from those anticipated by those forward-looking statementsdue to a variety of factors, including those set forth under “Forward-LookingStatements”, “Risk Factors” and elsewhere in this Annual Report.

 

# ***Critical Accounting Policies*** (refer F-11 – Note 1 AccountingPolicies)

 

Amcor’sconsolidated financial statements have been prepared in accordance withAustralian GAAP. Our significant accounting policies are more fully describedin Note 1 to our financial statements. The preparation of our financialstatements requires management to make estimates and judgements that affect thereported amounts of assets, liabilities, revenues and expenses and thedisclosure of contingent liabilities. We continually evaluate our estimates andjudgements including those related to bad debts, inventories, intangibleassets, income taxes, financing activities, restructuring costs, contingenciesand litigation. We base our estimates and judgements on historical experienceand on various other assumptions we believe to be reasonable under thecircumstances. This forms the basis for making judgements about the carryingvalues of assets and liabilities that are not readily apparent from othersources. Actual results may differ from these estimates under differentassumptions.

 

Our accounting policies have been developed over many years as generallyaccepted accounting principles or “GAAP” have evolved. As our financialstatements are prepared under A-GAAP our accounting policies are necessarilycompliant with all aspects of A-GAAP. A-GAAP is based on a ‘substance over form’conceptual framework that requires us to look through the legal interpretationof an arrangement or transaction to its underlying purpose and to reflect it inour financial statements on that basis.

 

Changes in Amcor’s accounting policies generally reflect changes tocurrently applicable Australian Accounting Standards and disclosurerequirements of Australia’s professional accounting bodies. These changes aredescribed in Note 1 to our financial statements, as are the financial effectsof these changes in the current or prior periods.

 

Indeveloping accounting policies, in addition to A-GAAP requirements, we alsoconsider industry practice. Where there is no conflict with A-GAAP we also considerthe suitability of accounting policies under US-GAAP. This reduces the numberof A-GAAP/US-GAAP reconciliation differences required to be adjusted in Note 33to our financial statements.

 

In all material respects ouraccounting policies are applied consistently across Amcor. The criticalaccounting policies discussed below generally apply to all segments of Amcor.Management has discussed the development

 

24

----

 

and selection of thesecritical accounting policies with the Audit and Compliance Committee of our Boardof Directors. The following are the critical accounting policies we apply inproducing our A-GAAP financial statements.

 

On July 3 2002, the AustralianFinancial Reporting Council announced that Australia would adopt InternationalFinancial Reporting Standards (“IFRS”), formerly known as InternationalAccounting Standards, for financial years beginning on or after January 1, 2005(fiscal year ending June 2006 for Amcor).  Refer to Note 32 to ourfinancial statements for a discussion of the key areas where accountingpolicies will change and may have an impact on the financial report ofAmcor.  At this stage the consolidatedentity has not been able to reliably quantify the impacts on the financialreport.

 

*Recovery of Long-lived Assets*

* *

Long-lived assets, consistingprimarily of property, plant and equipment and intangibles, comprise asignificant portion of Amcor’s total assets. Changes in the intended use ofthese assets may cause the estimated period of use or the value of these assetsto change.

 

Long-lived assets, includinggoodwill and intangibles, are reviewed for impairment whenever events orchanges in circumstances have indicated that changes in their carrying amountsmay not be recoverable. Estimates and assumptions used in both settingdepreciable lives and testing for recoverability require both judgements andestimations. Property assets are independently valued on an ‘existing use’basis every three years and we assess the recoverable amounts of our plant andequipment bi-annually, based on an analysis of the current replacement cost ofplant and equipment at each business location. We assess the carrying value ofacquired goodwill for impairment at least annually based on its recoverableamount. Our assessments include methodologies such as earnings multiples anddiscounted cash flow. If earnings and earnings multiples change, Amcor may haveto record additional impairment charges not previously recognized.

 

*Acquisition Accounting*

* *

In future years, Amcor may continue to grow ourbusiness through acquisitions. Amcor accounts for the acquisitions using thepurchase method of accounting. The accounting for business acquisitions is complexand involves the use of significant judgment.

 

Under the purchase method ofaccounting, a business acquisition is accounted for at a purchase price basedupon the fair value of the consideration given, whether it is in the form ofcash, assets, stock or the assumption of liabilities. The assets andliabilities acquired are measured at their fair values, and the purchase priceis allocated to the assets and liabilities, since the majority of the assetsand liabilities acquired do not have fair values that are readily determinable.Different techniques may be used to determine fair values, including marketprices, where available, appraisals, comparisons to transactions for similarassets and liabilities and present value of estimated future cash flows. Sincethese estimates involve the use of significant judgment, they can change as newinformation becomes available.

 

*Capitalization of Costs*

* *

When we incur costs, we classify them as eitheroperating expenses or capital costs. We expense operating expenses to thestatement of financial performance as they are incurred. We only capitalizecosts where we consider that they will generate future economic benefits.Capital costs are recorded as assets and shown in our statement of financialposition based on the asset class considered most appropriate to those costs.Management and accounting policy guidelines are used in determining costs to becapitalized.

 

*Doubtful Debts*

* *

We maintain provisions for doubtful debts based on anestimate of the inability of our customers to pay amounts due to us. Theseprovisions are based on historical trends and management’s assessment ofgeneral economic conditions. If the financial condition of our customersdeteriorates these provisions may not be sufficient and may lead to an increasein bad and doubtful debt expenses. We have no reason to believe that the provisionswe have raised will not sufficiently cover bad debts arising out of thereceivables we currently have on hand. Our provision for doubtful debts wasA$52 million at June 30, 2004, A$60 million at June 30, 2003 and A$43 millionat June 30, 2002. Trade debtors before any provision for doubtful debts wereA$1,283 million at June 30, 2004, A$1,163 million at June 30, 2003 and A$1,122million at June 30, 2002.

 

25

----

 

SlowMoving and Obsolete Inventory

 

Amcor’spolicy is to maintain a provision for slow moving and obsolete inventory basedon our best estimate of such amounts at year-end. We base our estimate on asystematic, on-going review and evaluation of inventory balances. As part ofthis evaluation, we also consider the average age of the inventory as comparedto anticipated necessary levels for future periods. We believe that theaccounting estimate related to the establishment of a provision for slow movingand obsolete inventory is a critical accounting estimate because the evaluationis inherently judgemental and requires the use of significant judgements aboutexpected future sales levels which may be susceptible to significant change.

 

Amcor’sinventories are valued at the lower of cost (including an appropriateproportion of fixed and variable overheads) and net realisable value in thenormal course of business.

 

Ourprovision for diminution in value of inventories was A$72 million at June 30,2004, A$72 million at June 30, 2003 and A$58 million at June 30, 2002. Totalvalue of inventories before any provision fordiminution were A$1,442 million at June 30, 2004, A$1,356 at June 30, 2003 andA$1,003 at June 30, 2002.

 

**Results ofOperations**

 

The followingdiscussion is based on Amcor’s consolidated financial statements as preparedunder A-GAAP.  A discussion of thedifferences between A-GAAP and US-GAAP, and the impact of those differences onthe consolidated financial statements, is set out in Note 33 to theconsolidated financial statements.

 

Amcor’s seniormanagement and Board review results on a PBITA basis and believe it is the mostinformative and reliable gauge for measuring and understanding trends across adiverse range of businesses. Given that Amcor will report under IFRS next yearwhen there will be no amortization of goodwill, it is more appropriate toreport segment results currently on a pre amortization basis.

 
| ** **                                    | ** ** | **Sales**               | ** ** | **Profit**              | ** ** |
|-----------------------------------------------|------------|-------------------------|------------|-------------------------|------------|
| ** **                                    | ** ** | **Year Ended June 30,** | ** ** | **Year Ended June 30,** | ** ** |
| ** **                                    | ** ** | **2004**                | ** ** | **2003**                | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| ***Industry Segments (1)***                   |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
|                                          |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Amcor  PET Packaging                          |       | 3,205.2                 |       | 3,236.2                 |       | 802.5 |   | 268.2 |   | 301.6 |   | 79.2 |   |
| Amcor  Australasia                            |       | 2,537.9                 |       | 2,455.7                 |       | 2,367.7 |   | 316.5 |   | 282.8 |   | 254.2 |   |
| Amcor  Flexibles                              |       | 2,241.0                 |       | 2,170.3                 |       | 1,976.6 |   | 131.2 |   | 132.6 |   | 93.2 |   |
| Amcor  Sunclipse                              |       | 1,158.1                 |       | 1,299.0                 |       | 1,413.2 |   | 57.6 |   | 84.8 |   | 95.2 |   |
| Amcor  Rentsch and Closures                   |       | 1,012.2                 |       | 1,310.6                 |       | 611.3 |   | 100.6 |   | 83.3 |   | 48.6 |   |
| Amcor  Asia                                   |       | 249.5                   |       | 263.4                   |       | 310.4 |   | 30.5 |   | 32.1 |   | 44.5 |   |
| Other                                         |       | 2.0                     |       | (25.3                   | )          | (9.3 | ) | (73.5 | ) | (56.8 | ) | 7.5 |   |
| Total  sales revenue                          |       | 10,405.9                |       | 10,709.9                |       | 7,472.4 |   |   |   |   |   |   |   |
|                                          |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Significant  items before tax (2)             |       |                    |       |                    |       |   |   | (99.8 | ) | (86.7 | ) | 534.8 |   |
|                                          |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Profit  before interest, tax and amortization |       |                    |       |                    |       |   |   | 731.3 |   | 773.7 |   | 1,157.2 |   |
|                                          |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Amortization                                  |       |                    |       |                    |       |   |   | (127.6 | ) | (138.8 | ) | (54.5 | ) |
| Profit  before interest and tax               |       |                    |       |                    |       |   |   | 603.7 |   | 634.9 |   | 1,102.7 |   |
| Net  borrowing costs                          |       |                    |       |                    |       |   |   | (132.2 | ) | (146.3 | ) | (121.5 | ) |
| Income  tax                                   |       |                    |       |                    |       |   |   | (111.3 | ) | (110.5 | ) | (120.2 | ) |
| Minority  interests                           |       |                    |       |                    |       |   |   | (14.5 | ) | (16.8 | ) | (9.3 | ) |
| Net  profit after tax                         |       |                    |       |                    |       |   |   | 345.7 |   | 361.3 |   | 851.7 |   |

 

26

----

 

----

(1)              Theindividual industry segments’ profit results refer to profit before interest,tax and goodwill amortization, excluding significant items (PBITA).

(2)               Details of significant items are as follows:

•                       2004 – PETbusiness integration and restructure expense – A$19.9 million; Flexibles’market sector rationalization expense – A$69.3 million; write-down residualassets of the former Twinpak group – A$10.6 million.

•                       2003 – restructuringexpenses following acquisition of Schmalbach-Lubeca businesses – A$86.7million.

•                       2002 – loss ondisposal of tobacco packaging business in Canary Islands – A$18.6 million;profit on disposal of balance of investment in Kimberly Clark Australia Pty Ltd– A$553.4 million.

 

**Year Ended June30, 2004 Compared with Year Ended June 30, 2003**

 

# ***Consolidated Results of Operations***

 

*Sales*

 

Sales revenuedecreased slightly from A$10.7 billion in 2002-03 to A$10.4 billion in 2003-04.The decrease of 2.8% reflected a combination of increases due to theacquisitions of Rexam’s Healthcare flexibles packaging business, Alcoa’s LatinAmerican PET packaging business, and the negative impact of translating foreignsales into Australian dollars. Other revenue was lower in 2003-04 due mainly tothe sale in 2002-03 of our 65% share of Amcor White Cap LLC to Silgan HoldingsInc.

 

*Interest*

* *

Amcor’s overall averageinterest rate in 2003-04 of 4.7%, was down from 5.0% in 2002-03.  This, coupled with the impact of currencytranslation were the main reasons that net borrowing costs fell in 2003-04 toA$132.2 million from A$146.3 million in 2002-03 despite net debt increasing by17% from A$2,297 million in 2002-03 to A$2,689 million in 2003-04.

 

*Income Tax*

 

Amcor’s incometax rate in 2003-04 before significant items of 20.4% fell from 22.1% in2002-03. This is primarily due to debt push down in higher rate jurisdictionsand increases in loss recoupment in high tax rate jurisdictions.

 

*Significant Items*

 

Thesignificant item in 2002-03 of A$86.7 million related to restructuring expensesfollowing the acquisition of the PET and Closures businesses fromSchmalbach-Lubeca. The significant items in 2003-04 totalled A$99.8 million andwere made up of expenses associated with the PET business integration andrestructure – A$19.9 million; the Flexibles’ market sector rationalization –A$69.3 million; and the write-down of residual assets of the former Twinpakgroup – A$10.6 million

 

*NetProfit*

* *

Amcor’s AustralianGAAP net profit after tax decreased from A$361.3 million in 2002-03 to A$345.7million in 2003-04. This result was negatively impacted by A$34 million fromthe translation, for reporting purposes, of overseas profits into Australiandollars, the currency in which we report our results. If exchange rates in2002-03 had remained unchanged in 2003-04, net profit after tax would have beenA$34 million higher in 2003-04.

 

The Company’sUS GAAP net profit increased from A$367.6 million in 2002-03 to A$377.6 millionin 2003-04. The difference between the 2003-04 Australian GAAP net profit andthe US GAAP net profit is detailed in Note 33 to the consolidated financialstatements included in Item 18.

 

*Dividend*

* *

A final dividend ofA$0.16 per share (franked to 40%) was declared on all fully paid ordinaryshares registered as at September 9, 2004, and paid on September 29, 2004. Thefinal dividend, combined with the interim dividend of A$0.16 per share,represented an annual dividend of A$0.32 per share. This represents an increaseof A$0.02 per share over the 2002-03 dividend.

 

27

----

 

# ***Amcor PET Packaging***

 
| ** **              | ** ** | **2003-04** | ** ** | **2002-03** | ** ** | **Change** | ** ** |
|-------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **              | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                    |       |        |       |        |       |       |       |
| Sales                   |       | 3,205.2     |       | 3,236.2     |       | (0.9       | )          |
| Segment  result (PBITA) |       | 268.2       |       | 301.6       |       | (11.1      | )          |

 

Amcor PETPackaging had a mixed year in 2003-04 with PBITA in US dollars increasing by7.6% compared with 2002-03 (from US$176.8 million to US$190.3 million). As canbe seen from the table, above, however, in Australian dollar terms, PBITA in2003-04 fell by 11.1% from 2002-03.  Thiswas before significant items of A$19.9 million expense in 2004 relating to thePET business integration and restructure and A$ 59.5 million restructuringexpenses in 2003 following acquisition of Schmalbach-Lubeca businesses.

 

Overall unitvolumes in 2003-04 grew by 17% to 32.4 billion, of which just under 5% was dueto acquisitions (see Recent Developments). This volume growth was achieved inall three regions (North America, Latin America and Europe).

 

The NorthAmerican operations, including Canada, experienced volume growth in 2003-04 of13.6% over 2002-03. This growth came primarily from the strength of the bottledwater and custom markets, the latter driven by growth in the single serve juiceand sports drinks categories. PBITA, however was down in 2003-04 by 13%compared with 2002-03. The higher Canadian dollar against US dollar forcedprices lower and in the US there was strong pricing pressure from largecustomers.

 

In response,the business has undergone a rationalisation and restructuring plan which,together with a review of overhead expenses, is expected to reduce the numberof North American employees by 250 people. In addition, PET Packaging has beguna review of pricing in the carbonated soft drink/water segment as, in manycases, prices are delivering unacceptable returns on the assets employed.

 

In LatinAmerica (excluding acquisitions) volume growth in 2003-04 was 7.7% up on2002-03. PBITA in this region was 25% higher in 2003-04 compared with 2002-03with strong performances in Argentina and Venezuela helping offset shortfallsin Brazil where over-capacity and general economic conditions are causing someconcern.

 

The Europeanoperations’ volumes in 2003-04 were 9% ahead of 2002-03 and PBITA, in US dollarterms was 42% ahead for the equivalent period (in local currency terms, PBITAin 2003-04 was 20% ahead of 2002-03). The good summer weather in Europe in2003-04 assisted the businesses in the UK, Spain and France to improve volumesand PBITA over 2002-03 and the German operations also benefited from stronggrowth in the carbonated soft drink market and increased volumes in 2003-04 by75%.

 

Excludingacquisitions, capital expenditure in 2003-04 was significantly less than in 2002-03and was well under 2003-04’s depreciation expense. Capital in 2003-04 wasinvested primarily in strengthening the push into higher margin, custommarkets, including juices, food and personal care products.

 

# ***Amcor Australasia***

 
| ** **              | ** ** | **2003-04** | ** ** | **2002-03** | ** ** | **Change** | ** ** |
|-------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **              | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                    |       |        |       |        |       |       |       |
| Sales                   |       | 2,537.9     |       | 2,455.7     |       | 3.3        |       |
| Segment  result (PBITA) |       | 316.5       |       | 282.8       |       | 11.9       |       |

 

Growth insales volume of glass wine bottles and restructuring initiatives in the fibrepackaging, folding cartons and food can sectors contributed to AmcorAustralasia’s sales and profit improvement in 2003-04 over 2002-03. Sales andPBITA increased in 2003-04 by 3.3% and 11.9% respectively. One-off costs ofrestructuring were effectively offset by profit on sale of properties. However,the strength of the Australian dollar in 2003-04 had a negative impact onexport margins, particularly in the paper and flexibles businesses.

 

In the fibrepackaging segment the drought in Australia in 2003-04 had an adverse affect oncorrugated box volumes in the dairy, fruit and produce markets. However thiswas partly offset by stronger demand in the meat market in Australia and NewZealand. Overall corrugated box volumes in 2003-04 were slightly down inAustralia and up 5% in New Zealand compared with 2002-03.

 

28

----

 

The recycledpaper mills continued to operate efficiently in 2003-04 but experienced adifficult year with lower demand from the Australian fibre box business, lowerpulp sales and an adverse impact of the strengthening of the Australian dollaron export pricing.

 

The foldingcarton business improved its PBITA in 2003-04 over 2002-03 due in part to therestructuring of its operations on the east coast of Australia resulting in alower cost base. The upgrade of the Petrie Mill in Queensland, Australia isexpected to improve board quality and create an opportunity for replacement ofimported whiteboards. Low margin export volumes, as expected, were adverselyimpacted by the shutdown of the mill for the upgrade.

 

The sacksbusiness experienced a difficult year in 2003-04 with the drought conditions inAustralia affecting dairy volumes. Additionally, the sacks market in Australiais very competitive. In the metal packaging segment, beverage can volumes in2003-04 were 4% up on 2002-03, mainly in the soft and mixer drink sectors.

 

The full yearbenefits of the closure of the Dandenong, Australia food can plant contributedto the improved PBITA in 2003-04 of this business despite sales volumes beingflat. Overall sales volumes in the aerosol can business improved in 2003-04,particularly aluminium cans.

 

In AmcorAustralasia’s plastics segment, the flexibles business’s sales volumes in2003-04 were slightly higher than 2002-03; however the strengthening of theAustralian dollar had an adverse impact on the profit margins of exports. Resinsupply was adversely affected by a gas field fire at Moomba, South Australiawhich necessitated importing resin and unfavourably impacted productivity.Overall, however, PBITA in 2003-04 was slightly up on 2002-03.

 

The glass winebottle operation operated at full capacity in 2003-04 and sales volume exceededexpectations. Most major customers experienced strong export volumes during theyear. A second glass furnace is on schedule for start-up in January 2005.

 

# ***Amcor Flexibles***

 
| ** **              | ** ** | **2003-04** | ** ** | **2002-03** | ** ** | **Change** | ** ** |
|-------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **              | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                    |       |        |       |        |       |       |       |
| Sales                   |       | 2,241.0     |       | 2,170.3     |       | 3.3        |       |
| Segment  result (PBITA) |       | 131.2       |       | 132.6       |       | (1.1       | )          |

 

In localcurrency (euros), Amcor Flexibles’ PBITA in 2003-04 increased 5.4% on 2002-03,from €74.2 million to €78.2 million. In Australian dollar terms, however, therewas a decrease of 1.1%. This was before a significant item of A$69.3 millionexpense in 2004 for the Flexibles’ market sector rationalization.  The result was below expectations due to adecline in sales in the processed food sector, operational underperformance atsome plants, poor economic conditions across much of Europe and a strong eurowhich impacted margins on export sales.

 

In Europe,Amcor Flexibles is organised into three markets – fresh food, healthcare andprocessed foods.  Our Americas businessis predominantly a healthcare business with some positions in processed andfresh food.

 

The fresh foodsector, benefited from increased demand from consumers for fresh produce,chilled foods and dairy products in the UK and Southern Europe. As a result,PBITA in 2003-04 showed a substantial improvement over 2002-03.

 

The healthcarebusiness has operations in Europe and the Americas. Assisted by the acquisitionof the Rexam healthcare flexibles business in October 2003, sales volume andPBITA improved in 2003-04 compared with 2002-03. The integration of the Rexamacquisition has been completed and it is expected that synergy benefits will beachieved in future periods.

 

Difficultconditions in certain market segments and operational performance belowexpectations contributed to a difficult year in the processed food sector.Sales values in 2003-04 were around 7% below 2002-03 and volumes for the sectorwere impacted by economic conditions in Europe including a trend to more genericpackaging. PBITA in 2003-04 was €15 million below 2002-03.

 

In order toaddress the operational difficulties experienced in 2003-04 in the processedfood sector, Amcor Flexibles has recently announced plans to restructure orclose a number of plants. It also plans to improve profitability in 2004-05 byreducing overheads.

 

29

----

 

# ***Amcor Sunclipse***

 
| ** **              | ** ** | **2003-04** | ** ** | **2002-03** | ** ** | **Change** | ** ** |
|-------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **              | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                    |       |        |       |        |       |       |       |
| Sales                   |       | 1,158.1     |       | 1,299.0     |       | (10.8      | )          |
| Segment  result (PBITA) |       | 57.6        |       | 84.8        |       | (32.1      | )          |

 

Reflectingadverse economic conditions in the USA, Amcor Sunclipse experienced a difficultyear in 2003-04 with PBITA in US dollars down 17.7% from US$49.7 million in2002-03 to US$40.9 million. In Australian dollar terms, PBITA was down 32.1% in2003-04 compared with 2002-03.

 

In localcurrency, volume growth contributed to an 8% improvement in sales value in2003-04 over 2002-03, however substantial pricing pressure led to reducedmargins and a lower return on funds invested.

 

Themanufacturing business, concentrated in California, was negatively impacted in2003-04 by overcapacity, pricing pressures and loss of business to Asia andMexico. Although volumes remained steady year on year, margins in 2003-04 werebelow those in 2002-03.

 

Paper suppliersimplemented price increases in 2003-04 for the first time in 18 months, US$50per tonne in March 2004 and US$50 per tonne in June 2004. The increases areexpected to have a positive effect on the manufacturing business’s profitabilityin 2004-05.

 

For thedistribution business, a more complete full line selling approach contributedto sales values improving in 2003-04 by 7.6% over 2002-03 which helped toensure PBITA was steady year on year.

 

AmcorSunclipse’s focus has been and will continue to be on reducing its cost base inan effort to ensure any improvement in sales values also reflects highermargins.

 

# ***Amcor Rentsch and Closures***

 
| ** **              | ** ** | **2003-04** | ** ** | **2002-03** | ** ** | **Change** | ** ** |
|-------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **              | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                    |       |        |       |        |       |       |       |
| Sales                   |       | 1,012.2     |       | 1,310.6     |       | (22.8      | )          |
| Segment  result (PBITA) |       | 100.6       |       | 83.3        |       | 20.8       |       |

 

The combinedAmcor Rentsch and Amcor Closures business improved PBITA in local currency(euros) and Australian dollars in 2003-04 compared with 2002-03 by 28.9% and20.8% respectively.  This was before asignificant item of A$8.2 million restructuring expenses in 2003 following theacquisition of Schmalbach-Lubeca businesses.

 

In AmcorRentsch, sales increased by 6% in 2003-04 to €325 million and PBITA was alsoahead of the equivalent period in the previous year.

 

In Russia,demand remains strong; a fourth printing press installed in the first half of2003-04 is fully loaded and a fifth machine is currently being installed and isexpected to start-up in December 2004. After the installation of the fifth press, this plant, which was firstcommissioned in 2000, will supply product to all major cigarette producers.

 

Ongoinggrowth has necessitated a second line be added to the new press in Portugal,which was started up in late 2003 to meet increased demand resulting from a newcontract in the Southern European market.

 

As new healthwarnings on cigarette packets are progressively introduced across Europe,increased printing capability is required. Accordingly, Amcor Rentsch’s present machines, which range from six to nine-colour,will be upgraded to 10-colour over the next two to three years.

 

AmcorClosures sales volumes and PBITA in 2003-04 were ahead of 2002-03 on acomparable basis. Sales and PBITA in 2002-03 included the 65% owned NorthAmerican plastic and metal closures operations that were sold in January 2003to the joint venture partner, Silgan Holdings.

 

In Europe anumber of projects were completed or commenced in 2003-04 which are expected tosupport the business going forward. These included the relocation of the plantin Turkey to new premises; the start-up of the

 

30

----

 

new plasticclosures plant in Poland and the commissioning of three new, in-house designed,manufacturing lines in Germany.

 

Despite thestronger Canadian dollar, the Bericap joint venture had a satisfactory yearwith strong operational performances in the Canadian plants. The new plant inCalifornia, which is in its second year of operation, is performing profitably.

 

## ***Amcor Asia***

 
| ** **              | ** ** | **2003-04** | ** ** | **2002-03** | ** ** | **Change** | ** ** |
|-------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **              | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                    |       |        |       |        |       |       |       |
| Sales                   |       | 249.5       |       | 263.4       |       | (5.3       | )          |
| Segment  result (PBITA) |       | 30.5        |       | 32.1        |       | (5.0       | )          |

 

Amcor Asia’sPBITA in Singapore dollars was up 12.7% in 2003-04 compared with 2002-03(2003-04 S$37.2 million; 2002-03 S$32.1 million). PBITA in the six months toJune 2004 of S$20.0 million was 55% ahead of the equivalent period in 2002-03which was severely affected by the SARS epidemic in the region.

 

Overcapacity,aggressive pricing and paperboard price increases in the corrugating business,particularly in Malaysia, led to a difficult year and an adverse impact onPBITA.

 

The tobaccopackaging business had a strong 2003-04 with sales volumes and PBITAsubstantially ahead of 2002-03. The two plants in China performed better thanexpected and Malaysian and Singaporean operations’ PBITA in 2003-04 improved on2002-03.

 

The flexiblesoperation, which consists of two plants in China and the recently acquiredRexam Healthcare plant in Singapore, had a solid year with PBITA in 2003-04ahead of 2002-03.

 

The outlookfor Asia is positive and it is expected that improving economic conditions willassist growth in the region in 2004-05.

 

**Year Ended June30, 2003 Compared with Year Ended June 30, 2002**

 

# ***Consolidated Results of Operations***

 

*Sales*

 

Sales revenuegrew 43% from A$7.5 billion in 2001-02 to A$10.7 billion in 2002-03 mainly as aconsequence of the increased sales in Amcor PET Packaging and Amcor Rentsch andClosures following the acquisition of Schmalbach-Lubeca in July 2002. Otherrevenue in 2001-02 of A$1.1 billion was A$0.8 billion more than 2002-03 duemainly to the disposal in 2001-02 of Amcor’s remaining 45% investment in KCA.Amcor’s share of associates’ net profit in 2001-02 was A$48 million but waszero in 2002-03 following the disposal of KCA.

 

*Interest*

 

Amcor’saverage interest rate decreased in 2002-03 to 5.0% from 5.2% in 2001-02;however net interest increased to A$146.3 million in 2002-03 from A$121.5million in 2001-02 due to the increase in debt levels following the Schmalbach-Lubecaacquisition.

 

*Income Tax*

 

Amcor’s income tax ratebefore significant items fell from 26.9% in 2001-02 to 22.1% in 2002-03. Thisis in part due to the full-year benefit of the tax deduction on the PACRS issuedin 2001-02 (which is charged below net profit after tax and shown as adistribution of profits); this had a 2.2% positive effect on the tax rate in2002-03. Amcor also implemented more efficient offshore capital structures in2002-03 by pushing debt into higher tax environments.

 

*Significant Items*

 

The majorityof the significant gain in 2001-02 of A$534.8 related to the gain on sale ofAmcor’s remaining holding in KCA and compares with a significant loss (aftertax) in 2002-03 of A$70.1 million. This loss refers to the restructuringexpenses consequent upon the acquisition of the PET and Closures businessesfrom Schmalbach-Lubeca.

 

31

----

 

*NetProfit*

* *

Amcor’sAustralian GAAP net profit after tax decreased from A$851.7 million in 2001-02to A$361.3 million in 2002-03.

 

The Company’sUS GAAP net profit decreased from A$819.3 million in 2001-02 to A$367.6 millionin 2002-03. The difference between the 2002-03 Australian GAAP net profit andthe US GAAP net profit is detailed in Note 33 to the consolidated financialstatements included in Item 18.

 

*Dividend*

* *

A final dividend ofA$0.15 per share (franked to 40%) was declared on all fully paid ordinaryshares registered as at September 11, 2003, and paid on October 1, 2003. Thefinal dividend, combined with the interim dividend of A$0.15 per share,represented an annual dividend of A$0.30 per share. This represented anincrease of A$0.02 per share over the 2001-02 dividend.

 

# ***Amcor PET Packaging***

 
| ** **              | ** ** | **2002-03** | ** ** | **2001-02** | ** ** | **Change** | ** ** |
|-------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **              | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                    |       |        |       |        |       |       |       |
| Sales                   |       | 3,236.2     |       | 802.5       |       | 303.1      |       |
| Segment  result (PBITA) |       | 301.6       |       | 79.2        |       | 280.8      |       |

 

Amcor PETPackaging had a strong year in 2002-03 with volumes up 11%, on a comparableyear basis over 2001-02, to 27.7 billion containers.  Growth in the higher margin custom business was27% with this business segment representing 16% of total annual sales volume in2002-03.  This was before significantitems of A$59.5 million restructuring expenses in 2003 following acquisition ofSchmalbach-Lubeca businesses.

 

PBITA was up280% in 2002-03 to A$301.6 million, reflecting the acquisition ofSchmalbach-Lubeca businesses as well as strong volume growth in all sectors ofthe market.

 

The businessin the US showed particularly strong volume growth in 2002-03; it grew 23% over2001-02 on a comparable basis.  This wasdue to underlying volume growth in the bottled water market and continuedpenetration of single serve juices and sports drinks.

 

In 2002-03 custom bottle growth was 25% over 2001-02continuing the strong trend in this higher margin segment over the past fewyears.  The Canadian business experiencedvolume growth during the year of 12%, mainly attributable to increased demandin the water segment.

 

The North American business yielded an increase inPBITA in 2002-03 of 22% over the prior year on a comparable basis due toincreased demand for PET bottles and the benefit of synergies.

 

In LatinAmerica, overall volumes in 2002-03 were in line with the 2001-02.  In Mexico, volumes were up strongly,particularly in the higher margin custom business driven mainly by the rapidgrowth of sports drink and juice containers.

 

In Brazil,volumes were down year on year due to a renewed focus on strategic customers,while in Argentina, the overall market in 2002-03 was slowly recovering fromthe 2002 economic crisis.  For the LatinAmerican region, PBITA in 2002-03 was ahead of 2001-02.

 

In Europe, volume growth in 2002-03 was 4% on acomparable basis, but with an improved performance in the second half whenvolumes were up 6%.  There was continued stronggrowth in the UK, France and Spain, while volumes in Germany were impacted bygovernment deposit legislation and were well down on 2001-02.

 

PBITA in Europe for2002-03 was up 18% on 2001-02, after being slightly lower in the firsthalf.  The UK operations had a stronggrowth in profit, however the delayed start-up of the new recycling facility atBeaune in France had an adverse impact. Elsewhere, volume and profit expectations were largely met and customcontainers continued to grow as a percent of the overall product mix.

 

32

----

 

The PET businesscontinued to experience new growth opportunities and during 2002-03 over US$120million, excluding the acquisition of Alcoa’s PET operations in Latin America(see Recent Developments), was approved for expansion; this consisted of anadditional 26 injection moulding machines and 29 blow moulding machines.

 

The 2002-03 year marked the first full year ofoperation after the acquisition of Schmalbach-Lubeca’s PET business. Thebusiness ended the year having completed its restructuring program (combiningtwo plants in Southern California and upgrading the remaining plant andcombining the Peru and Venezuela businesses) and implemented an integratedworldwide management structure.

 

***AmcorAustralasia***

 
| ** **              | ** ** | **2002-03** | ** ** | **2001-02** | ** ** | **Change** | ** ** |
|-------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **              | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                    |       |        |       |        |       |       |       |
| Sales                   |       | 2,455.7     |       | 2,367.7     |       | 3.7        |       |
| Segment  result (PBITA) |       | 282.8       |       | 254.2       |       | 11.3       |       |

 

AmcorAustralasia recorded another sound performance with sales up 4% from A$2.368 billionin 2001-02 to A$2.456 billion in 2002-03 and PBITA improving by 11.3% fromA$254.2 million to A$282.8 million in 2002-03.

 

In the fibre packaging segment, corrugated box volumeswere up 6%.  More settled industrialconditions in Australia underpinned volume growth of 7% with 2% volume growthin New Zealand.  Earnings improved bothin Australia and New Zealand due to continued productivity gains, fibreboardrationalisation initiatives and price increases recovering cost increases.

 

The recycledpaper mills’ buoyant first half continued with strong domestic demand whileexport prices held their first half levels. The mills continued to operate efficiently and were assisted bypaperboard specification rationalisation. Wastepaper collections totalled 815,000tonnes in 2002-03 up 4% on 2001-02.

 

The foldingcarton business consists of a paper mill at Petrie in Queensland, Australia aswell as a number of conversion plants in Australia and New Zealand. The PetrieMill experienced strong domestic demand and productivity levels, which offsetsome volume losses in the conversion business. During 2002-03 a $55 millionupgrade was approved for the Petrie Mill to improve the board quality and inthe conversion business there was a restructuring of operations, which includeda labour force reduction of 6%.

 

The sacksbusiness continued to focus on the dairy market, with innovative new productsthat reduce transport costs of bulk products. The drought conditions impacted volumes in 2002-03, which were down 9%from 2001-02.

 

In metalpackaging, the beverage can business had a solid year with volumes up 2% in2002-03 on the previous year.  Pre-mixedalcoholic beverages and soft drink multipack promotions were the main driversof growth.  Strategic capital investmenttotalling $30 million was approved for product development initiatives thatinclude shaped and poly coated steel cans and a new low cost can end.

 

The food can businessperformed strongly in 2002-03 despite being impacted by drought conditions inAustralia.  With the closure of the plantat Dandenong, Australia the business had three focused manufacturing plants inthe Goulburn Valley in Victoria, South Queensland and Hamilton, New Zealand atJune 30, 2003.

 

In plastics,the flexible packaging business achieved volume growth of 3% in 2002-03, whichwas slightly below expectations due to the drought conditions affecting thedairy and produce segments of their market. Profit rose in 2002-03 comparedwith 2001-02 and with further capital investment targeted at cost reduction, astrong focus on product development together with synergies flowing from theflexibles sector, the business is positioned to deliver improved results infuture periods.

 

The glass wine bottleoperation generated a positive profit contribution for the 2002-03 year.  A trouble free start up, strong customersupport with sales above forecast levels and strong productivity levels werethe key drivers to the profit contribution. Growth rates in the export winemarket remain strong and during 2002-03 Amcor obtained customer support toenable the justification of a further investment of $125 million in a secondfurnace that is expected to come on stream in the first half of calendar year2005 (see Recent Developments).

 

33

----

 

# ***Amcor Flexibles (AF)***

 
| ** **             | ** ** | **2002-03** | ** ** | **2001-02** | ** ** | **Change** | ** ** |
|------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **             | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                   |       |        |       |        |       |       |       |
| Sales                  |       | 2,170.3     |       | 1,976.6     |       | 9.8        |       |
| Segment  result(PBITA) |       | 132.6       |       | 93.2        |       | 42.3       |       |

 

AF continuedto make strong progress in 2002-03 with PBITA up 42.3% on 2001-02 to A$132.6million.  This performance was achievedin an environment of volatile raw material prices and uncertain economicconditions, particularly in France and Germany in the second half of the fiscalyear.

 

The PBITA tosales margin improved from 4.7% in 2001-02 to 6.1% in 2002-03. Furtherimprovements came from ongoing cost reductions and new product developments in prioryears.

 

The primaryfocus in 2002-03 was to improve the product mix to higher margin products andactively manage the impact of volatile raw material prices and as a result,volumes were flat. However, added value improved in all market sectors and rawmaterial price increases were successfully managed through strong relationshipswith our customers and suppliers.

 

The acquisitionsof Rexam Food Flexibles and Tobepal (see Recent Developments) were integratedinto the AF business successfully in 2002-03.

 

The portfoliorestructuring programme, which commenced in 2001-02, continued during the yearwith the sale of the non-core Unibag business in Denmark, the acquisition ofthe Leaderpack (Portugal) minorities in July 2002, the closure of the DutchFlexibles business at Haarlem in August 2002 and the closure of the small Syncooperation in Belgium in December 2002.  Furtherminor restructuring continued at a number of plants with a resultantimprovement in the operating cost base. Synergy benefits from the three-way merger in June 2001 continued toremain ahead of expectations.

 

During the2002-03 year great emphasis was placed on plant focus, product leadership andinnovation (PLI) and customer service. The PLI strategy strengthened AF’smarket, customer and product portfolio. Improvements were also achieved incustomer satisfaction, with service, quality and on-time deliveries contributingto stronger customer relationships.

 

The smallNorth American flexibles business performed to expectations and, along withother non-European Amcor flexibles operations, delivered synergy benefits fromits association with a large European flexibles group.

 

The secondhalf of 2002-03 saw softer demand due to economic weakness in France andGermany and, as a result, order books were generally weaker than anticipatedgoing into the summer period.

 

Industryconsolidation continued in the European flexibles packaging industry and AF wasan active participant with emphasis on value and strategic enhancement.

 

# ***Amcor Sunclipse***

 
| ** **             | ** ** | **2002-03** | ** ** | **2001-02** | ** ** | **Change** | ** ** |
|------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **             | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                   |       |        |       |        |       |       |       |
| Sales                  |       | 1,299.0     |       | 1,413.2     |       | (8.1       | )          |
| Segment  result(PBITA) |       | 84.8        |       | 95.2        |       | (10.9      | )          |

 

For the2002-03 year Amcor Sunclipse’s PBITA was flat in US$ terms, after being up 8%on 2001-02 in the first half.  In A$terms, PBITA in 2002-03 was down 10.9% compared with 2001-02.

 

The economy inthe second half of 2002-03 was impacted by the war in Iraq, reducing demandacross all segments of the business.

 

In themanufacturing business, cost containment efforts were not able to keep up withreduced prices and margins and PBITA was down 10% in 2002-03 compared with2001-02. Competition and difficult economic conditions were especiallyprevalent in the main area of operation, Southern California.

 

34

----

 

In thedistribution business, the Mexican operations experienced a reduction in demandas increased NAFTA tariffs resulted in several multinational customers movingmanufacturing operations from Mexico to Asia. In response, the Mexican operations increased their focus on Mexicanbased opportunities.

 

Thedistribution business’s largest United States sales regions are SouthernCalifornia, Northern California and Texas. The Northern Californian operations experienced reduced demand from thetechnology sector and, as a consequence, increased their focus on wine andproduce opportunities.  Southern Californiaand Texas operations generally experienced flat activity.

 

Overall, inlocal currency, sales grew by 4.8% in 2002-03 over the previous year andoperating margins remained stable despite intense competitive pressure causedby the severe contraction in business activity. In A$ terms sales were down8.1% in 2002-03 from A$1,413 million in 2001-02 to A$1,299 million.

 

In 2002-03 therookie sales force was increased by 11% over 2001-02 aimed at increasing theability to penetrate both new and existing accounts and markets.  Best practices in the areas of procurementand logistics proved effective in defending market share and improving customerservice.  Specifically, worldwide purchasing,the development of a hub and satellite logistics network and inventoryrationalisation projects yielded positive results.

 

# ***Amcor Rentsch and Closures***

 
| ** **             | ** ** | **2002-03** | ** ** | **2001-02** | ** ** | **Change** | ** ** |
|------------------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **             | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|                   |       |        |       |        |       |       |       |
| Sales                  |       | 1,310.6     |       | 611.3       |       | 114.4      |       |
| Segment  result(PBITA) |       | 83.3        |       | 48.6        |       | 71.4       |       |

 

For the combined AmcorRentsch and Amcor Closures operations, PBITA was up 73% from A$48.6 million in2001-02 to A$84.1 million in 2002-03 and sales were up 114% for the equivalentperiod mainly due to the acquisition of Schmalbach-Lubeca’s closuresoperations.  This was before significantitems A$8.2 million restructuring expenses in 2003 following the acquisition ofSchmalbach-Lubeca businesses and A$18.6 million loss on disposal of a business.

 

Amcor Rentschhad a strong year with sales up 15% in 2002-03 to A$549 million (from A$477million in 2001-02) and profit before interest, tax and goodwill amortisationin 2002-03 also up on the equivalent period last year.

 

Volumes wereparticularly strong in Russia with the third printing press installed atNovgorod in November 2002 operating at full capacity.

 

Volume growthin Western Europe was assisted by the implementation of the European Union’sdirective for new health warnings on cartons. New designs from customers led to strong sales for product developmentservices.

 

The business started up a new press in Portugal inlate 2003, to meet increased volumes resulting from a new contract in theSouthern European market.

 

In January2003 Amcor announced the sale of its 65% holding in the North American metaland plastic closure business to its joint venture partner Silgan Holdings, viaan existing agreement where Silgan Holdings exercised its right to acquireAmcor’s shareholding.

 

Subsequent tothe 2002-03 year-end, Amcor sold its plastic tub business for A$36 million.This business did not make a positive contribution to profit for the 2002-03year.

 

For theongoing White Cap Closures operations, volumes in 2002-03 were down 3.6%compared with 2001-02 due to a combination of the impact of deposit legislationin Germany, the weaker economy in Europe and the political uncertainty inVenezuela.  The business continued tofocus on ongoing cost cutting initiatives to improve operating productivity.

 

Expansion ofthe plastic closure capacity in Poland was completed and production commencedin January 2004. A new plant in the Philippines commenced operations and issupplying innovative proprietary closure technology to a food customer in theAsian region.

 

The 51% owned plasticclosure joint venture with Bericap in North America operated two plants in2002-03, one in Ontario and a new plant in California, which commencedproduction in July 2002.  Sales for the2002-03 year were

 

35

----

 

up 12% on 2001-02,mainly due to the start-up of this new plant. The weakness in the US$ impacted margins in Canada for those closuresexported to the US.

 

## ***Amcor Asia***

 
| ** **      | ** ** | **2002-03** | ** ** | **2001-02** | ** ** | **Change** | ** ** |
|-----------------|------------|-------------|------------|-------------|------------|------------|------------|
| ** **      | ** ** | **A$m**     | ** ** | **A$m**     | ** ** | **%**      | ** ** |
|            |       |        |       |        |       |       |       |
| Sales           |       | 263.4       |       | 310.4       |       | (15.1      | )          |
| Segment  result |       | 32.1        |       | 44.5        |       | (27.9      | )          |

 

Amcor Asiahad a difficult year with PBITA in 2002-03 down 21% in local currency terms anddown 28% in Australian dollar terms to A$32 million from A$45 million in2001-02.

 

After a flatfirst half of 2002-03, the economies of Asia were severely impacted by the SARSvirus and the advent of the war in Iraq. Sales were down 15% from A$310 millionin 2001-02 to A$263 million in 2002-03.

 

As a resultof the SARS virus, the corrugated business, which has exposure to a broad rangeof industries, faced unstable paper prices and a substantial fall in demand.  The plant at Dongguan in Southern China wasparticularly hard hit by its impact.

 

The tobaccocarton business performed satisfactorily, although the plant in Beijing wasseverely impacted when distribution in the city almost came to a halt during theSARS epidemic.

 

The twoflexible plants in China continued to improve their operating performance andPBITA in 2002-03 was ahead of 2001-02.

 

## **B.            Liquidityand Capital Resources**

 

Amcor believesthat its operating cash flow and existing credit facilities should besufficient to fund all of its existing business needs for the foreseeablefuture, including currently anticipated capital expenditure, debt repaymentsand other contingent liabilities.

 

As indicatedin the following table, Amcor has expended significant funds on capitalexpenditure projects and acquisitions over the past five fiscal years.

 
| ** **                                                | ** ** | **Year Ended June 30,**               | ** ** |
|-----------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                | ** ** | **2004**                              | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** | **2000** | ** ** |
| ** **                                                | ** ** | **(In millions, except percentages)** | ** ** |
| ** **                                                | ** ** | ** **                            | ** ** |
| Capital  expenditure                                      |       | A$                                    | 605        |   | A$ | 890 |   | A$ | 351 |   | A$ | 289 |   | A$ | 330 |   |
| Acquisitions                                              |       | A$                                    | 618        |   | A$ | 2,858 |   | A$ | 371 |   | A$ | 663 |   | A$ | 101 |   |
| Gearing:  net debt/net debt and shareholders’ equity |       | 36                                    | %          | 33 | % | (6 | )% | 46 | % | 43 | % |
| Total  liabilities as % of total assets                   |       | 54                                    | %          | 52 | % | 48 | % | 63 | % | 63 | % |

 

Capital expenditurecommitments and contingent liabilities at June 30, 2004 were A$122 million andnil, respectively. Acquisition expenditure in 2003-04 of A$618 million relatedmainly to the acquisition of Rexam’s Healthcare flexibles business and Alcoa’sLatin American PET packaging business and the buyout of the minority interestof Amcor Flexibles.

 

Amcor ensuresthat adequate back-up funding facilities are in place to cover the risk of aloss of credit support or a general market disruption. Amcor has arrangedback-up facilities to support sources of working capital funding.

 

Undrawn bankfacilities available to Amcor at June 30, 2004 totalled A$2,211 million, ofwhich A$1,220 million is committed funding. These unutilized credit linesincluded:

 

•                  a A$600 millionpromissory note facility (undrawn at June 30, 2004 A$600 million);

 

•                  a US$200 millioncommercial paper program (undrawn A$103 million);

 

36

----

 

•                  a US$200 millionmulti-currency Euronote facility (undrawn A$289 million);

 

•                  a A$350 millioncommitted bi-lateral multi-currency term loan facility (undrawn A$46 million);and

 

•                  a US$1,000 millioncommitted syndicated revolving multi-currency loan facility (undrawn A$1,134million).

 

Total borrowingsincreased from A$2,013 million at June 30, 2003 to A$2,505 million at June 30,2004. Net of cash and short-term deposits, net debt was A$1,851 million as atJune 30, 2003 compared with net debt of A$2,356 million at June 30, 2004.

 

Amcor’s debt profile forits last five fiscal years is shown below:

 
| ** **                                                                                     | ** ** | **At June 30,**                                   | ** ** |
|------------------------------------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                                                     | ** ** | **2004**                                          | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** | **2000** | ** ** |
| ** **                                                                                     | ** ** | **(In A$ millions, except where indicated)** | ** ** |
| ** **                                                                                     | ** ** | ** **                                        | ** ** |
| Long-term  debt (excluding undated subordinated convertibles but including finance  leases)(1) |       | A$                                                | 1,776      |   | A$ | 1,004 |   | A$ | 1,145 |   | A$ | 1,559 |   | A$ | 990 |   |
| Net  debt/(cash surplus)(2)                                                                    |       | A$                                                | 2,356      |   | A$ | 1,851 |   | A$ | (818 | ) | A$ | 1,733 |   | A$ | 984 |   |
| Average  interest rate(3)                                                                      |       | 4.7                                               | %          | 5.0 | % | 5.5 | % | 6.0 | % | 6.6 | % |

 

----

(1)          Non-current liabilities (ie. debt which is due to be repaid morethan twelve months after balance date). Undated subordinated convertible securities of A$332 million are notincluded in long term debt.

 

(2)          Current and non-current bank and other borrowings, current andnon-current lease liabilities and current indebtedness to related parties netof cash and deposits

 

(3)          Includes an interest rate of 7.25% on A$332 million undatedsubordinated notes.

 

By keeping aproportion of variable-rate debt, Amcor was able to maintain the averageinterest rate paid on all borrowings in 2003-04 at 4.7% (2002-03 – 5.0%). Netinterest cover at 4.5 times is higher than at June 30, 2003 and is well withinthe prudential limit established by Amcor’s Board of Directors. Balance sheetgearing (net debt as a proportion of net debt plus shareholders’ equity) was36% at June 30, 2004, compared with 33% as at June 30, 2003.

 

Amcor retainsStandard & Poor’s and Moody’s Investor Services to provide an independentrating of its creditworthiness. This provides a current assessment of the Group’soverall financial capacity to meet its financial obligations. Current creditratings for Amcor are as follows:

 
| Short-term: | A-2 (Standard & Poor’s)                        |
|-------------|---------------------------------------------------------|
|        | P-2  (Moody’s)                                     |
| Long-term:  | BBB+ Credit Watch Negative (Standard & Poor’s) |
|        | Baa1 Stable Outlook (Moody’s)                      |

 

Amcor believesthat having an investment grade rating delivers a conservative capitalstructure, retains financial flexibility, provides a buffer through thebusiness cycle and allows good access to capital as required.

 

Amcor believesthat it maintains a high level of liquidity including positive working capital(current assets less current liabilities), cash balances and substantial creditfacilities (described above). Our working capital increased by A$150 million atJune 30, 2004 due to an increase in current assets of A$102 million(receivables A$26 million, inventories A$86 million and cash (A$10 million))and a decrease in current liabilities of A$48 million (accounts payable (A$185million), borrowings A$280 million and provisions (A$47 million)).

 

37

----

 

The followingtable sets forth Amcor’s cash flow information for the last five fiscal years:

 
| ** **                                           | ** ** | **Year Ended June 30,**   | ** ** |
|------------------------------------------------------|------------|---------------------------|------------|
| ** **                                           | ** ** | **2004**                  | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** | **2000** | ** ** |
| ** **                                           | ** ** | **(In A$ millions)** | ** ** |
| Net  cash inflow from operating activities           |       | 1,032                     |       | 875 |   | 901 |   | 416 |   | 467 |   |
| Net  cash inflow/(outflow) from investing activities |       | (1,061                    | )          | (3,504 | ) | 269 |   | (934 | ) | 322 |   |
| Net  cash inflow/(outflow) from financing activities |       | 106                       |       | 398 |   | 810 |   | 608 |   | (783 | ) |
| Net  increase/(decrease) in cash held                |       | 77                        |       | (2,231 | ) | 1,980 |   | 90 |   | 6 |   |

 

The decreasein cash outflow from investing activities reflects lower levels of expenditurein 2003-04 on acquisitions and capital. The outflow in 2002-03 mainly refers tothe cash settlement of the purchase of the PET and Closures businesses fromSchmalbach-Lubeca. Net cash from financing activities in 2003-04 is less thanin 2002-03 due mainly to the lower levels of net borrowings in 2003-04.

 

Issued sharecapital increased from 848.2 million Ordinary Shares outstanding at June 30,2003 to 878.0 million Ordinary Shares outstanding at June 30, 2004 dueprimarily to the shares issued for the Dividend Reinvestment Plan (‘DRP’) andthe conversion to ordinary shares of convertible securities.

 

On October 1,2003, 30,178 shareholders participated in the DRP; 6,833,330 shares were issuedat a price of A$8.59 per share and on March 31, 2004, 29,614 shareholdersparticipated in the DRP; 4,505,792 shares were issued at a price of A$7.87 pershare. On September 29, 2004, 29,834 shareholders participated in the DRP and 3,819,048shares were issued at a price of A$7.34 per share.

 

## **C.**                                    Researchand Technology

 

Research and developmentis an integral part of Amcor’s strategy with a global presence establishedthrough ‘Centres of Excellence’ in North America, Europe and Australasia.Communication between these facilities, and the subsequent exchange ofinformation, provides Amcor’s customers with packaging solutions on a globalscale. Additionally, Amcor’s Product Leadership and Innovation program, whichwas launched during the year to June 2003, is now a part of our culture withincreased market and customer focus.

 

A key element of Amcor’sresearch and development activities is the securing of intellectual property (IP)for Amcor and its customers. Our IP program ensures that ideas generated byAmcor employees to solve customers’ needs and developments of innovative,cost-effective products and processes are kept as the IP of Amcor by utilisinga range of registration or confidentiality agreements.

 

During 2003-04 Amcorspent approximately A$48 million on research and development. This compareswith approximately A$50 million in 2002-03 and A$36 million in 2001-02.

 

Examples of Amcor’srecent initiatives include:

 

•                  OurP-Plus technology which enables pre-cut salads and vegetables in a sealed bagto remain fresh and nutritious for up to 10 days;

•                  Ournew Powerflex PET technology for PET bottles which offers the benefits ofsmooth sidewalls as well as vacuum control; it has a special vacuum-absorbingdiaphragm built into its base and a unique sidewall designed to resistdistortion;

•                  TheTrayBon Muffin Tray development which eliminates the need for repackaging asmuffins are baked, cooked, cooled, transported and sold in the tray; and

•                  AromaSeal,a plastic canister designed for Proctor and Gamble’s ‘Folgers’ coffee; afeature of the canister is Amcor’s one-way valve, SoftValve, which releasescarbon dioxide emitted from freshly-ground coffee, while preventing air fromentering and affecting the coffee’s freshness.

 

**D.            Trend Information**

 

Relevant trendsare discussed for Amcor as a whole and for each business in Item 5A “OperatingResults”

 

38

----

 

**E.             Off-Balance Sheet Arrangements**

 

***Non-recourse Receivables Securitization Programme***

 

Amcor utilisesan uncommitted, multi-currency receivables securitization programme in theUnited Kingdom, France, Germany, Spain and US. The trade receivables of some ofthe group entities in these jurisdictions are sold, on a non-recourse basis,into an independent securitization conduit which issues asset-backed commercialpaper into organised markets.

 

The programmelimit is A$210 million and the balance of trade receivables sold at June 2004was A$198 million (there was a balance of A$190 million at June 2003).

 

The programme isnot required to be included on balance sheet for A-GAAP purposes, but is addedback and included on balance sheet in the reconciliation to US-GAAP (referFinancial Statements – F-97).

 

**F.             Tabular Disclosure ofContractual Obligations**

 

***Contractual and Commercial Commitments as at June30, 2004***

 
| ** **               | ** ** | **Not later than 1 year** | ** ** | **1 and 3 years** | ** ** | **3 and 5 years** | ** ** | **later than 5 years** | ** ** | **TOTAL**   | ** ** |
|--------------------------|------------|---------------------------|------------|-------------------|------------|-------------------|------------|------------------------|------------|-------------|------------|
|                     |       |                      |       |              |       |              |       |                   |       |        |       |
| Capital  Expenditure (1) |       | 121.5                     |       | —            |       | —            |       | —                 | ** ** | **121.5**   | ** ** |
| ** **               | ** ** | ** **                | ** ** | ** **        | ** ** | ** **        | ** ** | ** **             | ** ** | ** **  | ** ** |
| Finance  Leases (2)      |       | 2.3                       |       | 19.7              |       | 4.5               |       | 73.5                   | ** ** | **100.0**   | ** ** |
| ** **               | ** ** | ** **                | ** ** | ** **        | ** ** | ** **        | ** ** | ** **             | ** ** | ** **  | ** ** |
| Operating  Leases (3)    |       | 123.0                     |       | 207.2             |       | 149.8             |       | 166.4                  | ** ** | **646.4**   | ** ** |
| ** **               | ** ** | ** **                | ** ** | ** **        | ** ** | ** **        | ** ** | ** **             | ** ** | ** **  | ** ** |
| Other  Expenditure (4)   |       | 25.8                      |       | 21.7              |       | 6.1               |       | 22.2                   | ** ** | **75.8**    | ** ** |
| ** **               | ** ** | ** **                | ** ** | ** **        | ** ** | ** **        | ** ** | ** **             | ** ** | ** **  | ** ** |
| Long-Term  Debt          | ** ** | **—**                |       | 193.3             |       | 145.2             |       | 1,340.0                | ** ** | **1,678.5** | ** ** |
| ** **               | ** ** | ** **                | ** ** | ** **        | ** ** | ** **        | ** ** | ** **             | ** ** | ** **  | ** ** |
| **TOTAL**                | ** ** | **272.6**                 | ** ** | **441.9**         | ** ** | **305.6**         | ** ** | **1,602.1**            | ** ** | **2,622.2** | ** ** |

 

----

(1)          Capital expenditure forplant and equipment contracted but not provided for.

 

(2)          Amcor leases equipment underfinance leases expiring from one to 11 years. At the end of the lease term we havethe option to purchase the equipment at an agreed residual.

 

(3)          Amcor leases motor vehicles,plant and equipment and property under operating leases. Leases generallyprovide us with a right of renewal at which time all terms are renegotiated.

 

(4)          Expenditure contracted butnot provided for covering supplies and services to be provided.

 

39

----

 

**ITEM6   DIRECTORS, SENIOR MANAGEMENT ANDEMPLOYEES**

 

**A.            Directors and Senior Management**

 

Details of the Directors in office at December 20, 2004are:

 

C I (Chris) Roberts

Executive Chairman

Age 60.  BCom.

Current term expires in October 2007.

Extensive knowledge of fast moving consumer products,where the packaging component is significant, gained through executive roles inAustralia, New Zealand, United Kingdom and Indonesia.

Currently Chairman of Cockatoo Ridge WinesLimited.  Director Australian AgricultureCompany Limited and The Centre for Independent Studies, General Governor WinifredWest Schools Limited and Adviser to Control Risks Group plc.  Former roles include Chairman and ManagingDirector of Arnott’s Limited, Managing Director of Orlando Wyndham WinesLimited, Chairman of  Email Ltd andDirector of Telstra Corporation Ltd and MLC Life Ltd.

Chairman of Executive and Nomination Committees.

Member of Audit and Compliance Committee.

Director since 1999 – appointed Chairman 2000.

 

E A (Elizabeth) Alexander AM

Independent Non-ExecutiveDirector

Age 61.  BCom, FCA, FCPA, FAICD.

Current term expires in October 2005.

Extensive governance, accounting and financialreporting experience.

Former PartnerPricewaterhouseCoopers.

Currently Director of BoralLtd, CSL Ltd and Deputy Chairman of Winston Churchill Memorial Trust andFinancial Reporting Council. Chairman of Board of Advice to the Salvation Army(Southern Command) and member of the Takeovers Panel. Former Chairman ofAustralian Institute of Company Directors.

Chairman of Amcor Superannuation Fund.

Member of Audit and Compliance, Human Resources andNomination Committees.

Director since 1994.

 

D C K (Charles) Allen AO

IndependentNon-Executive Director

Age 67.  MA, MSc, FTSE, FAICD.

Current termexpires in October 2005.

ExtensiveBoard and international management experience.

Currently Directorof Earthwatch Australia Limited, The Australian Gas Light Company and AirLiquide Australia Limited.  FormerChairman of National Australia Bank and CSIRO. Former Managing Director of Woodside Petroleum Limited and Chairman of NorthWest Shelf Project Committee.

Member of Executive,Audit and Compliance and Nomination Committees.

Director since1996.

 

## **R K (Keith) Barton**

IndependentNon-Executive Director

Age 63. BSc, PhD, FTSE, FAICD.

Currentterm expires in October 2006.

Extensivemanagement experience in manufacturing in Australia and internationally.

CurrentlyDirector of Coles Myer Ltd, Tower Limited, Citect Ltd and RBS. RVIV. VAFLimited. Former Managing Director of James Hardie Industries Limited andExecutive Director of CSR Limited.

Chairmanof Audit and Compliance Committee.

Memberof Executive and Nomination Committees.

Director since1999.

 

40

----

 

G J (John) Pizzey

Independent Non-Executive Director

Age 58.  BEng(Chem),Dip. Mgt., FIE Aust. FAICD, FAIM.

Current term expires in October 2006.

Extensive experience in the international resourcesindustry and general management.

Currently Chairman of ION Ltd, Range River Gold Ltdand Director of WMC Resources Ltd and St Vincent’s Institute.

Former Executive Vice President and Group PresidentPrimary Products for Alcoa Inc and Chairman London Metal Exchange.

Member of Human Resources and Nomination Committees.

Director since 2003.

 

J G (John) Thorn

Independent Non-Executive Director

Age 56, FCA

Appointment to be ratified at the October 2005 AGM.

Previously a partner with PricewaterhouseCoopers forover 20 years with the last three as National Managing Partner.

Currently Director of Caltex Australia Limited,National Australia Bank Limited and Salmat Limited.

Member of the Audit and Compliance Committee.

 

G A (Geoff) Tomlinson

Independent Non-Executive Director

Age 55.  BEcon.

Current term expires in October 2007.

Extensive experience in the financial servicesindustry in Australia and internationally.

Currently Chairman of Funtastic Limited and ProgrammedMaintenance Services Limited. Deputy Chairman of Hansen TechnologiesLimited.  Director Mirrabooka InvestmentsLimited and National Australia Bank Limited.

Former Group Managing Director National MutualHoldings Ltd.

Chairman Human Resources Committee.

Member of Nomination Committee.

Director since 1999.

 

In addition tothe Executive Director of Amcor noted above, details of the Executive Officersof Amcor who are not Directors at the date hereof are as follows:

 

E.E. (Eric)Bloom

President andChief Executive Officer, Amcor Sunclipse North America

Age 55, B.ScME, MBA

Joined Amcorin 1995 and appointed to current position in 2002.

PreviouslyResearch and Development Design Engineer, Director and later Vice President ofManufacturing.

Previoussenior manufacturing roles held at Fortune Brands and Black and Decker.

Director ofNational Paper Trade Association (NPTA).

 

Chan Chew Keak(Billy)

ManagingDirector, Amcor Asia

Age 54, C Eng(UK), MBA

Joined Amcorin 1993 and appointed to current position in 1998.

10 yearsexperience with Carnaud Metal box including Managing Director and ManagingDirector AMB Packaging Pte Ltd

 

W.P. (Peter)Day

ExecutiveGeneral Manager Finance

Age 55, LLB(Hons), MBA, FCA (UK & Aust), FCPA

Joined Amcorin 2001 and appointed Executive General Manager Finance in June 2001.

PreviouslyExecutive Director Finance Bonlac Foods Limited.

Former deputychairman of the Australian Securities and Investments Commission (ASIC).

FormerChairman of the Australian Accounting Standards Board.

Member of International Accounting Standards Board’sAdvisory Council.

 

41

----

 

G.S. (Graham)James

ChiefExecutive Officer, Amcor Flexibles

Age 58, BA.Hons.

Joined Amcorin 1994 and appointed to current position in 2001.

Over 30 yearsexperience in the packaging sector, particularly in Europe.

PreviouslyDivisional Chief Executive, packaging Films for Courtauds.

 

L.J. (Lou)Lachal

Acting ChiefOperating Officer

Age 53, BSc,B.Bus.

Joined Amcorin 1980.

Extensiveexperience in working overseas and with a diversified international business.  Previous positions in Amcor include GeneralManager Commercial, Amcor Packaging; Deputy Managing Director Amcor Packaging(Europe) Ltd; Commercial Director Amcor Packaging (Europe) Ltd; Mill ManagerBroadford. Appointed Group General Manager Commercial Operations in April 1998.Chief Financial Officer from July 2000 to June 2001.

 

W.J. (William)Long

President,Amcor PET Packaging

Age 49, B Sc.BA

Joined Amcorin 2002 and appointed to current position in 2002.

Previouslyheld various positions within Schmalbach-Lubeca, including President & CEOof Plastic Containers Americas and was previously Vice President and GeneralManager for Latin America at Johnson Controls Inc. prior to its sale toSchmalbach-Lubeca in 1997. At Johnson Controls he had also been Vice Presidentof Sales and Marketing USA PET and Director of Operations PET Europe,responsible for the start-up of JCI’s PET business there in the early 1990’s. Priorto this, he held various regional and plant management positions in variouscities across the US in businesses bought and merged into the Johnson ControlInc. Group.

 

K. N. (Ken)MacKenzie

Group ManagingDirector, Amcor Rentsch and Amcor Closures

Age 40, B Eng.

Joined Amcorin 1992 and appointed to current position in 2001.

17 yearsexperience in the manufacturing sector including senior management roles inOperations, Finance and Sales.  FormerAmcor positions include Group General Manager Amcor Flexibles Australasia;General Manager Corporate Sales and Marketing, Amcor Australasia; SeniorFinance and Operational roles, Amcor PET Packaging North America 1992.

PreviouslyManager Manufacturing Strategy Practice, Accenture.

 

J.V. (John)Murray

Executive GeneralManager Corporate Affairs

Age 46,B.E(Chem), B.Ec.

Joined Amcorin 1999 and appointed to current position in 1999.

Previously InvestorRelations Manager with National Mutual Holdings, Analyst for National MutualFunds Management. Previous positions include Chemical Engineer with Alfa-Lavaland institutional dealer for stockbroker AC Goode.

 

D.F. (Darryl)Roberts

ActingManaging Director of Amcor Australasia

Age 55, B Arts(Acc)

Joined Amcor28 November 1994

Previouspositions within Amcor include Divisional GM Two Piece (Amcor ContainersPackaging), GM Beverage & Food Can Division, Group GM Metals Division,Group GM Fibre Packaging.  Otherpositions include Regional General Manager – Victoria and Tasmania the ReadymixGroup (CSR Ltd) and Regional General Manager NSW & ACT The Readymix Group(CSR Ltd).

 

I.G. (Ian)Wilson

StrategicDevelopment Director

Age 46, LLB(Hons), LLM

Joined Amcorin 2000 and appointed to current position in 2000.

Extensiveexperience in international mergers and acquisitions, strategy development,finance and law from 14 years in investment banking with UBS and 6 years inprivate legal practice with Baker and McKenzie.

 

42

----

 

P.S. (Peter)Wilson

ExecutiveGeneral Manager, Human Resources and Operating Risk

Age 52, B.Comm(Hons), MA (Hons) (Melb), FCPA, FAICD.

Joined Amcorin 1999 and appointed to current position in 1999.

Chairman ofCommonwealth Safety Rehabilitation and Compensation Commission (Comcare) from1998-2004. Former roles include Director of Kimberly-Clark Australia, ChiefExecutive Officer Melbourne for Stratus - Energy 21 Group,  Group General Manager roles in Strategy, AsiaPacific Banking, Marketing and Distribution, HR and Management Services for theAustralia and New Zealand Banking Group Limited. Director General, Departmentof Industry, Technology and Resources; Commissioner, State ElectricityCommission of Victoria; and Chairman, Victorian Public Authority FinanceAgency.  In April 2003, he was awardedthe Centenary Medal by Australia’s Prime Minister and Governor-General for hiscontributions to the second century of Federation.

 

ExecutiveOfficers serve at the discretion of the Directors.  No family relationship exists between anyDirector or Executive Officer and any other Director or Executive Officer.

 

**B.            Compensation**

 

The aggregateamount of remuneration paid by Amcor during 2003-04 to all Directors andExecutive Officers, as a group, was A$16.4 million. This amount includesretiring allowance accrual for non-executive Directors of A$691,033.

 

Retirementagreements have been entered into between Amcor and five of the non-executiveDirectors that provide for the payment of benefits upon cessation of theirrespective directorships as covered in Rule 55 of Amcor’s Constitution.Retiring allowance accrual to June 30, 2004 of A$2,872,325 is allocated asfollows:

 

C.I. Roberts –A$1,016,302, E.A. Alexander – A$638,357, D.C.K. Allen – A$468,176, R.K. Barton– A$370,293,

G.A. Tomlinson– A$379,197.

 

Retiringallowance agreements have not been offered to any Non-Executive Directorappointed after June 30, 2003.

 

The ManagingDirector and a number of Executive Officers are members of defined benefitsuperannuation plans operated by the Company under which no specific contributionis determined in respect of any individual member.  The Company contributes to those plans atrates determined by an actuary as being necessary and sufficient to ensure theoverall financial soundness of the plan. The aggregate amount set aside by the Company during 2003-04 andincluded in the aggregate amount of remuneration of Directors and ExecutiveOfficers above, was A$1 million.

 

43

----

 

Details of thenature and amount of each major element of the emoluments of each director ofthe Company and each of the five named officers of the Company and Amcorreceiving the highest emoluments during 2003-04 are set out below:

 
| ** **        | ** ** | **Base  Emolument** | ** ** | **Incentive** | ** ** | **Salary  Sacrifice** | ** ** | **Super  annuation** | ** ** | **Other (inc  Retiring  Allowance)** | ** ** | **Total  (Excluding  Options and  Shares) (4)(5)** | ** ** |
|-------------------|------------|---------------------|------------|---------------|------------|-----------------------|------------|----------------------|------------|--------------------------------------|------------|----------------------------------------------------|------------|
| ** **        | ** ** | **A$**              | ** ** | **A$**        | ** ** | **A$**                | ** ** | **A$**               | ** ** | **A$**                               | ** ** | **A$**                                             | ** ** |
| **Director**      |       |                |       |          |       |                  |       |                 |       |                                 |       |                                               |       |
| C I  Roberts      |       | 269,166             |       | —        |       | 110,833               |       | 24,225               |       | 298,496                              |       | 702,720                                            |       |
| R H  Jones(1)     |       | 1,356,250           |       | 550,003       | (3)        | —                |       | 271,250              |       | 411,383                              |       | 2,588,886                                          |       |
| E A  Alexander    |       | 128,799             |       | —        |       | 32,200                |       | 11,592               |       | 112,271                              |       | 284,862                                            |       |
| D C K  Allen      |       | 39,666              |       | —        |       | 100,333               |       | —               |       | 75,030                               |       | 215,029                                            |       |
| R K  Barton       |       | 123,999             |       | —        |       | 31,000                |       | 11,160               |       | 111,870                              |       | 278,029                                            |       |
| G J  Pizzey       |       | 107,101             |       | —        |       | 26,775                |       | 5,250                |       | 2,354                                |       | 141,480                                            |       |
| G A  Tomlinson    |       | 114,000             |       | —        |       | 28,500                |       | 10,260               |       | 91,694                               |       | 244,454                                            |       |
| T C  Bergman(2)   |       | 33,926              |       | —        |       | 8,481                 |       | 3,053                |       | 19,899                               |       | 65,359                                             |       |
| **Total**         | ** ** | **2,172,907**       | ** ** | **550,003**   | ** ** | **338,122**           | ** ** | **336,790**          | ** ** | **1,122,997**                        | ** ** | **4,520,819**                                      | ** ** |
|              |       |                |       |          |       |                  |       |                 |       |                                 |       |                                               |       |
| **Amcor Limited** |       |                |       |          |       |                  |       |                 |       |                                 |       |                                               |       |
|              |       |                |       |          |       |                  |       |                 |       |                                 |       |                                               |       |
| I G Wilson        |       | 676,471             |       | 312,255       | (3)        | —                |       | —               |       | 241,060                              |       | 1,229,786                                          |       |
| L J  Lachal       |       | 601,250             |       | 231,800       | (3)        | —                |       | 96,200               |       | 57,828                               |       | 987,078                                            |       |
| P S  Wilson       |       | 551,250             |       | 218,400       | (3)        | —                |       | 88,200               |       | 105,358                              |       | 963,208                                            |       |
| P R  Sutton(1)    |       | 531,250             |       | 355,938       |       | —                |       | 11,002               |       | 153,592                              |       | 1,051,782                                          |       |
| W P  Day          |       | 588,750             |       | 237,900       | (3)        | —                |       | 58,875               |       | 71,125                               |       | 956,650                                            |       |
| **Total**         | ** ** | **2,948,971**       | ** ** | **1,356,293** | ** ** | **—**            | ** ** | **254,277**          | ** ** | **628,963**                          | ** ** | **5,188,504**                                      | ** ** |
|              |       |                |       |          |       |                  |       |                 |       |                                 |       |                                               |       |
| **Amcor**         |       |                |       |          |       |                  |       |                 |       |                                 |       |                                               |       |
|              |       |                |       |          |       |                  |       |                 |       |                                 |       |                                               |       |
| G S  James        |       | 891,544             |       | 358,456       |       | —                |       | 173,475              |       | 71,626                               |       | 1,495,101                                          |       |
| K N  MacKenzie    |       | 632,308             |       | 331,312       |       | —                |       | 94,032               |       | 206,800                              |       | 1,264,452                                          |       |
| I G  Wilson       |       | 676,471             |       | 312,255       | (3)        | —                |       | —               |       | 241,060                              |       | 1,229,786                                          |       |
| L J  Lachal       |       | 601,250             |       | 231,800       | (3)        | —                |       | 96,200               |       | 57,828                               |       | 987,078                                            |       |
| W J  Long         |       | 704,424             |       | 232,988       |       | —                |       | 28,177               |       | 47,456                               |       | 1,013,045                                          |       |
| **Total**         | ** ** | **3,505,997**       | ** ** | **1,466,811** | ** ** | **—**            | ** ** | **391,884**          | ** ** | **624,770**                          | ** ** | **5,989,462**                                      | ** ** |

 

----

(1)  On December 7, 2004 the Chairman ofAmcor Limited, Mr Chris Roberts, announced the resignation of Mr R H (Russell)Jones and Mr P R (Peter) Sutton.  It isthe Board’s intention that Messrs. Jones and Sutton will receive their minimumlegal entitlements only on resignation. It is not intended that any additional contractual payments (whether byway of accrued performance payments in lieu of notice or otherwise) will be madeto them.

 

(2)  T C Bergman resigned from the Board on 23October 2003 and received a retirement payment of $354,754 at that time.

 

(3)  Includes a carryover component from yearended 30 June 2003.

 

Executive directors andsenior executives may receive bonuses based on the achievement of specificperformance hurdles.  The performancehurdles are a blend of the consolidated entity’s and each relevant segment’sresult exceeding approved targets.  Thereis no separate profit-share plan.

 

44

----

 

(4)               Optionsentitling the holder to purchase one Amcor ordinary share per option wereissued during the year. The value of options has been calculated at the date ofgrant using the Black Scholes option pricing model and is determined by factorsincluding the option’s grant price, lifespan, share price volatility anddividend yield. Details are as follows:

 
| **Name**         | ** ** | **Number** | ** ** | **Exercise Price** | ** ** | **Expiry Date** | ** ** | **Fair Value** | ** ** |
|------------------|------------|------------|------------|--------------------|------------|-----------------|------------|----------------|------------|
| ** **       | ** ** | ** ** | ** ** | **A$**             | ** ** | ** **      | ** ** | **A$**         | ** ** |
| W. P.  Day       |       | 222,500    | *          | 7.87               |       | 24 Mar 10       |       | 317,500        |       |
|             |       |       |       |               |       |            |       |           |       |
| L.J.  Lachal     |       | 178,000    | *          | 7.87               |       | 24 Mar 10       |       | 254,000        |       |
|             |       |       |       |               |       |            |       |           |       |
| P.S.  Wilson     |       | 133,500    | *          | 7.87               |       | 24 Mar 10       |       | 190,500        |       |
|             |       |       |       |               |       |            |       |           |       |
| G.S.  James      |       | 133,500    | *          | 7.87               |       | 23 Mar 10       |       | 190,500        |       |
|             |       |       |       |               |       |            |       |           |       |
| W.J.  Long       |       | 178,000    | *          | 7.87               |       | 24 Mar 10       |       | 254,000        |       |
|             |       |       |       |               |       |            |       |           |       |
| P.R.  Sutton(1)  |       | 178,000    | *          | 7.87               |       | 24 Mar 10       |       | 254,000        |       |
|             |       |       |       |               |       |            |       |           |       |
| K. N.  MacKenzie |       | 100,000    | *          | 7.87               |       | 24 Mar 10       |       | 127,000        |       |
|             |       | 80,000     |       | 6.03               |       | 1 Oct 06        |       | 220,000        |       |

 

----

* As a result of the company performance for the year, 89%of these options are capable of being exercised.

 

(1)  OnDecember 7, 2004 the Chairman of Amcor Limited, Mr Chris Roberts, announced theresignation of Mr P R (Peter) Sutton. These options have now been cancelled.

 

(5)               Shareswere issued under the Employee Share Purchase Plan approved by shareholders onJanuary 29, 1985 and as amended on September 3, 1987, October 20, 1988, June 2,1999 and October 12, 2000.  These sharesare issued in accordance with the resolution at the 2000 annual general meetingand are part of the Managing Director’s/Chief Executive Officer’s short termincentive bonus.  The value of theseshares has been amortised over the relevant trading restriction period. Duringthe year ended June 30, 2004, 84,451 shares were granted to R.H. Jones.  These shares are valued at A$127,098.

 

**C.            BoardPractices**

 

# ***Role of the Board***

 

The Board’sprimary role is the protection and enhancement of long-term shareholdervalue.  To fulfil this role, the Board isresponsible for the overall corporate governance of the consolidated entityincluding approving the strategic direction put forward by management,approving and monitoring capital expenditure, setting remuneration, appointingremoving and creating succession policies for directors and senior executives,establishing and monitoring the achievement of management’s goals and ensuringthe integrity of internal control and management information systems.  It is also responsible for approving andmonitoring financial and other reporting. Details of the Board’s charter are located on the company’s website(www.amcor.com).

 

The Board hasdelegated responsibility for operation and administration of the company to theManaging Director/Chief Executive Officer and executive management.  Responsibilities are delineated by formalauthority delegations.

 

On December 7,2004 the Chairman of Amcor Limited, Mr Chris Roberts, announced the resignationof Mr R H (Russell) Jones.  Mr Robertsbecame Executive Chairman and Mr Louis Lachal ( Executive General ManagerOperations) became Acting Chief Operating Officer for the interim period priorto appointing a replacement Managing Director. During this period the responsibilities of the Managing Director/ChiefExecutive Officer as referred to below will be appropriately discharged by theExecutive Chairman and the Acting Chief Operating Officer.

 

45

----

***Board Processes***

 

To assist in the execution ofits responsibilities, the Board has established the following Board committees-

 

•              Executive

•              Nomination

•              HumanResources, and

•              Auditand Compliance

 

These committees have writtenmandates and operating procedures, which are reviewed on a regular basis.

 

The Board has also establisheda framework for the management of the consolidated entity including a system ofinternal control, a business risk management process and the establishment ofappropriate ethical standards.

 

The Board currently holds sixscheduled meetings during the year plus strategy meetings and any extraordinarymeetings at such other times as may be necessary to address any specificsignificant matters that may arise.  Theagenda for meetings is prepared in conjunction with the Chairman, ManagingDirector/Chief Executive Officer and Company Secretary.  Standing items include the ManagingDirector/Chief Executive Officer’s report, business group Managing Directors’reports, financial reports, strategic matters and governance and complianceissues.  Board papers are circulated inadvance and executives regularly provide input to Board discussion.  In addition, Directors have otheropportunities for contact with a wider group of employees with regular visitsto business units and plants, both local and overseas.

 

# ***Composition of the Board***

 

The composition of the Board isdetermined using the following principles:

 

•              aminimum of seven directors, with a broad range of expertise both nationally andinternationally;

•              amajority of independent non-executive directors;

•              a majority of directors havingextensive knowledge of the company’s industries, and those which do not, havingextensive expertise in significant aspects of financial reporting and riskmanagement of large companies;

•              a non-executive independentdirector as Chairman;

•              enough directors to serve on Boardcommittees without overburdening the directors or making it difficult for themto fully discharge their responsibilities; and

•              directors retire at the Boardmeeting following their 70th birthday and are subject to re-election at leastevery three years (except for the Managing Director/Chief Executive Officer).

 

***Nomination Committee***

 

The NominationCommittee oversees the appointment and induction process for directors andcommittee members, and the selection, appointment and succession planningprocess of the company’s Managing Director/Chief Executive Officer.  The committee makes recommendations to theBoard on the appropriate skill mix, personal qualities, expertise and diversityof each position.  When a vacancy existsor there is a need for particular skills, the committee in consultation withthe Board determines the selection criteria based on the skills deemednecessary. The committee identifies potential candidates with advice from anexternal consultant.  The Board thenappoints the most suitable candidate. Board candidates must stand for election at the next general meeting ofshareholders.

 

The NominationCommittee also conducts an annual review of the effectiveness of the Board, itscommittees, individual directors, and senior executives.  This review has been completed for the2003-04 financial period.  The review isconducted “in-house” and involves self-assessment.  All directors have an opportunity tocontribute to the review process.  Thereviews generate recommendations to the Board.

 

The NominationCommittee continues to review its evaluation processes to establish performanceindicators that are both measurable and qualitative.

 

46

----

 

The NominationCommittee currently comprises the following members:

 

•              C I Roberts (Chairman) - ExecutiveChairman

•              E A Alexander - IndependentNon-Executive Director

•              D C K Allen - IndependentNon-Executive Director

•              T C Bergman  (resigned 23 October 2003) - IndependentNon-Executive Director

•              R K Barton - IndependentNon-Executive Director

•              G J Pizzey (appointed 23 September2003) - Independent Non-Executive Director

•              G A Tomlinson - IndependentNon-Executive Director

 

The NominationCommittee meets as required.  The termsand conditions of the appointment and retirement of non-executive directors areset out in a letter of appointment, including expectations for attendance andpreparation for all Board meetings, appointments to other boards, theprocedures for dealing with conflicts of interest, and the availability ofindependent professional advice.

 

Furtherdetails of the Nomination Committee’s charter and policies, including those forappointing directors are available on the company’s website.

 

***Executive Committee***

 

The ExecutiveCommittee deals with matters referred to it by the Board or with urgent matterswhich may not be deferred until the next meeting of the Board.  The Board confirms the actions of thisCommittee at its next meeting.

 

The currentmembers of the Executive Committee are:

 

•     C I Roberts (Chairman) –ExecutiveChairman

•      D C K Allen – Independent Non-ExecutiveDirector

•      R K Barton (appointed 25 November 2003) –Independent Non-Executive Director

 

All othernon-executive directors receive the Executive Committee agendas and papers andare encouraged to attend meetings of the Executive Committee as available.

 

***Human Resources Committee***

 

The HumanResources Committee reviews and makes recommendations to the Board onremuneration packages and policies applicable to the Managing Director/ChiefExecutive Officer, senior executives and directors themselves.  It is also responsible for share optionschemes, incentive performance packages, superannuation entitlements,retirement and termination entitlements, fringe benefits policies, professionalindemnity and liability insurance policies, and succession planning.

 

The current members of theHuman Resources Committee are:

 

G A Tomlinson (Chairman) –Independent Non-Executive Director

E A Alexander - IndependentNon-Executive Director

T C Bergman (resigned 23October 2003) - Independent Non-Executive Director

G J Pizzey (appointed 23September 2003) - Independent Non-Executive Director

 

The Human Resources Committeemeets twice a year and otherwise as required. The committee met three times during the year.

 

The Human Resources Committee’scharter is available on the company’s website.

** **

***Audit and Compliance Committee***

 

The Audit andCompliance Committee has a documented charter, approved by the Board.  All members must be independent non-executivedirectors.  The Chairman may not be theChairman of the Board.  The committeeadvises on the establishment and maintenance of a framework of internal controland appropriate ethical standards for the management of the consolidatedentity.

 

47

----

 

The members ofthe Audit and Compliance Committee are:

 

R K Barton,BSc, PhD, FTSE, FAICD (Chairman) - Independent Non-Executive Director

D C K AllenMA, MSc, FTSE, FAICD - Independent Non-Executive Director

E A Alexander,B Com, FCA, FCPA, FAICD - Independent Non-Executive Director

C I Roberts, BCom - Executive Chairman

J G Thorn, FCA- Independent Non-Executive Director

 

The internaland external auditors, the Managing Director/Chief Executive Officer and theExecutive General Manager Finance, are invited to Audit Committee meetings atthe discretion of the committee.  TheAudit and Compliance Committee meets four times a year and otherwise asrequired.  The committee met six timesduring the year.  The external auditormet with the Audit and Compliance Committee six times and with the Board ofDirectors twice during the year without management being present.

 

The Audit andCompliance Committee’s charter is available on the company’s website along withinformation on procedures for the selection and appointment of the externalauditor, and for the rotation of external audit engagement partners.

 

The responsibilities of the Committee are to:

 

(a)                                 monitor the integrity of the company’s externalreporting processes, including the company’s compliance with its continuousdisclosure and financial reporting obligations;

 

(b)                                consider and report to the Board on thepreparation and integrity of the company’s half-yearly and yearly financialstatements prior to their release to the financial market;

 

(c)                                 review all significant accounting policy changesand, where appropriate, recommend to the Board that the changes be adopted bythe company;

 

(d)                                monitor and report to the Board on the frameworkfor, and effectiveness of, the company’s internal financial controls and riskmanagement system;

 

(e)                                 establish guidelines for the selection andappointment of the external auditor and the rotation of the principal externalaudit partner and the audit partner responsible for reviewing the audit work;

 

(f)                                   appoint, remove and determine the remunerationof the external auditor and oversee the rotation of the principal external auditpartner and the audit partner responsible for reviewing the audit work;

 

(g)                                to the extent permitted by law, consider and, ifappropriate, approve the provision of non-audit services by the company’sexternal auditor;

 

(h)                                regularly review and report to the Board on theeffectiveness, independence and performance of the internal and external auditfunctions;

 

(i)                                    implement appropriate procedures to ensure thatadequate audit coverage exists for all major financial risks of the businessand report to the Board on any issues arising from this coverage;

 

(j)                                    review reports from the internal auditor onmajor issues arising from the internal audit program and report to the Board onthose issues as appropriate;

 

(k)                                 review the annual financial reports with theexternal auditors and report to the Board on those reports, and any issuesarising out of those reports, as appropriate;

 

(l)                                    discuss with management and the external auditorany correspondence with regulatory or governmental bodies and any published reportswhich raise material issues regarding the company’s financial reports;

 

(m)                              consider post audit reviews of major capitalexpenditures and acquisitions;

 

(n)                                monitor the company’s funding commitments;

 

48

----

 

(o)                                assess significant business risks arising out ofor in connection with major customer and supplier contracts;

 

(p)                                monitor the company’s compliance with allapplicable legal and regulatory obligations;

 

(q)                                consider any fraud that involves management orother employees who have a significant role in the company’s internal controls;

 

(r)                                   establish procedures for the receipt, retentionand treatment of complaints received regarding accounting, internal accountingcontrol and auditing matters;

 

(s)                                 establish procedures for the confidential,anonymous submission by employees of concerns regarding questionableaccounting, auditing, management and operational matters;

 

(t)                                   review major non-financial regulatory mattersthrough the use of a compliance monitoring reporting regime, which covers thefollowing areas of exposure:

 

A.           environment;

 

B.             safetyand health;

 

C.             assetprotection;

 

D.            tradepractices;

 

E.              discriminationand harassment;

 

F.              conflictof interest; and

 

G.             ethicalstandards.

*** ***

***Risk management***

* *

*Oversight of the risk management system*

 

The Boardoversees the establishment, implementation, and annual review of the company’srisk management.  Management isestablishing a formalised Risk Management System for assessing, monitoring andmanaging operational, financial reporting, and compliance risks for theconsolidated entity.  The ExecutiveChairman and the Executive General Manager Finance have declared, in writing tothe Board, that except for the conduct related to possible breaches ofAustralian and New Zealand competition laws detailed in Item 8, “FinancialInformation – Legal Proceedings”, the financial reporting risk management andassociated compliance and controls have been assessed and found to be operatingeffectively.  The operational and othercompliance risk management processes have also been assessed and found to beoperating effectively.

 

The Audit andCompliance Committee reports to the Board on the status of the implementationof the risk management program which is aimed at ensuring risks are identified,assessed and appropriately managed.

 

Major risksarise from such matters as actions by competitors, government policy changes,the impact of exchange rate movements on the price of raw materials and sales,difficulties in sourcing raw materials, environment, occupational health andsafety, property, financial reporting, and the purchase, development and use ofinformation systems.

 

*Risk management and compliance and control*

 

The Board isresponsible for the overall internal control framework, but recognises that nocost-effective internal control system will preclude all errors andirregularities.  The Board’s policy oninternal control is comprehensive, details of which are available on the company’swebsite.  It comprises the company’sinternal compliance and control systems, including:

 

•        operatingunit controls – operating units confirm compliance with financial controls andprocedures including information systems controls detailed in proceduresmanuals;

•        functionalspecialty reporting – key areas subject to regular reporting to the boardinclude treasury and derivatives operations, environmental, legal and selfinsurance matters; and

 

49

----

 

•        investmentappraisal – guidelines for capital expenditure include annual budgets, detailedappraisal and review procedures, levels of authority and due diligencerequirements where businesses are being acquired or divested.

 

Comprehensivepractices, have been established to address:

 

•           capital expenditureand revenue commitments above a certain size obtain prior Board approval;

•           financialexposures are controlled, including the use of derivatives.  (Further details of the company’s policiesrelating to interest rate management, forward exchange rate management andcredit risk management are included in the Notes to the Consolidated FinancialStatements included herein.);

•           occupationalhealth and safety standards and management systems are monitored and reviewedto achieve high standards of performance and compliance with regulations;

•           businesstransactions are properly authorised and executed;

•           thequality and integrity of personnel (see below);

•           financialreporting accuracy and compliance with the financial reporting regulatoryframework (see below);

•           environmentalregulation compliance (see below).

 

Theconsolidated entity strives to ensure that its products are of the higheststandard.  Towards this aim it hasundertaken a program to achieve AS/NZS ISO 9002 quality assurance accreditationfor each of its business segments.

 

*Financial reporting*

 

The ExecutiveChairman of the Board of Directors and the Executive General Manager Financehave declared, in writing to the Board, that except for the conduct related topossible breaches of Australian and New Zealand competition laws detailed inItem 8, “Financial Information – Legal Proceedings”, the company’s financialreports are founded on a sound system of risk management and internalcompliance and control which implements the policies adopted by the Board.

 

*Assessment of effectiveness of risk management*

 

The internalauditors assist the Board in ensuring compliance with the internal controls andrisk management programs by regularly reviewing the effectiveness of theabovementioned compliance and control systems. The Audit and Compliance Committee is responsible for approving theprogram of internal audit visits to be conducted each financial year and forthe scope of the work to be performed on a regular basis.

 

***Ethical standards***

All directors,managers and employees are expected to act with the utmost integrity andobjectivity, striving at all times to enhance the reputation and performance ofthe consolidated entity.  Every employeehas a nominated supervisor to whom they may refer any issues arising from theiremployment.  The Board reviews theCorporate Code of Conduct and Ethics Policy regularly and processes are inplace to promote and communicate these policies.

 

50

----

 

**D.****                                  ****Employees**

 
| ** **                                 | ** ** | **as at June 30** | ** ** |
|--------------------------------------------|------------|-------------------|------------|
| **Employee Numbers by Industry  Segments** | ** ** | **2004**          | ** ** | **2003** | ** ** |
|                                       |       |              |       |   |   |
| Amcor PET Packaging                        |       | 6,191             |       | 5,601 |   |
| Amcor Australasia                          |       | 6,756             |       | 7,113 |   |
| Amcor Flexibles Europe                     |       | 7,606             |       | 6,766 |   |
| Amcor Sunclipse                            |       | 2,204             |       | 2,367 |   |
| Amcor Rentsch and Closures                 |       | 3,140             |       | 3,883 |   |
| Amcor Asia                                 |       | 2,833             |       | 2,765 |   |
| Corporate/Other                            |       | 333               |       | 115 |   |
| **TOTAL**                                  | ** ** | **29,063**        | ** ** | **28,610** | ** ** |

 
| **Employee Numbers by Geographic  Segments** | ** ** | **as at June 30  2002** | ** ** |
|----------------------------------------------|------------|-------------------------|------------|
|                                         |       |                    |       |
| Amcor Australasia                            |       | 7,793                   |       |
| Amcor North America                          |       | 5,006                   |       |
| Amcor Europe                                 |       | 7,926                   |       |
| Amcor Asia                                   |       | 2,782                   |       |
| Corporate/Other                              |       | 123                     |       |
| **TOTAL**                                    | ** ** | **23,650**              | ** ** |

 

**E.****                                    ****ShareOwnership**

 

The following table sets forth,as at June 30, 2004 the relevant interest of each Director and ExecutiveOfficer in the share capital of the company as notified by the Directors to theAustralian Stock Exchange.

 
| ** **                   | ** ** | **Number of**    | ** ** |
|------------------------------|------------|------------------|------------|
| **Name**                     | ** ** | **Shares Owned** | ** ** |
|                         |       |             |       |
| *Fully Paid Ordinary Shares* |       |             |       |
|                         |       |             |       |
| C I Roberts                  |       | 114,421          |       |
| R H Jones                    |       | 381,764          |       |
| E A Alexander (1)            |       | 26,258           |       |
| D C K Allen                  |       | 55,857           |       |
| R K Barton                   |       | 25,270           |       |
| G J Pizzey                   |       | 6,408            |       |
| G A Tomlinson                |       | 39,684           |       |
|                         |       |             |       |
| I G Wilson                   |       | 62,085           |       |
| L J Lachal (2)               |       | 299,469          |       |
| P S Wilson                   |       | 204,835          |       |
| P R Sutton                   |       | 275,000          |       |
| W P Day                      |       | 59,452           |       |
| W J Long                     |       | 100              |       |
| G S James                    |       | 70,360           |       |
| K N MacKenzie                |       | 500              |       |

 

----

(1)  E A Alexander also holds 50,000 partly paidshares paid to five cents.

(2) L J Lachal also holds 20,000 partly paidshares paid to one cent.

 

The aggregate of the fully paidordinary shares in the above table represents approximately 0.2% of thecompany’s fully paid ordinary shares.

 

As of December 20, 2004executive officers and employees had been issued with 12,816,395 ordinaryshares representing approximately 1.5% of issued capital, under employee sharepurchase plans.

 

51

----

 

***ShareBased and Employee Bonus Compensation Plans***

 

*Employee Share Purchase Plans*

 

In 1985, the consolidated entityestablished the Employee Share Purchase Plan (ESPP). The maximum number ofshares that can be issued under all plans cannot exceed 10% of the company’sissued capital.

 

•                  Employee Incentive Share Plan

 

Under theEmployee Incentive Share Plan (EISP), shares are offered for the benefit of allfull-time employees, permanent part-time employees and executive directors ofAmcor Limited with more than twelve months’ service.  The number of shares offered depends upon thecompany’s increase in earnings per share and is currently on the followingbasis:  an increase in earnings per shareof less than 5% will result in no offer; from 5% to 10%, an offer of 100shares; from more than 10% to 15%, an offer of 200 shares will be made; andabove 15%, an offer of 300 shares will be made.

 

Under theEISP, shares have been issued at a 40% discount to the prevailing market priceof Amcor Limited shares.  Thesubscription amount is funded by an interest-free loan from the company withthe exception of senior executives who are not provided with the loanfacility.  Dividends on the shares areapplied in repayment of the loan balance. If the employee leaves the company, the shares are sold and the proceedsare applied to discharge the loan.  Theemployee is not liable for any deficiency upon such discharge.

 

Due to therestrictions of the Sarbanes-Oxley Act of 2002 in the US, no such loansreferred to in the above plans have been made or extended to directors andexecutive officers since July 1, 2002.

 

•                  Senior Executive Retention Share Plan

 

Under theSenior Executive Retention Share Plan (“SERSP”), the Board may nominate certainsenior executives as being eligible to receive fully paid ordinary shares inpart satisfaction of their remuneration for the relevant financial year.  The number of shares issued is entirely atthe Board’s discretion.  The shares maynot be disposed of by the employee for a restricted period of up to 5 years,unless the employee ceases employment 3 years after the shares wereissued.  Any right or interest in theshares will be forfeited if the employee voluntarily ceases employment withinthree years from the date the shares were issued or if the employee isdismissed during the restricted period for cause or poor performance.  The shares subject to the SERSP carry fulldividend entitlements and voting rights.

 

*Employee Share/Option Plans*

 

In 1985, the consolidated entityalso established the Employee Share/Option Plan (ESOP).  Under the ESOP, partly paid shares or optionsof the company can be issued to executive officers and directors (includingdirectors who are executives) and senior staff members selected by thedirectors.  The shares are issued atmarket price at the time of issue.  Thecall outstanding only becomes payable on retirement, death or at the directors’discretion.  These shares do not carrydividend entitlements unless determined otherwise by the directors.  Voting rights exercisable by holders ofpartly paid ordinary shares are reduced pro rata to the portion of the issueprice paid up on those shares under the Australian Stock Exchange ListingRules.

 

Options granted under the ESOPmay be issued upon such terms and subject to such conditions as the directorsof the company determine at the time. Options which have been granted under the ESOP have an exercise pricewhich is based on the market price of Amcor Limited ordinary shares at the dateof grant of the options.

 

*2000 CEO Restricted Share andOption Issue*

 

Shareholders at the 2000 AnnualGeneral Meeting approved the issue of three million options to the ManagingDirector/Chief Executive Officer.  Thegrant of options was made on August 18, 2000 at an exercise price of $5.67which was the weighted average market price of Amcor Limited shares traded onthe Australian Stock Exchange (ASX) for the week ended August 18, 2000.  All options previously held by the ManagingDirector/Chief Executive Officer were cancelled following the approval byshareholders of the issue of the three million options.

 

These options were issued inthree equal annual tranches.  Eachtranche is subject to two performance hurdles: for the first half of eachtranche, the Board must be satisfied that the Managing Director/Chief ExecutiveOfficer has continued to demonstrate effective performance having regard to thefinancial and operating performance of the

 

52

----

 

Company and any other factorsaffecting the reputation of the company or otherwise as the Board deemsappropriate.  For the second half, theAmcor Limited total shareholder return is to exceed a comparator totalshareholder return.  Full details of theseperformance criteria are set out in the explanatory notes mailed to shareholdersfor the 2000 Annual General Meeting.

 

At the 2000 Annual GeneralMeeting, shareholders also approved the issue of Restricted Shares to theManaging Director/Chief Executive Officer as part of his Short Term IncentiveBonus (STI Bonus).  The number ofRestricted Shares depends upon both the size of the STI Bonus in each year anda formula which incorporates the simple average of the closing price of AmcorLimited shares for each ASX trading day of the relevant year.

 

Details of the terms of issue ofboth the options and the Restricted Shares are set out in full in theexplanatory notes for the 2000 Annual General Meeting.

 

*2002 CEO Option Issue*

 

Shareholders at the 2002 AnnualGeneral Meeting approved the issue of three million options to the Managing Director/ChiefExecutive Officer.  The grant of optionswas made on August 14, 2002 at an exercise price of $8.20.  These options were issued in three equalannual tranches.  Each tranche is subjectto the Amcor Limited total shareholder return exceeding a comparator totalshareholder return.  Full details ofthese performance criteria are set out in the explanatory notes mailed toshareholders for the 2002 Annual General Meeting.

 

*Other Compensation Plans*

 

The Employee Bonus Payment Plan(EBPP) is an alternative to the ESPP and the ESOP and is in place in countrieswhere the company is unable to issue shares or options. Participants areoffered entitlements and over the period during which employees hold theirentitlements, their value will mirror the fluctuating value of Amcor’s shares,including (in the case of the ESPP) all dividends paid on the shares duringthis time. Employees are only able to convert their entitlements into a cashbonus payment when they leave the company or three years have passed since thedate on which the entitlements were originally issued.

 

From time to time, the Board maynominate certain employees in Belgium, New Zealand, Poland, Switzerland and theUSA as being eligible to participate in a Senior Executive Retention PaymentPlan (“SERPP”) under which Plan entitlements, instead of fully paid ordinaryshares, are issued in part satisfaction of an employee’s remuneration for therelevant financial year.  The value ofeach Plan entitlement is linked to the performance of Amcor Limited shares(including the value of accrued dividends). Plan entitlements may be converted into a cash payment after the 5 yearrestriction period has expired, provided that the employee has not beendismissed for cause or poor performance during this time.  If the employee voluntarily ceases employmentwithin four or five years from the date the Plan entitlements were issued, theemployee forfeits 40% or 20% of their Plan entitlements (respectively).

 

The Share Appreciation OptionPlan offered executive directors the opportunity to receive options subject tocertain performance targets being met. This plan closed in 1999.

 

Share Appreciation Entitlementsmay be issued to employees who take part of their bonus by way of entitlements.During the period the employee holds them, the value of entitlements will beequivalent to the fluctuating value of Amcor Limited shares.

 

Phantom options are issued toemployees residing in jurisdictions that, for statutory reasons, are notcovered by option plans described above. The phantom option plan operates in amanner similar to other option plans although no entitlements to actual sharesor options exist.

 

53

----

 

***Options***

 

As at June 30, 2004, the number of options over ordinary shares held byExecutive Officers in the company are set out below;

 
| **Name**       | ** ** | **Number of Shares  Underlying Options Owned** | ** ** | **Exercise  Price  A$** | ** ** | **Expiration Date** | ** ** |
|----------------|------------|------------------------------------------------|------------|-------------------------|------------|---------------------|------------|
| ** **     | ** ** | ** **                                     | ** ** | ** **              | ** ** | ** **          | ** ** |
| R H Jones(1)   |       | 3,000,000                                      |       | 5.67                    |       | 1 Oct 2005          |       |
|           |       | 3,000,000                                      |       | 8.20                    |       | 30 Sept 2008        |       |
| W P Day        |       | 100,000                                        |       | 6.62                    |       | 1 Oct 2005          |       |
|           |       | 50,000                                         |       | 6.02                    |       | 13 Sept 2006        |       |
|           |       | 250,000                                        |       | 7.87                    |       | 24 Mar 2010         |       |
| L J Lachal     |       | 24,000                                         |       | 5.16                    |       | 14 Sept 2005        |       |
|           |       | 200,000                                        |       | 7.87                    |       | 24 Mar 2010         |       |
| W J Long       |       | 300,000                                        |       | 7.30                    |       | 1 July 2007         |       |
|           |       | 44,000                                         |       | 8.20                    |       | 1 Nov 2012          |       |
|           |       | 200,000                                        |       | 7.87                    |       | 24 Mar 2010         |       |
| G S James      |       | 20,000                                         |       | 6.02                    |       | 13 Sept 2006        |       |
|           |       | 44,000                                         |       | 8.20                    |       | 1 Nov 2012          |       |
|           |       | 150,000                                        |       | 7.87                    |       | 24 Mar 2010         |       |
| P S Wilson     |       | 50,000                                         |       | 5.43                    |       | 8 Nov 2004          |       |
|           |       | 200,000                                        |       | 5.10                    |       | 1 Oct 2005          |       |
|           |       | 50,000                                         |       | 6.47                    |       | 16 Sept 2004        |       |
|           |       | 40,000                                         |       | 5.16                    |       | 14 Sept 2005        |       |
|           |       | 150,000                                        |       | 7.87                    |       | 24 Mar 2010         |       |
| P R Sutton (1) |       | 100,000                                        |       | 5.24                    |       | 15 Feb 2006         |       |
|           |       | 80,000                                         |       | 5.24                    |       | 1 Oct 2005          |       |
|           |       | 50,000                                         |       | 6.02                    |       | 13 Sept 2006        |       |
|           |       | 44,000                                         |       | 8.20                    |       | 1 Nov 2012          |       |
|           |       | 200,000                                        |       | 7.87                    |       | 24 Mar 2010         |       |
| K N MacKenzie  |       | 80,000                                         |       | 6.03                    |       | 1 Oct 2006          |       |
|           |       | 10,000                                         |       | 6.47                    |       | 16 Sept 2004        |       |
|           |       | 8,000                                          |       | 5.16                    |       | 14 Sept 2005        |       |
|           |       | 5,000                                          |       | 6.02                    |       | 13 Sept 2006        |       |
|           |       | 88,000                                         |       | 8.20                    |       | 1 Nov 2012          |       |
|           |       | 100,000                                        |       | 7.87                    |       | 24 Mar 2010         |       |

 

----

(1)  On December 7, 2004 the Chairman ofAmcor Limited, Mr Chris Roberts, announced the resignation of Mr R H (Russell)Jones and Mr P R (Peter) Sutton.  Theseoptions have now been cancelled.

 

54

----

 

**ITEM 7    MAJORSHAREHOLDERS AND RELATED PARTY TRANSACTIONS**

 

**A.****                                  ****MajorShareholders**

 

The Company is not directly orindirectly owned or controlled by another corporation or by any foreigngovernment.   To our knowledge, based onsubstantial shareholder notices filed with the Australian Stock Exchange as of27 September 2004, the following table identifies those shareholders whobeneficially own 5% or more of our ordinary shares and their holdings as of thedate of their last respective notices.

 
| **Shareholder**                          | ** ** | **Fully Paid Ordinary Shares** | ** ** | **Percentage of Total Shares** | ** ** |
|------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|
| ** **                               | ** ** | ** **                     | ** ** | ** **                     | ** ** |
| Mondrian Investment Partners Limited (1) |       | 67,329,189                     |       | 7.66                           |       |

 

There are no arrangements knownto Amcor, the operation of which may at a subsequent date result in a change incontrol of Amcor. Major shareholders enjoy no rights different from any otherholder of Amcor’s Ordinary Shares.

 

**Major Shareholders OverPrevious Three Years**

 
| **Date of Notice** | ** ** | **Name of Shareholder**                   | ** ** | **% of Voting Shares at Year-end**   | ** ** |
|--------------------|------------|-------------------------------------------|------------|--------------------------------------|------------|
| 3 Aug 2001         |       | Delaware  International Advisers Ltd      |       | 9.24                                 |       |
| 20 Aug 2001        |       | Maple-Brown  Abbot Ltd                    |       | 5.08                                 |       |
| 21 Aug 2001        |       | Maple-Brown  Abbot Ltd                    |       | Ceased to be substantial shareholder |       |
| 8 Jul 2002         |       | Delaware  International Advisers Ltd      |       | 8.11                                 |       |
| 10 Jul 2002        |       | Commonwealth  Bank of Australia           |       | 5.05                                 |       |
| 4 Sep 2002         |       | Commonwealth  Bank of Australia           |       | 6.05                                 |       |
| 12 Mar 2003        |       | Delaware  International Advisers Ltd      |       | 6.73                                 |       |
| 4 Jun 2003         |       | Commonwealth  Bank of Australia           |       | 5.03                                 |       |
| 5 Jun 2003         |       | Commonwealth  Bank of Australia           |       | Ceased to be substantial shareholder |       |
| 15 Jan 2004        |       | Delaware  International Advisers Ltd      |       | 7.76                                 |       |
| 30 Apr 2004        |       | Delaware  International Advisers Ltd      |       | 10.00                                |       |
| 27 Sep 2004        |       | Mondrian  Investment Partners Limited (1) |       | 7.66                                 |       |

 

----

(1) - Previously DelawareInternational Advisors Ltd

 

**B.****                                  ****RelatedParty Transactions**

 

A number of loans have beenprovided by the Company to, or for the benefit of, certain Directors who areExecutives and Executive Officers.  Theaggregate amount of such loans outstanding as at October 14, 2004 was A$1.1million. Interest on these loans is charged at a rate varying from 0% to 5%.  This represents 0.02 per cent of total equityas at June 30, 2004.  (See Note 31 to theConsolidated Financial Statements for details on loans issued and repaid).  In addition, the Company continues toguarantee, in favour of a Director who is an Executive, a loan of A$0.4million. Due to the restrictions of the recently enacted Sarbanes-Oxley Act of2002 in the US, no such loans have been made or extended to Directors andExecutive Officers since July 1, 2002.

 

Under Amcor’s Employee SharePlans which are described in Item 6, interest-free loans are made available toeligible employees to acquire shares, which are repaid over time by dividendsreceived on the shares. In the past these interest-free loans have been madeavailable to directors and executive officers of Amcor to acquire shares. However,due to the Sarbanes-Oxley restrictions Directors and Executive Officers will nolonger receive this interest-free loan.

 

No Director or Officer of theCompany (or any relative or spouse thereof) has any interests in any materialtransactions of Amcor which were effected by the Company or any of itssubsidiaries since the current or immediately preceding financial year or wereeffected by the Company or any of its subsidiaries during an earlier financialyear and remain in any respect outstanding at the date hereof.  Directors and Executive Officers of Amcorhave participated in recent issues of shares under Employee Share Plans whichare described in Item 6.

 

Amcor trades withcertain partly owned controlled entities in the normal course of business andon an arm’s length basis. The amounts of these transactions were not materialto any parties.

 

**C.****                                  ****Interests of Experts and Counsel**

 

Not Applicable

 

55

----

 

## **ITEM 8    FINANCIALINFORMATION**

 

**A.****                                  ****FinancialStatements**

 

Amcor’sConsolidated Financial Statements are included as Item 18

 

## ***Legal Proceedings***

 

CFMEU Proceedings

 

On June 15,2000, the Construction, Forestry, Mining and Energy Union (CFMEU) filed aproceeding in the Federal Court of Australia against Amcor. The proceedingrelated to a claim for redundancy-related payments arising out of the change ofemployment of CFMEU members stemming from the demerger by Amcor in April 2000of the PaperlinX Group.

 

On May 13,2002 the court found that Amcor employees whose employment was transferred toPaperlinX Ltd had technically been made redundant and that the Court could notinterpret the relevant clauses of the certified agreement in a manner whichrelieved Amcor of the obligation to make redundancy severance payments to thetransferred employees. Amcor appealed this decision.

 

The appeal washeard by the Full Bench of the Federal Court on February 24, 2003 and itsdecision, dismissing Amcor’s appeal was handed down on March 28, 2003. Amcorsubsequently filed an application for special leave to appeal to the HighCourt, which was granted on December 12, 2003. The appeal was heard by the HighCourt on August 4, 2004 and the decision on the appeal is pending. Afterconsidering legal advice, the directors are of the opinion that no provision isrequired.

 

However, inthe event we are ultimately unsuccessful in the appeal, we could be required tomake redundancy payments to the former employees. Such payments, if eventuallyrequired may have a material effect on Amcor’s results of operations in theyear such a judgement is made. It is not possible to reliably estimate theamounts which might be involved.

 

Anti-Trust Investigations and Related Management Changes

 

*BoardAnnouncements*

 

On November 23, 2004, Amcorannounced that it had received information that led it to believe the Company’sAustralian business may have been involved in conduct which breachescompetition laws.  Amcor immediatelyinformed the ACCC of the information received and informed the ACCC that itwould provide full cooperation in any investigation which the ACCCundertakes.  Amcor also initiated its owninvestigation of these matters.

 

On December 7, 2004, Amcorannounced that after it had received the information referred to in itsNovember 23 announcement, the Board immediately:

 

•                                         notifiedthe ACCC of the information and advised the ACCC that it would cooperate fullywith any investigation by the ACCC;

 

•                                         notifiedthe ASX of possible breaches of competition laws; and

 

•                                         instructedits legal advisors to review the available information and to conductinterviews with relevant members of management who may be able to assist in theinvestigation.

 

In the December 7 announcementthe Board stated that it had met on December 6, 2004 to receive and consider aninterim report in the matter from its legal advisors.  The Board also resolved to accept offers ofresignation given by each of Mr. Russell Jones (Managing Director of theCompany) and Mr. Peter Sutton (Managing Director, Amcor Australasia) from theiremployment (and any directorships and other positions) with the AmcorGroup.  Mr. Peter Brown retired asManaging Director of Amcor Australasia in October 2003 and became a consultantto the Group.  That consultancy was alsoterminated.

 

56

----

 

 

The Board announced itsintention that Messrs. Jones and Sutton would receive only their minimum legalentitlements on resignation and that any additional contractual payments(whether by way of accrued performance payments or payments in lieu of noticeor otherwise) would not be made to them.

 

The Board also announced thefollowing interim appointments:

 

•                                         Mr.Chris Roberts (Chairman) would become Executive Chairman.

 

•                                         Mr.Louis Lachal, who was then the Executive General Manager Operations wouldbecome the Acting Chief Operating Officer of the Company.  Mr. Lachal has been with the Amcor Group for24 years and has worked in a number of divisions, both in Australia and theUnited Kingdom.

 

•                                         Mr.Darryl Roberts, who was then the Group General Manager Fibre Packaging inAustralasia, would become the Acting Managing Director of AmcorAustralasia.  Mr Roberts has extensiveexperience working within a number of divisions in Australasia, including 10 yearsmanaging the metal can operations.

 

The Board hascommenced the process of identifying suitable candidates for subsequentappointment to the executive positions.

 

The Board’s December 7 announcement included the followingbackground information.

 

On September28, 2004, four senior executives who had worked in the corrugated box businessof the Amcor Group in Australia resigned. On November 10, 2004, Amcor sought orders in the Federal Court relatingto the return of confidential information belonging to the Amcor Group andinjunctions to prevent use of that information by those former executives.  Subsequently, the Company joined Mr. JimHodgson (former head of its Australia and New Zealand corrugated box business)to the proceeding.  The Federal Courtgranted orders providing for the delivery up of any such confidentialinformation.

 

On theafternoon of November 19, 2004, the solicitors for those former executivesdelivered material to the Company’s solicitors which suggested that the Companymay have been involved in conduct which breached competition laws.  As noted above, on November 22, 2004, theCompany’s Board met to discuss the matter and resolved to refer the materialwhich it had to the ACCC and to fully cooperate with any investigation which theACCC may undertake.

 

The Boardalso resolved that the Company would urgently undertake its own investigationof the matter.

 

The Company’sinvestigation is at an early stage.  Todate, its investigation has revealed that certain of its officers and employeesappear to have entered into and given effect to arrangements which constitutedcartel conduct in the corrugated box business in Australia and NewZealand.  The full nature and extent ofthe cartel conduct has not yet been ascertained by the Company.

 

The Board iscontinuing to investigate the full nature and extent of the cartel conduct inthe corrugated box business in Australia and New Zealand.  At this stage, the Board is not aware of anycartel conduct affecting any other part of the Company’s operations.  It is to be expected that the ACCC, in thecourse of its investigation, will seek to ascertain whether any cartel conducthas occurred in any of the Company’s operations other than its corrugated boxbusiness in Australia and New Zealand.

 

The Australian and New Zealandcorrugated box business represented approximately 9% of Group sales revenue and8% of Group PBITA in the year ended June 30 2004, 9% of Group sales revenue and9% of Group PBITA in the year ended June 30 2003, and 11% of Group sales revenueand 11% of Group PBITA in the year ended June 30 2002.

 

*LeniencyApplication – Australia*

 

The ACCC is the statutoryauthority responsible for administering Australia’s anti-trust laws, the TradePractices Act 1974 (TPA).

 

On November 22, 2004 Amcorapplied for leniency pursuant to the ACCC’s Leniency Policy for Cartel Conduct(ACCC Leniency Policy).

 

The ACCC Leniency Policy allowsfor immunity from ACCC initiated proceedings to the first person involved in acartel to come forward with information about the cartel.  To obtain immunity, an applicant must meetcertain requirements (seehttp://www.accc.gov.au/content/index.phtml/itemId/454181), including theprovision of full co-operation on a continuous basis with the ACCC in itsinvestigation and any ensuing proceedings.

 

In circumstances where the ACCCLeniency Policy does not apply, the ACCC will consider any application forleniency pursuant to its Cooperation Policy for Enforcement Matters.

 

57

----

 

The operation of the ACCCLeniency Policy does not in any way exclude or limit the rights of thirdparties who claim to have suffered loss or damage as a result of acontravention of the TPA to commence legal proceedings for damages and otherrelief against those involved in the contravention.

 

*LeniencyApplication – New Zealand*

 

The NZCC is the regulatoryagency responsible for enforcing New Zealand’s anti-trust laws, the CommerceAct 1986 (Commerce Act).

 

On November 29, 2004 Amcornotified the NZCC that the Company may have been involved in cartel conduct inNew Zealand.  Amcor applied for leniencypursuant to the NZCC’s Leniency Policy for Cartel Conduct (NZ LeniencyPolicy).  The NZ Leniency Policy allowsfor immunity from NZCC initiated proceedings to the first person involved in acartel to come forward with information about the cartel and co-operate fullywith the NZCC in its investigation and prosecution of the cartel (seehttp://www.comcom.govt.nz/TheCommission/LeniencyPolicy/leniencypolicynew.aspx).

 

Amcor was granted conditionalimmunity on December 1, 2004.  Pursuantto the NZ Leniency Policy, Amcor entered into an agreement with the NZCC underwhich Amcor is obliged to comply with specified conditions including fullcooperation with the NZCC.

 

The operation of the NZLeniency Policy does not exclude or limit claims by third parties who claim tohave suffered loss or damage as a result of the cartel conduct. Under theCommerce Act, third parties may pursue private claims for compensatory orexemplary damages.

 

*EstimatedPenalties and Damages – Australia and New Zealand*

 

It is not possible to provideeither a reasonable estimate, or a reasonable estimated range, of either thestatutory penalties which might be imposed on Amcor or of the amounts, if any, whichmight become payable by way of damages to any third parties who might havesuffered loss as a result of any cartel conduct in Australia and New Zealand.

 

The following factors (amongothers) would be relevant to any attempted assessment of any such estimate orestimated range:

 

•                                         First,a breach of Australia’s relevant anti-trust laws may involve the imposition ofa civil pecuniary penalty for a corporation of up to $10 million for eachbreach.  Corporations found to be inbreach of New Zealand’s relevant anti-trust laws may face, for each breach, acivil pecuniary penalty up to the greater of:

 

•                                          NZ$10million; or either

 

•                                          threetimes the value of any commercial gain resulting from the contravention; or

 

•                                          ifthe commercial gain cannot be ascertained, 10 per cent of the annual turnoverof the body corporate and its interconnected bodies corporate as a result oftrading by that body corporate in New Zealand.

 

A court may,in its discretion, choose to impose a penalty for a lesser amount.

 

•                                         Second,at this early stage of its own investigation, Amcor is not aware of the fullnature and extent of any cartel conduct and is not able to make any reliableassessment of how many breaches of anti-trust laws may have occurred.  Based on the limited information which Amcorhas received since it first became aware of the cartel conduct on November 19,2004, Amcor believes that cartel conduct may have occurred in Australia and NewZealand for a number of years.  Amcordoes not know either when the cartel conduct first commenced or how manybreaches of anti-trust laws may have occurred over a period which is likely tobe a number of years.

 

•                                         Third,as referred to above, Amcor has applied for leniency and/or immunity under theACCC Leniency Policy and the NZCC Leniency Policy.  It is not possible at such an early stage inthe investigations being conducted by the ACCC and the NZCC to make areasonable assessment of whether or not such leniency/immunity applications willor will not be ultimately successful, in whole or part, or of the financialimpact if either of such applications is not successful.

 

•                                         Fourth,Amcor does not know when the ACCC and NZCC will make a decision as to whetherto commence legal proceedings, and, if a decision is taken to commenceproceedings, when any such proceedings will be commenced.  Any such legal proceedings may not be heardand determined by the courts for a number of years.  Accordingly, no reliable assessment can bemade at present of how many breaches of anti-trust laws may be found by thecourts to have occurred or as to the quantum of any pecuniary penalties whichmay be imposed by the courts.  Equally,no reliable assessment can be made at present of the prospects of success orthe quantum of damages, if any, that may be awarded in any proceedings whichmay be instituted by third parties.

 

58

----

 

Although itis not possible to establish a reasonable estimated range of either penaltiesor damages, there can be no assurance that the penalties or damages ultimatelyincurred will not be material to the results of operations or financialcondition of Amcor.

 

Other

 

There are other outstandingcourt proceedings, claims and possible claims against companies in the AmcorGroup, arising in the ordinary course of business, the aggregate amount ofwhich cannot be readily quantified. While the outcome of such proceedings and claims cannot be predictedwith certainty, Amcor considers that no such proceedings or claims,individually or in aggregate, will have a material adverse effect on thebusiness, consolidated financial condition or results of operations of Amcor.The foregoing discussion includes certain forward-looking statements. See“Forward-Looking Statements” and “Risk Factors”.

 

***Dividend Policy***

 

Amcor has notpublished a formal dividend policy. Interim and final dividends are determinedat the discretion of the Directors.

 

**B.            SignificantChanges**

 

No significantchanges have occurred since the date of the Consolidated Financial Statements,except for those disclosed in Note 32 to the Consolidated Financial StatementsEvents Subsequent to Balance Date.

 

**ITEM 9    THE OFFER AND THE LISTING**

 

# ***Markets***

 

The principal trading market forAmcor’s shares is the Australian Stock Exchange Limited. Amcor’s OrdinaryShares are also listed on the New Zealand Stock Exchange.  American Depositary Shares (“ADSs”), eachrepresenting four Ordinary Shares and evidenced by American Depositary Receipts(“ADRs”), for which JPMorgan Chase Bank is the Depositary, are quoted on theNASDAQ National Market System.  Inaddition to these ADRs, as of June 30, 2004, there were 3,809 shareholderswhose registered addresses are situated in the United States holding in total2,129,567 Amcor Ordinary Shares, which is equivalent to 0.24% of Amcor’s issuedshare capital.

 

59

----

 

The following table sets out,for the periods indicated, the respective highest and lowest prices for AmcorADSs as traded on the NASDAQ National Market System (with each ADS representingfour Ordinary Shares) and for Amcor’s Ordinary Shares reported as the last saleon any trading day on the Australian Stock Exchange Limited.

 
| ** **                           | ** ** | **American Depositary** | ** ** | ** **          | ** ** | ** ** | ** ** |
|--------------------------------------|------------|-------------------------|------------|---------------------|------------|------------|------------|
| ** **                           | ** ** | **Shares**              | ** ** | **Ordinary Shares** | ** ** |
| ** **                           | ** ** | **High**                | ** ** | **Low**             | ** ** | **High**   | ** ** | **Low** | ** ** |
| 1998-99 From July 1998 to June 1999* |       | US$                     | 24.13      |                | US$        | 13.25      |       | A$ | 9.05 |   | A$ | 5.64 |   |
|                                 |       |                    |       |                |       |       |       |   |   |
| 1999-00 From July 1999 to June 2000* |       | US$                     | 22.69      |                | US$        | 11.38      |       | A$ | 8.66 |   | A$ | 4.79 |   |
|                                 |       |                    |       |                |       |       |       |   |   |
| 2000-01 From July 2000 to June 2001  |       | US$                     | 14.48      |                | US$        | 10.31      |       | A$ | 6.84 |   | A$ | 5.04 |   |
|                                 |       |                    |       |                |       |       |       |   |   |
| 2001-02 First Quarter                |       | US$                     | 14.59      |                | US$        | 11.07      |       | A$ | 7.05 |   | A$ | 5.69 |   |
| Second Quarter                       |       | US$                     | 14.97      |                | US$        | 12.10      |       | A$ | 7.16 |   | A$ | 6.20 |   |
| Third Quarter                        |       | US$                     | 16.80      |                | US$        | 14.61      |       | A$ | 7.87 |   | A$ | 7.11 |   |
| Fourth Quarter                       |       | US$                     | 16.69      |                | US$        | 12.40      |       | A$ | 9.10 |   | A$ | 7.17 |   |
|                                 |       |                    |       |                |       |       |       |   |   |
| 2002-03 First Quarter                |       | US$                     | 19.79      |                | US$        | 17.04      |       | A$ | 8.86 |   | A$ | 8.00 |   |
| Second Quarter                       |       | US$                     | 19.48      |                | US$        | 17.85      |       | A$ | 8.49 |   | A$ | 7.93 |   |
| Third Quarter                        |       | US$                     | 20.40      |                | US$        | 18.73      |       | A$ | 8.68 |   | A$ | 7.76 |   |
| Fourth Quarter                       |       | US$                     | 22.20      |                | US$        | 19.78      |       | A$ | 8.55 |   | A$ | 8.05 |   |
|                                 |       |                    |       |                |       |       |       |   |   |
| 2003-04 First Quarter                |       | US$                     | 24.47      |                | US$        | 21.60      |       | A$ | 9.16 |   | A$ | 8.03 |   |
| Second Quarter                       |       | US$                     | 25.30      |                | US$        | 23.25      |       | A$ | 9.09 |   | A$ | 8.01 |   |
| Third Quarter                        |       | US$                     | 25.69      |                | US$        | 22.70      |       | A$ | 8.30 |   | A$ | 7.47 |   |
| Fourth Quarter                       |       | US$                     | 22.20      |                | US$        | 19.78      |       | A$ | 8.05 |   | A$ | 6.51 |   |
|                                 |       |                    |       |                |       |       |       |   |   |
| 2004-05 June                         |       | US$                     | 20.10      |                | US$        | 17.90      |       | A$ | 7.22 |   | A$ | 6.51 |   |
| July                                 |       | US$                     | 20.82      |                | US$        | 18.75      |       | A$ | 7.17 |   | A$ | 6.65 |   |
| Augt                                 |       | US$                     | 20.88      |                | US$        | 18.98      |       | A$ | 7.39 |   | A$ | 6.65 |   |
| September                            |       | US$                     | 21.20      |                | US$        | 19.98      |       | A$ | 7.53 |   | A$ | 6.99 |   |
| October                              |       | US$                     | 22.80      |                | US$        | 19.90      |       | A$ | 7.65 |   | A$ | 6.90 |   |
| November                             |       | US$                     | 24.35      |                | US$        | 22.65      |       | A$ | 7.90 |   | A$ | 7.32 |   |

 

----

* Pre PaperlinX Limited demerger.

 

The last reported sale of ourordinary shares on December 20 , 2004 on the ASX was A$7.17 . The last reportedsale of our ADSs on December 20, 2004 on Nasdaq was US$21.97.

 

60

----

 

**ITEM 10****                                                ADDITIONAL INFORMATION**

 

**A.****                                   Share Capital**

 

Notapplicable

 

**B.****                                   Constitution**

 

The following providesinformation on the material provisions of Amcor’s constitution. A full copy ofAmcor’s constitution is filed with the SEC.

 

Certain information in theconstitution on Directors is also included in Item 6, “Directors, SeniorManagement and Employees”.

 

## ***General Meetings***

 

By a resolution of theBoard, Amcor may call a general meeting of the Company. No shareholder mayconvene a general meeting except where entitled under the Corporations Act 2001to do so. Where a general meeting has been called, notice of the meeting may begiven in the form and manner the Board thinks fit. All provisions of theconstitution as to general meetings apply to any special meeting of any classof shareholders which may be held under the operation of this constitution orthe Corporations Act 2001.

 

The business of an annualgeneral meeting is to consider the accounts and reports required by theCorporations Act 2001 to be laid before the meeting, to elect Directors in theplace of those retiring under this constitution, when relevant, to appoint anauditor and to transact any other business which, under this constitution, isrequired to be transacted at any annual general meeting.

 

Three shareholders must bepresent to form a quorum. No business may be transacted at a meeting except theelection of a Chairman and the adjournment of the meeting unless a quorum ispresent.

 

## ***Votes of Shareholders***

 

Shareholders may vote at ameeting of the Company in person, by proxy or attorney. Shareholders must voteon a show of hands unless a poll is called. A poll may be called either beforea vote is taken or before or immediately after the voting results on a show ofhands are declared. A poll may be demanded by a shareholder under theCorporations Act 2001 (and not otherwise) or by the Chairman.

 

## ***Powers of the Board***

 

The management and control ofthe business and affairs of Amcor are vested in the Board including raising orborrowing money, guaranteeing debts or obligations of any person, providingsecurity for a debt and authorizing persons in whose favour debenture, mortgageor other security is executed to make calls on shareholders in respect ofuncalled capital.

 

Except where a Director isrestrained by the Corporations Act 2001, a Director may be present at a meetingof the Board while the matter in which the Director has an interest is beingconsidered and may vote in respect of that matter.

 

As remuneration for services,each non-executive Director is to be paid out of the funds of the Company a sumdetermined by the Board but the aggregate remuneration paid to allnon-executive Directors in any year may not exceed an amount fixed by Amcor ingeneral meeting.

 

## ***Dividends***

 

The Board determines that adividend is payable and fixes the amount, time for payment and method ofpayment. The Board may establish and maintain one or more dividend plans underwhich shareholders may elect to reinvest dividends by subscribing for shares inthe capital of the Company. The Board also determines the timing and amount ofinterim dividends.

 

The Board may retain anydividends in respect of which Amcor has a lien or charge and may apply anyretained dividends towards satisfaction of the calls, instalments or sums owingin respect of which the lien or charge exists.

 

61

----

 

All unclaimed dividends may beinvested or otherwise made use of by the Board for the benefit of Amcor untilclaimed or otherwise disposed of according to law.

 

# ***Preference Shares***

 

If Amcor at any time proposes toissue preference shares, the preference shares confer on the holders a right toreceive out of the profits of the Company available for dividend a preferentialdividend at the rate or of the amount and on the basis determined by the Boardat the time of issue of the preference shares.

 

The preference shares are toconfer on the holders the right on redemption and, in a winding up, to paymentin cash in priority to any other class of shares of the amount paid on each ofthe preference shares and the amount equal to the aggregate of any dividendsaccrued but unpaid.

 

The preference shares do notconfer on the holders any further rights to participate in assets or profits ofAmcor.

 

## ***Partial Takeovers***

 

Where apartial takeover offer is made, a contract to accept the offer is prohibiteduntil an Approving Resolution is passed. An Approving Resolution is to be votedon at a meeting, convened and conducted by Amcor and is taken to have beenpassed if more than one-half of eligible votes are in favour of the resolution;otherwise it is rejected.

 

**C.****                                   MaterialContracts**

 

There were no materialcontracts, other than those entered into in the normal course of business, towhich the company or any member of the group is a party from July 1, 2002 tothe date of this report.

 

**D.****                                  ****Exchange Controls and Other Limitations Affecting Security Holders**

 

Under existing Australianlegislation, the Reserve Bank of Australia does not inhibit the import andexport of funds, and no permission is required by Amcor for the movement offunds, into and out of Australia. However, Amcor is required to lodge a currency transfer reportdisclosing all transfers of A$10,000 or more out of Australia with theAustralian Transaction Reports and Analysis Centre.

 

There are no limitations,either under the laws of Australia or under the Constitution of Amcor, on theright of non-residents to hold or vote Ordinary Shares.

 

The Foreign Acquisitions andTakeovers Act 1975 (the “FATA”) and the Corporations Act 2001 (the “Act”) eachregulate acquisitions giving rise to ownership of substantial amounts of acompany’s shares.  A summary of the mainprovisions of the FATA and the Act is given below.

 

(a)                                  ForeignAcquisitions and Takeovers Act 1975

 

The FATAprohibits:

 

(i)                                     anatural person not ordinarily resident in Australia;

 

(ii)                                  acorporation in which either a natural person not ordinarily resident inAustralia or a foreign corporation (as defined in the FATA) holds a substantialinterest or a controlling interest;

 

(iii)                               acorporation in which two or more persons, each of whom is either a naturalperson not ordinarily resident in Australia or a foreign corporation, hold anaggregate substantial interest or an aggregate controlling interest;

 

(iv)                              thetrustee of a trust estate in which a natural person not ordinarily resident inAustralia or a foreign corporation holds a substantial interest; or

 

(v)                                 thetrustee of a trust estate in which two or more persons, each of whom is eithera natural person not ordinarily resident in Australia or a foreign corporation,hold an aggregate substantial interest,

 

from enteringinto an agreement to acquire shares if, after the acquisition, such person orcorporation would hold a substantial shareholding or controlling interest in anAustralian corporation (other than an exempt corporation, the definition ofwhich excludes a corporation such as Amcor) without first applying in the prescribedform for approval thereof by the Australian Treasurer and such approval beinggranted or 40 days having elapsed after such application was made.

 

62

----

 

*Substantial Interest*

 

A person willbe deemed to hold a substantial interest in a corporation if the person aloneor together with any associates (as defined in the FATA), is in a position tocontrol not less than 15 percent of the voting power in the corporation orholds legal or equitable interests in not less than 15 percent of the issuedshares in that corporation. Two or more persons will be deemed to hold anaggregate substantial interest in a corporation if they, together with anyassociates, are in a position to control not less than 40 percent of the votingpower in the corporation or hold legal or equitable interests in not less than40 percent of the issued shares in that corporation.

 

*Controlling Interests*

 

A substantialinterest or aggregate substantial interest will be deemed a controlling interestor aggregate controlling interest respectively, unless the Treasurer issatisfied that, having regard to all circumstances, the person or persons,together with any associates (as defined), is not or are not in a position todetermine the policy of the corporation.

 

(b)                                CorporationsAct 2001

 

The Actprohibits a person (including a corporation) from acquiring a relevant interestin issued voting shares in a listed company (or an unlisted company with morethan 50 members) if, after the acquisition, the voting power in the company ofthat person or any other person increases:

 

•                  from20% or below to more than 20%; or

 

•                  froma starting point that is above 20% and below 90%.

 

*Relevant Interest*

 

A person isconsidered to have a relevant interest in a security if they (whether solely orjointly, directly or indirectly, whether enforceable or not and irrespective ofcertain restrictions and restraints on such powers and other matters and thingsspecified in the Act):

 

(i)                                      arethe holder of the security;

 

(ii)                                   havepower to exercise, or control the exercise of, a right to vote attached to thesecurity; or

 

(iii)                                havepower to dispose of, or control the exercise of, a power to dispose of, thesecurity.

 

The Act alsodeems that a person acquires a relevant interest in voting shares in a companyif:

 

•                                          securitiesin which the person already had a relevant interest become voting shares in thecompany; or

 

•                                          thereis an increase in the number of votes that may be cast on a poll attached tovoting shares that the person already had a relevant interest in.

 

In thesecircumstances, the acquisition of the relevant interest will occur when thesecurities become voting shares or the number of votes increases.

 

*Voting Power*

 

A person’svoting power in a company is determined as follows:

 
| person’s  and associate’s votes  |   | x 100  |
|-------------------------------------------------|--------|--------|
| total votes  in company                         |   |   |

 

where:

 

•                  ‘person’sand associate’s votes’ is the total number of votes attached to all the votingshares in the company (if any) that the person or an associate has a relevantinterest in; and

 

•                  ‘totalvotes in the company’ is the total number of votes attached to all votingshares in the company.

 

The Actprovides that the number of votes attached to a voting share in a company isthe maximum number of votes that can be cast in respect of the share on a poll:

 

•                       onthe election of a director of the company (if the election of directors isdetermined by the casting of votes attached to voting shares); or

 

•                       onthe adoption or amendment of the company’s constitution (if the election ofdirectors is not determined by the casting of votes attached to voting shares).

 

63

----

 

*Exceptions to the Prohibition*

 

Exceptions tothis prohibition are outlined in section 611 of the Act.  Some of the more significant exceptions are:

 

•                  Section611 (item 1) permits a person who proposes to become entitled to more than20 percent of the voting shares of a company to make a formal takeover offer tothe shareholders of the target company to acquire their shares.  Separate takeover schemes are required foreach class of shares sought.

 

•                  UnderSection 611 (item 2), a person (either alone or together with others) canacquire in excess of 20 percent of a company’s voting shares by an on-marketpurchase during a bid period.  The bidmust be for all the voting shares in the bid class and be unconditional or onlyconditional on the happening of an event which entitles the bid to be withdrawnunder sections 652C(1) or (2).

 

•                  UnderSection 611 (item 7), a person (either alone or together with others) ispermitted to acquire shares in excess of 20 percent of a company’s issuedcapital where that company has agreed to the acquisition by a resolution passedat a general meeting at which no votes were cast in relation to the resolutionin respect of any shares held by the acquirer and their associates or thepersons (if any) from whom the acquisition is to be made and their associates.

 

•                  UnderSection 611 (item 9), a person who has been entitled to 19 percent ormore of the target company’s voting power for a continuous period of not lessthan six months is permitted to acquire voting power in the company which is nomore than 3 percentage points higher than they had 6 months beforethe acquisition.

 

**E.****                                    ****Taxation**

 

***Australian Taxation***

 

Thefollowing summary discusses the Australian tax consequences of owning ADSs orOrdinary Shares.  The summary is notexhaustive and is based on law in force as of the date of this Annual Report.  Holders of ADSs are advised to consult theirown tax advisers as to the tax and stamp duty consequences of their ownershipof and dealings in ADSs and Ordinary Shares.

 

Under thecurrent double taxation convention between Australia and the United States,dividends paid by Amcor to a United States resident shareholder of Amcor,including an ADS holder, who is not deemed to be an Australian resident for taxpurposes, and does not have a permanent establishment in Australia or performin Australia independent personal services from a fixed base situated inAustralia, will be subject to a maximum Australian withholding tax of 15percent of such gross dividend.

 

From July1, 2003 the applicable rates of dividend withholding tax are as follows:

 

0% - for80% or greater shareholders (down from 15%)

5% - for 10%or greater shareholders (down from 15%)

15% forothers (no change)

 

To theextent that withholding tax is paid, this is a final tax and no otherAustralian tax would be payable.

 

Dividendspaid to non-residents of Australia will not attract Australian withholding taxto the extent that the dividend has been “franked”.  A dividend will be franked to the extent thatthe corporation declaring the dividend has tax credits available from thepayment of Australian corporate tax and has declared that the dividend is sofranked.

 

TheAustralian Government introduced a holding period for shares operative fromJuly 1, 1997, such that franking credits will be denied on dividends payable onshares, and distributions paid on an interest in shares where:

 

•                  the taxpayer effectively holds ordinary shares (orsimilar interests) for less than 45 days, or less than 90 days in the case ofpreference shares; and

 

•                  during this period a dividend is payable on theshares, or a distribution is payable on the interest in the shares, so that thetaxpayer would be entitled to franking credits or the section 46inter-corporate dividend rebate (or both) in respect of the dividenddistribution.

 

The testwill focus only on arrangements (share investments and related hedges) whichremove 70% or more of downside and upside risk in relation to the shares.

 

64

----

 

Dividendspaid to United States residents which are not franked (or are partly franked)will, subject to the comments below, attract withholding tax at the rateslisted above on the unfranked amount.

 

bWitheffect from July 1, 1994, unfranked dividends paid to non-residents ofAustralia will, in certain circumstances, be wholly or partly exempt fromAustralian withholding tax.  Where theunfranked dividend is paid out of profits derived by Amcor from qualifyingforeign dividends, withholding tax will not be payable on any foreign dividendaccount (“FDA”) amount specified in a notice provided by Amcor to shareholders.

 

Since theintroduction of the imputation system, 27 dividend distributions have been madeby Amcor, all of which have been at least partly franked.  Dividend distributions, paid in April 1995,October 1995, April 1996 and October 1996 were franked to 100%. The dividendspaid in April 1997 were franked to 70%. Dividends paid in October 1997 andApril 1998 were franked to 25% and those paid in October 1998 were franked to35%. The dividends paid in April 1999, October 1999 and April 2000 were frankedto 20%. The dividend paid in October 2000 was franked to 35% and the dividendspaid in April 2001, October 2001, March 2002, October 2002 and April 2003 werefranked to 50%. The dividends paid in October 2003, March 2004 and September2004 were franked to 40%. Amcor has provided and will continue to provide allshareholders with notices which specify the franked and unfranked amount ofeach dividend and the amount (if any) of dividend withholding tax deducted.

 

Since July1, 1991 Amcor has been obliged to deduct tax at the highest marginal rate plusthe Medicare Levy (currently 48.5%) from unfranked dividends or interest paidto investors resident in Australia who have not supplied the Company with a taxfile number or exemption form.  Collectionof tax file number information is authorized by and its use and disclosure isstrictly regulated by the Tax Laws and Privacy Act.

 

A UnitedStates citizen who is a resident of Australia, or a United States corporationwhich is a resident of Australia (by reason of carrying on business in Australiaand having its voting power controlled by shareholders who are residents ofAustralia, or being managed or controlled in Australia) may be liable to payAustralian income tax in respect of the profit or capital gain (if any) derivedupon the disposal of ADSs or Ordinary Shares. Under current Australian tax laws, no tax is payable in respect of thedisposal of ADSs or Ordinary Shares held by non-residents of Australia except:

 

(a)                                  if the ADSs or Ordinary Shares are trading stockof the holder or if an ordinary incident of the holder’s business is the saleof securities for a profit, or the profit arises out of a profit making scheme(in certain circumstances) and, in any case, the profit is sourced inAustralia; or

 

(b)                                 if disposed of and the ADSs or Ordinary Sharesbeneficially owned by the non-resident or his associates, or the non-residenttogether with his associates, at any time during the period of five yearspreceding the disposal represent 10 percent or more of the issued share capitalof Amcor (excluding share capital carrying no right to participate beyond aspecified amount in a distribution of profits or capital).

 

FromOctober 1, 1999 any taxable unindexed capital gain on ADSs or Ordinary Sharesacquired on or after October 1, 1999 and held for at least one year is reducedby half for individuals and by one third for superannuation funds. Individualsand superannuation funds that acquired ADSs and Ordinary Shares before October1, 1999 and hold them for at least one year can either calculate their taxableunindexed capital gain, as above or choose to make an indexed capital gainbeing the whole of the difference between the realisation price and the indexedcost base as at September 30, 1999. Corporations do not benefit from suchconcessions and are disadvantaged by the removal of indexation.

 

Notwithstandingthat the profit or gain upon the disposal of the ADSs or Ordinary Shares isassessable in Australia in the circumstances of (a) or (b) above, if the vendoris a resident of the United States, then depending on the circumstances of thecase, relief from Australian tax may nevertheless be available under thecurrent double taxation convention referred to above.

 

Effectivefrom July 1, 2001 stamp duty on Australian share transfers has been abolished.In addition, under current Australian tax law, no Australian State or Federalestate duty or other inheritance taxes will be payable in respect of ADSs orOrdinary Shares upon the death of a holder thereof, regardless of the holder’sdomicile.  For capital gains purposes,the death of the holder will only produce a deemed disposal, if the ADSs orOrdinary Shares are bequeathed to a tax exempt person or if the deceased was anAustralian resident, the ADS or Ordinary Shares are bequeathed to a non-resident,and the ADS or Ordinary Shares did not fall within the meaning of a taxableAustralian asset as referred to in paragraph (b) above.  In all other circumstances, the liability fortax on any gain is effectively transferred to the deceased’s legal representativesor beneficiaries, subject to those matters referred to above.  Such deemed disposal or a disposalsubsequently by the beneficiary will have the consequences set out above.

 

65

----

 

***United States Federal Income Taxation***

 

The followingdiscussion is a summary of the material U.S. federal income tax consequences toyou of the ownership and disposition of the Amcor ADSs and Ordinary Shares, butit does not purport to be a comprehensive description of all of the UnitedStates tax considerations of the ownership and disposition of ADSs or OrdinaryShares.

 

The discussionis based on the tax laws of the United States, including the Internal RevenueCode of 1986, as amended, its legislative history, existing and proposedregulations, published rulings and court decisions, and the tax laws ofAustralia, as well as the double taxation convention between Australia and theUnited States, and a protocol thereto (collectively the “Treasury”), all ascurrently in effect and all subject to change at any time, perhaps withretroactive effect. In addition, the discussion is based in part upon therepresentations of the Depositary and the assumption that each obligationprovided for in the Deposit Agreement and any related document will beperformed in accordance with its terms.

 

You shouldconsult your own tax adviser as to the United States, Australian, or other taxconsequences of the ownership and disposition of the Amcor ADSs or OrdinaryShares in your particular circumstances.

 

The discussionrelating to U.S. tax consequences only applies to you if you hold your ADSs orOrdinary Shares as capital assets for tax purposes and you are not a member ofa special class of holders subject to special rules, including a dealer insecurities, a trader in securities that elects to use a mark-to-market methodof accounting for their securities holdings, a tax-exempt organization, a lifeinsurance company, a person liable for alternative minimum tax, a person thatactually or constructively owns 10% or more of our voting stock, a person thatholds Ordinary Shares or ADSs as part of a hedging or straddle or conversiontransaction or a person whose functional currency is not the U.S. dollar.

 

You are a U.S.holder if you are a beneficial owner of Ordinary Shares or ADSs and you are:(i) a citizen or resident of the United States, (ii) a domestic corporation,(iii) an estate whose income is subject to United States federal income taxregardless of its source, or (iv) a trust if a United States court can exerciseprimary supervision over the trust’s administration and one or more UnitedStates persons are authorized to control all substantial decisions of thetrust.

 

For U.S.federal income tax purposes if you hold ADRs evidencing ADSs, you will betreated as the owner of the underlying Ordinary Shares represented by thoseADSs, and exchanges of Ordinary Shares for ADSs, and ADSs for Ordinary Shares,will not be subject to United States federal income tax.

 

Taxation of Dividends

 

Subject to thepassive foreign investment company (“PFIC”) rules discussed below, if you are aU.S. holder you must include in your gross income the gross amount of anydividend (or other distribution, other than certain distributions in redemptionof ADSs or Ordinary Shares or distributions of our capital stock or rights tosubscribe for our capital stock) paid (before reduction for Australianwithholding taxes) by us out of our current or accumulated earnings and profits(as determined for United States federal income tax purposes).  The dividend is ordinary income that you mustinclude in income when you receive the dividend, either actually orconstructively, in the case of Ordinary Shares, or when the depositary receivessuch dividend, in the case of ADSs. For tax years beginning after December 31,2002, dividends will be taxed at capital gains rates, 15% for individuals withtaxable income in an income tax bracket above 15% and 5% for those with taxableincome in the 10% - 15% tax brackets. The dividend will not be eligible for thedividends-received deduction generally allowed to United States corporations inrespect of dividends received from other United States corporations.Distributions in excess of current and accumulated earnings and profits, asdetermined for United States federal income tax purposes, will be treated as anon-taxable return of capital to the extent of your basis in the ADSs orOrdinary Shares and thereafter as capital gain.

 

The amount ofthe dividend distribution that you must include in your income will be the U.S.dollar value of the Australian dollar payments made, determined at the spotAustralian dollar/U.S. dollar rate on the date such dividend distribution isincludible in your income, regardless of whether the payment is in factconverted into U.S. dollars.  Generally,any gain or loss resulting from currency exchange fluctuations during theperiod from the date you include the dividend payment in income to the datesuch payment is converted into U.S. dollars will be treated as ordinary incomeor loss.  Such gain or loss willgenerally be income or loss from sources within the United States for foreigntax credit limitation purposes.

 

66

----

 

Subject tocertain limitations, the Australian tax withheld in accordance with theTreasury and paid over to Australia will be creditable against the U.S. holder’sUnited States federal income tax liability. For foreign tax credit purposes,the dividend will be income from sources outside the United States, butgenerally will be “passive income” or “financial services income” which istreated separately from other types of income for purposes of computing theforeign tax credit allowable to you.  NoUnited States foreign tax credit will be allowed to U.S. holders of OrdinaryShares or ADSs in respect of any personal property or similar tax imposed byAustralia (or any taxing authority thereof or therein).

 

Distributionsof additional Ordinary Shares to U.S. holders with respect to their OrdinaryShares or ADSs that are made as part of a pro rata distribution to all ourshareholders generally will not be subject to United States federal income tax.

 

Taxationof Capital Gains

 

Subject to thePFIC rules discussed below, if you are a U.S. holder and you sell or otherwisedispose of your Ordinary Shares or ADSs, you will recognize a gain or loss forUnited States federal income tax purposes in an amount equal to the differencebetween the U.S. dollar value of the amount realized and your tax basis(determined in U.S. dollars) in such Ordinary Shares or ADSs.  Generally such gain or loss will be long-termcapital gain or loss if your holding period for such Ordinary Shares or ADSsexceeds one year and any such gain or loss will be income or loss from sourceswithin the United States for foreign tax credit limitation purposes. As aresult of the Jobs and Growth Tax Relief Reconciliation Act of 2003, long-termcapital gains of a non-corporate U.S. holder occurring after May 6, 2003 aresubject to tax at 15% for those with taxable income in an income tax bracketabove 15% and 5% for those with taxable income in the 10% - 15% taxbrackets.  For sales or exchangesoccurring prior to May 6, 2003, the maximum capital gains rate is 20%. (10% forindividuals in the 10% or 15% tax bracket). However, for tax years beginning after December 31, 2000, lowercapital gain rates may apply depending on the holding period and the U.S.individual holder’s tax bracket.  A lowercapital gains rate of 18% (8% for individuals in the 10% or 15% tax bracket)may be applied if the individual holds the asset more than five years.

 

#### **PFICRules**

 

We believethat our Ordinary Shares and ADSs should not be treated as stock of a PFIC forUnited States federal income tax purposes, but this conclusion is a factualdetermination made annually and thus may be subject to change.  If we were to be treated as a PFIC, unless aU.S. holder elects to be taxed annually on a mark-to-market basis with respectto the Ordinary Shares or ADSs, gain realized on the sale or other dispositionof Ordinary Shares or ADSs would in general not be treated as capital gain, anda U.S. holder would be treated as if such holder had realized such gain andcertain “excess distributions” rateably over the holder’s holding period forthe Ordinary Shares or ADSs and would be taxed at the highest tax rate ineffect for each such year to which the gain was allocated, together with aninterest charge in respect of the tax attributable to each such year.

 

**F.****                                     ****Dividends and PayingAgents**

 

Not applicable

 

**G.****                                   ****Statement by Experts**

 

Not applicable.

 

**H.****                                   ****Documents on Display**

 

It is possible to read and copy documents referred to in this AnnualReport on Form 20-F that have been filed with the Securities and ExchangeCommission (“SEC”) at the SEC’s public reference room located at 450 FifthStreet, NW, Washington DC 20549.  Pleasetelephone the SEC at 1-800-SEC-0330 or access the SEC website (www.sec.gov) forfurther information.

 

**I.****                                        ****Subsidiary Information**

 

Not applicable.

 

67

----

 

## **ITEM 11**                                                 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK

 

Thediscussion below contains certain forward-looking statements. See commentsregarding “Forward Looking Statements” on page 4 of this report.

 

Derivativefinancial instruments are not held or used by Amcor for speculative or tradingpurposes. Our policy is to hedge all material foreign exchange transactions byentering into forward foreign exchange contracts and currency swaps and to manageour exposure to movements in interest rates by entering into interest rateswaps.

 

In order tocontrol any exposure which may result from non-performance by counterparties,these contracts are only entered into with major banks with a minimum long termrating of A+ by Standard & Poor’s or A2 by Moody’s.  In addition, these banks must be approved foruse by the Amcor Limited Board, and specific internal guidelines have beenestablished with regard to limits, dealing and settlement procedures. Theestimated credit risk exposure of Amcor is minimal.

 

Amcor isexposed to adverse movements in interest rates under various debt facilities.By monitoring global interest rates and, where appropriate, hedging interestrate exposures, Amcor seeks to manage its interest rate risk.

 

As at June 30, 2004, Amcor’s ratio of fixed rate debt to total debtwas 64%, up from 55% at June 30, 2003.  The increase in theproportion of fixed rate debt was due to the issue of a 7 year €350 millionEurobond at a fixed coupon of 4.25% in March 2004. The Eurobond replaced anumber of maturing floating rate debt facilities and was also used to repayeuro denominated debt that had been drawn to fund acquisitions completed duringthe year.  Amcor achieved an averageinterest rate paid on all borrowings (excluding the coupon on PACRS) for2003-04 of 4.7% (5.0% last year in 2002-03). This was largely due to theEurobond replacing more expensive floating rate debt and the overall lowinterest rate environment experienced in the majority of countries in whichAmcor operates.

 

Amcor entersinto interest rate swap agreements and forward rate agreements to allow theconsolidated entity to swap floating rate borrowings into fixed rates.  Interest rate swaps are also used to swapfixed rate borrowings into floating rates. Cross currency interest rate swaps allow the consolidated entity to swaplong term Australian denominated borrowings into foreign currencies, to hedgethe investment in self sustaining foreign operations. Maturities of swapcontracts are principally between one and three years. Each contract involvesquarterly or semi-annual payment or receipt of the net amount of interest.  Floating rates are based on interest ratesettings in the currencies concerned plus the consolidated entity’s creditmargin.

 

From time totime the consolidated entity also enters into interest rate options to reducethe impact of changes in interest rates on floating rate long-term debt.

 

In March 2004, Amcor issued EUR350 million AmcorLimited Eurobond notes in the Eurobond market. The notes mature in 2011 and pay an annual coupon of 4.25%.

 

In December 2002, Amcor successfully completedarrangements for a US$500 million private placement of debt securities toUS-based institutional investors. The placement was done in tranches of 7, 10,12 and 15 years (average duration – 11.5 years) at a weighted average interestrate of 5.8%.

 

The placement was made in two instalments with US$350million being used immediately to replace the bridge finance facilityestablished at the time of the Schmalbach-Lubeca acquisition and a furtherUS$150 million refinancing notes that matured in June 2003.

 

68

----

 

***Interest Rate Risk Exposures***

 

Exposure tointerest rate risk and the effective weighted interest rate for classes offinancial assets and liabilities is set out below:

 
| ** **                                   | ** ** | **Fixed interest maturing  in:** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|
| **2003-04**                                  | ** ** | **Floating  interest  rate**     | ** ** | **1 year or  less** | ** ** | **Over  1 to 5  years** | ** ** | **More  than 5  years** | ** ** | **Non-  interest  Bearing** | ** ** | **Total** | ** ** | **Weighted  average  interest  rate** | ** ** |
| ** **                                   | ** ** | **A$m**                          | ** ** | **A$m** | ** ** | **A$m** | ** ** | **A$m** | ** ** | **A$m** | ** ** | **A$m** | ** ** | ** ** | ** ** |
| Financial Assets                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                                         |       | 131.0                            |       | — |   | — |   | — |   | — |   | 131.0 |   | 2.25 | % |
| Receivables                                  |       | 17.3                             |       | — |   | — |   | — |   | 1,615.9 |   | 1,633.2 |   | 3.53 | % |
| Other financial assets                       |       | —                           |       | — |   | — |   | — |   | 12.9 |   | 12.9 |   | — |   |
|                                         |       | 148.3                            |       | — |   | — |   | — |   | 1628.8 |   | 1,777.1 |   | 2.40 | % |
| Financial Liabilities                        |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Payables                                     |       | —                           |       | — |   | — |   | — |   | 1,762.2 |   | 1,762.2 |   | — |   |
| Bank and other loans                         |       | 833.4                            |       | 2.5 |   | 40.8 |   | — |   | 6.1 |   | 882.8 |   | 3.64 | % |
| Commercial paper                             |       | 186.3                            |       | — |   | — |   | — |   | — |   | 186.3 |   | 1.40 | % |
| US$ Notes                               |       | —                           |       | — |   | — |   | 723.7 |   | — |   | 723.7 |   | 5.83 | % |
| Eurobond                                     |       | —                           |       | — |   | — |   | 612.0 |   | — |   | 612.0 |   | 4.25 | % |
| Leases                                       |       | 1.1                              |       | 2.1 |   | 31.6 |   | 65.1 |   | — |   | 99.9 |   | 5.95 | % |
| Distributions payable                        |       | —                           |       | — |   | — |   | — |   | 8.8 |   | 8.8 |   | — |   |
| Employee entitlements                        |       | —                           |       | — |   | 74.2 |   | — |   | 241.3 |   | 315.5 |   | 6.00 | % |
| Undated subordinated convertible  securities |       | —                           |       | 4.6 |   | 332.3 |   | — |   | — |   | 332.3 |   | 7.25 | % |
|                                         |       | 1020.8                           |       | 4.6 |   | 478.9 |   | 1,400.8 |   | 2,018.4 |   | 4923.5 |   | 4.69 | % |
| Interest rate swaps                          |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| US$                                          |       | (8.3                             | )          | — |   | 8.3 |   | — |   | — |   | — |   | 7.65 | % |
| Euro                                         |       | (480.0                           | )          | — |   | 480.0 |   | — |   | — |   | — |   | 4.81 | % |
| A$                                           |       | 480.0                            |       | — |   | (480.0 | ) | — |   | — |   | — |   | (5.67 | )% |
|                                         |       | (8.3                             | )          | — |   | 8.3 |   | — |   | — |   | — |   | 4.55 | % |
| Cross Currency Interest Rate Swaps           |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| A$                                           |       | 607.0                            |       | — |   | — |   | — |   | — |   | 607.0 |   | 5.54 | % |
| Euro                                         |       | (607.0                           | )          | — |   | — |   | — |   | — |   | (607.0 | ) | (1.94 | )% |
| A$                                           |       | 116.0                            |       | — |   | — |   | — |   | — |   | 116.0 |   | 6.19 | % |
| CA$                                          |       | (116.0                           | )          | — |   | — |   | — |   | — |   | (116.0 | ) | (2.89 | )% |
|                                         |       | —                           |       | — |   | — |   | — |   | — |   | — |   | 3.87 | % |

 
| ** **                                   | ** ** | **Fixed interest maturing  in:** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|
| **2002-03**                                  | ** ** | **Floating  interest  rate**     | ** ** | **1 year or  less** | ** ** | **Over  1 to 5  years** | ** ** | **More  than 5  years** | ** ** | **Non-  interest  Bearing** | ** ** | **Total** | ** ** | **Weighted  average  interest  rate** | ** ** |
| ** **                                   | ** ** | **A$m**                          | ** ** | **A$m** | ** ** | **A$m** | ** ** | **A$m** | ** ** | **A$m** | ** ** | **A$m** | ** ** | ** ** | ** ** |
| Financial Assets                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                                         |       | 141.5                            |       | — |   | — |   | — |   | — |   | 141.5 |   | 2.61 | % |
| Receivables                                  |       | 20.5                             |       | — |   | — |   | — |   | 1,565.6 |   | 1,586.1 |   | 3.28 | % |
| Other financial assets                       |       | —                           |       | — |   | — |   | — |   | 21.5 |   | 21.5 |   | — |   |
|                                         |       | 162.0                            |       | — |   | — |   | — |   | 1,587.1 |   | 1,749.1 |   | 2.69 | % |
| Financial Liabilities                        |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Payables                                     |       | —                           |       | — |   | — |   | — |   | 1,525.7 |   | 1,525.7 |   | — |   |
| Bank and other loans                         |       | 971.4                            |       | 9.7 |   | 21.5 |   | 0.4 |   | 2.3 |   | 1,005.3 |   | 3.66 | % |
| Commercial paper                             |       | 108.4                            |       | — |   | — |   | — |   | — |   | 108.4 |   | 2.65 | % |
| US$ Notes                               |       | —                           |       | — |   | — |   | 748.9 |   | — |   | 748.9 |   | 5.83 | % |
| Leases                                       |       | 138.8                            |       | 1.5 |   | 1.6 |   | 8.5 |   | — |   | 150.4 |   | 5.31 | % |
| Employee entitlements                        |       | —                           |       | — |   | 80.3 |   | — |   | 263.2 |   | 343.5 |   | 6.00 | % |
| Dividend payable                             |       |                             |       |   |   |   |   |   |   | 8.8 |   | 8.8 |   | — |   |
| Undated subordinated convertible  securities |       | —                           |       | — |   | 446.2 |   | — |   | — |   | 446.2 |   | 7.08 | % |
|                                         |       | 1,218.6                          |       | 11.2 |   | 549.6 |   | 757.8 |   | 1,800.0 |   | 4,337.2 |   | 5.00 | % |
| Interest rate swaps/FRAs                     |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| US$                                          |       | (8.6                             | )          | — |   | 8.6 |   | — |   | — |   | — |   | 7.65 | % |
| A$                                           |       | (100.0                           | )          | — |   | 100.0 |   | — |   | — |   | — |   | 6.75 | % |
| Euro                                         |       | (480.0                           | )          | — |   | 480.0 |   | — |   | — |   | — |   | 4.81 | % |
| A$                                           |       | 480.0                            |       | — |   | (480.0 | ) | — |   | — |   | — |   | (5.67 | )% |
|                                         |       | (100.0                           | )          | — |   | 100.0 |   | — |   | — |   | — |   | 4.90 | % |
| Cross Currency Interest Rate Swaps           |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| A$                                           |       | 607.0                            |       | — |   | — |   | — |   | — |   | 607.0 |   | 4.80 | % |
| Euro                                         |       | (607.0                           | )          | — |   | — |   | — |   | — |   | (607.0 | ) | (2.43 | )% |
| A$                                           |       | 116.0                            |       | — |   | — |   | — |   | — |   | 116.0 |   | 5.29 | % |
| CA$                                          |       | (116.0                           | )          | — |   | — |   | — |   | — |   | (116.0 | ) | (4.02 | )% |
|                                         |       | —                           |       | — |   | — |   | — |   | — |   | — |   | 3.78 | % |

 

69

----

 

***Foreign Currency Exchange Rate Risk***

 

In relation totransactional foreign currency exposures, Amcor policy is to hedge all netforecast or actual currency exposures greater than A$100,000.  The gains or costs on entering the hedge andthe exchange differences up to the date of the purchase or sale are deferredand recognised as assets or liabilities on the statement of financial positionfrom the inception of the hedge contract, not when the specific purchase orsale occurs. At maturity, the costs or gains are included in the measurement ofthe underlying transaction.

 

Accountspayable and borrowings include amounts payable in foreign currencies shown attheir Australian dollar equivalents. All material foreign currency liabilitiesare hedged or matched by equivalent assets in the same currencies, such assetsrepresenting a natural hedge.

 

The followingtable sets out the gross value to be received under foreign currency contracts,the weighted average contracted exchange rates and the settlement periods ofcontracts outstanding as at June 30:

 
| ** **             | ** ** | **2004**                   | ** ** | **2003**                   | ** ** | **2004** | ** ** | **2003** | ** ** |
|------------------------|------------|----------------------------|------------|----------------------------|------------|----------|------------|----------|------------|
| ** **             | ** ** | **Weighted  Average Rate** | ** ** | **Weighted  Average Rate** | ** ** | **A$m**  | ** ** | **A$m**  | ** ** |
| *Buy Contracts*        |       |                       |       |                       |       |     |       |     |       |
|                   |       |                       |       |                       |       |     |       |     |       |
| 0 – 12 months     |       |                       |       |                       |       |     |       |     |       |
| Canadian Dollar        |       | —                     |       | 1.03                       |       | —   |       | 1.0      |       |
| Swiss Franc            |       | 0.82                       |       | 0.88                       |       | 12.4     |       | 11.9     |       |
| Danish Kroner          |       | 4.26                       |       | 4.34                       |       | 16.1     |       | 9.1      |       |
| European Currency Unit |       | 0.56                       |       | 0.58                       |       | 141.1    |       | 198.4    |       |
| United Kingdom Pound   |       | 0.38                       |       | 0.40                       |       | 80.1     |       | 44.7     |       |
| Japanese Yen           |       | 75.10                      |       | 73.61                      |       | 0.1      |       | 0.8      |       |
| Norwegian Krone        |       | 4.75                       |       | 4.69                       |       | 0.7      |       | 0.6      |       |
| New Zealand Dollar     |       | 1.13                       |       | 1.12                       |       | 4.9      |       | 4.9      |       |
| Swedish Krona          |       | 5.26                       |       | 5.37                       |       | 13.3     |       | 15.4     |       |
| United States Dollar   |       | 0.69                       |       | 0.61                       |       | 85.2     |       | 82.3     |       |
| More than12 months     |       |                       |       |                       |       |     |       |     |       |
| European Currency Unit |       | 0.59                       |       | 0.55                       |       | 2.2      |       | 8.9      |       |
| New Zealand Dollar     |       | 1.30                       |       | 1.30                       |       | 77.2     |       | 77.2     |       |
| United States Dollar   |       | 0.71                       |       | 0.54                       |       | 5.3      |       | 1.4      |       |
|                   |       |                       |       |                       |       |     |       |     |       |
| *Sell Contracts*       |       |                       |       |                       |       |     |       |     |       |
| * *               |       |                       |       |                       |       |     |       |     |       |
| 0 – 12 months     |       |                       |       |                       |       |     |       |     |       |
| Swiss Franc            |       | 0.89                       |       | —                     |       | 3.5      |       | —   |       |
| New Zealand Dollar     |       | 1.15                       |       | 1.11                       |       | 35.1     |       | 26.7     |       |
| United States Dollar   |       | 0.69                       |       | 0.62                       |       | 49.2     |       | 2.8      |       |

 

***Commodity Risk***

 

Amcor enters into various fixed price swap contracts on behalf ofcertain customers.  Hedging undertaken isbased on customer instructions, and all related costs are passed on to thecustomer.  The following table sets outthe gross value to be received under commodity swap contracts, the weightedaverage contracted London Metals Exchange rates and the settlement periods ofcontracts outstanding as at 30 June:

 
| ** **         | ** ** | **2004**                 | ** ** | **2003**                 | ** ** | **2004**              | ** ** | **2003**              | ** ** |
|--------------------|------------|--------------------------|------------|--------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **         | ** ** | **Average  Fixed Price** | ** ** | **Average  Fixed Price** | ** ** | **Contract  Amounts** | ** ** | **Contract  Amounts** | ** ** |
| ** **         | ** ** | **(US$/tonne)**          | ** ** | **(US$/tonne)**          | ** ** | **A$m**               | ** ** | **A$m**               | ** ** |
| *Buy Contracts*    |       |                     |       |                     |       |                  |       |                  |       |
| * *           |       |                     |       |                     |       |                  |       |                  |       |
| 0 – 12 months |       |                     |       |                     |       |                  |       |                  |       |
| ALU                |       | 1,576.9                  |       | 1,388.3                  |       | 17.0                  |       | 15.2                  |       |

 

70

----

 

***Credit Risk***

 

On Balance Sheet Financial Instruments

 

The maximumcredit risk on Amcor’s financial assets, other than investments in shares, isgenerally the carrying amount of receivables, net of provisions for doubtfuldebts.

 

Amcorminimises its concentrations of credit risk by undertaking transactions with alarge number of customers and counterparties in various countries. There is nomaterial exposure to any individual customer.

 

DerivativeFinancial Instruments

 

In order tocontrol any exposure which may result from non-performance by counterparties,hedging contracts are only entered into with major banks with a minimumlong-term credit rating of A- by Standard & Poor’s.  In addition, the Amcor Limited Board mustapprove these banks for use, and specific internal guidelines have beenestablished with regard to limits, dealing and settlement procedures.

 

The creditrisk exposure arising from the derivative financial instruments is the sum ofall contracts with a positive replacement cost. The maximum credit risk exposure on foreign currency contracts is thefull amount of the foreign currency Amcor is contracted to receive whensettlement occurs.  As at June 30,2004 the sum of all contracts with a positive replacement cost was A$50.5million compared to A$50.3 million at June 30, 2003.

 

***Net Fair Values***

 

On Balance Sheet Financial Instruments

 

Instrumentstraded on organised markets are valued by reference to market prices prevailingat balance date.

 

The netfair value of other monetary financial assets and financial liabilitiesapproximates their carrying value.

 

Thecarrying amounts and net fair values of financial assets and liabilities as at June 30are as follows:

 
| ** **                      | ** ** | **Carrying  Amount  2004** | ** ** | **Net Fair  Value  2004** | ** ** | **Carrying  Amount  2003** | ** ** | **Net Fair  Value  2003** | ** ** |
|---------------------------------|------------|----------------------------|------------|---------------------------|------------|----------------------------|------------|---------------------------|------------|
| ** **                      | ** ** | **A$m**                    | ** ** | **A$m**                   | ** ** | **A$m**                    | ** ** | **A$m**                   | ** ** |
| Financial Assets                |       |                       |       |                      |       |                       |       |                      |       |
|                            |       |                       |       |                      |       |                       |       |                      |       |
| Cash                            |       | 131.0                      |       | 131.0                     |       | 141.5                      |       | 141.5                     |       |
| Receivables                     |       | 1,633.2                    |       | 1,633.2                   |       | 1,586.1                    |       | 1,586.1                   |       |
| Other financial assets          |       | 12.9                       |       | 12.9                      |       | 21.5                       |       | 21.5                      |       |
|                            |       |                       |       |                      |       |                       |       |                      |       |
| Financial Liabilities           |       |                       |       |                      |       |                       |       |                      |       |
|                            |       |                       |       |                      |       |                       |       |                      |       |
| Payable                         |       | 1,781.6                    |       | 1,781.6                   |       | 1,525.7                    |       | 1,525.7                   |       |
| Bank and other loans            |       | 882.8                      |       | 882.8                     |       | 1,005.3                    |       | 1,005.3                   |       |
| Commercial paper                |       | 186.3                      |       | 186.3                     |       | 108.4                      |       | 108.4                     |       |
| US$Notes                        |       | 723.7                      |       | 723.7                     |       | 748.9                      |       | 748.9                     |       |
| Eurobond                        |       | 612.0                      |       | 612.0                     |       |                       |       |                      |       |
| Lease liabilities               |       | 99.9                       |       | 99.9                      |       | 150.4                      |       | 150.4                     |       |
| Employee entitlements           |       | 315.5                      |       | 315.5                     |       | 343.5                      |       | 343.5                     |       |
| Dividends/distributions payable |       | 8.8                        |       | 8.8                       |       | 8.8                        |       | 8.8                       |       |
| Undated subordinated            |       |                       |       |                      |       |                       |       |                      |       |
| convertible securities          |       | 332.3                      |       | 332.3                     |       | 515.3                      |       | 515.3                     |       |

 

The eurobondand undated subordinated convertible securities are readily traded in organisedmarkets.

 

71

----

 

DerivativeFinancial Instruments

 

The valuationreflects the estimated amounts which Amcor expects to pay or receive toterminate the contracts or replace the contracts at their current market ratesas at reporting date. This is based on independent market quotations anddetermined using standard valuation techniques. For foreign exchange related contracts, the net fair value is taken tobe the unrealised gain or loss at balance date calculated by reference tocurrent market rates.

 

The net fairvalue of off balance sheet financial instruments held as at reporting date are:

 
| ** **                         | ** ** | **2004** | ** ** | **2003** | ** ** |
|------------------------------------|------------|----------|------------|----------|------------|
| ** **                         | ** ** | **A$m**  | ** ** | **A$m**  | ** ** |
|                               |       |     |       |     |       |
| Interest rate swaps                |       | (20.3    | )          | (21.3    | )          |
| Cross currency swaps               |       | 35.1     |       | 41.7     |       |
| Forward foreign exchange contracts |       | 12.2     |       | 2.9      |       |
| Commodity fixed price swaps        |       | 1.5      |       | —   |       |
|                               |       |     |       |     |       |
| Net Gain/(Loss)                    |       | 28.5     |       | 23.3     |       |

 

72

----

 

**ITEM 12****                                               DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES**

 

Not Applicable

 

**ITEM13****                                               DEFAULTS DIVIDEND ARREARAGES AND DELINQUENCIES**

 

None.

 

**ITEM14****                                               MATERIAL MODIFICATIONS TO THE RIGHT OF SECURITY HOLDERS AND USE OFPROCEEDS**

 

None.

 

**ITEM 15****                                               CONTROLS AND PROCEDURES**

 

We have received information that leads us to believe that certainofficers and employees in the Company’s corrugated box business in Australiaand New Zealand appear to have entered into, and given effect to, arrangementswhich constituted cartel conduct.  SeeItem 8, “Financial Information – Legal Proceedings”, for further informationrelating to this matter.  We informed theACCC and the NZCC and we are cooperating with the investigations they haveinitiated.  We are also conducting ourown investigation of these matters.  Thepreliminary results of our investigation indicate that there have beenweaknesses in internal disclosure controls and procedures in relation to therecording, processing, summarizing and reporting in a timely manner to allappropriate people within the Company of information concerning our compliancewith competition laws and related matters. We are continuing to investigate the circumstances relating to thesematters and the effectiveness of our disclosure controls and procedures.

 

Under the requirements of the United States Sarbanes-Oxley Act of 2002,the Executive Chairman and the Chief Financial Officer must each review andevaluate the Company’s disclosure controls and procedures, including internalcontrol over financial reporting.  Thisevaluation has been performed, with the participation of the Company’smanagement.  Based on that evaluationthey have concluded that, except for the conduct related to possible breachesof Australian and New Zealand competition laws referred to above, which remainsunder investigation, the Company’s disclosure controls and procedures wereeffective as at June 30, 2004.

 

There have been no changes in the Company’s internal controls overfinancial reporting that occurred during the year that have materiallyaffected, or are reasonably likely to materially affect, the Company’s internalcontrol over financial reporting.

 

**ITEM 16A****                                      AUDIT COMMITTEE FINANCIAL EXPERT**

 

The Board of Directors has determined that Ms Elizabeth Alexander is an“audit committee financial expert”. Although the Board has determined that thisindividual has the requisite attributes defined under the rules of the SEC, herresponsibilities are the same as those of the other audit committee members.She is not an auditor or an accountant, does not perform “field work” and isnot a full-time employee. The SEC has determined that an audit committee memberwho is designated as an audit committee financial expert will not be deemed tobe an “expert” for any purpose as a result of being identified as an auditcommittee financial expert. The audit committee is responsible for oversight ofmanagement in the preparation of Amcor’s financial statements and financialdisclosures. The audit committee relies on the information provided bymanagement and the external auditor. The audit committee does not have the dutyto plan or conduct audits to determine Amcor’s financial statements anddisclosures are complete and accurate.

 

**ITEM16B****                                      CODE OF ETHICS**

 

## **Amcor has adopted a code of ethics that applies to all employees of theCompany. The code of ethics is referred to as the Amcor Limited Corporate Codeof Conduct and Ethics Policy and can be accessed on the Company’s website at**www.amcor.com.au. No amendments to the code of ethics were made during2004.

 

73

----

 

**ITEM16C****                                      PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 
| ** ** | ** ** | ** **                                                                                                                              | ** ** | **Year Ended  June 30, 2004** | ** ** | **Year Ended  June 30, 2003** | ** ** |
|------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------|------------|------------------------------------|------------|
| ** ** | ** ** | ** **                                                                                                                              | ** ** | **A$’000**                    | ** ** | **A$’000**                    | ** ** |
| **(a)**    | ** ** | **Remuneration for audit or review of the financial reports of the  parent entity or any entity in the consolidated entity:**           |       |                               |       |                               |       |
|       |       | Auditors of the company – KPMG                                                                                                     |       |                               |       |                               |       |
|       |       | -                    parent entity       |       | 814                                |       | 760                                |       |
|       |       | -                    controlled entities |       | 6,423                              |       | 4,926                              |       |
|       |       |                                                                                                                                    |       | 7,237                              |       | 5,686                              |       |
| **(b)**    | ** ** | **Remuneration for audit-related services**                                                                                             |       |                               |       |                               |       |
| ** ** | ** ** | Completion  audits and acquisition/equity raising due diligence                                                                         |       | 82                                 |       | 208                                |       |
| ** ** | ** ** | Other  assurance services (1)                                                                                                           |       | 2,776                              |       | 862                                |       |
| ** ** | ** ** |                                                                                                                                    |       | 2,858                              |       | 1,070                              |       |
| **(c)**    | ** ** | **Remuneration for tax services**                                                                                                       |       |                               |       |                               |       |
| ** ** | ** ** | Tax  compliance and advisory services                                                                                                   |       | 1,157                              |       | 1,606                              |       |
| ** ** | ** ** |                                                                                                                                    |       |                               |       |                               |       |
| **(d)**    | ** ** | **Remuneration for other services**                                                                                                     |       | —                             |       | —                             |       |

 

----

(1)          Includesaudit of local statutory financial statements, assurance services in respect ofAmcor’s IFRS implementation project and audit of Amcor’s US GAAP financialstatements

 

***Pre-Approval Policy***

 

The following non-auditservices pre-approval policy has been adopted by Amcor.

 

To achieve theappropriate balance, there are two broad principles which Amcor will adhere to:

 

1.                   The external auditorsshould not provide services which are fundamentally in conflict with their roleas independent statutory auditors. In broad terms this means that they shouldnot be in a position where they are seen to:

•             assumethe role of or as employees of Amcor

•             performwork which they will subsequently be required to audit;

•             becomean advocate for Amcor; or

•             havea mutual or conflicting interest with Amcor.

 

2.                   For services thatdo not come into these categories, it is in the best interests of Amcor thatthe company is able to select the best service provider for particularservices, provided that there is appropriate transparency and proper approvalprocesses are in place.

 

Non-Audit - Theexternal auditors shall not provide services to Amcor which are servicesconsidered to be in conflict with the guiding principles set out by current andprospective Australian and international legislative requirements, includingthe Sarbanes-Oxley Act, passed in the United States in August 2002. Inparticular, the external auditors may not provide the following non-auditservices:

1.                    Bookkeeping orother services related to the accounting records or financial statements ofAmcor.

2.                    Financialinformation systems design and implementation.

3.                    Appraisal orvaluation services, where these result in figures which are included in thecompany’s accounts;

4.                    Fairness opinions.

5.                    Actuarialservices.

6.                    Internal auditoutsourcing services.

7.                    Secondments toAmcor or other engagements involving management or human resources functions.

8.                    Broker or dealer, investmentadviser or investment banking services.

9.                    Legal services orexpert witness services unrelated to the audit.

 

Otherservices, including taxation services, may be provided by the external auditorsprovided pre-approval has been obtained from the Audit & ComplianceCommittee.

 

Permittednon-audit service engagements (PNASEs) may be provided by external auditors,subject to adherence to the following process:

•                       All PNASEs must be notified, with reasonable specificity to theChairman of the Audit & Compliance Committee;

•                       The notification must specify the services to be provided, specifythe period during which the services will be performed and specify the maximumtotal fees to be paid, before the engagement is commenced;

 

74

----

 

•                       Any one member of the Audit & Compliance Committee is delegatedto pre-approve individual PNASEs up to a financial limit of A$500,000;

•                       The Secretary of the Audit & Compliance Committee shall keep afinancial year running list of approved PNASEs and submit the cumulative list,together with a reasonably specific description of services provided to eachmeeting of the Audit & Compliance Committee for noting; and

•                       The Audit & Compliance Committee must specifically preapproveall proposed PNASEs. Where pre-approval is to be sought for the external auditorsto perform non-audit services, this should in the first instance be referred tothe Executive General Manager Finance who will seek the appropriate Audit &Compliance Committee pre-approval prior to commencement of the work.

 

Certificationof each PNASE recommended for pre-approval by the Executive General ManagerFinance must be supported by a confirmation by the external auditor that theperformance of the proposed engagement will not impair the independence of the externalauditor under applicable law in Australia or the United States. The external auditorwill provide the Audit & Compliance Committee with an annual certificationof their continued independence, under applicable law and professionalstandards both in Australia and in the United States and, in particular,confirm that they have not carried out any engagements during the year whichwould impair their professional independence.

 

Our Audit& Compliance Committee has not approved any services described incategories (b) through (d) above pursuant to paragraph (c)(7)(i)(C) ofRegulation S-X Rule 2-01.

 

**ITEM16D****                                      EXEMPTION FROM LISTING STANDARDS FOR AUDIT COMMITTEES**

 

Not Applicable

 

**ITEM17****                                               FINANCIAL STATEMENTS**

 

Not applicable, as we comply with Item 18.

 

**ITEM18**                                               **FINANCIAL STATEMENTS**

 

Consolidated Financial Statements - see pagesF1 to F100

 

**ITEM19**                                               Exhibits

 

1.                    Constitution ofAmcor Limited

 

2.                    Certaininstruments defining the rights of holders of other long-term debt of theCompany and its subsidiaries have been omitted pursuant to instruction 2(b)(i)of Item 19 of Form 20-F. The registrant hereby undertakes to furnish to theSEC, upon request, copies of such instruments.

 

7.                    Calculation ofBasic and Diluted Earnings per Share

 

8.                    List ofSubsidiaries of Amcor Limited

 

12                 Rule13a-14(a)/15d-14(a) Certifications

(a)               Certification of theCompany’s Chief Executive Officer

(b)              Certification of theCompany’s Chief Financial Officer

 

13                 Section 1350Certifications

(a)               Certification of theCompany’s Chief Executive Officer

(b)              Certification of theCompany’s Chief Financial Officer

 

75

----

 

Index to Financial Statements of Amcor Limited

 
| Audited  Financial Statements                                                                               |   |
|-------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                        |   |
| Report  of Independent Registered Public Accounting Firm                                                    |   |
|                                                                                                        |   |
| Consolidated  Statements of Income for the years ended June 30, 2004, 2003 and 2002                    |   |
|                                                                                                        |   |
| Consolidated Balance Sheets  at June 30, 2004, and 2003                                                |   |
|                                                                                                        |   |
| Consolidated Statements of  Shareholders’ Equity for the years ended June 30, 2004, 2003 and 2002 |   |
|                                                                                                        |   |
| Consolidated  Statements of Cash Flows for the years ended June 30, 2004, 2003 and  2002               |   |
|                                                                                                        |   |
| Notes  to the Consolidated Financial Statements 2003-2004                                                   |   |

 

76

----

 

Pursuant tothe requirements of Section 12 of the Securities Exchange Act of 1934, theregistrant certifies that it meets all of the requirements for filing on Form20-F and has duly caused this Annual Report to be signed on its behalf by theundersigned, thereunto duly authorized.

 

 
|                          | Amcor Limited     |   |
|-------------------------------|-------------------|--------|
|                          | (Registrant)      |   |
|                          |              |   |
|                          | /s/ Bert Guy      |   |
|                          | Bert Guy          |   |
|                          | Company Secretary |   |
|                          |              |   |
| Date:  December 23, 2004 |              |   |

 

77

----

 

**REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM**

 

To the AmcorLimited Board of Directors and Shareholders

 

We have audited the accompanying consolidated balance sheets of AmcorLimited and its subsidiary companies (the consolidated entity) as of June 30,2004 and 2003, and the related consolidated statements of income, cash flowsand changes in shareholders’ equity and for each of the years in the three-yearperiod ended June 30, 2004, all expressed in Australian dollars.  These consolidated financial statements arethe responsibility of the company’s management. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audits.

 

We conducted our audits in accordance with the standards of the PublicCompany Accounting Oversight Board (United States).  Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financialstatements.  An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to abovepresent fairly, in all material respects, the financial position of theconsolidated entity at June 30, 2004 and 2003 and the results of itsoperations and its cash flows for each of the years in the three-year periodended June 30, 2004, in conformity with accounting principles generallyaccepted in Australia.

 

Accounting principles generally accepted in Australia vary in certainsignificant respects from accounting principles generally accepted in theUnited States of America. Information relating to the nature and effect of suchdifferences is presented in Note 33 to the consolidated financial statements.

 

 
|   |   | /s/ KPMG |   |
|--------|--------|----------|--------|
|   |   | KPMG     |   |

 

 

Melbourne, Australia

August 19, 2004, except as to note 32(C), which is as of December23, 2004

 

Notes 1 to 33 form part of these accounts and are tobe read in conjunction therewith.

 

F-1

----

 

**AMCOR LIMITED**

**CONSOLIDATEDSTATEMENTS OF INCOME**

# ***FOR THE YEARS ENDED JUNE 30***

 
| ** **                                                           | ** ** | ** ** | ** ** | **(in millions of A$)** | ** ** |
|----------------------------------------------------------------------|------------|------------|------------|-------------------------|------------|
| ** **                                                           | ** ** | **Notes**  | ** ** | **2004**                | ** ** | **2003** | ** ** | **2002** | ** ** |
| Revenues                                                             |       |       |       |                    |       |   |   |   |   |
| Net sales                                                            |       |       |       | 10,405.9                |       | 10,709.9 |   | 7,472.4 |   |
| Other revenues                                                       |       | 2          |       | 175.0                   |       | 248.1 |   | 1,059.8 |   |
| Total revenue                                                        |       |       |       | 10,580.9                |       | 10,958.0 |   | 8,532.2 |   |
|                                                                 |       |       |       |                    |       |   |   |   |   |
| Costs and expenses                                                   |       |       |       |                    |       |   |   |   |   |
| Costs of goods sold                                                  |       |       |       | (8,589.7                | )          | (8,786.8 | ) | (6,053.4 | ) |
| Selling, general and administrative                                  |       |       |       | (1,327.9                | )          | (1,481.5 | ) | (1,331.1 | ) |
| Research and development                                             |       |       |       | (46.4                   | )          | (44.8 | ) | (36.0 | ) |
|                                                                 |       |       |       |                    |       |   |   |   |   |
| Total costs and expenses                                             |       |       |       | (9,964.0                | )          | (10,313.1 | ) | (7,420.5 | ) |
| Interest expense                                                     |       |       |       | (145.4                  | )          | (156.3 | ) | (130.5 | ) |
|                                                                 |       |       |       |                    |       |   |   |   |   |
| Operating profit before income tax                                   |       | 3          |       | 471.5                   |       | 488.6 |   | 981.2 |   |
|                                                                 |       |       |       |                    |       |   |   |   |   |
| Income tax expense                                                   |       | 5          |       | (111.3                  | )          | (110.5 | ) | (120.2 | ) |
|                                                                 |       |       |       |                    |       |   |   |   |   |
| Operating profit before minority interest                            |       |       |       | 360.2                   |       | 378.1 |   | 861.0 |   |
|                                                                 |       |       |       |                    |       |   |   |   |   |
| Minority interest in operating profit after  tax                     |       |       |       | (14.5                   | )          | (16.8 | ) | (9.3 | ) |
|                                                                 |       |       |       |                    |       |   |   |   |   |
| Net operating profit attributable to  members of the Holding Company |       |       |       | 345.7                   |       | 361.3 |   | 851.7 |   |

 

All revenue and expenses relate to continuing operations.

 

F-2

----

 
| ** **                                                                                            | ** ** | **(in millions of A$,  except for share and per share data)** | ** ** |
|-------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                                                                            | ** ** | **2004**                                                      | ** ** | **2003** | ** ** | **2002** | ** ** |
| **Earnings per share calculation**                                                                    |       |                                                          |       |   |   |   |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Net operating profit after significant  items (after convertible reset security distribution) (3)     |       | 293.3                                                         |       | 309.0 |   | 815.3 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Net significant items after income tax                                                                |       | 94.6                                                          |       | 70.1 |   | (534.8 | ) |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Net operating profit before significant  items                                                        |       | 387.9                                                         |       | 379.1 |   | 280.5 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| After tax effect of interest on  convertible securities                                               |       | 1.4                                                           |       | 6.0 |   | 28.1 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| After tax cost of convertible reset  security distribution                                            |       | —                                                        |       | — |   | 25.5 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Diluted operating profit before  significant items                                                    |       | 389.3                                                         |       | 385.1 |   | 334.1 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Diluted operating profit after  significant items (including after tax effect of dilutive securities) |       | 294.7                                                         |       | 315.0 |   | 868.9 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| **Reconciliation of average number of shares**                                                        |       |                                                          |       |   |   |   |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Basic average number of shares (m’s)                                                             |       | 867.1                                                         |       | 836.0 |   | 666.5 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Impact of dilutive securities (m’s)                                                              |       | 7.8                                                           |       | 22.2 |   | 123.3 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Dilutive average number of shares (m’s)                                                          |       | 874.9                                                         |       | 858.2 |   | 789.8 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Basic earnings per share:                                                                             |       |                                                          |       |   |   |   |   |
| - before significant items (cents)                                                                    |       | 44.7                                                          |       | 45.3 |   | 42.1 |   |
| - after significant items (cents)                                                                     |       | 33.8                                                          |       | 37.0 |   | 122.3 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Diluted earnings per share:                                                                           |       |                                                          |       |   |   |   |   |
| - before significant items (cents)                                                                    |       | 43.7                                                          |       | 44.7 |   | 42.3 |   |
| - after significant items (cents)                                                                     |       | 33.7                                                          |       | 36.7 |   | 110.0 |   |
|                                                                                                  |       |                                                          |       |   |   |   |   |
| Dividends per ordinary share (cents)                                                                  |       |                                                          |       |   |   |   |   |
| - Interim                                                                                             |       | 16.0                                                          |       | 15.0 |   | 14.0 |   |
| - Final                                                                                               |       | 16.0                                                          |       | 15.0 |   | 14.0 |   |

 

Excluded from the computation of diluted earnings per share above is thefollowing table of potential common shares:

 
| ** **                     | ** ** | **(number of shares in  millions)** | ** ** |
|--------------------------------|------------|-------------------------------------|------------|
| Potential common shares (1)    |       | 141.1                               |       | 128.0 |   | — |   |
| Options over common shares (2) |       | —                              |       | — |   | 2.0 |   |

 

----

(1)          The 7.25% Undated Subordinated ConvertibleUnsecured Notes, the 6.5% Undated Subordinated Convertible Unsecured Notes andthe Perpetual Amcor Convertible Reset Securities (PACRS) are considered to bepotential common stock and have been included in the computation of dilutedearnings per share to the extent they are dilutive.

 

(2)          Options over common shares have been includedin the computation of diluted earnings per share when the average market priceof common shares exceeds their exercise price.

 

(3)          Adjusted for $52.4 million (2003 $52.3million) convertible reset security distribution.

 

F-3

----

 

**AMCOR LIMITED**

**CONSOLIDATEDBALANCE SHEETS**

# ***AT JUNE 30***

 
| ** **                       | ** ** | ** ** | ** ** | **(in millions of A$)** | ** ** |
|----------------------------------|------------|------------|------------|-------------------------|------------|
| ** **                       | ** ** | **Notes**  | ** ** | **2004**                | ** ** | **2003** | ** ** |
|                             |       |       |       |                    |       |   |   |
| Current assets                   |       |       |       |                    |       |   |   |
| Cash and deposits                |       | 6          |       | 148.3                   |       | 162.0 |   |
| Accounts receivable              |       | 7          |       | 1,407.0                 |       | 1,399.3 |   |
| Inventories                      |       | 8          |       | 1,369.6                 |       | 1,284.0 |   |
| Prepaid expenses                 |       |       |       | 127.1                   |       | 105.2 |   |
|                             |       |       |       | 3,052.0                 |       | 2,950.5 |   |
|                             |       |       |       |                    |       |   |   |
| Non-Current assets               |       |       |       |                    |       |   |   |
| Accounts receivable              |       | 9          |       | 80.7                    |       | 60.0 |   |
| Amounts due from related parties |       | 9          |       | 1.1                     |       | 1.1 |   |
| Investments                      |       | 10         |       | 12.9                    |       | 21.5 |   |
| Property, plant and equipment    |       | 11         |       | 4,745.0                 |       | 4,295.6 |   |
| Intangible assets                |       | 12         |       | 2,062.7                 |       | 1,956.9 |   |
| Other non-current assets         |       | 13         |       | 332.0                   |       | 276.7 |   |
|                             |       |       |       | 7,234.4                 |       | 6,611.8 |   |
|                             |       |       |       |                    |       |   |   |
| TOTAL ASSETS                     |       |       |       | 10,286.4                |       | 9,562.3 |   |

 

F-4

----

 
|                                                                                                                                                                                                            |       |      |       | **(in millions of A$)** |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------|------------|-------------------------|------------|
| ** **                                                                                                                                                                                                      | ** ** | **Notes** | ** ** | **2004**                | ** ** | **2003** | ** ** |
| Current liabilities                                                                                                                                                                                             |       |      |       |                    |       |   |   |
|                                                                                                                                                                                                            |       |      |       |                    |       |   |   |
| Accounts payable                                                                                                                                                                                                |       | 14        |       | 1,831.1                 |       | 1,646.0 |   |
| Bank and other borrowings                                                                                                                                                                                       |       | 15        |       | 726.3                   |       | 869.9 |   |
| Other liabilities and provisions                                                                                                                                                                                |       | 16        |       | 419.3                   |       | 509.8 |   |
|                                                                                                                                                                                                            |       |      |       | 2,976.7                 |       | 3,025.7 |   |
|                                                                                                                                                                                                            |       |      |       |                    |       |   |   |
| Non-Current liabilities                                                                                                                                                                                         |       |      |       |                    |       |   |   |
|                                                                                                                                                                                                            |       |      |       |                    |       |   |   |
| Bank and other borrowings                                                                                                                                                                                       |       | 15        |       | 1,678.5                 |       | 992.7 |   |
| Other liabilities and provisions                                                                                                                                                                                |       | 16        |       | 591.3                   |       | 461.9 |   |
| Minority shareholders’ interest in  subsidiary companies                                                                                                                                                   |       |      |       | 90.6                    |       | 196.0 |   |
| Undated subordinated convertible  securities                                                                                                                                                                    |       | 17        |       | 332.3                   |       | 446.2 |   |
|                                                                                                                                                                                                            |       |      |       | 2,692.7                 |       | 2,096.8 |   |
| TOTAL LIABILITIES                                                                                                                                                                                               |       |      |       | 5,669.4                 |       | 5,122.5 |   |
|                                                                                                                                                                                                            |       |      |       |                    |       |   |   |
| Shareholders’ equity                                                                                                                                                                                       |       |      |       |                    |       |   |   |
|                                                                                                                                                                                                            |       |      |       |                    |       |   |   |
| Authorised capital - 1,000,000,000  ordinary shares (2003 1,000,000,000) Issued fully and partly paid ordinary  shares and convertible reset securities – 885,840,883 ordinary shares (2003:  856,589,964) |       | 18        |       | 3,351.9                 |       | 3,135.3 |   |
| Reserves                                                                                                                                                                                                        |       |      |       | (349.2                  | )          | (210.8 | ) |
| Retained profits                                                                                                                                                                                                |       |      |       | 1,614.3                 |       | 1,515.3 |   |
|                                                                                                                                                                                                            |       |      |       |                    |       |   |   |
| Shareholders’ equity attributable to  members of the Holding Company                                                                                                                                       |       |      |       | 4,617.0                 |       | 4,439.8 |   |
| TOTAL LIABILITIES & SHAREHOLDERS’  EQUITY                                                                                                                                                              |       |      |       | 10,286.4                |       | 9,562.3 |   |

 

F-5

----

 

**AMCOR LIMITED**

**CONSOLIDATEDSTATEMENTS OF****SHAREHOLDERS’ EQUITY**

**FOR THE YEARS ENDED JUNE 30**

 
| ** **                                                                     | ** ** | **(in millions of A$)** | ** ** |
|--------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                     | ** ** | **2004**                | ** ** | **2003** | ** ** | **2002** | ** ** |
| ISSUED FULLY AND PARTLY PAID ORDINARY  SHARES AND CONVERTIBLE RESET SECURITIES |       |                    |       |   |   |   |   |
|                                                                           |       |                    |       |   |   |   |   |
| Opening balance                                                                |       | 3,135.3                 |       | 2,972.8 |   | 1,401.6 |   |
|                                                                           |       |                    |       |   |   |   |   |
| Issue of convertible reset securities                                          |       | —                  |       | — |   | 207.4 |   |
|                                                                           |       |                    |       |   |   |   |   |
| Issue of shares to employees in lieu of  bonus payments                        |       | 1.4                     |       | 2.3 |   | 1.4 |   |
|                                                                           |       |                    |       |   |   |   |   |
| Employee share/option plan                                                     |       | 20.7                    |       | 28.3 |   | 23.4 |   |
|                                                                           |       |                    |       |   |   |   |   |
| Calls on partly-paid shares                                                    |       | 3.3                     |       | 4.6 |   | 6.7 |   |
|                                                                           |       |                    |       |   |   |   |   |
| Dividend Reinvestment Plan                                                     |       | 94.7                    |       | 112.7 |   | 134.9 |   |
|                                                                           |       |                    |       |   |   |   |   |
| Cost of employee share plan                                                    |       | (3.4                    | )          | (3.7 | ) | (3.6 | ) |
|                                                                           |       |                    |       |   |   |   |   |
| Conversion of convertible securities                                           |       | 99.9                    |       | 34.4 |   | 0.1 |   |
|                                                                           |       |                    |       |   |   |   |   |
| Institutional equity placement (net of  transaction costs)                     |       | —                  |       | (16.1 | ) | 835.4 |   |
|                                                                           |       |                    |       |   |   |   |   |
| Retail share offer                                                             |       | —                  |       | — |   | 365.5 |   |
|                                                                           |       |                    |       |   |   |   |   |
| TOTAL FULLY AND PARTLY PAID ORDINARY  SHARES AND CONVERTIBLE RESET SECURITIES  |       | 3,351.9                 |       | 3,135.3 |   | 2,972.8 |   |

 

F-6

----

 
| ** **                                                                      | ** ** | **(in millions of A$)** | ** ** |
|---------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                      | ** ** | **2004**                | ** ** | **2003** | ** ** | **2002** | ** ** |
| RETAINED PROFITS                                                                |       |                    |       |   |   |   |   |
|                                                                            |       |                    |       |   |   |   |   |
| Retained profits at beginning of period                                         |       | 1,515.3                 |       | 1,348.6 |   | 726.4 |   |
|                                                                            |       |                    |       |   |   |   |   |
| Adjustment to opening retained profits on  application of:                      |       |                    |       |   |   |   |   |
| Revised AASB 1028 ‘Employee Benefits’                                 |       | —                  |       | (1.5 | ) | — |   |
| AASB 1044 ‘Provisions, Contingent  Liabilities and Contingent Assets’ |       | —                  |       | 101.5 |   | — |   |
|                                                                            |       |                    |       |   |   |   |   |
| Aggregate of amounts transferred from  Reserves                            |       | 73.0                    |       | (1.5 | ) | 13.1 |   |
|                                                                            |       |                    |       |   |   |   |   |
| Net profit attributable to members of the  Holding Company                      |       | 345.7                   |       | 361.3 |   | 851.7 |   |
|                                                                            |       |                    |       |   |   |   |   |
| Final dividend                                                                  |       | (127.6                  | )          | (115.5 | ) | (115.2 | ) |
|                                                                            |       |                    |       |   |   |   |   |
| Interim dividend                                                                |       | (139.7                  | )          | (125.3 | ) | (91.0 | ) |
|                                                                            |       |                    |       |   |   |   |   |
| Distribution paid on convertible reset  securities                              |       | (43.7                   | )          | (43.6 | ) | (28.6 | ) |
|                                                                            |       |                    |       |   |   |   |   |
| Distribution accrued on convertible reset  securities                           |       | (8.7                    | )          | (8.7 | ) | (7.8 | ) |
|                                                                            |       |                    |       |   |   |   |   |
| RETAINED PROFITS AT END OF PERIOD                                               |       | 1,614.3                 |       | 1,515.3 |   | 1,348.6 |   |

 

F-7

----

 
| ** **                                                                                                                           | ** ** | **(in millions of A$)** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                                                                           | ** ** | **2004**                | ** ** | **2003** | ** ** | **2002** | ** ** |
| ASSET REVALUATION RESERVE                                                                                                            |       |                    |       |   |   |   |   |
|                                                                                                                                 |       |                    |       |   |   |   |   |
| Opening balance                                                                                                                      |       | 144.4                   |       | 144.4 |   | 140.1 |   |
| Adjustment/revaluation of non-current  assets                                                                                        |       | —                  |       | — |   | (2.3 | ) |
| Transfer (to)/from retained profits                                                                                                  |       | (7.5                    | )          | — |   | 6.6 |   |
| Closing balance                                                                                                                      |       | 136.9                   |       | 144.4 |   | 144.4 |   |
|                                                                                                                                 |       |                    |       |   |   |   |   |
| EXCHANGE FLUCTUATIONS RESERVE                                                                                                        |       |                    |       |   |   |   |   |
|                                                                                                                                 |       |                    |       |   |   |   |   |
| Opening balance                                                                                                                      |       | (355.2                  | )          | (71.1 | ) | 89.4 |   |
| Currency translation adjustments                                                                                                     |       | (67.7                   | )          | (413.0 | ) | (59.0 | ) |
| Currency translation adjustments arising  on designated hedges of net investments in self sustaining operations (before  income tax) |       | 3.3                     |       | 181.9 |   | (116.9 | ) |
| Income tax effect of currency translation  adjustments arising on hedges of net investments in self sustaining  operations           |       | (1.0                    | )          | (54.5 | ) | 35.1 |   |
| Transfer to retained profits                                                                                                         |       | (65.5                   | )          | 1.5 |   | (19.7 | ) |
| Closing balance                                                                                                                      |       | (486.1                  | )          | (355.2 | ) | (71.1 | ) |
|                                                                                                                                 |       |                    |       |   |   |   |   |
| EQUITY SHARE OF ASSOCIATES RESERVES                                                                                                  |       |                    |       |   |   |   |   |
|                                                                                                                                 |       |                    |       |   |   |   |   |
| Opening balance                                                                                                                      |       | —                  |       | — |   | 3.0 |   |
| Increments/(decrements)                                                                                                              |       | —                  |       | — |   | (3.0 | ) |
| Closing balance                                                                                                                      |       | —                  |       | — |   | — |   |
| TOTAL RESERVES                                                                                                                       |       | (349.2                  | )          | (210.8 | ) | 73.3 |   |
| TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE  TO MEMBERS OF THE HOLDING COMPANY                                                      |       | 4,617.0                 |       | 4,439.8 |   | 4,394.7 |   |

 

F-8

----

 

**AMCOR LIMITED**

**CONSOLIDATED STATEMENTS OF CASHFLOWS**

**FOR THE YEARS ENDED JUNE 30**

 
| ** **                                                                         | ** ** | **(in millions of A$)** | ** ** |
|------------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                         | ** ** | **2004**                | ** ** | **2003** | ** ** | **2002** | ** ** |
| CASH FLOWS FROM OPERATING ACTIVITIES                                               | ** ** | ** **              | ** ** | ** ** | ** ** | ** ** | ** ** |
| Receipts from customers                                                            |       | 10,453.7                |       | 10,514.4 |   | 7,714.7 |   |
| Payments to suppliers and employees                                                |       | (9,222.8                | )          | (9,471.4 | ) | (6,725.0 | ) |
| Dividends received                                                                 |       | 0.6                     |       | 1.0 |   | 49.1 |   |
| Interest received                                                                  |       | 14.7                    |       | 9.6 |   | 17.3 |   |
| Borrowing costs paid                                                               |       | (165.6                  | )          | (155.6 | ) | (137.8 | ) |
| Income taxes paid                                                                  |       | (105.8                  | )          | (86.6 | ) | (59.9 | ) |
| Other income received                                                              |       | 57.0                    |       | 63.3 |   | 42.3 |   |
| NET CASH FROM OPERATING ACTIVITIES (1)                                             |       | 1,031.8                 |       | 874.7 |   | 900.7 |   |
|                                                                               |       |                    |       |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                               |       |                    |       |   |   |   |   |
| Loans to associated companies                                                      |       | —                  |       | — |   | (11.8 | ) |
| Loans repaid by associated companies and  other persons                            |       | 24.5                    |       | — |   | 10.8 |   |
| Acquisition of:                                                                    |       |                    |       |   |   |   |   |
| Controlled entities and businesses                                                 |       | (618.9                  | )          | (2,857.9 | ) | (195.4 | ) |
| Property, plant and equipment                                                      |       | (605.4                  | )          | (890.1 | ) | (351.0 | ) |
| Additional payments for controlled  entities                                       |       | —                  |       | — |   | (175.5 | ) |
| Proceeds on disposal of:                                                           |       |                    |       |   |   |   |   |
| Controlled entities and businesses (net  of cash disposed)                         |       | 40.2                    |       | 186.2 |   | 9.6 |   |
| Equity accounted investments                                                       |       | —                  |       | — |   | 775.0 |   |
| Property, plant and equipment                                                      |       | 98.3                    |       | 57.9 |   | 207.1 |   |
| NET CASH (USED IN)/FROM INVESTING  ACTIVITIES                                      |       | (1,061.3                | )          | (3,503.9 | ) | 268.8 |   |
|                                                                               |       |                    |       |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                               |       |                    |       |   |   |   |   |
| Dividends and other distributions paid                                             |       | (225.0                  | )          | (193.0 | ) | (211.3 | ) |
| Proceeds from share issues, convertible  securities and call on partly-paid shares |       | 13.2                    |       | 27.8 |   | 1,602.3 |   |
| Proceeds from borrowings                                                           |       | 5,280.3                 |       | 6,752.4 |   | 3,651.5 |   |
| Repayment of borrowings                                                            |       | (4,817.1                | )          | (6,146.4 | ) | (4,217.5 | ) |
| Principal lease repayments                                                         |       | (144.8                  | )          | (43.1 | ) | (15.1 | ) |
| NET CASH FROM FINANCING ACTIVITIES                                                 |       | 106.6                   |       | 397.7 |   | 809.9 |   |
| NET INCREASE/(DECREASE) IN CASH HELD                                               |       | 77.1                    |       | (2,231.5 | ) | 1,979.4 |   |
|                                                                               |       |                    |       |   |   |   |   |
| CASH AT THE BEGINNING OF THE FINANCIAL  YEAR                                       |       | 46.1                    |       | 2,287.4 |   | 314.0 |   |
| Exchange rate changes on foreign currency  cash balances                           |       | (2.1                    | )          | (9.8 | ) | (6.0 | ) |
| CASH AT THE END OF THE FINANCIAL YEAR (2)                                          |       | 121.1                   |       | 46.1 |   | 2,287.4 |   |

 

F-9

----

 
| ** ** | ** **                                                                                          | ** ** | **(in millions of A$)** | ** ** |
|------------|-----------------------------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** ** | ** **                                                                                          | ** ** | **2004**                | ** ** | **2003** | ** ** | **2002** | ** ** |
| (1)        | RECONCILIATION OF OPERATING PROFIT                                                                  | ** ** | ** **              | ** ** | ** ** | ** ** | ** ** | ** ** |
|       | AFTER TAX TO NET CASH PROVIDED BY OPERATING  ACTIVITIES                                             | ** ** | ** **              | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** ** | ** **                                                                                          | ** ** | ** **              | ** ** | ** ** | ** ** | ** ** | ** ** |
|       | OPERATING PROFIT AFTER INCOME TAX                                                                   |       | 360.2                   |       | 378.1 |   | 861.0 |   |
|       | Depreciation of property, plant and  equipment                                                      |       | 459.4                   |       | 453.5 |   | 278.2 |   |
|       | Amortization of leased assets                                                                       |       | 13.2                    |       | 14.9 |   | 8.4 |   |
|       | Amortization of goodwill                                                                            |       | 131.2                   |       | 138.8 |   | 54.5 |   |
|       | Interest capitalized                                                                                |       | (4.5                    | )          | (0.3 | ) | (0.8 | ) |
|       | Finance charges on leased assets                                                                    |       | 4.7                     |       | 6.3 |   | — |   |
|       | Profit on disposal of non-current assets                                                            |       | (30.6                   | )          | (13.3 | ) | (9.0 | ) |
|       | Profit on disposal of business                                                                      |       | (4.1                    | )          | (6.1 | ) | 18.6 |   |
|       | Profit on disposal of investment                                                                    |       | —                  |       | (1.5 | ) | (553.4 | ) |
|       | Increase in current and deferred taxes                                                              |       | 10.7                    |       | 3.3 |   | 60.3 |   |
|       | (Decrease)/increase in provisions                                                                   |       | (55.4                   | )          | (15.1 | ) | 8.3 |   |
|       | Decrease in sundry assets                                                                           |       | (19.9                   | )          | (31.6 | ) | — |   |
|       | Non-cash significant item                                                                           |       | 50.2                    |       | 37.5 |   | — |   |
|       | Less share of associate companies’ net  profits after adding back dividends received           |       | —                  |       | — |   | (0.3 | ) |
|       |                                                                                                |       |                    |       |   |   |   |   |
|       | CASH FLOW FROM OPERATIONS BEFORE CHANGES  IN ASSETS AND LIABILITIES                                 |       | 915.1                   |       | 964.5 |   | 725.8 |   |
|       |                                                                                                |       |                    |       |   |   |   |   |
|       | Changes in assets and liabilities  excluding acquisitions/disposals of subsidiaries and businesses: |       |                    |       |   |   |   |   |
|       |                                                                                                |       |                    |       |   |   |   |   |
|       | Decrease in accounts receivable and  prepaid expenses                                               |       | 143.7                   |       | 113.9 |   | 60.5 |   |
|       | Increase in inventories                                                                             |       | (18.1                   | )          | (23.3 | ) | 90.6 |   |
|       | (Decrease)/increase in accounts payable                                                             |       | (8.9                    | )          | (180.4 | ) | 23.8 |   |
|       | NET CASH FROM OPERATING ACTIVITIES                                                                  |       | 1,031.8                 |       | 874.7 |   | 900.7 |   |

 
| (2)    | RECONCILIATION OF CASH                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |    |   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|---------|--------|
|   | For  the purposes of the Statements of Cash Flows, cash includes cash on hand and  at bank and short-term money market investments, net of outstanding bank  overdrafts.  Cash as at the end of the  financial year as shown in the Statements of Cash Flows is reconciled to the  related items in the Balance Sheets as follows: |
|   |                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |    |   |
|   | Cash and deposits – refer Note 6                                                                                                                                                                                                                                                                                                   |   | 131.0  |   | 141.5  |   | 2,307.1 |   |
|   | Short-term deposits – refer Note 6                                                                                                                                                                                                                                                                                                 |   | 17.3   |   | 20.5   |   | 17.9    |   |
|   | Bank overdrafts – refer Note 15                                                                                                                                                                                                                                                                                                    |   | (27.2  | )      | (115.9 | )      | (37.6   | )      |
|   |                                                                                                                                                                                                                                                                                                                                    |   | 121.1  |   | 46.1   |   | 2,287.4 |   |

 
| (3)    | NON-CASH FINANCING ACTIVITIES                                                 |   |   |   |   |   |   |   |
|--------|-------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|   | Capital lease obligations incurred by  entering into leases for new equipment |   | 104.0  |   | 136.0  |   | 0.2    |   |

 

During theyear ended June 30, 2004, the consolidated entity recognised property,plant and equipment with an aggregate value of $104.0 million (2003 $136.0million) by means of finance leases. Dividends of $94.7 million (2003 $112.7 million) were paid for via theDividend Reinvestment Plan and convertible securities of $99.9 million (2003$34.4 million) were converted into fully paid ordinary shares.  These transactions are not reflected in theStatements of Cash Flows.

 

F-10

----

 

**AMCOR LIMITED**

**NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS 2003-2004**

 

**GENERAL**

 

Amcor Limitedis a dedicated global packaging company with 76% of total sales and totalassets outside Australasia.

 

**INDEX**

 
| 1  | Accounting  policies                         |
|----|----------------------------------------------|
| 2  | Other  revenue                               |
| 3  | Operating profit  before income tax          |
| 4  | Significant items                            |
| 5  | Income tax expense                           |
| 6  | Cash and deposits                            |
| 7  | Accounts receivable – current           |
| 8  | Inventories                                  |
| 9  | Accounts receivable –  non-current      |
| 10 | Investments                                  |
| 11 | Property, plant  and equipment               |
| 12 | Intangible assets                            |
| 13 | Other non-current assets                     |
| 14 | Accounts payable                             |
| 15 | Bank and other borrowings                    |
| 16 | Other liabilities and  provisions            |
| 17 | Undated  subordinated convertible securities |
| 18 | Share  capital                               |
| 19 | Employee  benefits/employee share schemes    |
| 20 | Capital expenditure  commitments             |
| 21 | Lease commitments                            |
| 22 | Other expenditure  commitments               |
| 23 | Contingent liabilities                       |
| 24 | Auditors’ remuneration                  |
| 25 | Remuneration  of Directors and executives    |
| 26 | Superannuation commitments                   |
| 27 | Segment reporting                            |
| 28 | Acquisition of  subsidiaries/businesses      |
| 29 | Disposal of  subsidiaries/businesses         |
| 30 | Additional  financial instruments disclosure |
| 31 | Related party disclosures                    |
| 32 | Events subsequent to  balance date           |
| 33 | Reconciliation of  accounts to US GAAP       |

 

**Note 1****                                                             ACCOUNTING POLICIES**

 

Thesignificant accounting policies which have been adopted by Amcor Limited andits controlled entities (“the consolidated entity”) in the preparation of thisfinancial report are:

 

**(1)**                                 Accounting Standards

** **

**The consolidatedentity adopts the currently applicable Accounting Standards and disclosurerequirements of the professional accounting bodies in Australia.**

** **

**(2)**                                 Basis of Preparation

** **

**The financial reportof the consolidated entity is a general purpose financial report prepared inaccordance with Accounting Standards, Urgent Issues Group Consensus Views,other authoritative pronouncements of the Australian Accounting Standards Boardand the Corporations Act 2001 (‘Australian GAAP’).**

** **

**This financial reporthas been prepared on the basis of historical costs and, except where stated,does not take into account changing money values or current valuations ofnon-current assets.**

** **

**The preparation of thefinancial statements involves management estimates.**

** **

**These accountingpolicies have been consistently applied by each entity in the consolidatedentity and, except where there is a change in accounting policy, are consistentwith those of the previous year.**

 

**The ConsolidatedStatements of Income, Balance Sheets and Statements of Shareholders’ Equity areprepared using a US GAAP format for presentation of operating profit, assets,liabilities and shareholders’ equity which have been measured in accordancewith Australian GAAP.**

** **

**F-11**

----

** **

**(3)**                                 Consolidated FinancialStatements

 

**The consolidatedfinancial statements comprise the financial statements of the company, beingthe parent entity, and its controlled entities in accordance with AccountingStandard AASB 1024 ‘Consolidated Accounts’. The financial statements of controlled entities are included in theconsolidated financial statements from the date control commences until thedate control ceases.**

** **

**In preparing thefinancial statements all balances and transactions between entities included inthe consolidated entity have been eliminated.**

** **

**(4)**                                 Revenue Recognition

** **

**Sale of Goods**

** **

**Sales revenuecomprises revenue earned (net of returns, discounts and allowances) from theprovision of products to entities outside the consolidated entity.  Sales revenue is recognized when control ofthe goods passes to the customer.**

** **

**Interest Income**

** **

**Interest income isrecognized as it accrues, taking into account the effective yield on thefinancial asset.**

** **

**Sales of Non-Current Assets**

** **

**The gross proceeds ofasset sales are included as revenue of the consolidated entity.  The profit or loss on disposal of assets isbrought to account at the date control of the asset passes to the buyer. Theprofit or loss on disposal is calculated as the difference between the carryingamount of the asset at the time of disposal and the net proceeds on disposal.**

** **

**(5)**                                 Taxation

** **

**General**

** **

**The consolidatedentity adopts the accounting policy for treatment of company income tax as setout in Accounting Standard AASB 1020 ‘Tax Effect Accounting’ whereby thetaxation benefits or liabilities which arise due to differences between thetime when items are taken up in the consolidated entity’s financial statementsand when they are to be taken up for income tax purposes are shown either as afuture income tax benefit or as a deferred tax liability.  The deferred tax asset and deferred taxliability are taken up at tax rates applicable to the periods in which they areexpected to reverse.**

** **

**The deferred tax assetrelating to tax losses is not carried forward as an asset unless the benefitcan be regarded as being virtually certain of realization.  These benefits will be brought to account asa reduction in income tax expense in the period in which they are recouped.  The tax effect of capital losses is notrecorded unless realization is virtually certain.**

** **

**Capital Gains Tax**

** **

**Capital gains tax,where applicable, is provided in the period in which an asset is sold.**

** **

**Goods and Services Tax**

** **

**Revenues, expenses andassets are recognized net of the amount of goods and services tax (‘GST’),except where the amount of GST incurred is not recoverable from the AustralianTaxation Office (‘ATO’).  In thesecircumstances the GST is recognized as part of the cost of acquisition of theasset or as part of the expense.**

** **

**Receivables andpayables are stated with the amount of GST included.**

** **

**The net amount of GSTrecoverable from, or payable to, the ATO is included as a current asset orliability in the Consolidated Balance Sheets.**

** **

**Cash flows areincluded in the Consolidated Statements of Cash Flows on a gross basis.  The GST component of cash flows arising frominvesting and financing activities which are recoverable from, or payable to,the ATO are classified as operating cash flows.**

** **

**F-12**

----

**(6)****                                ****Depreciation**

 

Property,plant and equipment, excluding freehold land, are depreciated at rates basedupon their expected useful lives using the straight line method.

 

Depreciationrates used for each class of asset are as follows:

 

•                  Land improvements between 1% - 3% (2003 1% - 3%)

•                  Buildings between 1% - 5% (2003 1% - 5%)

•                  Plant and equipment between 3% - 25% (2003 3% - 25%)

•                  Finance leases between 4% - 20% (2003 4% - 20%)

 

**(7)****                                ****Employee Entitlements**

 

**Wages, Salaries, Annual Leave and Sick Leave**

 

Liabilitiesfor employee entitlements such as wages, salaries, annual leave, sick leave andother current employee entitlements represent present obligations resultingfrom employees’ service provided to reporting date, calculated at undiscountedamounts based on wage and salary rates that the consolidated entity expects topay as at reporting date including related on-costs.

 

Liabilitiesfor employee entitlements include, where appropriate, forecast future increasesin wages and salaries, grossed up for on-costs, and are based on theconsolidated entity’s experience with staff departures.

 

**Long Service Leave**

 

Liabilitiesrelating to long service leave and post-employment benefits have beencalculated to represent the present value of estimated future cash outflowsdiscounted to reporting date.

 

Liabilitieswhich are not expected to be settled within 12 months are discounted using therate attaching to those national government securities at reporting date whichmost closely match the terms of maturity of the related entitlements.

 

**Profit Sharing and Bonus Plans**

 

A liabilityis recognized for profit sharing and bonus plans, including benefits based onthe future value of equity instruments and benefits under plans allowing theconsolidated entity to settle in either cash or shares.

 

Entitlementsunder the Employee Bonus Payment Plan (EBPP) are estimated and accrued at theend of the financial reporting period.

 

**Employee Share and Option Plans**

 

Theconsolidated entity maintains two Employee Share Schemes, the Employee SharePurchase Plan (‘ESPP’) and the Employee Share/Option Plan (‘ESOP’).  Both Schemes were introduced in 1985, andhave been subsequently amended and approved by shareholders at Annual GeneralMeetings.

 

Issuesrelating to the ESPP and the ESOP are detailed in Note 19.

 

Loans toassist in the purchase of shares are shown as non-current receivables.  Shares are held in trust until the loan issettled.  The loans can be paid off atany time and must be settled when an individual ceases to be employed by theconsolidated entity.  No value isrecognized at the time of issue of options under the ESOP.  If exercised, contributions are recognized asequity.  Shares issued under the ESOP aretreated as equity to the extent the shares are paid-up.  Shares issued under the ESPP are credited toequity at the discounted value at the time of allotment.

 

**Superannuation Funds**

 

Theconsolidated entity contributes to employee superannuation funds.  Contributions are charged against profit asand when they are incurred.  Furtherinformation is set out in Note 19.

 

F - 13

----

 

**(8)****                                ****Provisions**

 

A provisionis recognized when there is a legal, equitable or constructive obligation as aresult of a past event and it is probable that a future sacrifice of economicbenefits will be required to settle the obligation, the timing or amount ofwhich is uncertain.

 

If the effectis material, a provision is determined by discounting the expected future cashflows (adjusted for expected future risks) required to settle the obligation ata pre-tax rate that reflects current market assessments of the time value ofmoney and the risks specific to the liability, being risk free rates ongovernment bonds most closely matching the expected future payments, exceptwhere noted below.  The unwinding of thediscount is treated as part of the expense related to the particular provision.

 

When some orall of the economic benefits required to settle a provision are expected to berecovered from a third party, the recovery receivable is recognized as an assetwhen it is probable that the recovery will be received and is measured on abasis consistent with the measurement of the related provision.

 

In theConsolidated Statements of Income, the expense recognized in respect of aprovision is presented net of the recovery. In the Consolidated Balance Sheets, the provision is recognized net ofthe recovery receivable only when the entity:

 

•                      has a legally recognized right to set-off therecovery receivable and the provision; and

•                      intends to settle on a net basis, or to realizethe asset and settle the provision simultaneously.

 

**Restructuring**

 

A provisionfor restructuring, including employee termination benefits, related to anacquired entity or operation is recognized at the date of acquisition where:

 

•             the main features of the restructuring were announced,implementation of the restructuring commenced, or contracts were entered intoby the date of acquisition;

•             a detailed formal plan is developed by the earlier of threemonths after the date of acquisition and the completion of this financialreport.

 

The provisiononly relates to costs associated with the acquired entity, and is included inthe determination of the fair value of the net assets acquired.  The provision includes liabilities fortermination benefits that will be paid to employees of the acquired entity as aresult of the restructuring.

 

Otherprovisions for restructuring or termination benefits are only recognized when adetailed plan has been formally approved and the restructuring or terminationbenefits have either commenced or been publicly announced, or firm contractsrelated to the restructuring or the termination benefits have been enteredinto.  Costs related to ongoingactivities are not provided for. The liabilities for termination benefits thatwill be paid as a result of these restructurings have been included in theprovision for restructuring.

 

**Dividends**

 

A provisionfor dividends payable is recognized in the reporting period in which thedividends are declared, for the entire undistributed amount, regardless of theextent to which they will be paid in cash.

 

**Onerous Contracts**

 

A provisionfor onerous contracts is recognized after impairment losses on assets dedicatedto the contract have been recognized and when the expected benefits are lessthan the unavoidable costs of meeting the contractual obligations.  A provision is recognized to the extent thatthe contract obligations exceed future economic benefits.

 

**Insurance and Other Claims**

 

Provisionsfor worker’s compensation, insurance and other claims are made for claimsreceived and claims expected to be received in relation to incidents occurringprior to reporting date, based on historical claim rates.

 

Estimated netfuture cash flows are based on the assumption that all claims will be settledand the weighted average cost of historical claims adjusted for inflation willcontinue to approximate future costs.

 

F - 14

----

 

**(9)****                                ****Borrowing Costs**

 

Borrowingcosts include interest, amortization of discounts or premiums relating toborrowings, amortization of ancillary costs incurred in connection with thearrangement of borrowings, foreign exchange differences on borrowings otherthan those designated as net investment hedges and lease finance charges.

 

Borrowingcosts are brought to account in determining profit for the year, except to theextent the interest incurred relates to major capital items, in which case,interest is capitalized as a cost of the asset up to the time it is ready forits intended use and amortized over the expected useful economic life.

 

The totalamount of interest capitalized during the year as part of the carrying amountof assets is shown in Note 3.

 

**(10)****                         ****Investments and Other FinancialAssets**

 

Investmentsin listed and unlisted securities, other than controlled entities andassociates, in the financial report, are brought to account at cost anddividend income is recognized in the Consolidated Statements of Income when receivable.

 

Theconsolidated entity follows the requirements of AASB 1016 ‘Accounting forInvestments in Associates’ and applies the equity method of accounting forinvestments in associates.  Associatesare those entities over which the consolidated entity exercisessignificant influence, but does not control.  The equity method requires the carryingamount of investments in associates to be adjusted by the consolidated entity’sshare of associates’ net profit or loss after tax and other movements in reserves.  Investments in associates are carried at thelower of the equity accounted amount and the recoverable amount.  These amounts are recognized in theConsolidated Statements of Income and consolidated reserves.

 

**(11)****                         ****Non-Current Assets**

 

Therecoverable amount of non-current assets carried at cost is reviewed at eachreporting date using profit multiples and undiscounted cash flows. Non-currentassets are written down to recoverable amount where the carrying value of anynon-current asset exceeds recoverable amount. The write-down is recognized as an expense in the ConsolidatedStatements of Income in the reporting period in which it occurs.

 

**(12)****                         ****Inventories**

 

Inventoriesare valued at the lower of cost (including an appropriate proportion of fixedand variable overheads) and net realizable value in the normal course ofbusiness.

 

**(13)****                         ****Foreign Currency Translation**

 

The financialstatements of overseas controlled entities which are classified asself-sustaining are converted to Australian currency at balance date using thecurrent rate method as set out in Accounting Standard AASB 1012 ‘ForeignCurrency Translation’.  Any exchangegains/losses arising from the effect of currency fluctuations on theseinvestments are taken directly to the exchange fluctuations reserve onconsolidation.

 

Prior totranslation, the financial reports of self-sustaining operations inhyper-inflationary economies are restated to account for changes in the generalpurchasing power of the local currency, based on relevant price indices atreporting date.  For hyper-inflationaryself-sustaining operations, the translated amounts for non-monetary assets,other than inventory, are compared to recoverable amounts translated at spotrates at reporting dates and any excess is expensed, unless a revaluationreserve balance exists for non-current assets carried at fair value.

 

Foreignexchange differences relating to foreign currency transactions hedging a netinvestment in a self-sustaining foreign operation, together with any relatedincome tax, are transferred to the exchange fluctuations reserve onconsolidation.

 

With theexception of transactions hedging a net investment in a self-sustaining foreignoperation, all material foreign currency transactions are subject to forwardcover contracts and any exchange gains/losses arising from the effect ofcurrency fluctuations on the underlying transactions are offset by the exchangegains/losses on the forward cover contract.

 

In thiscircumstance, hedged transactions are initially recorded at the relevant rateat the date of the transaction.  Hedgesoutstanding at reporting date are valued at the rates ruling on that date andgains or losses are brought to account in the Consolidated Statements ofIncome.  Costs or gains arising at thetime of entering into the hedge are deferred and amortized over the life of thehedge.

 

F - 15

----

 

**(14)****                         ****Financial Instruments**

 

**Financial Instruments Included in Equity**

 

Details ofshares and other securities issued and the terms and conditions of optionsoutstanding over ordinary shares at balance date are set out in Notes 18 and19.

 

The issue of$400 million of Perpetual Amcor Convertible Reset Securities (‘PACRS’) and $210million of 2002 Perpetual Amcor Convertible Reset Securities (‘PACRS2’) areclassified as equity and the coupon interest payable on the PACRS and PACRS2 istreated as a distribution of shareholders’ equity.  The Consolidated Statements of Income do notinclude the coupon interest on the PACRS or PACRS2.

 

**Financial Instruments Included in Liabilities**

 

Liabilitiesare recognized for amounts to be paid in the future for goods and servicesreceived, whether or not billed to the consolidated entity.

 

Bankoverdrafts, bank loans, mortgage loans and other loans are carried at theirprincipal amounts.  Interest is chargedas an expense as it accrues other than for amounts capitalized - refer Note1(9).

 

CommercialPaper is carried at the principal amount. The discount interest is carried as a deferred expense and brought toaccount on an accruals basis.

 

US$ Notes arecarried at face value and translated at the rates ruling at reporting date.Interest is charged as an expense as it accrues.

 

Eurobondnotes are carried at face value less their discount, with the discountamortised over the period to maturity. Interest is charged as an expense as it accrues.

 

Undatedsubordinated convertible securities were initially recorded at the amount ofconsideration received. Where applicable, these securities have been translatedat the rate of exchange ruling at reporting date. Interest payable on thesesecurities is recognized when entitlements accrue and is calculated inaccordance with the terms of each issue. The terms and conditions of undated subordinated convertible securitiesoutstanding are set out in Note 17.

 

**Financial Instruments Included in Assets**

 

Trade Debtorsare carried at nominal amounts due less any provision for doubtful debts.  Collectability of overdue accounts isassessed on an ongoing basis.  Specificprovision is made for all doubtful accounts. A provision for doubtful debts is recognized when collection of the fullnominal amount is no longer probable.

 

Receivablesother than trade debtors are carried at nominal amounts due.

 

**Derivatives**

 

The consolidatedentity’s policy on interest rate risk management is to monitor and, whereappropriate, hedge the consolidated entity’s exposure to movements in interestrates through the use of various hedging products available in the financialmarkets.

 

The consolidatedentity enters into interest rate and cross currency swaps, forward rateagreements and interest rate options to hedge interest rate and foreigncurrency exposures.  These instrumentsare not held for speculative purposes. Where hedge transactions are designatedas a hedge of the anticipated purchase or sale of goods or services or ananticipated interest transaction, gains and losses on the hedge arising up tothe date of the anticipated transactions are included in the measurement of theanticipated transaction when the transaction has occurred as designated.  Any gains or losses on the hedge transactionafter that date are included in the Consolidated Statements of Income.

 

The netamounts receivable or payable under forward foreign exchange contracts and theassociated deferred gains or losses are recorded in the Consolidated BalanceSheets until the hedge transaction occurs. When recognized, the net receivables or payables are revalued using therate of exchange ruling at reporting date.

 

Where a hedgetransaction is terminated early and the anticipated transaction is stillexpected to occur, the deferred gains and losses that arose prior to itstermination are included in the measurement of the purchase or sale or interesttransaction when it occurs.  Where ahedge transaction is terminated early because the anticipated transaction is nolonger expected to occur, deferred gains and losses that arose on the hedgeinstrument are included in the Consolidated Statements of Income.

 

F - 16

----

 

Net receiptsand payments under the interest rate swap contracts, forward rate agreementsand cross currency swaps are recognized on an accruals basis as an adjustmentto interest expense.  The premiums paidon interest rate options are included in other assets and amortized toborrowing costs over the term of the agreement.

 

**(15)****                         ****Leased Assets**

 

Leases underwhich the consolidated entity assumes substantially all the risks and benefitsof ownership are classified as finance leases. Other leases are classified asoperating leases.

 

Financeleases are capitalized. A lease asset and a lease liability equal to thepresent value of the minimum lease payments are recorded at the inception ofthe lease.

 

Payments madeunder operating leases are expensed over the term of the lease.

 

**(16)****                         ****Research and DevelopmentExpenditure**

 

Expenditureon research and development associated with product research and developmentinnovation is charged against operating profit in the year in which theexpenditure is incurred.

 

Where suchexpenditure is considered to have a demonstrable future economic benefit andcommercial value, it is capitalized and amortized over the period of timeduring which the benefits are expected to arise.

 

Expenditureon significant commercial development, including major software applicationsand associated systems, is capitalized and amortized over the period of timeduring which the benefits are expected to arise, typically not exceeding 10years.

 

**(17)****                         ****Trademarks / Licences**

 

Theconsolidated entity writes off expenditure on trademarks / licences to profitas incurred.

 

**(18)****                         ****Goodwill**

 

Theconsolidated entity recognises goodwill on acquisitions of controlled entitiesand businesses as required by Accounting Standard AASB 1013 ‘Accounting forGoodwill’.

 

All goodwillis amortized in equal instalments over the period of time during which thebenefits are expected to arise but for a period not exceeding 20 years.  The unamortized balance of goodwill isreviewed at reporting date and adjusted where it is considered that thecarrying amount exceeds the expected future benefits.

 

**(19)****                         ****Earnings per Share (EPS)**

 

**Basic Earnings per Share**

 

Basicearnings per share is calculated by dividing the net profit attributable tomembers of the consolidated entity for the reporting period, after adjustingfor distributions on PACRS, by the weighted average number of ordinary sharesof the consolidated entity, adjusted for any bonus issue.

 

**Diluted Earnings per Share**

 

Diluted EPSearnings is calculated by adjusting the basic EPS earnings for the after taxeffect of financing costs and the effect of conversion to ordinary sharesassociated with dilutive potential ordinary shares.

 

The dilutedEPS weighted average number of shares includes the number of ordinary sharesassumed to be issued for no consideration in relation to dilutive potentialordinary shares.  The number of ordinaryshares assumed to be issued for no consideration represents the difference betweenthe number that would have been issued at the exercise price and the numberthat would have been issued at the average market price.

 

Theidentification of dilutive potential ordinary shares is based on net profit orloss from continuing ordinary operations and is applied on a cumulative basis,taking into account the incremental earnings and incremental number of sharesfor each series of potential ordinary shares.

 

F - 17

----

 

**(20)****                         ****Acquisition of Assets**

 

All assetsacquired, including property, plant and equipment and intangibles other thangoodwill, are initially recorded at their cost of acquisition at the date ofacquisition, being the fair value of the consideration provided plus incidentalcosts directly attributable to the acquisition. Acquired in-process research and development is only recognized as aseparate asset when future benefits are expected beyond any reasonable doubt tobe recoverable.

 

**(21)****                         ****Repairs and Maintenance**

 

Costsassociated with repairs and maintenance are expensedas incurred where such costs serve to maintain the asset’s operating capacityat its previously assessed standard of performance.

 

**(22)****                         ****Reclassification of FinancialInformation**

 

Certain itemsin the comparative periods have been reclassified to conform to current perioddisclosures.

 

**Note 2    OTHER REVENUES**

 
| ** **                                                        | ** ** | **For the Years Ended June 30** | ** ** |
|-------------------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                        | ** ** | **(in millions of A$)**              | ** ** |
| ** **                                                        | ** ** | **2004**                             | ** ** | **2003** | ** ** | **2002** | ** ** |
| Interest received                                                 |       | 13.2                                 |       | 10.0 |   | 16.4 |   |
| Dividends received                                                |       | 0.6                                  |       | 1.0 |   | 0.8 |   |
| Gross proceeds on disposal of non-current  assets                 |       | 98.7                                 |       | 75.4 |   | 231.7 |   |
| Gross proceeds on disposal of businesses  and controlled entities |       | 2.1                                  |       | 98.4 |   | 55.4 |   |
| Gross proceeds on disposal of investments                         |       | —                               |       | — |   | 697.5 |   |
| Other                                                             |       | 60.4                                 |       | 63.3 |   | 58.0 |   |
| **TOTAL OTHER REVENUE**                                           |       | 175.0                                |       | 248.1 |   | 1,059.8 |   |

 

F - 18

----

 

**Note 3****             OPERATING PROFIT BEFORE INCOME TAX**

 
| ** **                                                                     | ** ** | **For the Years Ended June 30** | ** ** |
|--------------------------------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                                     | ** ** | **(in millions of A$)**              | ** ** |
| ** **                                                                     | ** ** | **2004**                             | ** ** | **2003** | ** ** | **2002** | ** ** |
| **Operating  profit before income tax arrived at after (charging)/crediting:** |       |                                 |       |   |   |   |   |
| Amortization  and depreciation:                                                |       |                                 |       |   |   |   |   |
| of property,  plant and equipment - refer Note 1(6)                            |       | (459.4                               | )          | (453.5 | ) | (278.2 | ) |
| of leased  assets - refer Note 1(15)                                           |       | (13.2                                | )          | (14.9 | ) | (8.4 | ) |
| of goodwill  and other intangibles - refer Note 1(18)                          |       | (131.2                               | )          | (138.8 | ) | (54.5 | ) |
|                                                                           |       | (603.8                               | )          | (607.2 | ) | (341.1 | ) |
| Interest  paid:                                                                |       |                                 |       |   |   |   |   |
| Finance  charges on leased assets – refer Note 1(15)                      |       | (4.7                                 | )          | (6.3 | ) | (4.7 | ) |
| Other  persons                                                                 |       | (138.4                               | )          | (143.8 | ) | (126.6 | ) |
| Interest  capitalized - refer Note 1(9)                                        |       | 4.5                                  |       | 0.3 |   | 0.8 |   |
|                                                                           |       | (138.6                               | )          | (149.8 | ) | (130.5 | ) |
| Interest  received                                                             |       | 13.2                                 |       | 10.0 |   | 16.4 |   |
| Net interest                                                                   |       | (125.4                               | )          | (139.8 | ) | (114.1 | ) |
| Other  borrowing costs                                                         |       | (6.8                                 | )          | (6.5 | ) | (7.4 | ) |
| Bad debts  written off:                                                        |       |                                 |       |   |   |   |   |
| Trade  debtors                                                                 |       | 6.2                                  |       | (1.0 | ) | (2.4 | ) |
| Provisions:                                                                    |       |                                 |       |   |   |   |   |
| Employee  entitlements and directors’ retiring allowances                 |       | (106.0                               | )          | (149.3 | ) | (92.7 | ) |
| Doubtful  debts                                                                |       | (1.1                                 | )          | (18.2 | ) | (13.0 | ) |
| Diminution  in value of inventories                                            |       | 5.4                                  |       | (23.1 | ) | (10.6 | ) |
| Insurance/workers’  compensation and other claims                         |       | (26.0                                | )          | (40.4 | ) | (27.2 | ) |
| Restructuring                                                                  |       | (57.0                                | )          | (41.1 | ) | (106.6 | ) |
| Onerous  contracts                                                             |       | (12.8                                | )          | — |   | — |   |
| Lease  rentals:                                                                |       |                                 |       |   |   |   |   |
| Operating  leases                                                              |       | (65.0                                | )          | (72.8 | ) | (37.3 | ) |
| Net profit  on disposal of non-current assets - refer Note 1(4)                |       | 34.7                                 |       | 20.9 |   | 9.0 |   |
| Net foreign  exchange gains                                                    |       | 4.8                                  |       | 2.4 |   | 5.6 |   |

 

F - 19

----

 

**Note 4****             SIGNIFICANT ITEMS**

 
| ** **                                                                                                                                   | ** ** | **For the Years Ended June 30** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                                                                                                   | ** ** | **(in millions of A$)**              | ** ** |
| ** **                                                                                                                                   | ** ** | **2004**                             | ** ** | **2003** | ** ** | **2002** | ** ** |
| **Significant  items before income tax**                                                                                                     |       |                                 |       |   |   |   |   |
| PET business  integration and restructure                                                                                                    |       | (19.9                                | )          | — |   | — |   |
| Flexibles’  market sector rationalization                                                                                               |       | (69.3                                | )          | — |   | — |   |
| Write-down  residual assets of the former Twinpak group                                                                                      |       | (10.6                                | )          | — |   | — |   |
| Loss on  disposal of businesses and subsidiaries                                                                                             |       | —                               |       | — |   | (18.6 | ) |
| Profit on  disposal of investment                                                                                                            |       | —                               |       | — |   | 553.4 |   |
| Restructuring  expenses consequent upon the acquisition of the PET and Closures businesses  from Schmalbach-Lubeca                           |       | —                               |       | (86.7 | ) | — |   |
| **Significant  Items Before Income Tax**                                                                                                     |       | (99.8                                | )          | (86.7 | ) | 534.8 |   |
| **Related  income tax benefit on significant items (where applicable)**                                                                      |       |                                 |       |   |   |   |   |
| Income tax  benefit on Flexibles’ market sector rationalization                                                                         |       | 2.4                                  |       | — |   | — |   |
| Income tax  benefit on write-down of residual assets of the former Twinpak group                                                             |       | 2.8                                  |       | — |   | — |   |
| Income tax  benefit on the restructuring expenses consequent upon the acquisition of the  PET and Closures businesses from Schmalbach-Lubeca |       | —                               |       | 16.6 |   | — |   |
| **Income  Tax on Significant Items**                                                                                                         |       | 5.2                                  |       | 16.6 |   | — |   |
| **Net  Significant Items After Income Tax Attributable to Members of Amcor Limited**                                                         |       | (94.6                                | )          | (70.1 | ) | 534.8 |   |

 

**Note 5****             INCOME TAX EXPENSE**

 
| Prima facie  income tax expense calculated at 30% rate of tax on operating profit before  income tax |   | (141.5 | )      | (146.6 | )      | (294.4 | )      |
|------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                 |   |   |   |   |   |   |   |
| (Add)/deduct  the tax effect of:                                                                     |   |   |   |   |   |   |   |
| Different overseas tax rates                                                                         |   | (6.9   | )      | (6.2   | )      | — |   |
| Non-assessable  profits on disposal of controlled entities and investments                           |   | — |   | 13.8   |   | 168.2  |   |
| Share of  associates’ net profit                                                                |   | — |   | — |   | 12.0   |   |
| Capital  structures and PACRS                                                                        |   | 71.9   |   | 71.6   |   | 10.9   |   |
| Amortization/write-down  of goodwill                                                                 |   | (25.7  | )      | (27.9  | )      | (13.1  | )      |
| Change in  estimate of prior year tax provision                                                      |   | 9.3    |   | 14.3   |   | 8.8    |   |
| Tax loss  utilisation                                                                                |   | 22.9   |   | 8.1    |   | — |   |
| Tax benefit  on significant items not recognised                                                     |   | (25.0  | )      | (9.4   | )      | — |   |
| Other                                                                                                |   | (16.3  | )      | (14.4  | )      | (12.6  | )      |
| **TOTAL  INCOME TAX EXPENSE**                                                                        |   | (111.3 | )      | (110.5 | )      | (120.2 | )      |

 

The balance of the franking account as at June 30,2004 was nil (2003 nil) after taking into account the payment of income taxpayable at that date and any franking credits included therein which may not bedistributable in the following year.

 

F - 20

----

 

**Note 6****             CASH AND DEPOSITS**

 
| ** **                   | ** ** | **At June 30**     | ** ** |
|------------------------------|------------|-------------------------|------------|
| ** **                   | ** ** | **(in millions of A$)** | ** ** |
| ** **                   | ** ** | **2004**                | ** ** | **2003** | ** ** |
| Cash on hand  and at bank    |       | 127.6                   |       | 117.0 |   |
| Deposits at  call            |       | 3.4                     |       | 24.5 |   |
| Short term  deposits         |       | 17.3                    |       | 20.5 |   |
| **TOTAL  CASH AND DEPOSITS** |       | 148.3                   |       | 162.0 |   |

 

**Note 7****             ACCOUNTS RECEIVABLE - CURRENT**

 
| Trade debtors (1)                |   | 1,283.4 |   | 1,163.4 |   |
|----------------------------------|--------|---------|--------|---------|--------|
| Provision for doubtful debts (2) |   | (51.6   | )      | (59.8   | )      |
|                             |   | 1,231.8 |   | 1,103.6 |   |
| Other  debtors                   |   | 157.5   |   | 279.6   |   |
| Other loans                      |   | 17.7    |   | 16.1    |   |
| **TOTAL  ACCOUNTS RECEIVABLE**   |   | 1,407.0 |   | 1,399.3 |   |

 

----

| (1)          Credit terms vary  across the group                                                     |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
|                                                                                                                                              |   |   |   |   |   |
| (2)          The movement in the  provision for doubtful debts for the year is explained as follows: |   |   |   |   |   |
| Balance at the beginning of the year                                                                                                              |   | (59.8  | )      | (42.8  | )      |
| Provided for during the year - refer Note 3                                                                                                       |   | (1.1   | )      | (18.2  | )      |
| Amounts previously provided for, written  off during the year                                                                                     |   | 9.9    |   | 11.8   |   |
| Amounts acquired during the year                                                                                                                  |   | (1.0   | )      | (13.0  | )      |
| Amounts disposed of during the year                                                                                                               |   | — |   | 1.4    |   |
| Foreign exchange translation                                                                                                                      |   | 0.4    |   | 1.0    |   |
| Balance at the end of the year                                                                                                                    |   | (51.6  | )      | (59.8  | )      |

 

**Note 8****             INVENTORIES**

 
| At cost:                           |   |    |   |    |   |
|------------------------------------|--------|---------|--------|---------|--------|
| Raw  materials and stores          |   | 550.5   |   | 493.3   |   |
| Provision  for diminution in value |   | (34.1   | )      | (31.0   | )      |
|                               |   | 516.4   |   | 462.3   |   |
| Work in  progress                  |   | 143.8   |   | 151.5   |   |
| Provision  for diminution in value |   | (5.7    | )      | (4.2    | )      |
|                               |   | 138.1   |   | 147.3   |   |
| Finished  goods                    |   | 731.7   |   | 695.5   |   |
| Provision  for diminution in value |   | (32.5   | )      | (36.9   | )      |
|                               |   | 699.2   |   | 658.6   |   |
| At net  realizable value:          |   |    |   |    |   |
| Raw  materials                     |   | 3.7     |   | 5.3     |   |
| Finished  goods                    |   | 12.2    |   | 10.5    |   |
|                               |   | 15.9    |   | 15.8    |   |
| **TOTAL  INVENTORIES**             |   | 1,369.6 |   | 1,284.0 |   |

 

F - 21

----

 

**Note 9****             ACCOUNTS RECEIVABLE – NON-CURRENT**

 
| ** **                                                                                                        | ** ** | **At June 30**     | ** ** |
|-------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                                                        | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                                                                        | ** ** | **2004**                | ** ** | **2003** | ** ** |
| ** **                                                                                                        | ** ** | ** **              | ** ** | ** ** | ** ** |
| Loans to  executive directors, officers and employees in the full time employment of  the consolidated entity (1) | ** ** | ** **              | ** ** | ** ** | ** ** |
| ** **                                                                                                        | ** ** | ** **              | ** ** | ** ** | ** ** |
| Directors of  Amcor Limited                                                                                       |       | 1.1                     |       | 1.1 |   |
| Directors of  controlled entities                                                                                 |       | 0.1                     |       | 0.4 |   |
| Other  employees                                                                                                  |       | 34.0                    |       | 34.1 |   |
| Other loans                                                                                                       |       | 46.6                    |       | 25.5 |   |
| **TOTAL  ACCOUNTS RECEIVABLE – NON-CURRENT**                                                                 |       | 81.8                    |       | 61.1 |   |

 

----

(1)          Loans to executive directors, officers and employees in the full timeemployment of the consolidated entity are made in accordance with:

•             the scheme for the provision of housing and other loans to employees of theconsolidated entity approved by shareholders on 19 September, 1980; and

•             the scheme to provide financial assistance to enable directors andemployees of the consolidated entity to purchase shares in the consolidatedentity as approved by Amcor Limited shareholders on 29 January, 1985 (assubsequently amended).

 

**Note 10****      INVESTMENTS**

 
| Investments  in companies listed on stock exchanges at cost     |   | 4.5  |   | 4.5  |   |
|-----------------------------------------------------------------|--------|------|--------|------|--------|
| Investments  in companies not listed on stock exchanges at cost |   | 8.4  |   | 17.0 |   |
| **TOTAL  INVESTMENTS**                                          |   | 12.9 |   | 21.5 |   |

 

Summarized and aggregated gross financialdata in respect of major associate investments is as follows:

 
| ** **                          | ** ** | **For the Years Ended June 30** | ** ** |
|-------------------------------------|------------|--------------------------------------|------------|
| ** **                          | ** ** | **(in millions of A$)**              | ** ** |
| ** **                          | ** ** | **2004**                             | ** ** | **2003** | ** ** | **2002** | ** ** |
| **Income  statement items**         |       |                                 |       |   |   |   |   |
| Sales  revenue                      |       | —                               |       | — |   | 946.9 |   |
| Operating  profit before income tax |       | —                               |       | — |   | 153.8 |   |
| Income tax  expense                 |       | —                               |       | — |   | (47.1 | ) |
| **Net  Profit**                     |       | —                               |       | — |   | 106.7 |   |

 

As at June 30, 2004, there were no majorinvestments in associates.

 

F - 22

----

 

**Note 11****      PROPERTY,PLANT AND EQUIPMENT**

 
| ** **                               | ** ** | **At June 30**     | ** ** |
|------------------------------------------|------------|-------------------------|------------|
| ** **                               | ** ** | **(in millions of A$)** | ** ** |
| ** **                               | ** ** | **2004**                | ** ** | **2003** | ** ** |
| Land:                                    |       |                    |       |   |   |
| At cost                                  |       | 233.6                   |       | 234.3 |   |
|                                     |       | 233.6                   |       | 234.3 |   |
| Land  improvements:                      |       |                    |       |   |   |
| At cost                                  |       | 20.6                    |       | 15.6 |   |
| Accumulated  depreciation                |       | (3.7                    | )          | (2.6 | ) |
|                                     |       | 16.9                    |       | 13.0 |   |
| Buildings:                               |       |                    |       |   |   |
| At cost                                  |       | 772.3                   |       | 687.3 |   |
| Accumulated  depreciation                |       | (120.8                  | )          | (79.5 | ) |
|                                     |       | 651.5                   |       | 607.8 |   |
| Plant and  equipment:                    |       |                    |       |   |   |
| At cost                                  |       | 7,371.0                 |       | 6,329.8 |   |
| Accumulated  depreciation                |       | (3,642.2                | )          | (3,036.6 | ) |
|                                     |       | 3,728.8                 |       | 3,293.2 |   |
| Leased  assets:                          |       |                    |       |   |   |
| Finance  leases                          |       | 150.4                   |       | 167.9 |   |
| Accumulated  amortization                |       | (36.2                   | )          | (20.6 | ) |
|                                     |       | 114.2                   |       | 147.3 |   |
| **TOTAL  PROPERTY, PLANT AND EQUIPMENT** |       | 4,745.0                 |       | 4,295.6 |   |

 

As at June 30, 2003, the Directors carried out a valuation of theconsolidated entity’s land, land improvements and buildings based onindependent valuations (Jones Lang LaSalle) and carrying valueassessments.  The valuation was carriedout on the basis of existing use, resulting in an aggregate valuation of $981.1million compared with net book value of land, land improvements and buildingsat 30 June 2003 of $855.1 million.

 

F - 23

----

 

**Note 12****      INTANGIBLE ASSETS**

 
| ** **                                                  | ** ** | **At June 30**     | ** ** |
|-------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                  | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                  | ** ** | **2004**                | ** ** | **2003** | ** ** |
| ** **                                                  | ** ** | ** **              | ** ** | ** ** | ** ** |
| Goodwill at  cost                                           |       | 2,652.4                 |       | 2,425.4 |   |
| Other  intangibles at cost                                  |       | 53.0                    |       | 38.6 |   |
| Accumulated  amortisation/write-downs                       |       | (642.7                  | )          | (507.1 | ) |
| **TOTAL  INTANGIBLE ASSETS**                                |       | 2,062.7                 |       | 1,956.9 |   |
|                                                        |       |                    |       |   |   |
| Estimated  future amortisation charge on other intangibles: |       |                    |       |   |   |

 
| ** **           | ** ** | **$’m** | ** ** |
|----------------------|------------|--------------|------------|
| Fiscal year  ending: |       |         |       |
| 30 June 2005    |       | 3.3          |       |
| 30 June 2006    |       | 2.4          |       |
| 30 June 2007    |       | 2.4          |       |
| 30 June 2008    |       | 2.4          |       |
| 30 June 2009    |       | 2.1          |       |

 

**Note 13****      OTHER NON-CURRENT ASSETS**

 
| Future  income tax benefits         |   | 238.8 |   | 199.4 |   |
|-------------------------------------|--------|-------|--------|-------|--------|
| Supply  contract deposits           |   | 26.6  |   | 28.7  |   |
| Unamortised  borrowing costs        |   | 13.1  |   | 8.1   |   |
| Other  non-current assets           |   | 53.5  |   | 40.5  |   |
| **TOTAL  OTHER NON-CURRENT ASSETS** |   | 332.0 |   | 276.7 |   |

 

**Note 14****      ACCOUNTSPAYABLE**

 
| Unsecured  creditors          |   |    |   |    |   |
|-------------------------------|--------|---------|--------|---------|--------|
| Trade  creditors (1)          |   | 1,230.0 |   | 1,078.0 |   |
| Other  creditors and accruals |   | 576.1   |   | 539.4   |   |
| Accrued interest              |   | 25.0    |   | 28.6    |   |
| **TOTAL  ACCOUNTS PAYABLE**   |   | 1,831.1 |   | 1,646.0 |   |

 

----

(1)          Terms for trade creditors vary across thegroup.

 

F - 24

----

 

**Note 15****      BANK AND OTHER BORROWINGS**

 

The consolidated entity borrows funds in various currencies to financethe group’s operations.  All materialforeign currency liabilities are hedged or matched by equivalent assets in thesame currencies, such assets representing a natural hedge.

 

The consolidated entity does not, as a rule, pledgeassets as security for borrowings, however, at June 30, 2004, bankoverdrafts, bank loans and other loans totalling $10.2 million (2003 $23.7million) were secured, principally against group property, plant andequipment.  These security arrangements relateto acquired subsidiaries and were in place prior to the companies concernedbecoming part of the consolidated entity.

 

The carrying value of current and non current pledgedassets (included in the total of Property, Plant and Equipment in Note 11) at June 30,2004 is $66.2 million (2003 $100.0 million), principally representing assets inNorth America and Europe.  The directorsbelieve there are no restrictions on the net assets of subsidiary companiesother than the above mortgages entered into in the normal course of borrowings.

 

**ByCurrency**

 

The following tables sets out details inrespect of the major components of current and non-current Bank and OtherBorrowings by currency:

 
| ** **                           | ** ** | ** **        | ** ** | ** **        | ** ** | **At June 30**     | ** ** |
|--------------------------------------|------------|-------------------|------------|-------------------|------------|-------------------------|------------|
| ** **                           | ** ** | ** **        | ** ** | **Interest Rate** | ** ** | **(in millions of A$)** | ** ** |
| **Nature of Borrowing**              | ** ** | **Maturity Date** | ** ** | **%****p.a.**     | ** ** | **2004**                | ** ** | **2003** | ** ** |
| ** **                           | ** ** | ** **        | ** ** | ** **        | ** ** | ** **              | ** ** | ** ** | ** ** |
| **Current**                          |       |              |       |              |       |                    |       |   |   |
| **Secured  bank overdrafts** (1)/(2) |       |              |       |              |       |                    |       |   |   |
| Swiss Francs                         |       | At call           |       | 4.50              |       | 0.3                     |       | — |   |
| Euros                                |       |              |       |              |       | —                  |       | 0.1 |   |
| Polish Zloty                         |       |              |       |              |       | —                  |       | 0.1 |   |
|                                 |       |              |       |              |       | 0.3                     |       | 0.2 |   |
| **Secured  bank term loans**(3)      |       |              |       |              |       |                    |       |   |   |
| Indonesian  Rupiahs                  |       | 09/28/2004        |       | 10.50             |       | 0.6                     |       | 0.9 |   |
| United  States Dollars               |       |              |       |              |       | —                  |       | 1.3 |   |
| Canadian  Dollars                    |       |              |       |              |       | —                  |       | 3.8 |   |
| Euros                                |       |              |       |              |       | —                  |       | 0.1 |   |
| Turkish Lira                         |       |              |       |              |       | —                  |       | 0.2 |   |
|                                 |       |              |       |              |       | 0.6                     |       | 6.3 |   |

 

F - 25

----

 
| ** **                            | ** ** | ** **   | ** ** | ** **          | ** ** | **At June 30**     | ** ** |
|---------------------------------------|------------|--------------|------------|---------------------|------------|-------------------------|------------|
| ** **                            | ** ** | **Maturity** | ** ** | **Interest Rate**   | ** ** | **(in millions of A$)** | ** ** |
| **Nature of Borrowing**               | ** ** | **Date**     | ** ** | **% p.a.**          | ** ** | **2004**                | ** ** | **2003** | ** ** |
| ** **                            | ** ** | ** **   | ** ** | ** **          | ** ** | ** **              | ** ** | ** ** | ** ** |
| **Secured  mortgage loans**(3)        |       |         |       |                |       |                    |       |   |   |
| Euros                                 |       |         |       |                |       | —                  |       | 0.2 |   |
|                                  |       |         |       |                |       | —                  |       | 0.2 |   |
| **Secured  other loans**(2)           |       |         |       |                |       |                    |       |   |   |
| Euros                                 |       | 12/31/2004   |       | Nil                 |       | 0.3                     |       | 1.0 |   |
| Great  British Pounds                 |       |         |       |                |       | —                  |       | 4.5 |   |
|                                  |       |         |       |                |       | 0.3                     |       | 5.5 |   |
| **Total  Secured Current Borrowings** |       |         |       |                |       | 1.2                     |       | 12.2 |   |
| **Unsecured  bank overdrafts**(1)     |       |         |       |                |       |                    |       |   |   |
| Canadian  Dollars                     |       | At call      |       | Libor               |       | 3.6                     |       | — |   |
| Danish  Kroner                        |       | At call      |       | Various             |       | 2.9                     |       | — |   |
| Euros                                 |       | Various      |       | Various             |       | 15.9                    |       | 64.5 |   |
| Great  British Pounds                 |       | At call      |       | Variable            |       | 2.2                     |       | 2.8 |   |
| Malaysian  Ringgit                    |       | At call      |       | 6.75 – 7.00    |       | 0.6                     |       | 0.5 |   |
| New Zealand  Dollars                  |       | At call      |       | 6.60                |       | 0.1                     |       | — |   |
| Polish Zloty                          |       | 10/09/2004   |       | Libor + 0.90        |       | 0.1                     |       | — |   |
| Turkish Lira                          |       | 07/01/2004   |       | Various             |       | 0.1                     |       | — |   |
| United  States Dollars                |       | At call      |       | 6.00                |       | 1.4                     |       | 47.9 |   |
|                                  |       |         |       |                |       | 26.9                    |       | 115.7 |   |
| Unsecured  bills of exchange (4)      |       |         |       |                |       |                    |       |   |   |
| Australian  Dollars                   |       |         |       |                |       | —                  |       | 41.1 |   |
| United  States Dollars                |       | Various      |       | Libor +  margin     |       | 186.3                   |       | 67.3 |   |
|                                  |       |         |       |                |       | 186.3                   |       | 108.4 |   |
| **Unsecured  bank term loans**(5)     |       |         |       |                |       |                    |       |   |   |
| Australian  Dollars                   |       |         |       |                |       | —                  |       | 173.6 |   |
| Brazilian  Reals                      |       | Various      |       | 14.00 –  15.00 |       | 6.2                     |       | 2.6 |   |
| Chinese  Renminbi                     |       | Various      |       | Various             |       | 7.6                     |       | 7.0 |   |
| Euros                                 |       | Various      |       | Various             |       | 66.8                    |       | 95.0 |   |
| Indian  Rupees                        |       | 02/24/2005   |       | 7.10                |       | 2.8                     |       | 5.4 |   |
| Indonesian  Rupiahs                   |       | 09/30/2004   |       | 8.90 – 10.00   |       | 2.2                     |       | 1.5 |   |
| Malaysian  Ringgits                   |       | Various      |       | 3.36 – 4.20    |       | 11.1                    |       | 9.9 |   |
| Philippine Pesos                      |       |         |       |                |       | —                  |       | 0.8 |   |
| Polish Zloty                          |       | 09/14/2004   |       | Libor + 0.75        |       | 1.3                     |       | — |   |
| Swiss Francs                          |       |         |       |                |       | —                  |       | 30.0 |   |
| United  States Dollars                |       | Various      |       | Various             |       | 403.9                   |       | 300.9 |   |
|                                  |       |         |       |                |       | 501.9                   |       | 626.7 |   |

 

F - 26

----

 
| ** **                              | ** ** | ** **   | ** ** | ** **        | ** ** | **At June 30**     | ** ** |
|-----------------------------------------|------------|--------------|------------|-------------------|------------|-------------------------|------------|
| ** **                              | ** ** | **Maturity** | ** ** | **Interest Rate** | ** ** | **(in millions of A$)** | ** ** |
| **Nature of Borrowing**                 | ** ** | **Date**     | ** ** | **% p.a.**        | ** ** | **2004**                | ** ** | **2003** | ** ** |
| ** **                              | ** ** | ** **   | ** ** | ** **        | ** ** | ** **              | ** ** | ** ** | ** ** |
| **Unsecured  other loans**              |       |         |       |              |       |                    |       |   |   |
| Australian  Dollars                     |       |         |       |              |       | —                  |       | 0.7 |   |
| Euros                                   |       | Various      |       | Various           |       | 0.1                     |       | — |   |
| Great  British Pounds                   |       |         |       |              |       | —                  |       | 4.6 |   |
| United  States Dollars                  |       | Various      |       | Various           |       | 9.9                     |       | 1.6 |   |
|                                    |       |         |       |              |       | 10.0                    |       | 6.9 |   |
| **Total  Unsecured Current Borrowings** |       |         |       |              |       | 725.1                   |       | 857.7 |   |
| **TOTAL  CURRENT BORROWINGS**           |       |         |       |              |       | 726.3                   |       | 869.9 |   |

 

----

(1)          The consolidated entity has committed bank overdraft facilities (bothsecured and unsecured) to a maximum of $95.5 million (2003 $275.5million).  As at June 30, 2004 theunused portions of the facilities were $68.3 million (2003 $159.6 million). Thebank overdrafts are payable on demand and are subject to annual review.

 

(2)          These bank overdrafts/loans are secured by a charge over assets ofcertain controlled entities.

 

(3)          Comprises facilities secured over property, plant and equipment inoverseas controlled entities to the extent of $54.9 million (2003 $77.3million).  The carrying value of thepledged property is $54.5 million (2003 $87.1 million)

 

(4)          Bills of exchange include:

 

US Commercial Paper Program

An uncommitted commercialpaper program of US$200 million. As at June 30 2004, A$186.3 million ofcommercial paper was outstanding with an average maturity of 40 days (2003A$67.3 million).

 

Promissory Note Facility

An uncommitted promissorynote facility of $600 million.  This facility continuesindefinitely until terminated by giving prior written notice to the dealerpanel.  As at June 30, 2004, therewere nil promissory notes outstanding (2003 $41.1 million).

 

Euro-Commercial Paper/Medium Term Note Program

A US$200 million non-underwritten facility underwhich commercial paper and medium term notes can be issued into the Asian andEuropean capital markets.  As at June 30,2004, there were nil euronotes outstanding (2003 nil).

 

(5)          Relate to various bank borrowings including:

 

Amcor Limited and AmcorFinance (USA) Inc - $350 million multi-currency facility maturing in September 2005. Drawings under this facility bear interest at BBSY or LIBOR plus anapplicable credit margin (2004 $304.0 million; 2003 $297.2 million).

 

F - 27

----

 
| ** **                                  | ** ** | ** **        | ** ** | ** **        | ** ** | **At June 30**     | ** ** |
|---------------------------------------------|------------|-------------------|------------|-------------------|------------|-------------------------|------------|
| ** **                                  | ** ** | ** **        | ** ** | **Interest Rate** | ** ** | **(in millions of A$)** | ** ** |
| **Nature of Borrowing**                     | ** ** | **Maturity Date** | ** ** | **% p.a.**        | ** ** | **2004**                | ** ** | **2003** | ** ** |
| ** **                                  | ** ** | ** **        | ** ** | ** **        | ** ** | ** **              | ** ** | ** ** | ** ** |
| **Non-current**                             |       |              |       |              |       |                    |       |   |   |
| **Secured  bank term loans**(1)             |       |              |       |              |       |                    |       |   |   |
| Euros                                       |       |              |       |              |       | —                  |       | 0.8 |   |
| New Zealand  Dollars                        |       | 03/31/2009        |       | 6.60              |       | 2.6                     |       | — |   |
| Thai Baht                                   |       | 02/28/2007        |       | 6.40              |       | 6.4                     |       | 7.6 |   |
| United  States Dollars                      |       |              |       |              |       | —                  |       | 3.1 |   |
|                                        |       |              |       |              |       | 9.0                     |       | 11.5 |   |
| **Total  Secured Non-Current Borrowings**   |       |              |       |              |       | 9.0                     |       | 11.5 |   |
| **Unsecured  bank terms loans**(2)          |       |              |       |              |       |                    |       |   |   |
| Australian  Dollars                         |       | 10/30/2006        |       | BBSY + 0.65       |       | 116.0                   |       | 101.1 |   |
| Euros                                       |       | Various           |       | 3.35 - 3.40       |       | 7.3                     |       | 56.6 |   |
| Great  British Pounds                       |       | 06/25/2008        |       | Libor + 0.40      |       | 128.2                   |       | — |   |
| New Zealand  Dollars                        |       | 04/29/2006        |       | 6.50              |       | 50.6                    |       | 45.6 |   |
| United  States Dollars                      |       | 11/30/2008        |       | Libor + 2.00      |       | 1.6                     |       | 19.0 |   |
|                                        |       |              |       |              |       | 303.7                   |       | 222.3 |   |
| **Unsecured  US$notes**(3)                  |       |              |       |              |       |                    |       |   |   |
| United  States Dollars                      |       | Various           |       | 4.91 – 5.95  |       | 723.7                   |       | 748.9 |   |
|                                        |       |              |       |              |       | 723.7                   |       | 748.9 |   |
| **Unsecured  Eurobond** (4)                 |       |              |       |              |       |                    |       |   |   |
| Euros                                       |       | 03/25/2011        |       | 4.25              |       | 612.0                   |       | — |   |
|                                        |       |              |       |              |       | 612.0                   |       | — |   |
| **Unsecured  other loans**                  |       |              |       |              |       |                    |       |   |   |
| Australian  Dollars                         |       | 08/24/2010        |       | Nil               |       | 2.3                     |       | 2.4 |   |
| Canadian  Dollars                           |       |              |       |              |       | —                  |       | 4.0 |   |
| Euros                                       |       | Various           |       | Various           |       | 3.4                     |       | 0.9 |   |
| United  States Dollars                      |       | Various           |       | Various           |       | 24.4                    |       | 2.7 |   |
|                                        |       |              |       |              |       | 30.1                    |       | 10.0 |   |
| **Total  Unsecured Non-Current Borrowings** |       |              |       |              |       | 1,669.5                 |       | 981.2 |   |
| **TOTAL  NON-CURRENT BORROWINGS**           |       |              |       |              |       | 1,678.5                 |       | 992.7 |   |

 

F - 28

----

 
| ** **                                   | ** ** | **At June 30**     | ** ** |
|----------------------------------------------|------------|-------------------------|------------|
| ** **                                   | ** ** | **(in millions of A$)** | ** ** |
| ** **                                   | ** ** | **2004**                | ** ** | **2003** | ** ** |
| ** **                                   | ** ** | ** **              | ** ** | ** ** | ** ** |
| **Maturity  Profile**                        |       |                    |       |   |   |
| Due within  1-2 years                        |       | 70.7                    |       | 27.8 |   |
| Due within  2-3 years                        |       | 122.6                   |       | 47.1 |   |
| Due within  3-4 years                        |       | 131.3                   |       | 110.8 |   |
| Due within  4-5 years                        |       | 13.9                    |       | 55.3 |   |
| Due after 5  years                           |       | 1,340.0                 |       | 751.7 |   |
| **BANK AND  OTHER BORROWINGS - NON-CURRENT** |       | 1,678.5                 |       | 992.7 |   |

 

----

(1)          Comprises facilities secured over property, plant and equipment inoverseas controlled entities to the extent of $10.8 million (2003 $12.0million).  The carrying value of thepledged property is $11.7 million (2003 $12.9 million).

 

(2)          Principally relates to bank borrowings in:

 

•                      Amcor Finance (New Zealand) Limited - A$50.6million (2003 A$45.6 million) drawn under a NZ$100 million revolving cashadvance facility maturing in 2006.  Thisfacility bears interest at the bank bill rate plus an applicable creditmargin.  The entity is charged an annualcommitment fee of 30 basis points paid quarterly.

•                      Amcor Packaging (USA) Inc Group - fully drawnunder an Australian dollar bill facility maturing in October 2006. Theamount drawn under this facility bears interest at BBSY plus a credit margin andhas been converted to Canadian Dollars 103.9 million under a cross-currency andinterest rate swap.

•                      Amcor Limited - A$128.2 million (2003 A$46.2million) drawn under a US$1,000 million global syndicated multi-currencyfacility term-tranche of US$650 million maturing June 2008.  Drawings are in various currencies and bearinterest at the applicable LIBOR rate plus a credit margin.  The entity is charged an annual commitmentfee of 27.5 basis points paid quarterly.

 

(3)          Represents US$500 million Amcor Limited senior unsecured guaranteednotes issued in the United States Private Placement market.  The notes were issued at face value and havefinal maturities between 2009 and 2017. Interest on these notes is payable semi-annually.

 

(4)          Represents EUR350 million Amcor Limited Eurobond notes issued in theEurobond market.  The notes mature in2011 and pay an annual coupon of 4.25%. The discounted proceeds due to the issuer were EUR348.3 million,providing an effective annual interest yield of 4.33%.

 

Each long term debt facility is subject tostandard terms and conditions of borrowing. Events of default under which facility commitments may be withdrawninclude non-payment, cross default, insolvency, material adverse effect,illegality or non-compliance with other obligations.

 

F - 29

----

 

**Note 16****      OTHER LIABILITIES AND PROVISIONS**

 
| ** **                                                 | ** ** | **At June 30**     | ** ** |
|------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                 | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                 | ** ** | **2004**                | ** ** | **2003** | ** ** |
| **CURRENT**                                                |       |                    |       |   |   |
| Lease  liabilities                                         |       | 2.2                     |       | 139.5 |   |
|                                                       |       |                    |       |   |   |
| Provisions  for:                                           |       |                    |       |   |   |
| Dividend/distributions  payable                            |       | 8.8                     |       | 8.8 |   |
| Income tax                                                 |       | 77.4                    |       | 74.1 |   |
| Employee  entitlements                                     |       | 159.2                   |       | 142.8 |   |
| Insurance  and other claims                                |       | 71.0                    |       | 67.0 |   |
| Onerous  contracts                                         |       | 9.6                     |       | 4.2 |   |
|                                                       |       |                    |       |   |   |
| Amcor  Flexibles restructuring                             |       |                    |       |   |   |
| Relocation                                                 |       | 2.2                     |       | 1.4 |   |
| Plant  closure                                             |       | 3.7                     |       | 3.6 |   |
| Redundancy                                                 |       | 41.1                    |       | 2.0 |   |
| Other                                                      |       | 9.8                     |       | 2.9 |   |
| Total Amcor  Flexibles restructuring                       |       | 56.8                    |       | 9.9 |   |
|                                                       |       |                    |       |   |   |
| Amcor  PET/Amcor Rentsch-Closures restructuring            |       |                    |       |   |   |
| Relocation                                                 |       | 4.1                     |       | 4.0 |   |
| Plant  closure                                             |       | 1.0                     |       | 7.9 |   |
| Redundancy                                                 |       | 1.2                     |       | 7.8 |   |
| Asset  impairment                                          |       | 2.1                     |       | 4.3 |   |
| Other                                                      |       | 0.1                     |       | 7.3 |   |
| Total Amcor  PET/Amcor Rentsch-Closures restructuring      |       | 8.5                     |       | 31.3 |   |
|                                                       |       |                    |       |   |   |
| Other  business groups restructuring                       |       |                    |       |   |   |
| Relocation                                                 |       | 6.0                     |       | 3.2 |   |
| Redundancy                                                 |       | 13.7                    |       | 14.2 |   |
| Asset  impairment                                          |       | 5.8                     |       | 7.9 |   |
| Other                                                      |       | 0.3                     |       | 6.9 |   |
| Total other  business groups restructuring                 |       | 25.8                    |       | 32.2 |   |
| **TOTAL  OTHER LIABILITIES AND PROVISIONS – CURRENT** |       | 419.3                   |       | 509.8 |   |

 

F - 30

----

 
| ** **                                                                                                           | ** ** | **At June 30**     | ** ** |
|----------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                                                           | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                                                                           | ** ** | **2004**                | ** ** | **2003** | ** ** |
| **NON-CURRENT**                                                                                                      |       |                    |       |   |   |
| Lease  liabilities                                                                                                   |       | 97.7                    |       | 10.9 |   |
| Other  creditors – unsecured                                                                                    |       | 13.2                    |       | 0.1 |   |
|                                                                                                                 |       |                    |       |   |   |
| Provisions  for:                                                                                                     |       |                    |       |   |   |
| Employee  entitlements                                                                                               |       | 74.2                    |       | 80.3 |   |
| Deferred tax  liabilities                                                                                            |       | 388.5                   |       | 345.5 |   |
| Insurance  and other claims                                                                                          |       | 3.3                     |       | 1.6 |   |
| Onerous  contracts                                                                                                   |       | 7.8                     |       | 10.0 |   |
|                                                                                                                 |       |                    |       |   |   |
| Amcor  Flexibles restructuring                                                                                       |       |                    |       |   |   |
| Relocation                                                                                                           |       | 2.5                     |       | 1.2 |   |
| Plant  closure                                                                                                       |       | —                  |       | 3.2 |   |
| Redundancy                                                                                                           |       | —                  |       | 1.9 |   |
| Other                                                                                                                |       | 3.8                     |       | 2.6 |   |
| Total Amcor  Flexibles restructuring                                                                                 |       | 6.3                     |       | 8.9 |   |
|                                                                                                                 |       |                    |       |   |   |
| Amcor  PET/Amcor Rentsch-Closures restructuring                                                                      |       |                    |       |   |   |
| Relocation                                                                                                           |       | —                  |       | 0.5 |   |
| Redundancy                                                                                                           |       | —                  |       | 1.3 |   |
| Asset  impairment                                                                                                    |       | —                  |       | 1.0 |   |
| Other                                                                                                                |       | 0.3                     |       | 1.8 |   |
| Total Amcor  PET/Amcor Rentsch-Closures restructuring                                                                |       | 0.3                     |       | 4.6 |   |
| **TOTAL  OTHER LIABILITIES AND PROVISIONS – NON-CURRENT**                                                       |       | 591.3                   |       | 461.9 |   |
| ** **                                                                                                           | ** ** | ** **              | ** ** | ** ** | ** ** |
| ** **                                                                                                           | ** ** | **2004**                | ** ** | **2003** | ** ** |
| ** **                                                                                                           | ** ** | **$m**                  | ** ** | **$m** | ** ** |
| **Reconciliations**                                                                                                  | ** ** | ** **              | ** ** | ** ** | ** ** |
| Reconciliations of the carrying amounts of each class of provision,  except for employee benefits are set out below: |       |                    |       |   |   |
|                                                                                                                 |       |                    |       |   |   |
| **Dividends/Distributions**                                                                                          |       |                    |       |   |   |
| Carrying amount at beginning of year                                                                                 |       | 8.8                     |       | 123.0 |   |
| Adjustment on adoption of AASB 1044 ‘Provisions, Contingent  Liabilities and Contingent Assets’            |       | —                  |       | (115.2 | ) |
| Provisions made during the year:                                                                                     |       |                    |       |   |   |
| Final dividend 2003                                                                                                  |       | 127.6                   |       | 115.2 |   |
| Interim dividend 2004                                                                                                |       | 139.7                   |       | 125.3 |   |
| PACRS distribution                                                                                                   |       | 52.4                    |       | 52.3 |   |
| Payments made during the year                                                                                        |       | (319.7                  | )          | (291.8 | ) |
| **Carrying amount at end of year**                                                                                   |       | 8.8                     |       | 8.8 |   |

 

F - 31

----

 
| ** **                                                                                                | ** ** | **2004** | ** ** | **2003** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| ** **                                                                                                | ** ** | **$m**   | ** ** | **$m**   | ** ** |
| **Insurance and Other Claims**                                                                            |       |     |       |     |       |
| **Current**                                                                                               |       |     |       |     |       |
| Carrying amount at beginning of year                                                                      |       | 67.0     |       | 47.9     |       |
| Provisions made during the year                                                                           |       | 24.3     |       | 40.4     |       |
| Payments made during the year                                                                             |       | (19.5    | )          | (21.3    | )          |
| Other movements                                                                                           |       | (0.8     | )          | —   |       |
| **Carrying amount at end of year**                                                                        |       | 71.0     |       | 67.0     |       |
| **Non-Current**                                                                                           |       |     |       |     |       |
| Carrying amount at beginning of year                                                                      |       | 1.6      |       | 1.8      |       |
| Provisions made during the year                                                                           |       | 1.7      |       | —   |       |
| Other movements                                                                                           |       | —   |       | (0.2     | )          |
| **Carrying amount at end of year**                                                                        |       | 3.3      |       | 1.6      |       |
|                                                                                                      |       |     |       |     |       |
| **Onerous Contracts**                                                                                     |       |     |       |     |       |
| **Current**                                                                                               |       |     |       |     |       |
| Carrying amount at beginning of year                                                                      |       | 4.2      |       | —   |       |
| Adjustment on adoption of AASB 1044 ‘Provisions, Contingent  Liabilities and Contingent Assets’ |       | —   |       | 10.1     |       |
| Provisions made during the year                                                                           |       | 12.8     |       | —   |       |
| Payments made during the year                                                                             |       | (9.6     | )          | (5.9     | )          |
| Transfers from non-current                                                                                |       | 2.2      |       | —   |       |
| **Carrying amount at end of year**                                                                        |       | 9.6      |       | 4.2      |       |
| **Non-Current**                                                                                           |       |     |       |     |       |
| Carrying amount at beginning of year                                                                      |       | 10.0     |       | —   |       |
| Adjustment on adoption of AASB 1044 ‘Provisions, Contingent  Liabilities and Contingent Assets’ |       | —   |       | 10.0     |       |
| Transfers to current                                                                                      |       | (2.2     | )          | —   |       |
| **Carrying amount at end of year**                                                                        |       | 7.8      |       | 10.0     |       |

 

F - 32

----

 
| ** **                                            | ** ** | **2004** | ** ** | **2003** | ** ** |
|-------------------------------------------------------|------------|----------|------------|----------|------------|
| ** **                                            | ** ** | **$m**   | ** ** | **$m**   | ** ** |
| **Amcor Flexibles Restructuring**                     |       |     |       |     |       |
| **Current**                                           |       |     |       |     |       |
| Carrying amount at beginning of year                  |       | 9.9      |       | 49.9     |       |
| Provisions made during the year                       |       | 45.9     |       | 3.8      |       |
| Payments made during the year                         |       | (10.3    | )          | (67.9    | )          |
| Business acquisitions                                 |       | 11.3     |       | 0.9      |       |
| Transfer from non-current                             |       | —   |       | 23.3     |       |
| Other movements                                       |       | —   |       | (0.1     | )          |
| **Carrying amount at end of year**                    |       | 56.8     |       | 9.9      |       |
| **Non-Current**                                       |       |     |       |     |       |
| Carrying amount at beginning of year                  |       | 8.9      |       | 38.9     |       |
| Provisions made during the year/(provisions released) |       | (0.2     | )          | —   |       |
| Payments made during the year                         |       | (2.4     | )          | (7.0     | )          |
| Transferred to current                                |       | —   |       | (23.3    | )          |
| Other movements                                       |       | —   |       | 0.3      |       |
| **Carrying amount at end of year**                    |       | 6.3      |       | 8.9      |       |
|                                                  |       |     |       |     |       |
| **Amcor PET/Amcor Rentsch-Closures Restructuring**    |       |     |       |     |       |
| **Current**                                           |       |     |       |     |       |
| Carrying amount at beginning of year                  |       | 31.3     |       | 0.2      |       |
| Provisions made during the year/(provisions released) |       | (7.3     | )          | 4.3      |       |
| Payments made during the year                         |       | (16.1    | )          | (27.2    | )          |
| Business acquisitions                                 |       | —   |       | 55.7     |       |
| Business disposals                                    |       | —   |       | (3.4     | )          |
| Other movements                                       |       | 0.6      |       | 1.7      |       |
| **Carrying amount at end of year**                    |       | 8.5      |       | 31.3     |       |

 

F - 33

----

 
| ** **                                            | ** ** | **2004** | ** ** | **2003** | ** ** |
|-------------------------------------------------------|------------|----------|------------|----------|------------|
| ** **                                            | ** ** | **$m**   | ** ** | **$m**   | ** ** |
| **Amcor PET/Amcor Rentsch-Closures Restructuring**    |       |     |       |     |       |
| **Non-Current**                                       |       |     |       |     |       |
| Carrying amount at beginning of year                  |       | 4.6      |       | —   |       |
| Provisions made during the year/(provisions released) |       | (1.4     | )          | 17.5     |       |
| Payments made during the year                         |       | (2.9     | )          | (47.5    | )          |
| Business acquisitions                                 |       | —   |       | 35.4     |       |
| Other movements                                       |       | —   |       | (0.8     | )          |
| **Carrying amount at end of year**                    |       | 0.3      |       | 4.6      |       |

 

The carrying amount of the current provision at theend of the year relates to the following business segments (as defined in Note27):

 

Amcor Rentsch-Closures

$4.1 million (2003 $4.0 million) of relocationprovisions;

$nil (2003 $5.6 million) of redundancy provisions;

$nil (2003 $4.3 million) of asset impairmentprovisions;

$0.1 million (2003 $4.6million) of other provisions.

 

Amcor PET

$1.0 million (2003 $7.9 million) of plant closureprovisions;

$1.2 million (2003 $2.2 million) of redundancyprovisions;

$2.1 million (2003 $nil) of asset impairmentprovisions;

$nil (2003 $2.7 million) ofother provisions.

 

The carrying amount of the non current provision atthe end of the year relates to the following business segments (as defined inNote 27):

 

Amcor Rentsch-Closures

$nil (2003 $0.5 million) of relocation provisions;

$nil (2003 $1.3 million) of redundancy provisions;

$nil (2003 $1.0 million) of asset impairmentprovisions;

$nil (2003 $1.8 million) ofother provisions.

 

Amcor PET

$0.3 (2003 $nil) of otherprovisions.

 
| **Other Business Groups Restructuring - Current** |   |   |   |   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|
| Carrying amount at beginning of year              |   | 32.2   |   | 28.3   |   |
| Provisions made during the year                   |   | 20.0   |   | 15.5   |   |
| Payments made during the year                     |   | (26.7  | )      | (11.3  | )      |
| Business acquisitions                             |   | — |   | (0.3   | )      |
| Other movements                                   |   | 0.3    |   | — |   |
| **Carrying amount at end of year**                |   | 25.8   |   | 32.2   |   |

 

The carrying amount at the end of the year relates tothe following business segments (as defined in Note 27):

 

Amcor Rentsch-Closures

$0.2 million (2003 $0.1million) of other provisions.

$nil (2003 $3.3 million) of asset impairmentprovisions;

 

Amcor Australasia

$6.0 million (2003 $3.1 million) of relocationprovisions;

$13.7 million (2003 $14.2 million) of redundancyprovisions;

$5.8 million (2003 $4.2 million) of asset impairmentprovisions;

$0.1 million (2003 $0.4 million) of other provisions,

 

Amcor Asia

$nil (2003 $0.5 million) of asset impairmentprovisions;

$nil (2003 $0.6 million) ofother provisions.

 

Corporate

$nil (2003 $5.8 million) ofother provisions.

 

F - 34

----

 

**Note 17****      UNDATED SUBORDINATED CONVERTIBLESECURITIES**

 
| ** **                                                               | ** ** | **At June 30**          | ** ** |
|--------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                               | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                               | ** ** | **2004**                | ** ** | **2003** | ** ** |
|                                                                     |       |                    |       |   |   |
| 1997 issue of 7.25%  undated subordinated convertible unsecured notes(1) |       | 332.3                   |       | 344.5 |   |
| 1994 issue of 6.5% Undated  Subordinated Convertible Unsecured Notes(2)  |       | —                  |       | 101.7 |   |
| **TOTAL  UNDATED SUBORDINATED CONVERTIBLE SECURITIES**                   |       | 332.3                   |       | 446.2 |   |

 

----

(1)          Original issue of US$230 million 7.25%undated subordinated convertible notes convertible into American DepositoryShares, representing four ordinary shares of the company, at the rate in therange of 2.347 to 2.664 for each US$50 principal amount of notes converteddepending on the market price at the date of conversion.  The market price at date of conversion is thelast bid price of the Nasdaq National Market on the date of conversion.  The notes were convertible from 19 November1996 and may be converted until 19 November 2006.

 

These notes have nomaturity dates, are only redeemable after 19 November 2006, and then only atAmcor Limited’s option, and are subordinated to all other obligations of thecompany save for issued capital. Interest on these notes is payable semi-annually.

 

During the year ended 30June 2004, 4,000 notes were converted to ordinary shares (2003 3,755).

 

(2)          Original issue of 16,100,000 notes of $9.35convertible into 1.27 ordinary shares for each note converted. The notes wereconvertible between 1 July 1995 and 31 October 2003 and could be redeemed afterthat date at Amcor Limited’s option.

 

During the year ended 30June 2004, 10,661,955 notes were converted to ordinary shares and the remainingbalance of 210,467 notes were redeemed.

 

**Note 18****      SHARE CAPITAL**

 
| ** **                                                               | ** ** | **At June 30**          | ** ** |
|--------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                               | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                               | ** ** | **2004**                | ** ** | **2003** | ** ** |
| Issued and  paid-up:                                                     |       |                    |       |   |   |
| 877,949,796  ordinary shares (2003 848,223,877)                          |       | 2,755.2                 |       | 2,538.6 |   |
|                                                                     |       |                    |       |   |   |
| 1,792,000  partly paid ordinary shares (2003 2,267,000)                  |       | 0.1                     |       | 0.1 |   |
|                                                                     |       |                    |       |   |   |
| 6,099,087  Perpetual Amcor Convertible Reset Securities (2003 6,099,087) |       | 596.6                   |       | 596.6 |   |
| **TOTAL  PAID-UP CAPITAL**                                               |       | 3,351.9                 |       | 3,135.3 |   |

 

Perpetual Amcor Convertible Reset Securities(‘PACRS’) are fully paid perpetual, non-cumulative, subordinated, convertible,reset, unsecured notes.  Non-cumulativeinterest is paid semi-annually on the initial PACRS at a coupon rate of 8.5733%and on the PACRS2 at a coupon rate of 8.57% per annum which are fixed until thefirst reset dates being 30 April 2006 for PACRS and 30 April 2007 for PACRS2.

 

On the reset dates, holders may convert some or alloutstanding PACRS into ordinary shares calculated with reference to theconversion discount.  The issuer mayconvert some or all of the outstanding PACRS at any time in the six monthsbefore a reset date.  Coupon rates,conversion terms and the conversion discount are able to be reset by the issueron the reset date.

 

After adjusting for the conversion discount, thenumber of ordinary shares issued on conversion will be subject to a minimum ofapproximately 10.26 per PACRS (a maximum conversion price of $9.75 per ordinaryshare) and a maximum of 100 per PACRS (a minimum conversion price of $1.00 perordinary share).  The ordinary shareprice is calculated via reference to the volume weighted average sale price onthe ASX during the 20 business days immediately preceding the conversion date.

 

The fair value of the PACRS as at 30 June 2004 was$670.4 million.

 

F - 35

----

 

**Note 19****      EMPLOYEE BENEFITS/EMPLOYEE SHARESCHEMES**

 
| ** **                                                      | ** ** | **At June 30**          | ** ** |
|-----------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                      | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                      | ** ** | **2004**                | ** ** | **2003** | ** ** |
| Aggregate  liability for employee benefits, including on-costs: |       |                    |       |   |   |
| **Current**                                                     |       |                    |       |   |   |
| Other  creditors and accruals                                   |       | 82.1                    |       | 120.4 |   |
| Employee  entitlements – refer Note 16                     |       | 159.2                   |       | 142.8 |   |
|                                                            |       | 241.3                   |       | 263.2 |   |
| **Non-Current**                                                 |       |                    |       |   |   |
| Employee  entitlements – refer Note 16                     |       | 74.2                    |       | 80.3 |   |
| Total  Employee Benefits                                        |       | 315.5                   |       | 343.5 |   |

 

Included in the aboveemployee benefits of the consolidated entity are provisions relating todirectors’ retiring allowances.  Theseprovisions only relate to non-executive directors of Amcor Limited and are inaccordance with the company’s Constitution and with agreements between thecompany and individual directors.

 

**Employee Share PurchasePlans (‘ESPP’)**

 

In 1985, the consolidated entity established theESPP.  The maximum number of shares thatcan be issued under all plans cannot exceed 10% of the company’s issuedcapital.

 

•                                          **EmployeeIncentive Share Plan (‘EISP’)**

 

Under theEISP, shares are offered for the benefit of all full-time employees,permanent/casual employees and executive directors of Amcor Limited with morethan 12 months’ service. The number of shares offered depends upon theconsolidated entity’s increase in earnings per share and is currently on thefollowing basis: an increase in earnings per share of less than 5% will resultin no offer; from 5% to 10%, an offer of 100 shares; from more than 10% to 15%,an offer of 200 shares will be made; and above 15%, an offer of 300 shares willbe made.

 

Under the EISP, shareshave been issued at a 40% discount to the prevailing market price of AmcorLimited shares.  The subscription amountis funded by an interest-free loan from the company with the exception ofsenior executives who are not provided with the loan facility.  Dividends on the shares are applied inrepayment of the loan balance.

 

On 10 February 2004,16,982 employees in 18 countries elected to participate and received anallotment of 100 ordinary shares each in respect of the 2003 financialyear.  1,606,600 ordinary shares wereissued at a price of $4.59; and in one country, due to legislativerequirements, 91,600 ordinary shares were issued at a price of $1.91.

 

F - 36

----

 

•                                          **Senior Executive Retention SharePlan (‘SERSP’)**

 

Under the second plan, the SERSP, the Boardmay nominate certain senior executives as being eligible to receive fully paidordinary shares in part satisfaction of their remuneration for the relevantfinancial year.  The number of sharesissued is entirely at the Board’s discretion. The shares may not be disposed of by the employee for a restrictedperiod of up to 5 years, unless the employee ceases employment 3 years afterthe shares were issued.  Any right orinterest in the shares will be forfeited if the employee voluntarily ceasesemployment within three years from the date the shares were issued or if theemployee is dismissed during the restricted period for cause or poorperformance.  The shares subject to theSERSP carry full dividend entitlements and voting rights.

 

| ** **                        | ** ** | **2004**    | ** ** | **Weighted average  Exercise price** | ** ** | **2003**    | ** ** | **Weighted average  Exercise price** | ** ** | **2002**   | ** ** | **Weighted average  Exercise price** | ** ** |
|-----------------------------------|------------|-------------|------------|--------------------------------------|------------|-------------|------------|--------------------------------------|------------|------------|------------|--------------------------------------|------------|
| Outstanding at beginning  of year |       | 130,000     |       | 7.32                                 |       | 80,000      |       | 6.74                                 |       | —     |       | —                               |       |
| Granted                           |       | 8,000       |       | 8.77                                 |       | 50,000      |       | 8.25                                 |       | 80,000     |       | 6.74                                 |       |
| Exercised                         |       | —      |       | —                               |       | —      |       | —                               |       | —     |       | —                               |       |
| Lapsed                            |       | (30,000     | )          | 6.97                                 |       | —      |       | —                               |       | —     |       | —                               |       |
| ** **                        | ** ** | ** **  | ** ** | ** **                           | ** ** | ** **  | ** ** | ** **                           | ** ** | ** ** | ** ** | ** **                           | ** ** |
| **Outstanding at end of year**    | ** ** | **108,000** | ** ** | **7.15**                             | ** ** | **130,000** | ** ** | **7.32**                             | ** ** | **80,000** | ** ** | **6.74**                             | ** ** |

 

**Employee Share/Option Plan (‘ESOP’)**

 

In1985, the consolidated entity also established the Employee Share/Option Plan(ESOP).  Under the ESOP, partly paidshares or options of the company can be issued to executive officers anddirectors (including directors who are executives) and senior staff membersselected by the directors.  The sharesare issued at market price at the time of issue.  The call outstanding only becomes payable ontermination, death or at the directors’ discretion.  These shares do not carry dividendentitlements unless determined otherwise by the directors.  Voting rights exercisable by holders ofpartly paid ordinary shares are reduced pro rata to the portion of the issueprice paid up on those shares under the Australian Stock Exchange ListingRules.

 

Optionsgranted under the ESOP may be issued upon such terms and subject to suchconditions as the directors of the company determine at the time.  Options granted under the ESOP areexercisable at a priceequal to the closing share market price of Amcor Limited shares traded on theAustralian Stock Exchange at the date on which the options were granted or aweighted average market price during a four day period up to and including thedate of grant.

 

Options are granted under the ESOP at noconsideration and carry no dividend entitlement or voting rights until they areexercised to ordinary shares on a one-for-one basis.

 

For the majority of options issued in the years ended June 30, 2004 andJune 30, 2003, executives and certain members of staff are generally onlyeligible to exercise the options issues, if returns on average funds investedexceed targeted levels at the end of the financial reporting period in whichthe options were granted.  Returns onfunds invested are defined as Earnings Before InterestTax and Amortisation (‘EBITA’).

 

Details of the total movement in options issued under the ESOP duringthe three years ended June 30, 2004 are shown in the table below:

 

| ** **                        | ** ** | ** **     | ** ** | **Weighted average** | ** ** | ** **     | ** ** | **Weighted average** | ** ** | ** **    | ** ** | **Weighted average** | ** ** |
|-----------------------------------|------------|----------------|------------|----------------------|------------|----------------|------------|----------------------|------------|---------------|------------|----------------------|------------|
| ** **                        | ** ** | **2004**       | ** ** | **Exercise price**   | ** ** | **2003**       | ** ** | **Exercise price**   | ** ** | **2002**      | ** ** | **Exercise price**   | ** ** |
| Outstanding at beginning  of year |       | 21,524,850     |       | 6.89                 |       | 9,909,350      |       | 5.60                 |       | 7,987,650     |       | 5.53                 |       |
| Granted                           |       | 6,409,500      |       | 7.81                 |       | 14,439,878     |       | 7.46                 |       | 4,718,500     |       | 5.47                 |       |
| Exercised                         |       | (2,372,412     | )          | 5.59                 |       | (2,824,378     | )          | 5.31                 |       | (2,796,800    | )          | 5.20                 |       |
| Lapsed                            |       | (1,696,518     | )          | —               |       | —         |       | —               |       | —        |       | —               |       |
| ** **                        | ** ** | ** **     | ** ** | ** **           | ** ** | ** **     | ** ** | ** **           | ** ** | ** **    | ** ** | ** **           | ** ** |
| **Outstanding at end of year**    | ** ** | **23,865,420** | ** ** | **7.18**             | ** ** | **21,524,850** | ** ** | **6.89**             | ** ** | **9,909,350** | ** ** | **5.60**             | ** ** |

 

F - 37

----

 

**2000 CEO Restricted Share and Option Issue**

 

Shareholdersat the 2000 Annual General Meeting approved the issue of three million optionsto the Managing Director/Chief Executive Officer.  The grant of options was made on August 18,2000 at an exercise price of $5.67 which was the weighted average market priceof Amcor Limited shares traded on the Australian Stock Exchange (ASX) for theweek ended August 18, 2000.  All optionspreviously held by the Managing Director/Chief Executive Officer were cancelledfollowing the approval by shareholders of the issue of the three millionoptions.

 

Theseoptions were issued in three equal ‘annual’ tranches.  Each tranche is subject to two performancehurdles: for the first half of each tranche, the Board must be satisfied thatthe Managing Director/Chief Executive Officer has continued to demonstrateeffective performance having regard to the financial and operating performanceof the Company and any other factors affecting the reputation of the company orotherwise as the Board deems appropriate. For the second half, the Amcor Limited total shareholder return is toexceed a comparator total shareholder return. Full details of these performance criteria are set out in theexplanatory notes mailed to shareholders for the 2000 Annual General Meeting.

 

Atthe 2000 Annual General Meeting, shareholders also approved the issue ofRestricted Shares to the Managing Director/Chief Executive Officer as part ofhis Short Term Incentive Bonus (STI Bonus). The number of Restricted Shares depends upon both the size of the STIBonus in each year and a formula which incorporates the simple average of theclosing price of Amcor Limited shares for each ASX trading day of the relevantyear.

 

Detailsof the terms of issue of both the options and the Restricted Shares are set outin full in the explanatory notes for the 2000 Annual General Meeting.

 

During the year 84,541 ordinary shares were issuedby way of bonus for nil consideration with performance restrictions of threeand up to five years.

 

**2002 CEO Option Issue**

 

Shareholdersat the 2002 Annual General Meeting approved the issue of three million optionsto the Managing Director/Chief Executive Officer.  The grant of options was made on August 14,2002 at an exercise price of $8.20. These options were issued in three equal “annual” tranches.  Each tranche is subject to the Amcor Limitedtotal shareholder return exceeding a comparator total shareholder return.  Full details of these performance criteriaare set out in the explanatory notes mailed to shareholders for the 2002 AnnualGeneral Meeting.  During the yearthere were no options issued under this plan.

 

F - 38

----

 

**Other Compensation Plans**

 

TheEBPP is an alternative to the ESPP and the ESOP and is in place in countrieswhere the company is unable to issue shares or options. Participants areoffered entitlements and over the period during which employees hold theirentitlements, their value will mirror the fluctuating value of Amcor’s shares,including (in the case of the ESPP) all dividends paid on the shares duringthis time.  Employees are only able toconvert their entitlements into a cash bonus payment when they leave thecompany or three years have passed since the date on which the entitlementswere originally issued.

 

On February 10, 2004, 2,334 employees in 11countries elected to participate and received 100 ordinary entitlements each inrespect of the 2003 financial year. 233,400 entitlements were issued at a price of $4.59.

 

Fromtime to time, the Board may nominate certain employees in Belgium, New Zealand,Poland, Switzerland and the USA as being eligible to participate in a SeniorExecutive Retention Payment Plan (“SERPP”) under which Plan entitlements,instead of fully paid ordinary shares, are issued in part satisfaction of anemployee’s remuneration for the relevant financial year.  The value of each Plan entitlement is linkedto the performance of Amcor Limited shares (including the value of accrueddividends).  Plan entitlements may beconverted into a cash payment after the 5 year restriction period has expired,provided that the employee has not been dismissed for cause or poor performanceduring this time.  If the employeevoluntarily ceases employment within four or five years from the date the Planentitlements were issued, the employee forfeits 40% or 20% of their Planentitlements (respectively).  Detailsof entitlements issued during the three years ended June 30, 2004 are shown inthe table below.

 

| ** **                        | ** ** | **2004**    | ** ** | **Weighted average  Exercise price** | ** ** | **2003**    | ** ** | **Weighted average  Exercise price** | ** ** | **2002**    | ** ** | **Weighted average  Exercise price** | ** ** |
|-----------------------------------|------------|-------------|------------|--------------------------------------|------------|-------------|------------|--------------------------------------|------------|-------------|------------|--------------------------------------|------------|
| Outstanding at beginning  of year |       | 581,925     |       | 7.15                                 |       | 295,000     |       | 5.97                                 |       | 250,000     |       | 5.71                                 |       |
| Granted                           |       | —      |       | —                               |       | 286,925     |       | 8.36                                 |       | 45,000      |       | 7.42                                 |       |
| Exercised                         |       | —      |       | —                               |       | —      |       | —                               |       | —      |       | —                               |       |
| Lapsed                            |       | —      |       | —                               |       | —      |       | —                               |       | —      |       | —                               |       |
| ** **                        | ** ** | ** **  | ** ** | ** **                           | ** ** | ** **  | ** ** | ** **                           | ** ** | ** **  | ** ** | ** **                           | ** ** |
| **Outstanding at end of year**    | ** ** | **581,925** | ** ** | **7.15**                             | ** ** | **581,925** | ** ** | **7.15**                             | ** ** | **295,000** | ** ** | **5.97**                             | ** ** |

 

TheShare Appreciation Option Plan offered executive directors the opportunity toreceive options subject to certain performance targets being met.  This plan closed in 1999.  Details of entitlements issued duringthe three years ended June 30, 2004 are shown in the table below.

 

| ** **                        | ** ** | **2004**   | ** ** | **Weighted  average  Exercise price (1)** | ** ** | **2003**   | ** ** | **Weighted  average  Exercise price** | ** ** | **2002**   | ** ** | **Weighted  average  Exercise price** | ** ** |
|-----------------------------------|------------|------------|------------|-------------------------------------------|------------|------------|------------|---------------------------------------|------------|------------|------------|---------------------------------------|------------|
| ** **                        | ** ** | ** ** | ** ** | ** **                                | ** ** | ** ** | ** ** | ** **                            | ** ** | ** ** | ** ** | ** **                            | ** ** |
| Outstanding at beginning  of year |       | 73,600     |       | 5.63                                      |       | 73,600     |       | 5.63                                  |       | 73,600     |       | 5.63                                  |       |
| Granted                           |       | —     |       | —                                    |       | —     |       | —                                |       | —     |       | —                                |       |
| Exercised                         |       | (33,600    | )          | 4.64                                      |       | —     |       | —                                |       | —     |       | —                                |       |
| Cancelled                         |       | —     |       | —                                    |       | —     |       | —                                |       | —     |       | —                                |       |
|                              |       |       |       |                                      |       |       |       |                                  |       |       |       |                                  |       |
| **Outstanding at end of year**    | ** ** | **40,000** | ** ** | **6.47**                                  | ** ** | **73,600** | ** ** | **5.63**                              | ** ** | **73,600** | ** ** | **5.63**                              | ** ** |

 

----

(1)     The exercise price has been reduced by $1.22to reflect the capital reduction arising from the PaperlinX demerger.

 

F - 39

----

 

ShareAppreciation Entitlements may be issued to employees who take part of theirbonus by way of entitlements.  During theperiod the employee holds them, the value of entitlements will be equivalent tothe fluctuating value of Amcor Limited Shares. Details of entitlements issued during the three years ended June30, 2004 are shown in the table below.

 

| ** **                        | ** ** | **2004**    | ** ** | **Weighted  average  Exercise price** | ** ** | **2003**    | ** ** | **Weighted  average  Exercise price** | ** ** | **2002**    | ** ** | **Weighted  average  Exercise price** | ** ** |
|-----------------------------------|------------|-------------|------------|---------------------------------------|------------|-------------|------------|---------------------------------------|------------|-------------|------------|---------------------------------------|------------|
|                              |       |        |       |                                  |       |        |       |                                  |       |        |       |                                  |       |
| Outstanding at beginning  of year |       | 915,398     |       | 6.18                                  |       | 615,398     |       | 5.68                                  |       | 315,398     |       | 5.63                                  |       |
| Granted (1)                       |       | 150,000     |       | 8.28                                  |       | 300,000     |       | 7.20                                  |       | 300,000     |       | 5.74                                  |       |
| Exercised                         |       | (255,133    | )          | 5.58                                  |       | —      |       | —                                |       | —      |       | —                                |       |
| Cancelled                         |       | —      |       | —                                |       | —      |       | —                                |       | —      |       | —                                |       |
| ** **                        | ** ** | ** **  | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **                            | ** ** |
| **Outstanding at end of year**    | ** ** | **810,265** | ** ** | **6.76**                              | ** ** | **915,398** | ** ** | **6.18**                              | ** ** | **615,398** | ** ** | **5.68**                              | ** ** |

 

----

(1)     During the year, 150,000 shares were issued toan employee who took part of his bonus by way of entitlements under the SAE.The number of entitlements issued was determined by an option price formuladetermined by the Hay Group. During the period during which the employee holdshis entitlements, their value will mirror the fluctuating value of AmcorLimited shares. The employee is able to convert his entitlements to cash asthey vest or when he leaves the consolidated entity.

 

Phantomoptions are issued to employees residing in jurisdictions that, for statutoryreasons, are not covered by option plans described above.  The phantom option plan operates in a mannersimilar to other option plans although no entitlements to actual shares oroptions exist.  Details ofentitlements issued during the three years ended June 30, 2004 are shown in thetable below.

 
| ** **                        | ** ** | **2004**      | ** ** | **Weighted  average  Exercise price** | ** ** | **2003**      | ** ** | **Weighted  average  Exercise price** | ** ** | **2002**   | ** ** | **Weighted  average  Exercise price** | ** ** |
|-----------------------------------|------------|---------------|------------|---------------------------------------|------------|---------------|------------|---------------------------------------|------------|------------|------------|---------------------------------------|------------|
|                              |       |          |       |                                  |       |          |       |                                  |       |       |       |                                  |       |
| Outstanding  at beginning of year |       | 1,235,000     |       | 7.94                                  |       | —        |       | —                                |       | —     |       | —                                |       |
| Granted                           |       | 480,000       |       | 7.88                                  |       | 1,235,000     |       | 7.94                                  |       | —     |       | —                                |       |
| Exercised                         |       | (68,800       | )          | 7.50                                  |       | —        |       | —                                |       | —     |       | —                                |       |
| Cancelled                         |       | (262,200      | )          | —                                |       | —        |       | —                                |       | —     |       | —                                |       |
|                              |       |          |       |                                  |       |          |       |                                  |       |       |       |                                  |       |
| **Outstanding  at end of year**   | ** ** | **1,384,000** | ** ** | **7.90**                              | ** ** | **1,235,000** | ** ** | **7.94**                              | ** ** | **—** | ** ** | **—**                            | ** ** |

 

F - 40

----

 

**Employee options**

 

As described above, an employee share scheme has been established wherethe consolidated entity may grant options over the ordinary shares of AmcorLimited to executive directors, executives and certain members of staff of theconsolidated entity. The options, issued for nil consideration, are granted inaccordance with performance guidelines established by the directors of AmcorLimited.  The options are issued for upto a term of ten years.  The optionscannot be transferred and will not be quoted on the Australian Stock Exchange.

 
| **Grant**                      | ** ** | **Exercise  date on or** | ** ** | ** **      | ** ** | **Exercise**     | ** ** | **Number of  options at  beginning** | ** ** | **Options** | ** ** | **Options** | ** ** | **Options**   | ** ** | **Number of options at  end of year** | ** ** | **Fair value  of options  at grant  date** | ** ** | **Proceeds  received** | ** ** | **Date  issued** | ** ** | **Number  of  shares  issued** | ** ** | **Fair  value  per  share** | ** ** |
|--------------------------------|------------|--------------------------|------------|-----------------|------------|------------------|------------|--------------------------------------|------------|-------------|------------|-------------|------------|---------------|------------|---------------------------------------|------------|--------------------------------------------|------------|------------------------|------------|------------------|------------|--------------------------------|------------|-----------------------------|------------|
| **date**                       | ** ** | **after**                | ** ** | **Expiry date** | ** ** | **price****(1)** | ** ** | **of year**                          | ** ** | **granted** | ** ** | **lapsed**  | ** ** | **exercised** | ** ** | **On issue**                          | ** ** | **Vested**                                 | ** ** | ** **             | ** ** | ** **       | ** ** | ** **                     |
| **Consolidated Entity - 2004** |       | **$**                    |       |            |       |             |       |                                 |       |        |       |        |       |          |       | **$**                                 |       | **$**                                      |       |                   |       |             |       | **$**                          |       |
| 24-Sep-98                      |       | 24-Sep-01                |       | 24-Sep-03       |       | 4.64             |       | 85,850                               |       |        |       |        |       | 85,850        |       |                                  |       |                                       |       | 1.98                   |       | 398,344          |       | Various                        |       | 85,850                      |       | 8.59 |   |
| 16-Sep-99                      |       | 16-Sep-02                |       | 16-Sep-04       |       | 6.47             |       | 810,500                              |       |        |       |        |       | 378,000       |       | 432,500                               |       | 432,500                                    |       | 1.36                   |       | 2,445,660        |       | Various                        |       | 378,000                     |       | 8.44 |   |
| 08-Nov-99                      |       | 08-Nov-99                |       | 08-Nov-04       |       | 5.43             |       | 100,000                              |       |        |       |        |       |          |       | 100,000                               |       | 100,000                                    |       | 2.11                   |       |             |       |                           |       |                        |       |   |   |
| 31-Jul-00                      |       | 31-Jul-00                |       | 31-Jul-05       |       | 5.10             |       | 50,000                               |       |        |       |        |       | 7,500         |       | 42,500                                |       | 42,500                                     |       | 1.85                   |       | 38,250           |       | Various                        |       | 7,500                       |       | 8.09 |   |
| 18-Aug-00                      |       | 01-Oct-01                |       | 01-Oct-05       |       | 5.67             |       | 1,000,000                            |       |        |       |        |       |          |       | 1,000,000                             |       | 1,000,000                                  |       | 1.71                   |       |             |       |                           |       |                        |       |   |   |
| 18-Aug-00                      |       | 01-Oct-02                |       | 01-Oct-05       |       | 5.67             |       | 1,000,000                            |       |        |       |        |       |          |       | 1,000,000                             |       | 1,000,000                                  |       | 1.71                   |       |             |       |                           |       |                        |       |   |   |
| 18-Aug-00                      |       | 01-Oct-03                |       | 01-Oct-05       |       | 5.67             |       | 1,000,000                            |       |        |       |        |       |          |       | 1,000,000                             |       | 1,000,000                                  |       | 1.71                   |       |             |       |                           |       |                        |       |   |   |
| 14-Sep-00                      |       | 14-Sep-03                |       | 14-Sep-05       |       | 5.16             |       | 810,000                              |       |        |       |        |       | 240,000       |       | 570,000                               |       | 570,000                                    |       | 1.58                   |       | 1,238,400        |       | Various                        |       | 240,000                     |       | 8.51 |   |
| 01-Oct-00                      |       | 01-Oct-00                |       | 01-Oct-05       |       | 5.10             |       | 415,000                              |       |        |       |        |       | 132,000       |       | 283,000                               |       | 283,000                                    |       | 1.56                   |       | 673,200          |       | Various                        |       | 132,000                     |       | 8.64 |   |
| 15-Feb-01                      |       | 15-Feb-01                |       | 15-Feb-06       |       | 5.24             |       | 100,000                              |       |        |       |        |       |          |       | 100,000                               |       | 100,000                                    |       | 1.63                   |       |             |       |                           |       |                        |       |   |   |
| 01-Mar-01                      |       | 01-Mar-01                |       | 01-Mar-06       |       | 5.47             |       | 10,000                               |       |        |       |        |       | 10,000        |       |                                  |       |                                       |       | 1.69                   |       | 54,700           |       | Various                        |       | 10,000                      |       | 8.98 |   |
| 13-Sep-01                      |       | 13-Sep-04                |       | 13-Sep-06       |       | 6.02             |       | 1,442,500                            |       |        |       |        |       | 160,000       |       | 1,282,500                             |       |                                       |       | 1.34                   |       | 963,200          |       | Various                        |       | 160,000                     |       | 8.33 |   |
| 01-Oct-00                      |       | 01-Oct-00                |       | 01-Oct-06       |       | 6.03             |       | 100,000                              |       |        |       |        |       |          |       | 100,000                               |       | 100,000                                    |       | 1.54                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-00                      |       | 01-Oct-00                |       | 01-Oct-05       |       | 5.10             |       | 1,044,000                            |       |        |       |        |       | 436,000       |       | 608,000                               |       | 608,000                                    |       | 1.76                   |       | 2,223,600        |       | Various                        |       | 436,000                     |       | 8.57 |   |
| 01-Oct-00                      |       | 01-Oct-00                |       | 01-Oct-05       |       | 6.62             |       | 50,000                               |       |        |       |        |       |          |       | 50,000                                |       | 50,000                                     |       | 1.29                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-00                      |       | 01-Oct-00                |       | 01-Oct-05       |       | 5.30             |       | 10,000                               |       |        |       |        |       |          |       | 10,000                                |       | 10,000                                     |       | 1.68                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-00                      |       | 01-Oct-00                |       | 01-Oct-05       |       | 5.24             |       | 40,000                               |       |        |       |        |       |          |       | 40,000                                |       | 40,000                                     |       | 1.71                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-00                      |       | 01-Oct-00                |       | 01-Oct-06       |       | 5.71             |       | 30,000                               |       |        |       |        |       | 30,000        |       |                                  |       |                                       |       | 1.63                   |       | 171,300          |       | Various                        |       | 30,000                      |       | 7.99 |   |
| 14-Aug-02                      |       | 01-Oct-04                |       | 30-Sep-08       |       | 8.20             |       | 1,000,000                            |       |        |       |        |       |          |       | 1,000,000                             |       |                                       |       | 1.72                   |       |             |       |                           |       |                        |       |   |   |
| 14-Aug-02                      |       | 01-Oct-05                |       | 30-Sep-08       |       | 8.20             |       | 1,000,000                            |       |        |       |        |       |          |       | 1,000,000                             |       |                                       |       | 1.72                   |       |             |       |                           |       |                        |       |   |   |
| 14-Aug-02                      |       | 01-Oct-06                |       | 30-Sep-08       |       | 8.20             |       | 1,000,000                            |       |        |       |        |       |          |       | 1,000,000                             |       |                                       |       | 1.72                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-02                      |       | 01-Oct-02                |       | 01-Oct-05       |       | 5.10             |       | 1,590,000                            |       |        |       |        |       | 644,000       |       | 946,000                               |       | 946,000                                    |       | 3.09                   |       | 3,284,400        |       | Various                        |       | 644,000                     |       | 8.61 |   |

 

F - 41

----

 
| **Grant  date** | ** ** | **Exercise  date on or**** ****after** | ** ** | ** ** | ** ** | **Exercise  price****(1)** | ** ** | **Number of  options at  beginning**** ****of  year** | ** **   | **Options  granted** | ** ** | **Options  lapsed** | ** ** | **Options  exercised** | ** ** | **Number of options at  end of year** | ** ** | **Fair value  of options  at grant  date** | ** ** | **Proceeds  received** | ** ** | **Date  issued** | ** ** | **Number  of  shares  issued** | ** ** | **Fair  value  per  share** | ** ** |
|-----------------|------------|---------------------------------------------|------------|------------|------------|----------------------------|------------|------------------------------------------------------------|--------------|----------------------|------------|---------------------|------------|------------------------|------------|---------------------------------------|------------|--------------------------------------------|------------|------------------------|------------|------------------|------------|--------------------------------|------------|-----------------------------|------------|
| ** **      | ** ** | **Expiry date**                             | ** ** | ** ** | ** ** | ** **                 | ** ** | ** **                                                 | **On issue** | ** **           | **Vested** | ** **          | ** ** | ** **             | ** ** | ** **                            | ** ** |
| ** **      | ** ** | ** **                                  | ** ** | ** ** | ** ** | **$**                      | ** ** | ** **                                                 | ** **   | ** **           | ** ** | ** **          | ** ** | ** **             | ** ** | ** **                            | ** ** | ** **                                 | ** ** | **$**                  | ** ** | **$**            | ** ** | ** **                     | ** ** | ** **                  | ** ** | **$** | ** ** |
| 01-Oct-02       |       | 01-Oct-02                                   |       | 01-Oct-05  |       | 6.62                       |       | 50,000                                                     |         |                 |       |                |       |                   |       | 50,000                                |       | 50,000                                     |       | 2.01                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-02       |       | 01-Oct-02                                   |       | 01-Oct-05  |       | 5.30                       |       | 10,000                                                     |         |                 |       |                |       |                   |       | 10,000                                |       | 10,000                                     |       | 2.94                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-02       |       | 01-Oct-02                                   |       | 01-Oct-05  |       | 5.24                       |       | 40,000                                                     |         |                 |       |                |       |                   |       | 40,000                                |       | 40,000                                     |       | 2.98                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-02       |       | 01-Oct-02                                   |       | 01-Oct-06  |       | 6.03                       |       | 100,000                                                    |         |                 |       |                |       |                   |       | 100,000                               |       | 100,000                                    |       | 2.47                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-02       |       | 01-Oct-02                                   |       | 01-Oct-06  |       | 5.71                       |       | 30,000                                                     |         |                 |       |                |       | 30,000                 |       |                                  |       |                                       |       | 2.68                   |       | 171,300          |       | Various                        |       | 30,000                      |       | 7.95 |   |
| 01-Oct-02       |       | 01-Oct-02                                   |       | 01-Oct-07  |       | 7.25                       |       | 40,000                                                     |         |                 |       |                |       |                   |       | 40,000                                |       | 40,000                                     |       | 1.89                   |       |             |       |                           |       |                        |       |   |   |
| 01-Nov-02       |       | 01-Nov-05                                   |       | 01-Nov-12  |       | 8.20                       |       | 5,927,000                                                  |         |                 |       | 1,273,118           |       | 76,562                 |       | 4,577,320                             |       |                                       |       | 2.00                   |       | 627,808          |       | Various                        |       | 76,562                      |       | 8.30 |   |
| 01-Nov-02       |       | 01-Nov-02                                   |       | 01-Jul-07  |       | 7.30                       |       | 50,000                                                     |         |                 |       |                |       | 50,000                 |       |                                  |       |                                       |       | 1.80                   |       | 365,000          |       | Various                        |       | 50,000                      |       | 8.49 |   |
| 01-Nov-02       |       | 01-Nov-02                                   |       | 01-Jul-07  |       | 7.30                       |       | 100,000                                                    |         |                 |       |                |       |                   |       | 100,000                               |       | 100,000                                    |       | 1.80                   |       |             |       |                           |       |                        |       |   |   |
| 01-Nov-02       |       | 30-Sep-03                                   |       | 01-Jul-07  |       | 7.30                       |       | 100,000                                                    |         |                 |       |                |       |                   |       | 100,000                               |       | 100,000                                    |       | 1.80                   |       |             |       |                           |       |                        |       |   |   |
| 01-Nov-02       |       | 30-Sep-04                                   |       | 01-Jul-07  |       | 7.30                       |       | 100,000                                                    |         |                 |       |                |       |                   |       | 100,000                               |       |                                       |       | 1.80                   |       |             |       |                           |       |                        |       |   |   |
| 01-Nov-02       |       | 30-Sep-03                                   |       | 01-Jul-07  |       | 7.40                       |       | 1,145,000                                                  |         |                 |       | 200,000             |       | 52,500                 |       | 892,500                               |       | 892,500                                    |       | 1.76                   |       | 388,500          |       | Various                        |       | 52,500                      |       | 8.32 |   |
| 01-Nov-02       |       | 30-Sep-04                                   |       | 01-Jul-07  |       | 7.40                       |       | 1,145,000                                                  |         |                 |       | 200,000             |       |                   |       | 945,000                               |       |                                       |       | 1.76                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-03       |       | 01-Oct-03                                   |       | 01-Oct-06  |       | 6.03                       |       |                                                       |         | 180,000              |       |                |       |                   |       | 180,000                               |       | 180,000                                    |       | 2.75                   |       |             |       |                           |       |                        |       |   |   |
| 01-Oct-03       |       | 01-Oct-03                                   |       | 01-Oct-06  |       | 5.71                       |       |                                                       |         | 40,000               |       |                |       | 40,000                 |       |                                  |       |                                       |       | 2.99                   |       | 228,400          |       | Various                        |       | 40,000                      |       | 7.88 |   |
| 01-Oct-03       |       | 01-Oct-03                                   |       | 01-Oct-07  |       | 7.25                       |       |                                                       |         | 40,000               |       |                |       |                   |       | 40,000                                |       | 40,000                                     |       | 2.04                   |       |             |       |                           |       |                        |       |   |   |
| 13-Oct-03       |       | 01-Nov-05                                   |       | 01-Nov-12  |       | 8.20                       |       |                                                       |         | 165,000              |       | 19,800              |       |                   |       | 145,200                               |       |                                       |       | 2.43                   |       |             |       |                           |       |                        |       |   |   |
| 20-Oct-03       |       | 01-Nov-05                                   |       | 01-Nov-12  |       | 8.20                       |       |                                                       |         | 30,000               |       | 3,600               |       |                   |       | 26,400                                |       |                                       |       | 2.58                   |       |             |       |                           |       |                        |       |   |   |
| 24-Mar-04       |       | 24-Mar-07                                   |       | 24-Mar-10  |       | 7.87                       |       |                                                       |         | 5,934,500            |       |                |       |                   |       | 5,934,500                             |       |                                       |       | 1.27                   |       |             |       |                           |       |                        |       |   |   |
| 31-May-04       |       | 24-Mar-07                                   |       | 24-Mar-10  |       | 7.87                       |       |                                                       |         | 20,000               |       |                |       |                   |       | 20,000                                |       |                                       |       | 0.74                   |       |             |       |                           |       |                        |       |   |   |
|            |       |                                        |       |       |       |                       |       |                                                       |         |                 |       |                |       |                   |       |                                  |       |                                       |       |                   |       |             |       |                           |       |                        |       |   |   |
|            |       |                                        |       |       |       |                       |       | 21,524,850                                                 |         | 6,409,500            |       | 1,696,518           |       | 2,372,412              |       | 23,865,420                            |       | 7,834,500                                  |       |                   |       |             |       |                           |       |                        |       |   |   |

 

----

(1)  Where necessary, theexercise price has been reduced by $1.22 to reflect the capital reductionarising from the Paperlinx demerger.

 

The weighted average remaining contractual life for options issued andunexercised at 30 June 2004 is 1,594 days (4.3 years).

 

The number of options with vesting dates after July1, 2003 are 19,189,982.  Theweighted average fair value for these options vesting is $1.36.

 

F - 42

----

 

The fair value of each option is estimated on the date of grant using aBlack-Scholes option-pricing model with the following weighted averageassumptions used for grants made in the year to June 30, 2004, June 30, 2003and June 30, 2002:

 
| ** **                       | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
|----------------------------------|------------|----------|------------|----------|------------|----------|------------|
|                             |       |     |       |     |       |     |       |
| Dividend  yield (%)              |       | 3.9      |       | 3.4      |       | 4.6      |       |
| Expected  volatility (%)         |       | 20.0     |       | 20.0     |       | 22.7     |       |
| Historical  volatility (%)       |       | 20.0     |       | 20.0     |       | 22.7     |       |
| Risk-free  interest rate (%)     |       | 5.1      |       | 5.3      |       | 5.3      |       |
| Expected  life of option (years) |       | 4.9      |       | 5.7      |       | 5.0      |       |

 

The dividend yield reflects the assumption that the current dividendpayout will continue with no anticipated changes. The expected life of theoptions is based on historical data and is not necessarily indicative ofexercise patterns that may occur. The expected volatility reflects theassumption that the historical volatility is indicative of future trends, whichmay also not necessarily be the actual outcome.

 

Currently, the fair values of options granted are not recognized asexpenses in the financial statements. However, should these grants be expensed, they would be amortized overthe vesting periods resulting in an increase in employee benefits expense of$8.0 million for the 2004 financial year (2003 $17.8 million). Note that noadjustments to these amounts have been made to reflect estimated or actualforfeitures (i.e. options that do not vest).

 

Based on similar valuation principles, if the ESPP shares and theordinary shares issued for nil consideration (refer above) were to be expensed,an increase in the employee benefit expense of $6.7 million (2003 $10.8million) would result.

 

The consolidated entity participates in a number of superannuationfunds which were established to provide benefits for employees and theirdependants.  Details of these plans areset out in Note 26.

 

**Note 20****      CAPITAL EXPENDITURE COMMITMENTS**

 
| ** **                                                                                 | ** ** | **At June 30**          | ** ** |
|--------------------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                                 | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                                                 | ** ** | **2004**                | ** ** | **2003** | ** ** |
| Capital  expenditure for plant and equipment contracted but not provided for and  payable: |       |                    |       |   |   |
|                                                                                       |       |                    |       |   |   |
| Not later  than one year                                                                   |       | 121.5                   |       | 128.7 |   |
| Later than  one year but not later than two years                                          |       | —                  |       | 54.2 |   |
| **TOTAL  CAPITAL EXPENDITURE COMMITMENTS**                                                 |       | 121.5                   |       | 182.9 |   |

 

F - 43

----

 

**Note 21****      LEASE COMMITMENTS**

 
| ** **                                            | ** ** | **At June 30**          | ** ** |
|-------------------------------------------------------|------------|-------------------------|------------|
| ** **                                            | ** ** | **(in millions of A$)** | ** ** |
| ** **                                            | ** ** | **2004**                | ** ** | **2003** | ** ** |
| **Finance  Leases**                                   |       |                    |       |   |   |
| Lease  expenditure contracted and provided for:       |       |                    |       |   |   |
| Not later  than one year                              |       | 2.3                     |       | 139.7 |   |
| Later than  one year but not later than two years     |       | 15.8                    |       | 2.9 |   |
| Later than  two years but not later than three years  |       | 3.8                     |       | 1.5 |   |
| Later than  three years but not later than four years |       | 2.8                     |       | 1.1 |   |
| Later than  four years but not later than five years  |       | 1.8                     |       | 1.0 |   |
| Later than  five years                                |       | 73.5                    |       | 4.4 |   |
| Minimum  lease payments                               |       | 100.0                   |       | 150.6 |   |
| Less: Future  finance charges                         |       | (0.1                    | )          | (0.2 | ) |
| **TOTAL  FINANCE LEASE LIABILITY**                    |       | 99.9                    |       | 150.4 |   |
|                                                  |       |                    |       |   |   |
| Current  lease liabilities - refer Note 16            |       | 2.2                     |       | 139.5 |   |
| Non-current  lease liabilities - refer Note 16        |       | 97.7                    |       | 10.9 |   |
| **TOTAL  FINANCE LEASE LIABILITY**                    | ** ** | **99.9**                | ** ** | **150.4** | ** ** |

 

The consolidated entity leases equipmentunder finance leases expiring from one to 11 years.  At the end of the lease term, the consolidatedentity has the option to purchase the equipment at an agreed residual value.

 
| **OPERATING  LEASES**                                           |   |   |   |   |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|--------|
| Lease  expenditure contracted but not provided for and payable: |   |   |   |   |   |
| Not later  than one year                                        |   | 123.0  |   | 142.0  |   |
| Later than  one year but not later than two years               |   | 110.8  |   | 128.5  |   |
| Later than  two years but not later than three years            |   | 96.4   |   | 121.6  |   |
| Later than  three years but not later than four years           |   | 83.1   |   | 88.2   |   |
| Later than  four years but not later than five years            |   | 66.7   |   | 116.8  |   |
| Later than  five years                                          |   | 166.4  |   | 373.7  |   |
| **TOTAL  OPERATING LEASE COMMITMENTS**                          |   | 646.4  |   | 970.8  |   |

 

The consolidated entity leases motor vehicles, plant and equipment andproperty under operating leases.  Leasesgenerally provide the consolidated entity with a right of renewal at which timeall terms are renegotiated.

 

F - 44

----

 

**Note 22****      OTHEREXPENDITURE COMMITMENTS**

 
| ** **                                                                                   | ** ** | **At June 30**          | ** ** |
|----------------------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                                   | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                                                   | ** ** | **2004**                | ** ** | **2003** | ** ** |
| Expenditure  contracted but not provided for covering supplies and services to be  provided: |       |                    |       |   |   |
| Not later  than one year                                                                     |       | 25.8                    |       | 14.2 |   |
| Later than  one year but not later than two years                                            |       | 9.7                     |       | 1.6 |   |
| Later than  two years but not later than five years                                          |       | 18.1                    |       | 5.0 |   |
| Later than  five years                                                                       |       | 22.2                    |       | 18.1 |   |
| **TOTAL  OTHER EXPENDITURE COMMITMENTS**                                                     |       | 75.8                    |       | 38.9 |   |

 

**Note 23****      CONTINGENT LIABILITIES**

 

Details of contingentliabilities which the directors consider should be disclosed are set outbelow.  The directors are of the opinionthat provisions are not required in respect of these matters, as it is eithernot probable that a future sacrifice of economic benefits will be required orthe amount is not capable of reliable measurement.

 

•                      Amcor Ltd hasindemnified the PaperlinX Limited Group in relation to potential taxation andwork cover liabilities in excess of any provisions made in the financialstatements of the PaperlinX Limited Group at March 31, 2000.

 

•                      Under the terms ofthe ASIC Class Order 98/1418 (as amended) dated August 13, 1998, which relievedcertain wholly-owned subsidiaries from the requirement to prepare auditedfinancial statements, Amcor Limited and certain wholly-owned subsidiaries haveentered into approved deeds for the cross guarantee of liabilities with thosesubsidiaries.  No liabilities subject tothe deeds of cross guarantee at June 30, 2004 are expected to arise to AmcorLimited and its subsidiaries as all such subsidiaries were financially soundand solvent at that date.

 

•                      On June 15, 2000, the Construction, Forestry,Mining and Energy Union (CFMEU) filed a proceeding in the Federal Court ofAustralia against Amcor. The proceeding related to a claim forredundancy-related payments arising out of the change of employment of CFMEUmembers stemming from the demerger by Amcor in April 2000 of the PaperlinX Group.

 

On May 13, 2002 the court found that Amcor employeeswhose employment was transferred to PaperlinX Ltd had technically been maderedundant and that the Court could not interpret the relevant clauses of thecertified agreement in a manner which relieved Amcor of the obligation to makeredundancy severance payments to the transferred employees. Amcor appealed thisdecision.

 

The appeal was heard by the Full Bench of the FederalCourt on February 24, 2003 and its decision, dismissing Amcor’s appeal was handeddown on March 28, 2003.  Amcorsubsequently filed an application for special leave to appeal to the HighCourt, which was granted on December 12, 2003. The appeal was heard by the High Court on August 4, 2004 and thedecision on the appeal is pending.  Afterconsidering legal advice, the directors are of the opinion that no provision isrequired.

 

However, in the event we are ultimately unsuccessfulin the appeal, we could be required to make redundancy payments to the formeremployees.  Such payments, if eventually required may have a materialeffect on Amcor’s results of operations in the year such a judgement is made. It is not possible to reliably estimate the amounts which might beinvolved.

 

F - 45

----

 

**Note 24****      AUDITORS’REMUNERATION**

 
| ** **                                                      | ** ** | **For the Years Ended June 30** | ** ** |
|-----------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                      | ** ** | **(in millions of A$)**         | ** ** |
| ** **                                                      | ** ** | **2004**                        | ** ** | **2003** | ** ** | **2002** | ** ** |
| **Audit  services:**                                            | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                            |       |                            |       |   |   |   |   |
| Auditors of  the consolidated entity – KPMG                |       |                            |       |   |   |   |   |
| Audit and  review of financial reports                          |       | 7.2                             |       | 5.7 |   | 6.0 |   |
|                                                            |       |                            |       |   |   |   |   |
| Other  auditors of the consolidated entity                      |       |                            |       |   |   |   |   |
| Audit and  review of financial reports                          |       | —                          |       | 2.2 |   | — |   |
|                                                            |       |                            |       |   |   |   |   |
| **Other  services:**                                            | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                            |       |                            |       |   |   |   |   |
| Auditors of  the consolidated entity – KPMG                |       |                            |       |   |   |   |   |
| Taxation  services                                              |       | 1.1                             |       | 1.6 |   | 1.0 |   |
| Completion  audits and acquisition/equity raising due diligence |       | 0.1                             |       | 0.2 |   | 2.2 |   |
| Other  assurance services                                       |       | 2.8                             |       | 0.9 |   | 0.7 |   |
|                                                            |       |                            |       |   |   |   |   |
|                                                            |       | 4.0                             |       | 2.7 |   | 3.9 |   |
| Other  auditors of the consolidated entity:                     |       |                            |       |   |   |   |   |
| Taxation  services                                              |       | —                          |       | 12.1 |   | — |   |
| Completion  audits and acquisition/equity raising due diligence |       | —                          |       | 2.8 |   | — |   |
| Other  assurance services                                       |       | —                          |       | 0.2 |   | — |   |
|                                                            |       |                            |       |   |   |   |   |
|                                                            |       | —                          |       | 15.1 |   | — |   |
| KPMG related  practices: (1)                                    |       |                            |       |   |   |   |   |
| Systems  review                                                 |       | —                          |       | — |   | 0.4 |   |
| Other                                                           |       | —                          |       | — |   | 0.1 |   |
|                                                            |       |                            |       |   |   |   |   |
|                                                            |       | —                          |       | — |   | 0.5 |   |

 

----

(1)  Relates tofees paid to KPMG Consulting Australia to October 3, 2001. The business wassold on October 3, 2001 and ceased to be a related practice of KPMG.

 

F - 46

----

 

**Note 25      REMUNERATION OF DIRECTORS ANDEXECUTIVES**

 

**Directors**

The following persons were directors of AmcorLimited during the financial year:

 

C I Roberts - Chairman

R H Jones - Managing Director and ChiefExecutive Officer

E A Alexander

D C K Allen

R K Barton

T C Bergman

G J Pizzey

G A Tomlinson

 

T C Bergman resigned from the position ofNon-Executive Director on October 23, 2003.

G J Pizzey was appointed as a Non-ExecutiveDirector on September 23, 2003.

 

**Executives (other than directors) with thegreatest authority for strategic direction and management**

The following persons were the five executives with the greatestauthority for the strategic direction and management of the consolidated entity(‘specified executives’) during the financial year:

 
| **Name**   | ** ** | **Position**                               | ** ** | **Employer**                  |
|------------|------------|--------------------------------------------|------------|-------------------------------|
|       |       |                                       |       |                          |
| W P Day    |       | Executive General Manager  Finance         |       | Amcor Limited                 |
| L J Lachal |       | Executive General Manager  Operations      |       | Amcor Limited                 |
| G S James  |       | Chief Executive Officer -  Amcor Flexibles |       | Amcor Europe Group Management |
| W J Long   |       | President, Amcor PET Packaging             |       | Amcor PET Packaging USA Inc   |
| I G Wilson |       | Strategic Development Director             |       | Amcor Limited                 |

 

**Remuneration of directors and executives**

 

***Principles used to determine the nature andamount of remuneration***

Theobjective of the company’s executive reward framework is to ensure reward forperformance is competitive and appropriate for the results delivered.  The framework aligns executive reward withachievement of strategic objectives and the creation of value for shareholdersand conforms with market best practice for delivery ofreward.  The directors ensure thatexecutive reward satisfies the following key criteria for good rewardgovernance practices:

 

•                  competitiveness and reasonableness

•                  acceptability to shareholders

•                  performance linkage/alignment of executive compensation

•                  transparency

•                  capital management.

 

F - 47

----

 

Inconsultation with external remuneration consultants, the company has structuredan executive remuneration framework that is market competitive andcomplementary to the reward strategy of the organisation.

 

Alignmentto shareholders’ interests:

•                  focuses on sustained growth in share priceand delivering constant return on assets as well as focusing the executive onkey non-financial drivers of value

•                  attracts and retains high calibreexecutives.

 

Alignmentto program participants’ interests:

•                  rewards capability and experience

•                  reflects competitive reward for contributionto shareholder growth

•                  provides a clear structure for earningrewards

•                  provides recognition for contribution.

 

Theframework provides a mix of fixed and variable pay, and a blend of short andlong term incentives.  As executives gainseniority within the consolidated entity, the balance of this mix shifts to ahigher proportion of ‘at risk’ rewards.

 

***Non-Executive Directors***

Fees andpayments to non-executive directors reflect the demands which are made on, andthe responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed annually by theBoard.  The Board has also accepted theadvice of independent remuneration consultants to ensure non-executivedirectors’ fees and payments are appropriate and in line with the market.  The Chairman’s fees are determinedindependently to the fees of non-executive directors based on comparative rolesin the external market.

 

TheChairman is not present at any discussions relating to determination of his ownremuneration.  Non-executive directors donot receive share options.  Each yearnon-executive directors receive a percentage of their remuneration in AmcorLimited shares, which are acquired on-market. A minimum of 20% of remuneration has been allocated in this way sinceshareholders approved this arrangement on October 22, 1999.

 

***Directors’ Fees***

The currentbase remuneration was last reviewed with effect from July 1, 2003.  The Chairman’s Remuneration is inclusive ofcommittee fees while non-executive directors who chair or are members of anycommittees receive additional yearly fees. An additional fee is also payable to the non-executive director whochairs the Amcor Superannuation Fund.

 

Non-executivedirectors’ fees are determined within an aggregate directors’ fee pool limit,which is periodically recommended for approval by shareholders.

 

***Retirement Allowances for Directors***

On August1, 2003, the Board resolved to remove retirement allowances for non-executivedirectors appointed

after that date.

 

F - 48

----

 

***Executive Pay***

Theexecutive pay and reward framework has four components:

•                  base pay and benefits

•                  short term performance incentives

•                  long term incentives through participation inoption plans

•                  other remuneration such as superannuation.

 

Thecombination of these comprises the executive’s total remuneration.  The company intends to continue its long termoption plan for executives during the year ended 30 June 2005.

 

***Base Pay***

Base pay isstructured as a total employment cost package which may be delivered as a mixof cash and prescribed non-monetary benefits at the executives’ discretion.

 

Executivesare offered a competitive base pay that comprises the fixed component of payand rewards.  External remunerationconsultants provide analysis and advice to ensure base pay is set to reflectthe market for a comparable role.  Basepay for senior executives is reviewed annually to ensure the executive’s pay iscompetitive with the market.  Anexecutive’s pay is also reviewed on promotion.

 

There areno guaranteed base pay increases fixed in any senior executive’s contract.

 

***Benefits***

Executivesreceive benefits including health insurance, car allowances and tax advisoryservices.

 

***Retirement benefits***

Retirementbenefits are delivered under superannuation funds.  These funds currently provide defined benefitsbased on years of service and final average salary and/or accumulation typebenefits.

 

F - 49

----

 

***Short-Term Incentives***

Ashort-term incentive (‘STI’) pool is available for executives for allocationduring the annual review subject to achievement of company and/or personalobjectives.  Incentives (bonuses) arepayable in cash on 30 September each year. Using a profit target as one of the performance triggers ensures asignificant portion of this variable reward is only available when value hasbeen created for shareholders and when profit is consistent with the businessplan.  The incentive pool is leveragedfor performance above the threshold to provide an incentive for executive out-performance.

 

Eachexecutive has a target STI opportunity depending on the accountabilities of therole and impact on organisation or business unit performance.  For senior executives the maximum targetbonus opportunity is 100% of total base salary.

 

Each year,the Remuneration Committee considers the appropriate targets and keyperformance indicators (‘KPIs’) to link the STI plan and the level of payout iftargets are met.  This includes settingany maximum payout under the STI plan, and minimum levels of performance totrigger payment of STI.

 

For theyear ended June 30, 2004, the KPIs linked to short term incentive plans werebased on group, individual business and personal objectives.  The KPIs included reducing operating costsand achieving specific targets in relation to return on assets and profit aftertax as well as other key, strategic non-financial measures linked to drivers ofperformance in future reporting periods. These KPIs are generic across the senior executive team.

 

The shortterm bonus payments are adjusted up or down in line with under or overachievement against the target performance levels.

 

The STItarget annual payment is reviewed annually.

 

***Employee Share/Option Plan***

Details ofthe employee share/option plan are set out in Note 19.

 

F - 50

----

 

**Details of Remuneration**

Details of the remuneration of each directorof Amcor Limited and each of the five specified executives of the consolidatedentity, including their personally-related entities, are set out in thefollowing tables.

 

***Directors of Amcor Ltd***

 
| ** **    | ** ** | **Primary**     | ** ** | **Post-employment** | ** ** | **Equity**         | ** ** | ** **    | ** ** |
|---------------|------------|-----------------|------------|---------------------|------------|--------------------|------------|---------------|------------|
| ** **    | ** ** | **Cash salary** | ** ** | **Cash**            | ** ** | **Non-  monetary** | ** ** | **Super-**    | ** ** | **Retirement** | ** ** | **Share appreciation** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **$**         | ** ** | **and fees**    | ** ** | **Bonus**           | ** ** | **benefits**       | ** ** | **annuation** | ** ** | **benefits** | ** ** | **rights** | ** ** | **Options** | ** ** | **Shares** | ** ** | **Total** | ** ** |
| C I Roberts   |       | 269,166         |       |                |       | 115,915            |       | 24,225        |       | 293,414 |   |   |   |   |   |   |   | 702,720 |   |
| R H Jones     |       | 1,356,250       |       | 550,003             |       | 411,383            |       | 271,250       |       |   |   |   |   | 1,892,304 |   | 376,640 |   | 4,857,830 |   |
| E A Alexander |       | 128,799         |       |                |       | 35,249             |       | 11,592        |       | 109,222 |   |   |   |   |   |   |   | 284,862 |   |
| D C K Allen   |       | 39,666          |       |                |       | 103,382            |       |          |       | 71,981 |   |   |   |   |   |   |   | 215,029 |   |
| R K Barton    |       | 123,999         |       |                |       | 34,049             |       | 11,160        |       | 108,821 |   |   |   |   |   |   |   | 278,029 |   |
| T C Bergman   |       | 33,926          |       |                |       | 9,430              |       | 3,053         |       | 18,950 |   |   |   |   |   |   |   | 65,359 |   |
| G J Pizzey    |       | 107,101         |       |                |       | 29,129             |       | 5,250         |       |   |   |   |   |   |   |   |   | 141,480 |   |
| G A Tomlinson |       | 114,000         |       |                |       | 31,549             |       | 10,260        |       | 88,645 |   |   |   |   |   |   |   | 244,454 |   |
|          |       | 2,172,907       |       | 550,003             |       | 770,086            |       | 336,790       |       | 691,033 |   | — |   | 1,892,304 |   | 376,640 |   | 6,789,763 |   |

 

***Specified executives of theconsolidated entity***

 
| ** ** | ** ** | **Primary**     | ** ** | **Post-employment** | ** ** | **Equity**         | ** ** | ** **    | ** ** |
|------------|------------|-----------------|------------|---------------------|------------|--------------------|------------|---------------|------------|
| ** ** | ** ** | **Cash salary** | ** ** | **Cash**            | ** ** | **Non-  monetary** | ** ** | **Super-**    | ** ** | **Retirement** | ** ** | **Share appreciation** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **$**      | ** ** | **and fees**    | ** ** | **Bonus**           | ** ** | **benefits**       | ** ** | **annuation** | ** ** | **benefits** | ** ** | **rights** | ** ** | **Options** | ** ** | **Shares** | ** ** | **Total** | ** ** |
| W P Day    |       | 588,750         |       | 237,900             |       | 71,125             |       | 58,875        |       |   |   |   |   | 48,236 |   | 104,738 |   | 1,109,624 |   |
| G S James  |       | 891,544         |       | 358,456             |       | 71,626             |       | 173,475       |       |   |   |   |   | 57,319 |   |   |   | 1,552,420 |   |
| L J Lachal |       | 601,250         |       | 231,800             |       | 57,828             |       | 96,200        |       |   |   |   |   | 23,355 |   | 237,138 |   | 1,247,571 |   |
| W J Long   |       | 704,424         |       | 232,988             |       | 47,456             |       | 28,177        |       |   |   | 82,500 |   | 125,055 |   |   |   | 1,220,600 |   |
| I G Wilson |       | 676,471         |       | 312,255             |       | 241,060            |       |          |       |   |   | 100,533 |   |   |   | 104,738 |   | 1,435,057 |   |
|       |       | 3,462,439       |       | 1,373,399           |       | 489,095            |       | 356,727       |       | — |   | 183,033 |   | 253,965 |   | 446,614 |   | 6,565,272 |   |

 

F - 51

----

 

**Service Agreements**

Remunerationand other terms of employment for the Managing Director and Chief ExecutiveOfficer, and the specified executives are formalised in serviceagreements.  Each of these agreementsprovide for the provision of performance-related cash bonuses, other benefits includinghealth insurance, car allowance and tax advisory services, and participation,where eligible, in the employee option plan. Other major provisions of the agreements relating to remuneration areset out below.

 

R H Jones -Managing Director and Chief Executive Officer

•                  Term of agreement - unspecified

•                  Base salary, inclusive of superannuation,for the year ended June 30, 2004 of $1,627,500, to be reviewed annually by theRemuneration Committee.

•                  Payment of termination benefit on earlytermination by the employer, other than for gross misconduct.

Noticeperiod of 12 months applies.

 

W P Day -Executive General Manager Finance

•                  Term of agreement - unspecified

•                  Base salary, inclusive of superannuation,for the year ended June 30, 2004 of $647,625, to be reviewed annually by theRemuneration Committee.

•                  Payment of termination benefit on earlytermination by the employer, other than for gross misconduct.

Noticeperiod of 6 months applies.

 

L J Lachal -Executive General Manager Operations

•                  Term of agreement - unspecified

•                  Base salary, inclusive of superannuation,for the year ended June 30, 2004 of $697,450, to be reviewed annually by theremuneration committee.

•                  Payment of termination benefit on earlytermination by the employer, other than for gross misconduct.

Noticeperiod of 12 months applies.

 

W J Long -President, Amcor PET Packaging

•                  Term of agreement -unspecified

•                  Base salary, inclusive of superannuation,for the year ended June 30, 2004 of $732,601, to be reviewed annually by theRemuneration Committee.

•                  Payment of termination benefit on earlytermination by the employer, other than for gross misconduct.

Noticeperiod of 12 months applies.

 

G S James -Chief Executive Officer, Amcor Flexibles

•                  Term of agreement - unspecified

•                  Base salary, inclusive of superannuation,for the year ended June 30, 2004 of $1,065,019, to be reviewed annually by theRemuneration Committee.

•                  Payment of termination benefit on earlytermination by the employer, other than for gross misconduct.

Noticeperiod of 12 months applies.

 

F - 52

----

 

I G Wilson -Strategic Development Director

•                  Term of agreement – two years 11 monthscommencing 1 February 2002.

•                  Base salary, inclusive of superannuation,for the year ended June 30, 2004 of $676,471, to be reviewed annually by theRemuneration Committee.

•                  Payment of termination benefit on earlytermination by the employer, other than for gross misconduct.

Noticeperiod of 6 months applies for the remaining term of the agreement.

 

**Share-Based Compensation - Options**

Internalregulations apply which preclude executives from exercising options duringperiods leading up to the half yearly/annual profit announcements and AnnualGeneral Meeting.

 

The termsand conditions of each grant of options affecting remuneration in this orfuture reporting period are as follows:

 
| **Grant Date** | ** ** | **Expiry Date** | ** ** | **Exercise********Price** | ** ** | **Value Per**** ****Option at********Grant Date** | ** ** | **Date Exercisable** |
|----------------|------------|-----------------|------------|---------------------------|------------|--------------------------------------------------------|------------|----------------------|
| 18-Aug-00      |       | 01-Oct-05       |       | $                         | 5.67       |                                                   | $          | 1.71                 |   | 1-Oct-01,  1-Oct-02 & 1-Oct-03 |
| 14-Aug-02      |       | 30-Sep-08       |       | $                         | 8.20       |                                                   | $          | 1.72                 |   | 1-Oct-04,  1-Oct-05 & 1-Oct-06 |
| 14-Sep-00      |       | 14-Sep-05       |       | $                         | 5.16       |                                                   | $          | 1.58                 |   | 14-Sep-03 |
| 13-Sep-01      |       | 13-Sep-06       |       | $                         | 6.02       |                                                   | $          | 1.34                 |   | 13-Sep-04 |
| 01-Nov-02      |       | 01-Jul-07       |       | $                         | 7.30       |                                                   | $          | 1.80                 |   | 30-Sep-03 |
| 01-Nov-02      |       | 01-Jul-07       |       | $                         | 7.30       |                                                   | $          | 1.80                 |   | 30-Sep-04 |
| 01-Nov-02      |       | 01-Nov-12       |       | $                         | 8.20       |                                                   | $          | 2.00                 |   | 01-Nov-05 |
| 24-Mar-04      |       | 24-Mar-10       |       | $                         | 7.87       |                                                   | $          | 1.27                 |   | 24-Mar-07 |

 

***Employee Share/Option Plan (‘ESOP’)***

 

Details ofthe shareholder approved ESOP are set out in Note 19.

 

Optionsissued under the ESOP aim to reward excellence and encourage executives tofocus on improving the longer term performance of the company and optionsgranted are subject to specific performance targets and conditions.

 

Options areeither exercisable at any time or vest after a three year restriction periodduring their term which may either be five, six or 10 years after which timethe options will lapse.  Internalregulations apply which preclude executives from exercising these optionsduring periods leading up to the half yearly/annual profit announcements andthe Annual General Meeting.

 

***2002 CEO Option Issue and 2000 CEO Restricted Shares and Option Issue***

 

Details ofthese shareholder approved issues, are set out in Note 19.

 

***Employee Share Purchase Plans (‘ESPP’)***

 

Details ofthe shareholder approved ESPP are set out in Note 19.

 

F - 53

----

 

**Equity Instrument Disclosures Relating to Directors and Executives**

 

***Options provided as remuneration***

Details ofoptions over ordinary shares in the company provided during the year asremuneration to each director of Amcor Limited (‘the company’) and each of thefive specified executives of the consolidated entity are set out below.  When exercisable, each option is convertibleinto one ordinary share of Amcor Limited.

 

Furtherinformation on the options is set out in Note 19.

 
| **Name**                                               | ** ** | **Number  of  Options  Granted During  the Year** | ** ** | **Number  of  Options  Vested During  the Year** | ** ** |
|--------------------------------------------------------|------------|---------------------------------------------------|------------|--------------------------------------------------|------------|
| ***Directors of Amcor Limited***                       |       |                                              |       |                                             |       |
| R H Jones                                              |       | nil                                               |       | 1,000,000                                        |       |
| ***Specified executives of the consolidated  entity*** |       |                                              |       |                                             |       |
| W P Day                                                |       | 250,000                                           |       | nil                                              |       |
| L J Lachal                                             |       | 200,000                                           |       | 24,000                                           |       |
| W J Long                                               |       | 200,000                                           |       | 100,000                                          |       |
| G S James                                              |       | 150,000                                           |       | 32,000                                           |       |
| I G Wilson                                             |       | nil                                               |       | nil                                              |       |

 

Theassessed fair value at grant date of options granted to directors and specifiedexecutives is allocated equally over the period from grant date to vestingdate, and the amount is included in the remuneration tables above.  Fair values at grant date are independentlydetermined using a Black-Scholes option pricing model that takes into account theexercise price, the term of the option, the vesting and performance criteria,the impact of dilution, the non-tradeable nature of the option, the share priceat grant date and expected price volatility of the underlying share, theexpected dividend yield and the risk-free interest rate for the term of theoption.

 

The modelinputs for options granted during the year ended 30 June 2004 are listed inNote 19.

 

***Shares Provided on Exercise of RemunerationOptions***

Details ofordinary shares in the company provided as a result of the exercise ofremuneration options to each director of Amcor Limited and each of the fivespecified executives of the consolidated entity are set out below.

 

F - 54

----

 
| **Name**                                               | ** ** | **Date  of Exercise of  Options** | ** ** | **Number  of  Ordinary Shares  Issued on  Exercise of  Options During  the Year** | ** ** |
|--------------------------------------------------------|------------|-----------------------------------|------------|-----------------------------------------------------------------------------------|------------|
| ***Directors of Amcor Limited***                       |       |                              |       |                                                                              |       |
| C I Roberts                                            |       | nil                               |       | nil                                                                               |       |
| R H Jones                                              |       | nil                               |       | nil                                                                               |       |
| E A Alexander                                          |       | nil                               |       | nil                                                                               |       |
| D C K Allen                                            |       | nil                               |       | nil                                                                               |       |
| R K Barton                                             |       | nil                               |       | nil                                                                               |       |
| T C Bergman                                            |       | nil                               |       | nil                                                                               |       |
| G J Pizzey                                             |       | nil                               |       | nil                                                                               |       |
| G A Tomlinson                                          |       | nil                               |       | nil                                                                               |       |
| ***Specified executives of the consolidated  entity*** |       |                              |       |                                                                              |       |
| W P Day                                                |       | nil                               |       | nil                                                                               |       |
| L J Lachal                                             |       | 09-Jul-03                         |       | 157,900                                                                           |       |
| W J Long                                               |       | nil                               |       | nil                                                                               |       |
| G S James                                              |       | 26-Aug-03                         |       | 40,000                                                                            |       |
| G S James                                              |       | 18-Sep-03                         |       | 92,000                                                                            |       |
| I G Wilson                                             |       | nil                               |       | nil                                                                               |       |

 

The amountspaid per ordinary share by each specified executive on the exercise of optionsat the date of exercise were as follows:

 
| **Exercise Date** | ** ** | **Amount  Paid Per Share** | ** ** |
|-------------------|------------|----------------------------|------------|
| 09-Jul-03         |       | $                          | 4.64       |   |
| 09-Jul-03         |       | $                          | 6.47       |   |
| 09-Jul-03         |       | $                          | 5.10       |   |
| 26-Aug-03         |       | $                          | 6.47       |   |
| 18-Sep-03         |       | $                          | 5.16       |   |
| 18-Sep-03         |       | $                          | 5.10       |   |

 

F - 55

----

 

***Option Holdings***

The numberof options over ordinary shares in the company held during the financial yearby each director of Amcor Limited and each of the five specified executives ofthe consolidated entity, including their personally-related entities, are setout below.

 
| **Name**                                               | ** ** | **Balance  at the beginning of  the year** | ** ** | **Granted  during the  year as  remuneration** | ** ** | **Exercised  during the  year** | ** ** | **Other  changes  during the  year** | ** ** | **Balance  at the end of  the year** | ** ** | **Balance  vested  and not yet  exercised at  end of year** | ** ** |
|--------------------------------------------------------|------------|--------------------------------------------|------------|------------------------------------------------|------------|---------------------------------|------------|--------------------------------------|------------|--------------------------------------|------------|-------------------------------------------------------------|------------|
| ***Directors of Amcor Limited***                       |       |                                       |       |                                           |       |                            |       |                                 |       |                                 |       |                                                        |       |
|                                                   |       |                                       |       |                                           |       |                            |       |                                 |       |                                 |       |                                                        |       |
| R H Jones                                              |       | 6,000,000                                  |       | nil                                            |       | nil                             |       | nil                                  |       | 6,000,000                            |       | 3,000,000                                                   |       |
| ***Specified executives of the consolidated  entity*** |       |                                       |       |                                           |       |                            |       |                                 |       |                                 |       |                                                        |       |
|                                                   |       |                                       |       |                                           |       |                            |       |                                 |       |                                 |       |                                                        |       |
| W P Day                                                |       | 150,000                                    |       | 250,000                                        |       | nil                             |       | nil                                  |       | 400,000                              |       | 100,000                                                     |       |
| L J Lachal                                             |       | 181,900                                    |       | 200,000                                        |       | (157,900                        | )          | nil                                  |       | 224,000                              |       | 24,000                                                      |       |
| W J Long                                               |       | 350,000                                    |       | 200,000                                        |       | nil                             |       | (6,000                               | )          | 544,000                              |       | 200,000                                                     |       |
| G S James                                              |       | 202,000                                    |       | 150,000                                        |       | (132,000                        | )          | (6,000                               | )          | 214,000                              |       | nil                                                         |       |
| I G Wilson                                             |       | nil                                        |       | nil                                            |       | nil                             |       | nil                                  |       | nil                                  |       | nil                                                         |       |

 

No optionsare vested and unexercisable at the end of the year.

 

F - 56

----

 

***Share holdings***

The numberof shares in the company held during the financial year by each director ofAmcor Limited and each of the five specified executives of the consolidatedentity, including their personally-related entities, are set out below.

 
| **Name**                         | ** ** | **Balance  at the  Beginning of  the Year** | ** ** | **Received  During  the Year on the  Exercise of  options** | ** ** | **Other  Changes  During the Year** | ** ** | **Balance  at the End  of the Year** | ** ** |
|----------------------------------|------------|---------------------------------------------|------------|-------------------------------------------------------------|------------|-------------------------------------|------------|--------------------------------------|------------|
| ***Directors of Amcor Limited*** |       |                                        |       |                                                        |       |                                |       |                                 |       |
| **Ordinary Shares**              |       |                                        |       |                                                        |       |                                |       |                                 |       |
| C I Roberts                      |       | 80,998                                      |       | —                                                      |       | 33,423                              |       | 114,421                              |       |
| R H Jones                        |       | 297,223                                     |       | —                                                      |       | 84,541                              |       | 381,764                              |       |
| E A Alexander *                  |       | 21,434                                      |       | —                                                      |       | 4,824                               |       | 26,258                               |       |
| D C K Allen                      |       | 43,504                                      |       | —                                                      |       | 12,353                              |       | 55,857                               |       |
| R K Barton                       |       | 21,444                                      |       | —                                                      |       | 3,826                               |       | 25,270                               |       |
| G J Pizzey                       |       | nil                                         |       | —                                                      |       | 6,408                               |       | 6,408                                |       |
| G A Tomlinson                    |       | 25,595                                      |       | —                                                      |       | 14,089                              |       | 39,684                               |       |

 

----

* E AAlexander also holds 50,000 partly paid shares paid to five cents.

T C Bergmanheld 24,892 shares at the start of the year and retired as a Director duringthe year.

 

 
| ***Specified Executives of the Consolidated  Entity*** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** |
|--------------------------------------------------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|
| **Ordinary Shares**                                    |         |         |         |         |         |         |         |         |         |
| W P Day                                                |         | 47,684       |         | —       |         | 11,768       |         | 59,452       |         |
| L J Lachal *                                           |         | 321,467      |         | 157,900      |         | (179,898     | )            | 299,469      |         |
| W J Long                                               |         | —       |         | —       |         | 100          |         | 100          |         |
| G S James                                              |         | 63,020       |         | 132,000      |         | (124,660     | )            | 70,360       |         |
| I G Wilson                                             |         | 61,985       |         | —       |         | 100          |         | 62,085       |         |

 

----

* L J Lachal also holds 20,000partly paid shares paid to one cent.

 

F - 57

----

 

**Loans to Directors and Executives**

Details ofloans made to directors of Amcor Limited and the five specified executives ofthe consolidated entity, including their personally-related entities, are setout below.

 

**Aggregates for Directors and Specified Executives**

 
| **Group**                                       | ** ** | **Balance  at the  Beginning of  the Year** | ** ** | **Interest  Paid and  Payable for the  year** | ** ** | **Interest  Not  Charged** | ** ** | **Balance  at  the End of the  Year** | ** ** | **Number  in  Group at the  End of the  Year** | ** ** |
|-------------------------------------------------|------------|---------------------------------------------|------------|-----------------------------------------------|------------|----------------------------|------------|---------------------------------------|------------|------------------------------------------------|------------|
| ** **                                      | ** ** | **$**                                       | ** ** | **$**                                         | ** ** | **$**                      | ** ** | **$**                                 | ** ** | ** **                                     | ** ** |
| Directors of Amcor Limited                      |       | 1,075,180                                   |       | 7,500                                         |       | 47,000                     |       | 1,056,180                             |       | 1                                              |       |
| Specified executives of the consolidated entity |       | 357,219                                     |       | 782                                           |       | nil                        |       | 13,516                                |       | 1                                              |       |

 

**Individuals with Loans Above $100,000 Duringthe Financial Year**

 
| **Name**   | ** ** | **Balance  at the  Beginning of  the Year** | ** ** | **Interest  Paid and  Payable for the  Year** | ** ** | **Interest  Not  Charged** | ** ** | **Balance  at  the End of the  Year** | ** ** |
|------------|------------|---------------------------------------------|------------|-----------------------------------------------|------------|----------------------------|------------|---------------------------------------|------------|
|       |       | **$**                                       | ** ** | **$**                                         | ** ** | **$**                      | ** ** | **$**                                 |       |
| R H Jones  |       | 1,075,180                                   |       | 7,500                                         |       | 47,000                     |       | 1,056,180                             |       |
| L J Lachal |       | 357,219                                     |       | 782                                           |       | nil                        |       | 13,516                                |       |

 

Loans to directors and specified executivesare repayable on cessation of employment, have interest charged at varyingrates and are secured by holding locks on employee entitlements and securities.

 

The amounts shown for interest not charged inthe tables above represent the difference between the amount paid and payablefor the year and the amount of interest that would have been charged on an arm’slength basis.

 

No write-downs or allowances for doubtfuldebts have been recognised in relation to any loans made to directors orspecified executives.

 

F - 58

----

 

**OtherTransactions with Directors and Specified Executives**

 

***Directors of Amcor Limited***

 

Nil

 

***Specified Executives of the Controlled Entity***

 

EssentialMarketing is a company that supplies various marketing services to theconsolidated entity.  The company isowned by the daughter of G S James, a specified executive.  Transactions are based on normal terms andconditions.

 

Aggregateamounts of the above transactions with specified executives of the consolidatedentity are as follows:

 
| **$**                                                       | ** ** | **2004** | ** ** | **2003** | ** ** |
|-------------------------------------------------------------|------------|----------|------------|----------|------------|
| **Amount recognised as expenses**                           |       |     |       |     |       |
| Provision of goods supplied at cost and marketing  services |       | 510,326  |       | 433,000  |       |

 

Aggregateamounts payable to specified executives of the consolidated entity at balancedate relating to the above types of other transactions:

 
| **$**                   | ** ** | **2004** | ** ** | **2003** | ** ** |
|-------------------------|------------|----------|------------|----------|------------|
| **Current liabilities** |       | 63,515   |       | —   |       |

 

**Note26     SUPERANNUATIONCOMMITMENTS**

 

Theconsolidated entity participates in a number of superannuation funds which wereestablished to provide benefits for employees and their dependants.  The funds cover company sponsored plans,industry/union plans, government plans and defined benefit plans.

 

***Company Sponsored Plans***

 

The principalbenefits are pensions or lump sums for members on resignation, retirement,death or total permanent disablement. These benefits are determined on either adefined benefit or accumulation benefit basis.

 

Employeecontribution rates are either determined by the rules of the fund or selectedby members from a specified range of rates. In addition to legislative requirements, employer companies contributeto defined benefit funds as described below or, in the case of accumulationfunds, the amounts set out in the appropriate fund rules.

 

***Industry/Union Plans***

 

Employercompanies participate in industry and union plans on behalf of certainemployees.  These plans operate on anaccumulation basis and provide lump sum benefits for members on resignation,retirement or death. The employer company has a legally enforceable obligationto contribute at varying rates to these plans.

 

***Government Plans***

 

Employercompanies participate in government plans, on behalf of certain employees,which provide pension benefits.

 

There exists alegally enforceable obligation on employer companies to contribute as requiredby legislation.

 

F - 59

----

 

***Defined Benefit Plans***

 

Theconsolidated entity maintains several defined benefit superannuationarrangements world-wide.  On a vestedbenefit basis, some arrangements are in actuarial surplus, others are in a positionof actuarial deficiency.  Surpluses anddeficiencies depend on many diverse factors and can vary significantly overtime having regard, for example, to movements in the investment markets, futuresalary increases and changes in employment patterns.  This note sets out the consolidated entity’sposition and accounting policy in relation to its defined benefit arrangements.

 

Theconsolidated entity’s current intention is to make annual contributions todefined benefits funds at a rate determined from time to time followingdiscussions with the funds’ actuaries or other competent authorities andadvisers.  The consolidated entityexpects that the contribution rates will be determined after taking intoaccount sound actuarial principles and would be designed to enable all theconsolidated entity’s defined benefit funds to meet retirement expectations andrelevant regulatory requirements.  Theconsolidated entity’s current intention is based on these assumptions.

 

While theconsolidated entity does not expect its current intention to change, theconsolidated entity does not accept any liability to fund any present or futuredeficiency in the funds, as calculated at any particular point in time.  The consolidated entity reserves the right toincrease, reduce or terminate its contributions to the funds as it sees fit.

 

Accordingly,the consolidated entity is of the opinion that, under Australian accountingstandards, it has no constructive or legal obligation, as at the balance date,to fund deficits that may arise in particular funds from time to time.  In all cases, however, the consolidatedentity expects to have the financial capacity to make or cause to be madesufficient annual contributions to the funds that ensure employee retirementexpectations will be met.

 

Theconsolidated entity’s accounting policies and disclosures contained herein arein accordance with AASB 1028 ‘Employee Benefits’.  All plans are listed below showing the lastactuarial assessments, where applicable, made by independent actuaries on thedates indicated.

 

Fund assetsnet of liabilities other than accrued benefits (funds assets) at net marketvalue as at the reporting date, accrued benefits as at the last actuarialreview date and vested benefits of the funds/plans as at the reporting date areas follows:

 

F - 60

----

 
| **Defined Benefit Funds as  at 30 June 2004**                   | ** ** | **Reporting Date** | ** ** | **Fund Assets at  Net Market  Value** | ** ** | **Accrued  Benefits****(3)** | ** ** | **Accrued Surplus/  (Deficit)****(4)** | ** ** | **Vested  Benefits****(5)** | ** ** | **Vested  Surplus/  (Deficit)** | ** ** |
|-----------------------------------------------------------------|------------|--------------------|------------|---------------------------------------|------------|------------------------------|------------|----------------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| ** **                                                      | ** ** | ** **         | ** ** | **$m**                                | ** ** | **$m**                       | ** ** | **$m**                                 | ** ** | **$m**                      | ** ** | **$m**                          | ** ** |
|                                                            |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| **Amcor Limited**                                               |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| Amcor Superannuation Fund (1)                                   |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - June 2003 by W R Aitchison FIA, FIAA                          |       | 30-Jun-03          |       | 511.8                                 |       | 560.2                        |       | (48.4                                  | )          | 556.9                       |       | (45.1                           | )          |
|                                                            |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| **Controlled Entities**                                         |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| Amcor Flexibles (UK) Pension Plan                               |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - April 2004 by J Porteus FFA                                   |       | 30-Jun-04          |       | 200.2                                 |       | 259.9                        |       | (59.7                                  | )          | 244.3                       |       | (44.1                           | )          |
| Amcor New Zealand Super Fund                                    |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - June 2003 by J Spooner BSc, FIA, FNZSA                        |       | 30-Jun-04          |       | 30.1                                  |       | 30.8                         |       | (0.7                                   | )          | 23.9                        |       | 6.2                             |       |
| Amcor PET Packaging UK Limited Pension Plan                     |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - January 2004 by D Piltz FIA                                   |       | 30-Jun-04          |       | 21.9                                  |       | 30.8                         |       | (8.9                                   | )          | 20.6                        |       | 1.3                             |       |
| Amcor PET Packaging Pension Plan USA                            |       | 30-Jun-04          |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - January 2003 by Mercer Human Resource  Consulting             |       |               |       | 17.6                                  |       | 20.3                         |       | (2.7                                   | )          | 16.5                        |       | 1.1                             |       |
| Amcor Rentsch / Poly Laupen                                     |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - June 2003 by M Schreiber                                      |       | 30-Jun-04          |       | 70.8                                  |       | 76.0                         |       | (5.2                                   | )          | 69.2                        |       | 1.6                             |       |
| Amcor Twinpak Americas Inc Pension Plan for  salaried employees |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - June 2003 by Avalon Consulting                                |       | 30-Jun-04          |       | 16.2                                  |       | 20.1                         |       | (3.9                                   | )          | 14.8                        |       | 1.4                             |       |
| Other funds (2)                                                 |       | 30-Jun-04          |       | 48.6                                  |       | 66.6                         |       | (18.0                                  | )          | 51.3                        |       | (2.7                            | )          |
|                                                            |       |               |       | 917.2                                 |       | 1,064.7                      |       | (147.5                                 | )          | 997.5                       |       | (80.3                           | )          |

 

F - 61

----

 
| **Defined Benefit Funds as  at 30 June 2003**                   | ** ** | **Reporting Date** | ** ** | **Fund Assets at  Net Market  Value** | ** ** | **Accrued  Benefits****(3)** | ** ** | **Accrued Surplus/  (Deficit)****(4)** | ** ** | **Vested  Benefits****(5)** | ** ** | **Vested  Surplus/  (Deficit)** | ** ** |
|-----------------------------------------------------------------|------------|--------------------|------------|---------------------------------------|------------|------------------------------|------------|----------------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| ** **                                                      | ** ** | ** **         | ** ** | **$m**                                | ** ** | **$m**                       | ** ** | **$m**                                 | ** ** | **$m**                      | ** ** | **$m**                          | ** ** |
| ** **                                                      | ** ** | ** **         | ** ** | ** **                            | ** ** | ** **                   | ** ** | ** **                             | ** ** | ** **                  | ** ** | ** **                      | ** ** |
| **Amcor Limited**                                               |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| Amcor Superannuation Fund (1)                                   |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - June 2002 by W R Aitchison FIA, FIAA                          |       | 30-Jun-02          |       | 495.0                                 |       | 529.6                        |       | (34.6                                  | )          | 528.1                       |       | (33.1                           | )          |
|                                                            |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| **Controlled Entities**                                         |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| Amcor Flexibles (UK) Pension Plan                               |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - June 2003 by J Porteus FFA                                    |       | 30-Jun-03          |       | 165.4                                 |       | 228.5                        |       | (63.1                                  | )          | 214.8                       |       | (49.4                           | )          |
| Amcor New Zealand Super Fund                                    |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - June 2003 by J Spooner BSc, FIA, FNZSA                        |       | 30-Jun-03          |       | 23.3                                  |       | 26.5                         |       | (3.2                                   | )          | 20.9                        |       | 2.4                             |       |
| Amcor PET Packaging UK Limited Pension Plan                     |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - January 2003 by D Piltz FIA                                   |       | 30-Jun-03          |       | 16.1                                  |       | 17.6                         |       | (1.5                                   | )          | 14.1                        |       | 2.0                             |       |
| Amcor PET Packaging Pension Plan USA                            |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - July 2002 by Mercer Human Resource Consulting                 |       | 30-Jun-03          |       | 14.3                                  |       | 15.1                         |       | (0.8                                   | )          | 12.0                        |       | 2.3                             |       |
| Amcor Rentsch / Poly Laupen                                     |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - June 2003 by M Schreiber                                      |       | 30-Jun-03          |       | 70.7                                  |       | 76.9                         |       | (6.2                                   | )          | 76.9                        |       | (6.2                            | )          |
| Amcor Twinpak Americas Inc Pension Plan for  salaried employees |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
| - June 2003 by Avalon Consulting                                |       | 30-Jun-03          |       | 11.3                                  |       | 13.9                         |       | (2.6                                   | )          | 13.9                        |       | (2.6                            | )          |
| Other funds (2)                                                 |       |               |       | 41.1                                  |       | 52.7                         |       | (11.6                                  | )          | 41.6                        |       | (0.5                            | )          |
|                                                            |       |               |       |                                  |       |                         |       |                                   |       |                        |       |                            |       |
|                                                            |       |               |       | 837.2                                 |       | 960.8                        |       | (123.6                                 | )          | 922.3                       |       | (85.1                           | )          |

 

F - 62

----

 

----

(1)          The netdeficit as estimated by the Fund Actuary for the Amcor Limited sub-fund at June30, 2004 was $40.0 million compared with $48.4 million at June 30, 2003

 

(2)          Otherfunds comprise the following (including details of the latest actuarialvaluation):

 

Amcor Twinpak America Inc Plan for hourly paid employees - January 2003by Avalon Consulting

 

Amcor Twinpak America Inc Pension Plan and unregistered plan forexecutive employees - January 2003 by Avalon Consulting

 

Amcor Employees Plan Belgium - AXA Royal Belge - June 2003 by I MarbaixActuary

 

Amcor Workers Plan Belgium - AXA Royal Belge - June 2003 by I Marbaix,Actuary

 

Amcor Employee Plans Belgium - Fortis AG - June 2003 by I Marbaix,Actuary

 

Amcor Flexibles Netherlands - June 2003 by L De Gruijter, Actuary

 

Amcor Flexibles Envi Netherlands  -June 2003 by L De Gruijter, Actuary

 

Amcor Flexibles Drammen Norway - June 2002 by V Pekon AS

 

Amcor PET Packaging Belgium - June 2003 by AON Biomet Merck

 

(3)          Accruedbenefits have been determined based on the amount calculated by the FundActuary at the date of the most recent actuarial review.

 

(4)          Theaggregate deficit of funds assets over accrued benefits, calculated as thedifference between fund assets at net market value as at the last reportingdate of each fund and the accrued benefits as at the last actuarial review dateof each fund is $147.5 million (2003 $123.6 million).  This amount does not represent the actualshortfall of fund assets over accrued benefits that existed at June 30, 2004but does represent the most up to date information which it has been possibleto obtain. It should be noted that as at June 30, 2004 an amount of $24.9million (2003 $25.0 million) was provided for and recognised in theconsolidated accounts against this deficit, as a result of obligations whichexisted at the time of acquisition of the relevant entities, or which arerequired by legislation.

 

(5)          Vestedbenefits are benefits which are not conditional upon membership of therespective fund or any other factor.

 
| ** **                                                                                        | ** ** | **For the Years Ended June 30** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                                        | ** ** | **(in millions of A$)**         | ** ** |
| ** **                                                                                        | ** ** | **2004**                        | ** ** | **2003** | ** ** | **2002** | ** ** |
| Employer  contributions made by the consolidated entity to Defined Benefit Funds during  the year |       | 53.8                            |       | 47.6 |   | 50.0 |   |
| Employer  contributions made by the consolidated entity to Accumulation Funds during  the year    |       | 30.0                            |       | 26.4 |   | 7.7 |   |

 

F - 63

----

 

Details of the funded statusof domestic and material defined benefit plans and of the net periodic pensioncost as prepared by consulting actuaries, are set out below in accordance withU.S. SFAS 132.  While not related toAustralian GAAP the details support the reconciliation to US GAAP set out inNote 33.

** **
| ** **                                      | ** ** | **For the Years Ended June 30** | ** ** |
|-------------------------------------------------|------------|---------------------------------|------------|
| ** **                                      | ** ** | **(in millions of A$)**         | ** ** |
| ** **                                      | ** ** | **Domestic**                    | ** ** | **Foreign** | ** ** |
| ** **                                      | ** ** | **2004**                        | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
| **Change in benefit obligation**                |       |                            |       |   |   |   |   |   |   |
| Benefit  obligation at beginning of year        |       | 222.4                           |       | 221.0 |   | 503.7 |   | 331.9 |   |
| Foreign  currency exchange variation            |       | —                          |       | — |   | 16.9 |   | (24.6 | ) |
| Service  cost                                   |       | 17.5                            |       | 15.6 |   | 21.0 |   | 18.6 |   |
| Interest  cost                                  |       | 13.3                            |       | 13.0 |   | 26.6 |   | 24.6 |   |
| Plan  participants’ contributions          |       | 2.9                             |       | 3.2 |   | 9.9 |   | 8.4 |   |
| Acquisitions                                    |       | —                          |       | — |   | — |   | 121.8 |   |
| Actuarial  (gain)/loss                          |       | 8.9                             |       | 8.1 |   | (0.7 | ) | 43.7 |   |
| Transfers                                       |       | —                          |       | — |   | — |   | (1.5 | ) |
| Expenses  (including tax)                       |       | (3.5                            | )          | (4.5 | ) | (0.4 | ) | 0.3 |   |
| Benefits  paid from plan assets                 |       | (25.4                           | )          | (34.0 | ) | (13.1 | ) | (18.5 | ) |
| Benefits  paid directly by consolidated entity  |       | —                          |       | — |   | (1.2 | ) | (1.0 | ) |
|                                            |       |                            |       |   |   |   |   |   |   |
| Estimated  benefit obligation at end of year    |       | 236.1                           |       | 222.4 |   | 562.7 |   | 503.7 |   |
|                                            |       |                            |       |   |   |   |   |   |   |
| **Change in plan assets**                       |       |                            |       |   |   |   |   |   |   |
| Fair  value of plan assets at beginning of year |       | 184.3                           |       | 197.4 |   | 340.2 |   | 256.1 |   |
| Exchange  rate adjustment                       |       | —                          |       | — |   | 13.2 |   | (18.6 | ) |
| Actual  return on plan assets                   |       | 29.3                            |       | 2.7 |   | 28.1 |   | 2.8 |   |
| Transfers                                       |       | —                          |       | — |   | — |   | (1.5 | ) |
| Consolidated  entity contribution               |       | 21.1                            |       | 19.5 |   | 24.1 |   | 24.0 |   |
| Plan  participants’ contributions          |       | 2.9                             |       | 3.2 |   | 9.9 |   | 8.4 |   |
| Benefits  paid from plan assets                 |       | (25.4                           | )          | (34.0 | ) | (13.1 | ) | (18.5 | ) |
| Expenses                                        |       | (3.5                            | )          | (4.5 | ) | (0.4 | ) | 0.3 |   |
| Acquisitions                                    |       | —                          |       | — |   | — |   | 87.2 |   |
|                                            |       |                            |       |   |   |   |   |   |   |
| Fair  value of plan assets at end of year       |       | 208.7                           |       | 184.3 |   | 402.0 |   | 340.2 |   |
|                                            |       |                            |       |   |   |   |   |   |   |
| **Reconciliation of Funded Status**             |       |                            |       |   |   |   |   |   |   |
|                                            |       |                            |       |   |   |   |   |   |   |
| Funded  status                                  |       | (27.4                           | )          | (38.1 | ) | (160.7 | ) | (163.5 | ) |
| Unrecognized  net actuarial loss                |       | 83.1                            |       | 98.1 |   | 88.9 |   | 95.3 |   |
| Unrecognized  prior service cost                |       | 1.1                             |       | 1.8 |   | — |   | — |   |
| Unrecognized  net transition obligation         |       | —                          |       | (2.5 | ) | 13.7 |   | 16.8 |   |
| Net  amount recognised                          |       | —                          |       | — |   | (64.3 | ) | (67.4 | ) |
|                                            |       |                            |       |   |   |   |   |   |   |
| Prepaid/(accrued)  benefit cost                 |       | 56.8                            |       | 59.3 |   | (122.4 | ) | (118.8 | ) |

 

F - 64

----

 
| ** **                                                                                       | ** ** | **For the Years Ended June 30** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                                       | ** ** | **(in millions of A$)**         | ** ** |
| ** **                                                                                       | ** ** | **Domestic**                    | ** ** | **Foreign** | ** ** |
| ** **                                                                                       | ** ** | **2004**                        | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| **Net periodic pension cost included the following components:**                                 |       |                            |       |   |   |   |   |   |   |   |   |   |   |
| Service  cost                                                                                    |       | 17.5                            |       | 15.6 |   | 14.6 |   | 21.0 |   | 18.6 |   | 11.5 |   |
| Interest  cost                                                                                   |       | 13.3                            |       | 13.0 |   | 14.5 |   | 26.6 |   | 24.6 |   | 18.7 |   |
| Expected  return on plan assets                                                                  |       | (13.0                           | )          | (13.5 | ) | (16.9 | ) | (22.5 | ) | (22.4 | ) | (18.7 | ) |
| Recognized  net actuarial loss                                                                   |       | 7.5                             |       | 5.7 |   | 4.1 |   | 4.5 |   | 0.6 |   | 0.1 |   |
| Net  amortization and deferral costs                                                             |       | (1.7                            | )          | (4.0 | ) | (4.0 | ) | 1.1 |   | 2.0 |   | 1.9 |   |
| Termination  benefit arising due to settlement/disposal of business (as required under  SFAS 88) |       | —                          |       | — |   | — |   | 1.1 |   | 5.3 |   | — |   |
|                                                                                             |       | 23.6                            |       | 16.8 |   | 12.3 |   | 31.8 |   | 28.7 |   | 13.5 |   |
| **Weighted average assumptions used to determine net periodic cost as  at June 30:**             |       |                            |       |   |   |   |   |   |   |   |   |   |   |
| Discount  rate                                                                                   |       | 5.8                             | %          | 6.5 | % | 6.5 | % | 5.2 | % | 6.0 | % | 6.0 | % |
| Rate  of increase in future salary levels                                                        |       | 3.5                             | %          | 3.5 | % | 3.5 | % | 3.6 | % | 3.9 | % | 4.0 | % |
| Expected  long-term rate of return on assets                                                     |       | 7.0                             | %          | 7.5 | % | 8.0 | % | 6.3 | % | 6.9 | % | 6.2 | % |
|                                                                                             |       |                            |       |   |   |   |   |   |   |   |   |   |   |
| **Weighted average assumptions used to determine benefit obligations as  at June 30:**           |       |                            |       |   |   |   |   |   |   |   |   |   |   |
| Discount  rate                                                                                   |       | 6.8                             | %          | 5.8 | % | 6.5 | % | 5.3 | % | 5.2 | % | 6.0 | % |
| Rate  of increase in future salary levels                                                        |       | 5.0                             | %          | 3.5 | % | 3.5 | % | 3.6 | % | 3.6 | % | 3.9 | % |

 

Notes:

 

(1)              Reconciliation of FundedStatus

 
| ** **                                              | ** ** | **For the Years Ended June 30** | ** ** |
|---------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                              | ** ** | **(in millions of A$)**         | ** ** |
| ** **                                              | ** ** | **Domestic**                    | ** ** | **Foreign** | ** ** |
| ** **                                              | ** ** | **2004**                        | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
| Funded  status                                          |       | (27.4                           | )          | (38.1 | ) | (160.7 | ) | (163.5 | ) |
| Unrecognized  net actuarial loss                        |       | 83.1                            |       | 98.1 |   | 88.9 |   | 95.3 |   |
| Unrecognized  prior service cost                        |       | 1.1                             |       | 1.8 |   | — |   | — |   |
| Unrecognized  net transition obligation                 |       | —                          |       | (2.5 | ) | 13.7 |   | 16.8 |   |
|                                                    |       |                            |       |   |   |   |   |   |   |
| Net  amount recognised                                  |       | 56.8                            |       | 59.3 |   | (58.1 | ) | (51.4 | ) |
| **Amounts recognized in the balance sheet consist of:** | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Prepaid/(accrued)  benefit cost                         |       | 56.8                            |       | 59.3 |   | (122.4 | ) | (118.8 | ) |
| Intangible  assets                                      |       | —                          |       | — |   | 9.3 |   | 10.3 |   |
| Accumulated  other comprehensive income                 |       | —                          |       | — |   | 55.0 |   | 45.4 |   |
| Outside  equity interest                                |       | —                          |       | — |   | — |   | 11.7 |   |
|                                                    |       |                            |       |   |   |   |   |   |   |
| Net  amount recognised                                  |       | 56.8                            |       | 59.3 |   | (58.1 | ) | (51.4 | ) |

 

F - 65

----

 

(2)              Additionalinformation for pension plans with accumulated benefit obligations in excess ofplan assets at June 30, 2004

 
| ** **                      | ** ** | **$m** | ** ** |
|---------------------------------|------------|--------|------------|
| Projected  benefit obligation   |       | 404.4  |       |
| Accumulated  benefit obligation |       | 364.3  |       |
| Fair  value of plan assets      |       | 264.5  |       |

 

All domestic plans have plan assets which exceed the accumulatedbenefit obligations.

 

(3)              Allocation of assets

 
| ** **                                    | ** ** | ** **    | ** ** | **Domestic** | ** ** | **Foreign** | ** ** |
|-----------------------------------------------|------------|---------------|------------|--------------|------------|-------------|------------|
| ** **                                    | ** ** | **Benchmark** | ** ** | **2004**     | ** ** | **2004**    | ** ** |
| **Plan Assets at end of Year**                | ** ** | ** **    | ** ** | ** **   | ** ** | ** **  | ** ** |
| Weighted  Average of Fair Value of Assets by: |       |          |       |         |       |        |       |
| Equity  securities                            |       | 55.2          | %          | 65.6         | %          | 48.2        | %          |
| Debt  securities                              |       | 34.7          | %          | 21.7         | %          | 42.6        | %          |
| Real  estate                                  |       | 1.6           | %          | —       |       | 2.4         | %          |
| Other                                         |       | 8.5           | %          | 12.7         | %          | 6.8         | %          |
| Total                                         |       | 100.0         | %          | 100.0        | %          | 100.0       | %          |

 

(4)              Accumulated benefitobligation

 

The accumulated benefit obligation for all domestic defined benefitpension plans at June 30, 2004 was $181.3 million (2003 $176.4 million).

 

The accumulated benefit obligation for all foreign defined benefitpension plans at June 30, 2004 was $494.3 million (2003 $434.9 million).

 

(5)              Movement in othercomprehensive income

 

The increase in the minimum liability included in other comprehensive incomefor the years ended June 30, 2004 and June 30, 2003 were $9.5 million and $38.8million respectively.

 

(6)              Estimated futurebenefit payments

 
| **Fiscal year ending:** | ** ** | **Domestic** | ** ** | **Foreign** | ** ** |
|-------------------------|------------|--------------|------------|-------------|------------|
| 30  June 2005           |       | 21.6         |       | 14.3        |       |
| 30  June 2006           |       | 23.1         |       | 15.0        |       |
| 30  June 2007           |       | 22.5         |       | 15.8        |       |
| 30  June 2008           |       | 24.1         |       | 16.1        |       |
| 30  June 2009           |       | 25.6         |       | 17.4        |       |
| Next  5 years           |       | 143.1        |       | 97.3        |       |
| Total                   |       | 260.0        |       | 175.9       |       |

 

(7)              Estimated futurecontributions

 

Employer contributions for defined benefit liabilities during the fiscalyear ending June 30, 2005 are expected to total $21.6 million for domesticplans and $24.1 million for foreign plans.

 

(8)              Expected return onasset assumption

 

The expected return on plan assets assumption is determined byweighting the expected long-term return for each asset class by the benchmarkallocation of assets to each class.  Thereturns used for each class are net of investment tax and investment fees.

 

F - 66

----

 

(9)              Investment strategy

 

Theinvestment strategy for Amcor’s defined benefit plans are varied, with theplans seeking to achieve moderate to high returns.  Investment target strategies for the materialdefined benefit plans include:

 

•                                          High returns in the long term, while tolerating a reasonably highdegree of variability of returns over short periods.

•                                          A balance of 50% equity and 50% debt, which would be expected toproduce a moderately high return over the long-term, with only a moderatedegree of variability of returns over short periods.

 

**Note27     SEGMENTREPORTING**

 

Theconsolidated entity operates its packaging business through the following businesssegments:

 

*Amcor PET Packaging* manufactures PET containers andpreforms and provides them to consumer goods companies worldwide.  Products manufactured include PET bottles forcarbonated soft drinks, mineral water, juices, spirits and beer, milk and otherdairy products, PET containers for hot-filled drinks and food products, PETcontainers for household chemicals, preforms (for moulding by customers) and recycledPET materials.  The business has 83plants across 21 countries including 20 operations co-located with customers.

 

*Amcor**Australasia*manufactures a broad range of packaging items throughout Australia and NewZealand, including corrugated boxes, cartons, packaging papers, aluminiumbeverage cans, aluminium and steel aerosol cans, steel cans for food,  flexible and film packaging, pouches, PETplastic jars and bottles, rigid plastic containers, glass wine bottles, plasticand metal closures and multiwall sacks. Major manufacturing sites include 13 corrugated box plants, 12 metalpackaging plants, 13 flexible and plastic packaging plants, 13 carton and sackplants, four paper mills and a glass plant.

 

*AmcorFlexibles*isa manufacturer of flexible packaging, servicing a range of food, beverage,healthcare and industrial segments.  Itstechnological capabilities include gravure and flexographic printing, coatingand lamination, co-extrusion, metallising, micro-perforation, and pouch, bagmaking and Die Cut lids.  Amcor Flexiblesoperates 40 manufacturing plants throughout Europe and 7 in the Americas.

 

*AmcorSunclipse*is a manufacturer and distributor of industrial packaging supplies and relatedproducts and services.  The manufacturingbusiness produces corrugated board and boxes and consists of three corrugatedsheet operations and nine manufactured packaging products facilities.  The distribution group, known as the Kent H.Landsberg Company, operates 31 divisions in 13 US states and four in Mexico.The distribution group sells all types of industrial and janitorial suppliesincluding flexible packaging.

 

*AmcorRentsch & Closures*

 

•                  *Amcor Rentsch* is a producer of specialty folding cartonsfor the tobacco, cosmetics and confectionery industries.  It has seven manufacturing plants in sixcountries – Switzerland (2), France, Germany, Poland, Portugal and Russia.

•                  Amcor Closures is a producer of metal and plastic closures.  The business’ main products are vacuumclosures for glass jars and bottles.  Ithas 12 manufacturing plants in 11 countries.

 

*Amcor Asia*, headquartered in Singapore, supplies corrugated andtobacco packaging in the region.  Otherproducts supplied include flexible packaging, paper sacks and closures.   The business has 15 manufacturing plantsacross five countries - Singapore, Malaysia, Indonesia, China and Thailand.

 

*Other* largely representsamounts attributable to the consolidated entity’s corporate activities.

 

The primaryreporting segments have been classified based on the consolidated entity’smanagement reporting system.  Thesecondary segments have been classified based on the geographical location ofthe consolidated entity’s business segments. Comparative information has been restated for changes in theconsolidated entity’s management reporting and business segments.

 

Inter-segmentpricing is determined on an arm’s-length basis.

 

F - 67

----

 

**BusinessSegment**

** **
| **For the year**                                                                  | ** ** | **Amcor Australasia** | ** ** | **Amcor PET** | ** ** | **Amcor Sunclipse** | ** ** |
|-----------------------------------------------------------------------------------|------------|-----------------------|------------|---------------|------------|---------------------|------------|
| **ended June 30**                                                                 | ** ** | **2004**              | ** ** | **2003**      | ** ** | **2002**            | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                                                                        | ** ** | **$****m**            | ** ** | **$****m**    | ** ** | **$****m**          | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** |
| **Revenue**                                                                       |       |                  |       |          |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Net  sales                                                                        |       | 2,524.3               |       | 2,440.1       |       | 2,361.9             |       | 3,205.2 |   | 3,234.7 |   | 800.8 |   | 1,155.4 |   | 1,296.1 |   | 1,413.2 |   |
| Inter-segment  revenue                                                            |       | 13.6                  |       | 15.6          |       | 5.8                 |       | — |   | 1.5 |   | 1.7 |   | 2.7 |   | 2.9 |   | — |   |
| Total  segment revenue                                                            |       | 2,537.9               |       | 2,455.7       |       | 2,367.7             |       | 3,205.2 |   | 3,236.2 |   | 802.5 |   | 1,158.1 |   | 1,299.0 |   | 1,413.2 |   |
| Other  unallocated revenue                                                        |       |                  |       |          |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total  Revenue                                                                    |       |                  |       |          |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |       |                  |       |          |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Result**                                                                        |       |                  |       |          |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating  profit before interest, income tax, amortization and significant items |       | 316.5                 |       | 282.8         |       | 254.2               |       | 268.2 |   | 301.6 |   | 79.2 |   | 57.6 |   | 84.8 |   | 95.2 |   |
| Operating  profit before interest income tax and significant items                |       | 300.6                 |       | 267.1         |       | 238.7               |       | 199.9 |   | 220.6 |   | 68.9 |   | 43.9 |   | 68.5 |   | 78.1 |   |
| Net  borrowing costs                                                              |       |                  |       |          |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating  profit from before income tax and significant items                    |       |                  |       |          |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Significant  items                                                                |       | —                |       | —        |       | 56.9                |       | (19.9 | ) | (59.5 | ) | — |   | — |   | — |   | (19.9 | ) |
| Operating profit before income  tax                                               |       |                  |       |          |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation  & amortization                                                  |       | 123.6                 |       | 125.3         |       | 108.1               |       | 261.8 |   | 271.1 |   | 72.4 |   | 25.8 |   | 30.9 |   | 33.1 |   |
| Other  non-cash expenses                                                          |       | (3.2                  | )          | 75.9          |       | 50.4                |       | 3.4 |   | 36.6 |   | 28.8 |   | 17.1 |   | 19.9 |   | 32.2 |   |

 
| **For the year**                                                                  | ** ** | **Amcor Flexibles** | ** ** | **Amcor Asia** | ** ** | **Amcor Rentsch/Amcor  Closures** | ** ** |
|-----------------------------------------------------------------------------------|------------|---------------------|------------|----------------|------------|-----------------------------------|------------|
| **ended June 30**                                                                 | ** ** | **2004**            | ** ** | **2003**       | ** ** | **2002**                          | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                                                                        | ** ** | **$****m**          | ** ** | **$****m**     | ** ** | **$****m**                        | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** |
| **Revenue**                                                                       |       |                |       |           |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Net  sales                                                                        |       | 2,233.7             |       | 2,166.2        |       | 1,975.0                           |       | 248.9 |   | 263.4 |   | 310.4 |   | 1,009.2 |   | 1,309.4 |   | 611.1 |   |
| Inter-segment  revenue                                                            |       | 7.3                 |       | 4.1            |       | 1.6                               |       | 0.6 |   | — |   | — |   | 3.0 |   | 1.2 |   | 0.2 |   |
| Total  segment revenue                                                            |       | 2,241.0             |       | 2,170.3        |       | 1,976.6                           |       | 249.5 |   | 263.4 |   | 310.4 |   | 1,012.2 |   | 1,310.6 |   | 611.3 |   |
| Other  unallocated revenue                                                        |       |                |       |           |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total  Revenue                                                                    |       |                |       |           |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |       |                |       |           |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Result**                                                                        |       |                |       |           |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating  profit before interest, income tax, amortization and significant items |       | 131.2               |       | 132.6          |       | 93.2                              |       | 30.5 |   | 32.1 |   | 44.5 |   | 100.6 |   | 83.3 |   | 48.6 |   |
| Operating  profit before interest income tax and significant items                |       | 113.5               |       | 120.1          |       | 83.5                              |       | 29.6 |   | 31.5 |   | 43.6 |   | 89.5 |   | 70.8 |   | 47.6 |   |
| Net  borrowing costs                                                              |       |                |       |           |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating  profit from before income tax and significant items                    |       |                |       |           |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Significant  items                                                                |       | (69.3               | )          | —         |       | —                            |       | — |   | — |   | — |   | — |   | (8.2 | ) | (18.6 | ) |
| Operating profit before income  tax                                               |       |                |       |           |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation  & amortization                                                  |       | 114.1               |       | 79.7           |       | 87.5                              |       | 13.8 |   | 15.4 |   | 16.5 |   | 61.7 |   | 84.4 |   | 19.6 |   |
| Other  non-cash expenses                                                          |       | 86.4                |       | 26.6           |       | 132.3                             |       | 2.0 |   | (0.3 | ) | 6.8 |   | 8.7 |   | 80.2 |   | 3.1 |   |

 
| **For the year**                                                                  | ** ** | **Other** | ** ** | **Inter Segment  Eliminations**** ** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------------------------------------------|------------|-----------|------------|-------------------------------------------|------------|------------------|------------|
| **ended June 30**                                                                 | ** ** | **2004**  | ** ** | **2003**                                  | ** ** | **2002**         | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                                                                        | ** ** | **$m**    | ** ** | **$m**                                    | ** ** | **$m**           | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** |
| **Revenue**                                                                       |       |      |       |                                      |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Net  sales                                                                        |       | 29.2      |       | —                                    |       | —           |       | — |   | — |   | — |   | 10,405.9 |   | 10,709.9 |   | 7,472.4 |   |
| Inter-segment  revenue                                                            |       | —    |       | —                                    |       | —           |       | (27.2 | ) | (25.3 | ) | (9.3 | ) | — |   | — |   | — |   |
| Total  segment revenue                                                            |       | 29.2      |       | —                                    |       | —           |       | (27.2 | ) | (25.3 | ) | (9.3 | ) | 10,405.9 |   | 10,709.9 |   | 7,472.4 |   |
| Other  unallocated revenue                                                        |       |      |       |                                      |       |             |       |   |   |   |   |   |   | 175.0 |   | 248.1 |   | 1,059.8 |   |
| Total  Revenue                                                                    |       |      |       |                                      |       |             |       |   |   |   |   |   |   | 10.580.9 |   | 10,958.0 |   | 8,532.2 |   |
|                                                                              |       |      |       |                                      |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Result**                                                                        |       |      |       |                                      |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating  profit before interest, income tax, amortization and significant items |       | (73.5     | )          | (56.8                                     | )          | 7.5              |       |   |   |   |   |   |   | 831.1 |   | 860.4 |   | 622.4 |   |
| Operating  profit before interest income tax and significant items                |       | (73.5     | )          | (57.0                                     | )          | 7.5              |       |   |   |   |   |   |   | 703.5 |   | 721.6 |   | 567.9 |   |
| Net  borrowing costs                                                              |       |      |       |                                      |       |             |       |   |   |   |   |   |   | (132.2 | ) | (146.3 | ) | (121.5 | ) |
| Operating  profit from before income tax and significant items                    |       |      |       |                                      |       |             |       |   |   |   |   |   |   | 571.3 |   | 575.3 |   | 446.4 |   |
| Significant  items                                                                |       | (10.6     | )          | (19.0                                     | )          | 553.4            |       |   |   |   |   |   |   | (99.8 | ) | (86.7 | ) | 534.8 |   |
| Operating profit before income  tax                                               |       |      |       |                                      |       |             |       |   |   |   |   |   |   | 471.5 |   | 488.6 |   | 981.2 |   |
| Depreciation  & amortization                                                  |       | 3.0       |       | 0.4                                       |       | 3.9              |       | — |   | — |   | — |   | 603.8 |   | 607.2 |   | 341.1 |   |
| Other  non-cash expenses                                                          |       | 11.1      |       | 12.6                                      |       | (12.2            | )          | — |   | — |   | — |   | 125.5 |   | 251.5 |   | 241.4 |   |

 

F - 68

----

 

**BusinessSegment**

 
| **For the year**          | ** ** | **Amcor  Australasia** | ** ** | **Amcor PET** | ** ** | **Amcor Sunclipse** | ** ** |
|---------------------------|------------|------------------------|------------|---------------|------------|---------------------|------------|
| **ended June 30**         | ** ** | **2004**               | ** ** | **2003**      | ** ** | **2004**            | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                | ** ** | **$m**                 | ** ** | **$m**        | ** ** | **$m**              | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** |
| Goodwill                  |       | 270.5                  |       | 266.7         |       | 1,391.0             |       | 1,375.5 |   | 248.4 |   | 251.5 |   |
| Accumulated  amortisation |       | (156.4                 | )          | (138.3        | )          | (183.0              | )          | (116.5 | ) | (116.8 | ) | (106.2 | ) |
| Net  Goodwill             |       | 114.1                  |       | 128.4         |       | 1,208.0             |       | 1,259.0 |   | 131.6 |   | 145.3 |   |
| Segment  assets           |       | 2,481.9                |       | 2,447.9       |       | 3,484.3             |       | 3,297.2 |   | 561.5 |   | 560.8 |   |
| Capital  expenditure      |       | 242.6                  |       | 262.4         |       | 275.3               |       | 2,727.1 |   | 23.2 |   | 13.3 |   |

 
| **For the year**          | ** ** | **Amcor Flexibles** | ** ** | **Amcor Asia** | ** ** | **Amcor  Rentsch/Amcor  Closures** | ** ** |
|---------------------------|------------|---------------------|------------|----------------|------------|------------------------------------|------------|
| **ended June 30**         | ** ** | **2004**            | ** ** | **2003**       | ** ** | **2004**                           | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                | ** ** | **$m**              | ** ** | **$m**         | ** ** | **$m**                             | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** |
| Goodwill                  |       | 408.1               |       | 229.0          |       | 69.8                               |       | 63.4 |   | 264.6 |   | 239.3 |   |
| Accumulated  amortisation |       | (39.8               | )          | (21.1          | )          | (56.4                              | )          | (55.9 | ) | (61.6 | ) | (48.6 | ) |
| Net  Goodwill             |       | 368.3               |       | 207.9          |       | 13.4                               |       | 7.5 |   | 203.0 |   | 190.7 |   |
| Segment  assets           |       | 2,173.5             |       | 1,758.9        |       | 339.7                              |       | 320.2 |   | 1,013.0 |   | 1,033.2 |   |
| Capital  expenditure      |       | 587.6               |       | 143.6          |       | 29.5                               |       | 5.6 |   | 63.5 |   | 716.6 |   |

 
| **For the year**          | ** ** | **Other** | ** ** | **Inter segment  eliminations** | ** ** | **Consolidated** | ** ** |
|---------------------------|------------|-----------|------------|---------------------------------|------------|------------------|------------|
| **ended June 30**         | ** ** | **2004**  | ** ** | **2003**                        | ** ** | **2004**         | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                | ** ** | **$m**    | ** ** | **$m**                          | ** ** | **$m**           | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** |
| Goodwill                  |       | —    |       | —                          |       | —           |       | — |   | 2,652.4 |   | 2,425.4 |   |
| Accumulated  amortisation |       | —    |       | —                          |       | —           |       | — |   | (614.0 | ) | (486.6 | ) |
| Net  Goodwill             |       | —    |       | —                          |       | —           |       | — |   | 2,038.4 |   | 1,938.8 |   |
| Segment  assets           |       | 232.5     |       | 144.1                           |       | —           |       | — |   | 10,286.4 |   | 9,562.3 |   |
| Capital  expenditure      |       | —    |       | 1.0                             |       | —           |       | — |   | 1,221.7 |   | 3,869.6 |   |

 

Segment results and assets include items directly attributable to asegment as well as those that can be allocated on a reasonable basis, includinginter-segment eliminations.  Unallocateditems mainly comprise other revenue.  Theaccounting policies used in determining segment operating profit are consistentwith the policies applied to the consolidated financial report.

 

Interest and net debt are managed by the central treasury function andtherefore it is not considered appropriate to analyse these by segment.

 

**Geographic Segment**

 

The analysis of turnover isbased on the country in which the order is received and would not be materiallydifferent to the country in which the goods are produced.

** **
| **For the year ended**      | ** ** | **Australasia** | ** ** | **Europe** | ** ** | **North America** | ** ** |
|-----------------------------|------------|-----------------|------------|------------|------------|-------------------|------------|
| **June 30**                 | ** ** | **2004**        | ** ** | **2003**   | ** ** | **2002**          | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                  | ** ** | **$m**          | ** ** | **$m**     | ** ** | **$m**            | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** |
| Net  sales                  |       | 2,524.3         |       | 2,440.1    |       | 2,361.9           |       | 3,852.3 |   | 4,005.3 |   | 2,412.9 |   | 3,120.2 |   | 3,519.4 |   | 2,258.2 |   |
| Long  lived assets (1) |       | 1,572.8         |       | 1,545.4    |       |              |       | 1,515.9 |   | 1,436.3 |   |   |   | 1,140.2 |   | 1,001.4 |   |   |   |
| Segment  assets             |       | 2,501.0         |       | 2,511.0    |       |              |       | 3,415.2 |   | 3,312.0 |   |   |   | 3,048.0 |   | 2,770.0 |   |   |   |

** **
| **For the year ended**      | ** ** | **Latin America** | ** ** | **Asia**   | ** ** | **Consolidated** | ** ** |
|-----------------------------|------------|-------------------|------------|------------|------------|------------------|------------|
| **June 30**                 | ** ** | **2004**          | ** ** | **2003**   | ** ** | **2002**         | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                  | ** ** | **$****m**        | ** ** | **$****m** | ** ** | **$****m**       | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** | **$****m** | ** ** |
| Net  sales                  |       | 632.0             |       | 462.6      |       | 129.0            |       | 277.1 |   | 282.5 |   | 310.4 |   | 10,405.9 |   | 10,709.9 |   | 7,472.4 |   |
| Long  lived assets (1) |       | 341.4             |       | 174.5      |       |             |       | 174.7 |   | 138.0 |   |   |   | 4,745.0 |   | 4,295.6 |   |   |   |
| Segment  assets             |       | 894.1             |       | 609.3      |       |             |       | 428.1 |   | 360.0 |   |   |   | 10,286.4 |   | 9,562.3 |   |   |   |

** **

----

(1)          Long lived assets comprise tangibleassets expected to be used for more than 12 months.

(2)          The following table presents netsales, long lived assets and segment assets for each material country for theyears ended June 30, 2004 and June 30, 2003. It is not possible to prepare this information for the year ended June30, 2002.

 
| ** **                 | ** ** | **Domestic** | ** ** | **United States of  America** | ** ** | **United Kingdom** | ** ** | **Other Foreign  (Comprises 37 countries)** | ** ** | **Consolidated** | ** ** |
|----------------------------|------------|--------------|------------|-------------------------------|------------|--------------------|------------|---------------------------------------------|------------|------------------|------------|
| ** **                 | ** ** | **2004**     | ** ** | **2003**                      | ** ** | **2004**           | ** ** | **2003**                                    | ** ** | **2004**         | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                 | ** ** | **$m**       | ** ** | **$m**                        | ** ** | **$m**             | ** ** | **$m**                                      | ** ** | **$m**           | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** |
| Net sales                  |       | 2,089.3      |       | 2,054.3                       |       | 2,783.0            |       | 3,161.6                                     |       | 839.3            |       | 827.7 |   | 4,694.3 |   | 4,666.3 |   | 10,405.9 |   | 10,709.9 |   |
| Long lived assets (1) |       | 1,409.5      |       | 1,328.5                       |       | 969.9              |       | 860.9                                       |       | 258.9            |       | 207.1 |   | 2,106.7 |   | 1,899.1 |   | 4,745.0 |   | 4,295.6 |   |
| Segment assets             |       | 2,192.5      |       | 2,216.9                       |       | 2,731.8            |       | 2,390.0                                     |       | 589.0            |       | 481.2 |   | 4,773.1 |   | 4,474.2 |   | 10,286.4 |   | 9,562.3 |   |

 

F - 69

----

 

**Note 28     ACQUISITION OFSUBSIDIARIES/BUSINESSES**

 

The consideration paid for businesses/controlled entities and the netassets at the dates of acquisition are set out in the table below:

 
| **Businesses/Controlled  Entities  Acquired**       | ** ** | **Date of Acquisition** | ** ** | **Net Tangible  Assets  Acquired** | ** ** | **Proportion of Shares  Acquired** | ** ** | **Consideration** | ** ** | **Method  of  Funding** | ** ** |
|-----------------------------------------------------|------------|-------------------------|------------|------------------------------------|------------|------------------------------------|------------|-------------------|------------|-------------------------|------------|
| ** **                                          | ** ** | ** **              | ** ** | **A$’m**                      | ** ** | ** **                         | ** ** | **A$’m**     | ** ** | ** **              | ** ** |
| **2004**                                            |       |                    |       |                               |       |                               |       |              |       |                    |       |
| Alcoa’s  Latin American PET Packaging business |       | October 1,  2003        |       | 60.1                               |       | 100                                | %          | 110.0             |       | Cash                    |       |
| Rexam’s  Healthcare flexibles business         |       | October 17,  2003       |       | 189.1                              |       | 100                                | %          | 327.1             |       | Cash                    |       |
| Minority  interest in Amcor Flexibles Europe        |       | July 1, 2003            |       | 135.5                              |       |                               | (c)        | 165.1             |       | Cash                    |       |
| Other  – refer below for further details       |       |                    |       | 5.7                                |       |                               |       | 15.6              |       | Cash                    |       |
|                                                |       |                    |       | 390.4                              |       |                               |       | 617.8             |       |                    |       |
| **Other represented by:**                           |       |                    |       |                               |       |                               |       |              |       |                    |       |
| Central  Coast Cartons Pty Ltd                      |       | July 1, 2003            |       |                               |       |                               | (c)        |              |       | Cash                    |       |
| PPI  PET Products International del Peru            |       | July 1, 2003            |       |                               |       |                               | (c)        |              |       | Cash                    |       |
| Rota  Die International Pty Ltd                     |       | September  12, 2003     |       |                               |       |                               | (c)        |              |       | Cash                    |       |
| Ryco  Dies Ltd                                      |       | September  12, 2003     |       |                               |       |                               | (c)        |              |       | Cash                    |       |
| KDS  Packaging & Printing Inc                   |       | October 16,  2003       |       |                               |       | 100                                | %          |              |       | Cash                    |       |
| Hanson  Staple Company Inc                          |       | December 19,  2003      |       |                               |       | 100                                | %          |              |       | Cash                    |       |
| Mayer  Meyers                                       |       | December 12,  2003      |       |                               |       |                               | (a)        |              |       | Cash                    |       |
|                                                |       |                    |       |                               |       |                               |       |              |       |                    |       |
| **2003**                                            |       |                    |       |                               |       |                               |       |              |       |                    |       |
| ** **                                          |       |                    |       |                               |       |                               |       |              |       |                    |       |
| Schmalbach-Lubeca                                   |       | July 1, 2002            |       | 1,214.2                            |       | 100                                | %          | 2,827.5           |       | Cash                    |       |
| Other  – refer below for further details       |       |                    |       | (4.5                               | )          |                               |       | 30.6              |       | Cash                    |       |
|                                                |       |                    |       | 1,209.7                            |       |                               |       | 2,858.1           |       |                    |       |
| **Other represented by:**                           |       |                    |       |                               |       |                               |       |              |       |                    |       |
| Central  Coast Cartons                              |       | July 1, 2002            |       |                               |       | 15                                 | %          |              |       | Cash                    |       |
| Amcor  Flexibles Zhongshan                          |       | July 1, 2002            |       |                               |       |                               | (c)        |              |       | Cash                    |       |
| Brick,  Malow and Camco                             |       | July 1, 2002            |       |                               |       |                               | (b)        |              |       | Cash                    |       |
| Injepet                                             |       | July 1, 2002            |       |                               |       |                               | (c)        |              |       | Cash                    |       |
| Leaderpack                                          |       | August 1,  2002         |       |                               |       |                               | (c)        |              |       | Cash                    |       |
| Flexoprint                                          |       | March 31,  2003         |       |                               |       | 100                                | %          |              |       | Cash                    |       |
| Incentive  Innovations                              |       | May 16, 2003            |       |                               |       |                               | (a)        |              |       | Cash                    |       |
| LBR  Marketing                                      |       | June 24,  2003          |       |                               |       |                               | (a)        |              |       | Cash                    |       |
| ACI  Closures                                       |       | June 30,  2003          |       |                               |       |                               | (a)        |              |       | Cash                    |       |

 

----

(a) Acquisition of businessonly.

(b) Additional payment onshares acquired in prior years.

(c) Acquisition of outstandingshares in former partly-owned subsidiary.

 

F - 70

----

 

**Reconciliation of Net Tangible Assets Acquired**

 
| ** **                                          | ** ** | **For the Years Ended  June 30** | ** ** |
|-----------------------------------------------------|------------|----------------------------------|------------|
| ** **                                          | ** ** | **(in millions of A$)**          | ** ** |
| ** **                                          | ** ** | **2004**                         | ** ** | **2003** | ** ** |
| **Net assets acquired:**                            |       |                             |       |   |   |
| Current  receivables                                |       | 112.7                            |       | 341.1 |   |
| Inventories                                         |       | 67.5                             |       | 457.5 |   |
| Investments                                         |       | —                           |       | 0.9 |   |
| Property,  plant and equipment                      |       | 188.1                            |       | 1,311.6 |   |
| Other  assets                                       |       | 4.8                              |       | 44.6 |   |
| Current  liabilities - creditors and borrowings     |       | (93.2                            | )          | (606.6 | ) |
| Non-current  liabilities - creditors and borrowings |       | (5.1                             | )          | — |   |
| Provisions  (including employee entitlements)       |       | (23.6                            | )          | (262.6 | ) |
| Minority  interests                                 |       | (4.3                             | )          | (76.8 | ) |
| Buy-out  of minority interest                       |       | 143.5                            |       | — |   |
| **NET TANGIBLE ASSETS ACQUIRED**                    |       | 390.4                            |       | 1,209.7 |   |
|                                                |       |                             |       |   |   |
| **Reconciliation of Goodwill at Cost**              |       |                             |       |   |   |
| Consideration  paid                                 |       | 617.8                            |       | 2,858.1 |   |
| Less  net tangible assets acquired                  |       | (390.4                           | )          | (1,209.7 | ) |
| Goodwill  on acquisition                            |       | 227.4                            |       | 1,648.4 |   |
| Exchange  fluctuation on overseas goodwill          |       | (0.4                             | )          | (346.1 | ) |
| Goodwill  disposed                                  |       | —                           |       | (60.5 | ) |
| Goodwill  adjustments current year                  |       | —                           |       | 8.2 |   |
| **INCREASE IN GOODWILL AT COST**                    |       | 227.0                            |       | 1,250.0 |   |

 

F - 71

----

 

**Note 29     DISPOSAL OF SUBSIDIARIES/BUSINESSES**

 

On September 1, 2003, the consolidated entitysold it’s ownership of Tritello AB.  Theconsideration received and the net assets of disposed controlled entities andsubsidiaries at the dates of disposal are set out in the table below:

 

On December 31, 2002, the consolidated entitysold its 65% stake of Amcor White Cap LLC to Silgan Holdings Inc, its 35% jointventure partner.  The joint ventureconsisted of seven plants in the United States and one plant in Mexico.  Amcor White Cap LLC was formerly part of theconsolidated entity’s Amcor Rentsch/Closures business segment.

 

Gains/losses arising from the disposal ofsubsidiaries and businesses are included in the operating profit before incometax reported on F-2.

 
| ** **                                                           | ** ** | **For the Years Ended  June 30** | ** ** |
|----------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                           | ** ** | **(in millions of A$)**          | ** ** |
| ** **                                                           | ** ** | **2004**                         | ** ** | **2003** | ** ** |
| Consideration  received:                                             |       |                             |       |   |   |
| Cash  received                                                       |       | 2.1                              |       | 186.4 |   |
| Cash  accrued                                                        |       | —                           |       | 38.6 |   |
|                                                                 |       | 2.1                              |       | 225.0 |   |
| Net  assets disposed:                                                |       |                             |       |   |   |
| Cash,  net of bank overdraft                                         |       |                             |       | 1.1 |   |
| Current  receivables                                                 |       | 1.4                              |       | 15.4 |   |
| Inventories                                                          |       | 1.5                              |       | 89.8 |   |
| Property,  plant and equipment                                       |       | 0.2                              |       | 219.2 |   |
| Intangibles                                                          |       | —                           |       | 60.5 |   |
| Current  liabilities – creditors and borrowings                 |       | (1.6                             | )          | (45.9 | ) |
| Provisions                                                           |       | (0.4                             | )          | (73.6 | ) |
| Minority  interests                                                  |       | —                           |       | (47.6 | ) |
|                                                                 |       | 1.1                              |       | 218.9 |   |
| Gross  profit/(loss) on disposal                                     |       | 1.0                              |       | 6.1 |   |
|                                                                 |       | 2.1                              |       | 225.0 |   |
|                                                                 |       |                             |       |   |   |
| Cash  received                                                       |       | 2.1                              |       | 186.4 |   |
| Cash,  net of bank overdraft disposal                                |       | —                           |       | (1.1 | ) |
| Cash  received in current period for entity disposed in prior period |       | 38.1                             |       | 0.9 |   |
| **NET INFLOW OF CASH**                                               |       | 40.2                             |       | 186.2 |   |

 

F - 72

----

 

**Note30     ADDITIONAL FINANCIAL INSTRUMENTSDISCLOSURE**

 

**InterestRate Risk**

 

The consolidated entity isexposed to movements in interest rates under various debt facilities.  By monitoring global interest rates and,where appropriate, hedging interest rate exposures, the company is able tomanage the consolidated entity’s interest rate risk.

*** ***

***Cross Currency Interest RateSwaps, Interest Rate Swaps, Options and Forward Rate Agreements.***

 

Interest rate swaps andforward rate agreements allow the consolidated entity to swap floating rate borrowingsinto fixed rates. Interest rate swaps are also used to swap fixed rateborrowings into floating rates.  Crosscurrency interest rate swaps allow the consolidated entity to swap long termAustralian denominated borrowings into foreign currencies, to hedge theinvestment in self sustaining foreign operations.  Maturities of swap contracts are principallybetween one and three years.

 

Each contract involvesquarterly or semi-annual payment or receipt of the net amount of interest.  Floating rates are based on interest ratesettings in the currencies concerned plus the consolidated entity’s creditmargin.

 

There were no forward rateagreements outstanding at year end (2003 nil).

 

From time to time, theconsolidated entity also enters into interest rate options to reduce the impactof changes in interest rates on floating rate long-term debt.  There were no interest rate optionsoutstanding at year end (2003 nil).

 

***Interest Rate Risk Exposures***

 

Exposure to interest raterisk and the effective weighted average interest rate for classes of financialassets and liabilities is set out below:

 

F - 73

----

 

**Fixedinterest maturing in:**

 
| **2004  $million**                          | ** ** | **Floating  Interest  Rate** | ** ** | **1 Year  or Less** | ** ** | **Over 1 to  5 Years** | ** ** | **More  Than 5  Years** | ** ** | **Non-  Interest  Bearing** | ** ** | **Total** | ** ** | **Weighted  Average  Interest  Rate** | ** ** |
|---------------------------------------------|------------|------------------------------|------------|---------------------|------------|------------------------|------------|-------------------------|------------|-----------------------------|------------|-----------|------------|---------------------------------------|------------|
|                                        |       |                         |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| **Financial Assets**                        |       |                         |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| Cash                                        |       | 131.0                        |       | —              |       | —                 |       | —                  |       | —                      |       | 131.0     |       | 2.25                                  | %          |
| Receivables                                 |       | 17.3                         |       | —              |       | —                 |       | —                  |       | 1,615.9                     |       | 1,633.2   |       | 3.53                                  | %          |
| Other financial assets                      |       | —                       |       | —              |       | —                 |       | —                  |       | 12.9                        |       | 12.9      |       | —                                |       |
|                                        |       | 148.3                        |       | —              |       | —                 |       | —                  |       | 1,628.8                     |       | 1,777.1   |       | 2.40                                  | %          |
| **Financial Liabilities**                   |       |                         |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| Payables                                    |       | —                       |       | —              |       | —                 |       | —                  |       | 1,762.2                     |       | 1,762.2   |       | —                                |       |
| Bank and other loans                        |       | 833.4                        |       | 2.5                 |       | 40.8                   |       | —                  |       | 6.1                         |       | 882.8     |       | 3.64                                  | %          |
| Commercial paper                            |       | 186.3                        |       | —              |       | —                 |       | —                  |       | —                      |       | 186.3     |       | 1.40                                  | %          |
| US$ Notes                              |       | —                       |       | —              |       | —                 |       | 723.7                   |       | —                      |       | 723.7     |       | 5.83                                  | %          |
| Eurobond                                    |       | —                       |       | —              |       | —                 |       | 612.0                   |       | —                      |       | 612.0     |       | 4.25                                  | %          |
| Leases                                      |       | 1.1                          |       | 2.1                 |       | 31.6                   |       | 65.1                    |       | —                      |       | 99.9      |       | 5.95                                  | %          |
| Distributions payable                       |       | —                       |       | —              |       | —                 |       | —                  |       | 8.8                         |       | 8.8       |       | —                                |       |
| Employee entitlements                       |       | —                       |       | —              |       | 74.2                   |       | —                  |       | 241.3                       |       | 315.5     |       | 6.00                                  | %          |
|                                        |       | 1,020.8                      |       | 4.6                 |       | 146.6                  |       | 1,400.8                 |       | 2,018.4                     |       | 4,591.2   |       | 4.35                                  | %          |
| Undated subordinated convertible securities |       | —                       |       | —              |       | 332.3                  |       | —                  |       | —                      |       | 332.3     |       | 7.25                                  | %          |
|                                        |       | 1,020.8                      |       | 4.6                 |       | 478.9                  |       | 1,400.8                 |       | 2,018.4                     |       | 4,923.5   |       | 4.69                                  | %          |
| **Interest Rate Swaps**                     |       |                         |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| USD                                         |       | (8.3                         | )          | —              |       | 8.3                    |       | —                  |       | —                      |       | —    |       | 7.65                                  | %          |
| EUR                                         |       | (480.0                       | )          | —              |       | 480.0                  |       | —                  |       | —                      |       | —    |       | 4.81                                  | %          |
| AUD                                         |       | 480.0                        |       | —              |       | (480.0                 | )          | —                  |       | —                      |       | —    |       | (5.67                                 | )%         |
|                                        |       | (8.3                         | )          | —              |       | 8.3                    |       | —                  |       | —                      |       | —    |       | 4.55                                  | %          |
| **Cross Currency Interest Rate Swaps**      |       |                         |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| AUD                                         |       | 607.0                        |       | —              |       | —                 |       | —                  |       | —                      |       | 607.0     |       | 5.54                                  | %          |
| EUR                                         |       | (607.0                       | )          | —              |       | —                 |       | —                  |       | —                      |       | (607.0    | )          | (1.94                                 | )%         |
| AUD                                         |       | 116.0                        |       | —              |       | —                 |       | —                  |       | —                      |       | 116.0     |       | 6.19                                  | %          |
| CAD                                         |       | (116.0                       | )          | —              |       | —                 |       | —                  |       | —                      |       | (116.0    | )          | (2.89                                 | )%         |
|                                        |       | —                       |       | —              |       | —                 |       | —                  |       | —                      |       | —    |       | 3.87                                  | %          |

 

F - 74

----

 

**Fixedinterest maturing in:**

 
| **2003  $million**                          | ** ** | **Floating  Interest Rate** | ** ** | **1 Year  or Less** | ** ** | **Over 1 to  5 Years** | ** ** | **More  Than 5  Years** | ** ** | **Non-  Interest  Bearing** | ** ** | **Total** | ** ** | **Weighted  Average  Interest  Rate** | ** ** |
|---------------------------------------------|------------|-----------------------------|------------|---------------------|------------|------------------------|------------|-------------------------|------------|-----------------------------|------------|-----------|------------|---------------------------------------|------------|
|                                        |       |                        |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| **Financial Assets**                        |       |                        |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| Cash                                        |       | 141.5                       |       | —              |       | —                 |       | —                  |       | —                      |       | 141.5     |       | 2.61                                  | %          |
| Receivables                                 |       | 20.5                        |       | —              |       | —                 |       | —                  |       | 1,565.6                     |       | 1,586.1   |       | 3.28                                  | %          |
| Other financial assets                      |       | —                      |       | —              |       | —                 |       | —                  |       | 21.5                        |       | 21.5      |       | —                                |       |
|                                        |       | 162.0                       |       | —              |       | —                 |       | —                  |       | 1,587.1                     |       | 1,749.1   |       | 2.69                                  | %          |
| **Financial Liabilities**                   |       |                        |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| Payables                                    |       | —                      |       | —              |       | —                 |       | —                  |       | 1,525.7                     |       | 1,525.7   |       | —                                |       |
| Bank and other loans                        |       | 971.4                       |       | 9.7                 |       | 21.5                   |       | 0.4                     |       | 2.3                         |       | 1,005.3   |       | 3.66                                  | %          |
| Commercial paper                            |       | 108.4                       |       | —              |       | —                 |       | —                  |       | —                      |       | 108.4     |       | 2.65                                  | %          |
| US$ Notes                              |       | —                      |       | —              |       | —                 |       | 748.9                   |       | —                      |       | 748.9     |       | 5.83                                  | %          |
| Leases                                      |       | 138.8                       |       | 1.5                 |       | 1.6                    |       | 8.5                     |       | —                      |       | 150.4     |       | 5.31                                  | %          |
| Distributions payable                       |       | —                      |       | —              |       | —                 |       | —                  |       | 8.8                         |       | 8.8       |       | —                                |       |
| Employee entitlements                       |       | —                      |       | —              |       | 80.3                   |       | —                  |       | 263.2                       |       | 343.5     |       | 6.00                                  | %          |
|                                        |       | 1,218.6                     |       | 11.2                |       | 103.4                  |       | 757.8                   |       | 1,800.0                     |       | 3,891.0   |       | 4.54                                  | %          |
| Undated subordinated convertible securities |       | —                      |       | —              |       | 446.2                  |       | —                  |       | —                      |       | 446.2     |       | 7.08                                  | %          |
|                                        |       | 1,218.6                     |       | 11.2                |       | 549.6                  |       | 757.8                   |       | 1,800.0                     |       | 4,337.2   |       | 5.00                                  | %          |
| **Interest Rate Swaps**                     |       |                        |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| USD                                         |       | (8.6                        | )          | —              |       | 8.6                    |       | —                  |       | —                      |       | —    |       | 7.65                                  | %          |
| AUD                                         |       | (100.0                      | )          | —              |       | 100.0                  |       | —                  |       | —                      |       | —    |       | 6.75                                  | %          |
| EUR                                         |       | (480.0                      | )          | —              |       | 480.0                  |       | —                  |       | —                      |       | —    |       | 4.81                                  | %          |
| AUD                                         |       | 480.0                       |       | —              |       | (480.0                 | )          | —                  |       | —                      |       | —    |       | (5.67                                 | )%         |
|                                        |       | (108.6                      | )          | —              |       | 108.6                  |       | —                  |       | —                      |       | —    |       | 4.93                                  | %          |
|                                        |       |                        |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| **Cross Currency Interest Rate Swaps**      |       |                        |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
|                                        |       |                        |       |                |       |                   |       |                    |       |                        |       |      |       |                                  |       |
| AUD                                         |       | 607.0                       |       | —              |       | —                 |       | —                  |       | —                      |       | 607.0     |       | 4.80                                  | %          |
| EUR                                         |       | (607.0                      | )          | —              |       | —                 |       | —                  |       | —                      |       | (607.0    | )          | (2.43                                 | )%         |
| AUD                                         |       | 116.0                       |       | —              |       | —                 |       | —                  |       | —                      |       | 116.0     |       | 5.29                                  | %          |
| CAD                                         |       | (116.0                      | )          | —              |       | —                 |       | —                  |       | —                      |       | (116.0    | )          | (4.02                                 | )%         |
|                                        |       | —                      |       | —              |       | —                 |       | —                  |       | —                      |       | —    |       | 3.78                                  | %          |

 

F - 75

----

 

**Foreign Exchange Risk**

 

Inrelation to transactional foreign currency exposures, the consolidated entity’spolicy is to hedge all net forecast or actual foreign currency exposuresgreater than A$100,000.  The gains orcosts on entering the hedge and the exchange differences up to the date of thepurchase or sale are deferred and recognised as assets or liabilities on thebalance sheet from the inception of the hedge contract, not when the specificpurchase or sale occurs.  At maturity,the costs or gains are included in the measurement of the underlyingtransaction.

 

Accountspayable and borrowings include amounts repayable in foreign currencies shown attheir Australian dollar equivalents.  Allmaterial foreign currency liabilities are hedged or matched by equivalentassets in the same currencies, such assets representing a natural hedge.

 

Thefollowing table sets out the gross value to be received under foreign currencycontracts, the weighted average contracted exchange rates and the settlementperiods of contracts outstanding as at June 30:

 
| ** **              | ** ** | **2004**                    | ** ** | **2003**                    | ** ** | **2004**              | ** ** | **2003**              | ** ** |
|-------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **              | ** ** | **Weighted  Average  Rate** | ** ** | **Weighted  Average  Rate** | ** ** | **Contract  Amounts** | ** ** | **Contract  Amounts** | ** ** |
| ** **              | ** ** | ** **                  | ** ** | ** **                  | ** ** | **$m**                | ** ** | **$m**                | ** ** |
| ** **              |       |                        |       |                        |       |                  |       |                  |       |
| **Buy Contracts**       |       |                        |       |                        |       |                  |       |                  |       |
| Not later than one year |       |                        |       |                        |       |                  |       |                  |       |
| CAD                     |       | —                      |       | 1.03                        |       | —                |       | 1.0                   |       |
| CHF                     |       | 0.82                        |       | 0.88                        |       | 12.4                  |       | 11.9                  |       |
| DKK                     |       | 4.26                        |       | 4.34                        |       | 16.1                  |       | 9.1                   |       |
| EUR                     |       | 0.56                        |       | 0.58                        |       | 141.1                 |       | 198.4                 |       |
| GBP                     |       | 0.38                        |       | 0.40                        |       | 80.1                  |       | 44.7                  |       |
| JPY                     |       | 75.10                       |       | 73.61                       |       | 0.1                   |       | 0.8                   |       |
| NOK                     |       | 4.75                        |       | 4.69                        |       | 0.7                   |       | 0.6                   |       |
| NZD                     |       | 1.13                        |       | 1.12                        |       | 4.9                   |       | 4.9                   |       |
| SEK                     |       | 5.26                        |       | 5.37                        |       | 13.3                  |       | 15.4                  |       |
| USD                     |       | 0.69                        |       | 0.61                        |       | 85.2                  |       | 82.3                  |       |
| Later than one year     |       |                        |       |                        |       |                  |       |                  |       |
| EUR                     |       | 0.59                        |       | 0.55                        |       | 2.2                   |       | 8.9                   |       |
| NZD                     |       | 1.30                        |       | 1.30                        |       | 77.2                  |       | 77.2                  |       |
| USD                     |       | 0.71                        |       | 0.54                        |       | 5.3                   |       | 1.4                   |       |
|                    |       |                        |       |                        |       |                  |       |                  |       |
| **Sell Contracts**      |       |                        |       |                        |       |                  |       |                  |       |
| Not later than one year |       |                        |       |                        |       |                  |       |                  |       |
| CHF                     |       | 0.89                        |       | —                      |       | 3.5                   |       | —                |       |
| NZD                     |       | 1.15                        |       | 1.11                        |       | 35.1                  |       | 26.7                  |       |
| USD                     |       | 0.69                        |       | 0.62                        |       | 49.2                  |       | 2.8                   |       |

 

**Commodity Risk**

 

The consolidated entity enters into variousAluminium fixed price swap contracts on behalf of certain customers. Hedgingundertaken is based on customer instructions, and all related costs are passedonto the customer. The following table sets out the gross value to be receivedunder commodity swap contracts, the weighted average contracted London MetalsExchange rates and the settlement periods of contracts outstanding as at June30:

 

F - 76

----

 

 
| ** **              | ** ** | **2004**                  | ** ** | **2003**                  | ** ** | **2004**        | ** ** | **2003**              | ** ** |
|-------------------------|------------|---------------------------|------------|---------------------------|------------|-----------------|------------|-----------------------|------------|
| ** **              | ** ** | **Average  Fixed  Price** | ** ** | **Average  Fixed  Price** | ** ** | **Contract**    | ** ** | **Contract  Amounts** | ** ** |
| ** **              | ** ** | **(US$/tonne)**           | ** ** | **(US$/tonne)**           | ** ** | **Amounts A$m** | ** ** | **A$m**               | ** ** |
| **Buy Contracts**       |       |                      |       |                      |       |            |       |                  |       |
| Not later than one year |       |                      |       |                      |       |            |       |                  |       |
| ALU                     |       | 1,576.9                   |       | 1,388.3                   |       | 17.0            |       | 15.2                  |       |

 

**Credit Risk**

 

***OnBalance Sheet Financial Instruments***

 

Themaximum credit risk on financial assets of the consolidated entity, other thaninvestments in shares, is generally the carrying amount of receivables, net ofprovisions for doubtful debts.

 

Theconsolidated entity minimises its concentrations of credit risk by undertakingtransactions with a large number of customers and counterparties in variouscountries.  There is no material exposureto any individual customer.

 

DerivativeFinancial Instruments

 

Inorder to control any exposure which may result from non-performance by counterparties,hedging contracts are only entered into with major banks with a minimum longterm rating of A- by Standard & Poor’s. In addition, the Amcor Limited Board must approve these banks for use,and specific internal guidelines have been established with regard to limits,dealing and settlement procedures.

 

Thecredit risk exposure arising from the derivative financial instruments is thesum of all contracts with a positive replacement cost.  The maximum credit risk exposure on foreigncurrency contracts is the full amount of the foreign currency the consolidatedentity is contracted to receive when settlement occurs. As at June 30, 2004 thesum of all contracts with a positive replacement cost was $50.5 million (2003$50.3 million).

 

F - 77

----

 

**Net Fair Values**

 

***OnBalance Sheet Financial Instruments***

 

Instrumentstraded on organised markets are valued by reference to market prices prevailingat balance date.

 

Thenet fair value of other monetary financial assets and financial liabilitiesapproximates their carrying value.

 

Thecarrying amounts and net fair values of financial assets and liabilities as atreporting date are as follows:

 
| ** **                                  | ** ** | **Carrying  Amount  2004** | ** ** | **Net Fair  Value  2004** | ** ** | **Carrying  Amount  2003** | ** ** | **Net Fair  Value  2003** | ** ** |
|---------------------------------------------|------------|----------------------------|------------|---------------------------|------------|----------------------------|------------|---------------------------|------------|
| ** **                                  | ** ** | **$m**                     | ** ** | **$m**                    | ** ** | **$m**                     | ** ** | **$m**                    | ** ** |
|                                        |       |                       |       |                      |       |                       |       |                      |       |
| **Financial Assets**                        |       |                       |       |                      |       |                       |       |                      |       |
| Cash assets                                 |       | 131.0                      |       | 131.0                     |       | 141.5                      |       | 141.5                     |       |
| Receivables                                 |       | 1,633.2                    |       | 1,633.2                   |       | 1,586.1                    |       | 1,586.1                   |       |
| Other financial assets                      |       | 12.9                       |       | 12.9                      |       | 21.5                       |       | 21.5                      |       |
| **Financial Liabilities**                   |       |                       |       |                      |       |                       |       |                      |       |
| Payables                                    |       | 1,781.6                    |       | 1,781.6                   |       | 1,525.7                    |       | 1,525.7                   |       |
| Bank overdrafts and loans                   |       | 882.8                      |       | 882.8                     |       | 1,005.3                    |       | 1,005.3                   |       |
| Commercial paper                            |       | 186.3                      |       | 186.3                     |       | 108.4                      |       | 108.4                     |       |
| US$ Notes                              |       | 723.7                      |       | 723.7                     |       | 748.9                      |       | 748.9                     |       |
| Eurobond                                    |       | 612.0                      |       | 592.2                     |       | —                     |       | —                    |       |
| Lease liabilities                           |       | 99.9                       |       | 99.9                      |       | 150.4                      |       | 150.4                     |       |
| Employee entitlements                       |       | 315.5                      |       | 315.5                     |       | 343.5                      |       | 343.5                     |       |
| Distributions payable                       |       | 8.8                        |       | 8.8                       |       | 8.8                        |       | 8.8                       |       |
| Undated subordinated convertible securities |       | 332.3                      |       | 345.6                     |       | 446.2                      |       | 515.3                     |       |

 

Theeurobond and undated subordinated convertible securities are readily traded inorganised markets.

 

**DerivativeFinancial Instruments**

 

Thevaluation detailed reflects the estimated amounts which the consolidated entityexpects to pay or receive to terminate the contracts or replace the contractsat their current market rates as at reporting date.  This is based on independent marketquotations and determined using standard valuation techniques.  For foreign exchange related contracts, thenet fair value is taken to be the unrealised gain or loss at balance datecalculated by reference to current market rates.

 

Thenet fair value of derivative financial instruments held as at reporting dateare:

 
| ** **                         | ** ** | **2004** | ** ** | **2003** | ** ** |
|------------------------------------|------------|----------|------------|----------|------------|
| ** **                         | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                               |       |     |       |     |       |
| Interest rate swaps                |       | (20.3    | )          | (21.3    | )          |
| Cross currency swaps               |       | 35.1     |       | 41.7     |       |
| Forward foreign exchange contracts |       | 12.2     |       | 2.9      |       |
| Commodity fixed price swaps        |       | 1.5      |       | —   |       |
|                               |       |     |       |     |       |
|                               |       | 28.5     |       | 23.3     |       |

 

An equivalent movement on the underlyingtransactions offsets the above net notional positions.

 

F - 78

----

 

**Non-recourse ReceivablesSecuritisation Programme**

 

Theconsolidated entity utilises an uncommitted, multi-currency receivablessecuritisation programme in the UK, France, Germany, Spain and the US. Thetrade receivables of some of the group entities in these jurisdictions aresold, on a non-recourse basis, into an independent securitisation conduit whichissues asset-backed commercial paper into organised markets.

 

Thecost of the programme is included in the expenses from ordinary activities ofthe consolidated entity.

 

Theprogramme limit is $210.0 million (2003 $205.0 million) and the balance oftrade receivables sold at June 2004 was $197.9 million (2003 $190.0 million).

 

**Note 31**     **RELATED PARTY DISCLOSURES**

 

**Loans to Directors of theConsolidated Entity**

 

Loansfor the purchase of shares and other loans are made in accordance with theterms and conditions of the plans referred to in Note 9(1).

 

Duringthe year, under the employee share plans, share loan repayments totalling$36,000 (2003 $33,000) were received from C H Clayton, B Guy, R H Jones, L JLachal and D Solomon.

 

Noloans were advanced during the year. A guarantee continues in favour of R HJones for a loan of $448,000 (2003 $448,000).

 

Loans to directors of Amcor Limited in Note 9total $1,056,000 (2003 $1,075,000).

 

Loans to directors of controlled entities inNote 9 total $77,000 (2003 $435,000).

 

Interest received from directors during the year amounted to $8,000(2002 $30,000).

*** ***

**Other Transactions**

 

Directorrelated entities of S Ryder received in aggregate management fees of $15,000(2003 $40,000).

 

Directorrelated entity of G M McGhie received captive management fees of $135,000 (2003$125,000).

 

Salesof beverage containers totalling $5,534,000 (2003 $6,685,000) were made todirector related entities of F Daley, B Boyd and C Newell.

 

Salesof manufactured goods totalling $26,050,000 (2003 $22,120,000) were made todirector related entity of H Lin.

 

Purchasesof paper products totalling $5,480,000 (2003 $8,558,000) were made fromdirector related entities of D S Kurniawan and S Tirtowidjojo.

 

Provisionof secretarial services by a director related entity of J Durston totalled$57,000 (2003 $63,000).

 

Provisionof information technology services by a director-related entity of T S Piangtotalled $10,000 (2003 nil).

 

Purchasesof manufacturing supplies totalling $95,000 (2003 $572,000) were made fromdirector-related entity of S Ryder.

 

F - 79

----

 

**Note 32     EVENTS SUBSEQUENT TO BALANCE DATE**

** **

**(A) Dividends**

** **

Sincethe end of the financial year, the directors declared a final dividend of 16cents per share franked to 40% payable on September, 29 2004.  The financial effect of this dividend has notbeen brought to account in the financial statements for the year ended June 30,2004 and will be recognised in subsequent financial reports.

 

**(B) International Financial Reporting Standards**

 

Theconsolidated entity has commenced transitioning its accounting policies andfinancial reporting from current Australian Standards to Australian equivalentsof International Financial Reporting Standards (‘IFRS’). The consolidatedentity has allocated internal resources and engaged expert consultants toperform diagnostics and conduct impact assessments to identify key areas thatwill be impacted by the transition to IFRS.

 

Asa result of these procedures, the affected areas have been graded as eitherhigh, medium or low impact and dedicated project teams have been established toaddress each of the areas in order of priority as represented by the gradings.

 

AnIFRS steering committee monitors the progress of each of the project teams anddevelopments in IFRS. Regular progress reporting to the Audit and ComplianceCommittee on the status of the IFRS implementation project has been instituted.

 

Asthe consolidated entity has a June 30 year-end, priority has been given toconsidering the preparation of an opening balance sheet in accordance with AASBequivalents to IFRS as at 1 July 2004. This will form the basis of accounting for Australian equivalents ofIFRS in the future, and is required when the consolidated entity prepares itsfirst fully compliant financial reports for the half-year ending 31 December2005 and the full year ending June 30, 2006.

 

Mostadjustments required on transition to IFRS will be made, retrospectively,against opening retained earnings on 1 July 2004; however transitionaladjustments relating to those standards where comparatives are not requiredwill only be made on 1 July 2005.

 

Setout below are the key areas where accounting policies will change and may havean impact on the financial report of Amcor Limited under Australian GAAP.  At this stage, the consolidated entity hasnot been able to reliably quantify the impacts on the financial report.

*** ***

***(i)       FinancialInstruments***

 

Financialinstruments will be required to be classified into categories which will, inturn, determine the accounting treatment of the item. The classifications areloans and receivables, held for trading, held-to-maturity and available forsale and, depending upon classification, measured at fair value or amortisedcost.

 

Thiswill result in a change in the current accounting policy that does not classifyfinancial instruments. Current measurement is at amortised cost, with certainderivative financial instruments not recognised in the Balance Sheet.

 

Allderivative contracts will be recognised on the consolidated entity’s BalanceSheet and measured at fair value. IFRS recognise fair value hedge accounting,cash flow hedge accounting and hedges of investments in foreign operations.

 

Theconsolidated entity expects to predominantly use cash flow hedging in respectof its interest rate risk hedges and foreign exchange contracts held forhedging purposes, with changes in fair value reflected in equity reserves.

Otherfinancial instrument effects may include:

•                  Recognitionin the Balance Sheet of certain securitised assets and off-balance sheetprograms. Existing securitisations require review to determine whether they are‘grandfathered’ under IFRS, and if not, an assessment of accounting treatmentthat will be required under IFRS.

•                  Re-classification of PerpetualAmcor Convertible Reset Securities as debt rather than equity. Interestaccruing on these reset securities will be recorded as borrowing costs ratherthan a distribution from retained earnings.

 

F - 80

----

 

***(ii)      Goodwill***

 

Under Accounting StandardAASB 3 ‘Business Combinations’, goodwill will no longer be able to be amortisedbut instead will be subject to annual impairment testing. This will result in achange in the consolidated entity’s current accounting policy which amortisesgoodwill over its useful life not exceeding 20 years. Under the new policy,amortisation will no longer be charged - refer Note 3 for amortisation expensefor the year ended June 30, 2004. However, post the transition date of July 1,2004, goodwill will be recognised immediately in the Statement of Income to theextent it is impaired.

 

Potentially higher expensesmay result in the event of a business combination because an acquiring entitywill not be permitted to recognise liabilities for terminating or reducing theactivities of the acquired entity as part of allocating the cost of thebusiness acquisition. Any such liabilities existing at transition will beadjusted against opening retained earnings.

 

***(iii)     Impairment of Assets***

 

Under the AccountingStandard AASB 136 ‘Impairment of Assets’, the recoverable amount of an asset isdetermined as the higher of net selling price and value in use. This willresult in a change in the consolidated entity’s current accounting policy whichdetermines the recoverable amount of an asset on the basis of undiscounted cashflows. Under the new policy, it is likely that impairment of assets will berecognised sooner and that the amount of write-downs charged to the Statementof Income could be greater.

 

***(iv)     Share-Based Payments***

 

The consolidated entitydoes not currently recognise an expense for options issued to staff. Onadoption of Accounting Standard AASB 2 ‘Share-Based Payments’, the Amcorconsolidated entity will recognise an expense for all share based remunerationsuch as Amcor’s Employee Incentive Share Plans. On transition, this change inaccounting policy will result in a change to opening retained earnings.

 

***(v)       Income Taxes***

 

Under Accounting StandardAASB 112 ‘Income Taxes’, the consolidated entity will be required to use abalance sheet liability method which focuses on the tax effects of transactionsand other events that affect amounts recognised in either the Balance Sheet ora tax-based Balance Sheet.  On thisbasis, it is possible that significant adjustments to deferred tax assets andliabilities may be required as a result of the requirements to tax effectbalance sheet items and other transactions, not previously considered withinthe consolidated entity’s tax calculation.

 

***(vi)     Employee Benefits***

 

Under Accounting StandardAASB 119 ‘Employee Benefits’, employer sponsors are required to recognisethe net surplus or deficit in their employer sponsored defined benefit funds asan asset or liability, respectively. This will result in a change in thecurrent accounting policy which does not recognise the net surplus/deficit ofdefined benefit funds as an asset/liability.

 

The initial net deficit forthe consolidated entity will be disclosed as a financial liability and, ontransition, will be charged to retained earnings. Subsequent adjustments willbe to net profit or loss for the period. The impact and volatility on theStatement of Income is likely to be higher for actuarially determinedvaluations under AASB 119 compared with cash contributions under AustralianGAAP.

 

***(vii)     Intangible Assets***

 

Under Accounting StandardAASB 138 ‘Intangible Assets’, costs incurred in the research phase of thedevelopment of an internally generated intangible must be expensed. This willresult in a change in the consolidated entity’s current accounting policy whichallows for the capitalisation of costs incurred in the research phase of aninternally generated intangible asset where future benefits are expected beyondreasonable doubt. Under the new policy, all research costs will be written offas incurred.

 

F - 81

----

 

**(C) Anti-****Trust Investigations and Related Management Changes**

 

*Board Announcements*

 

On November 23, 2004, Amcorannounced that it had received information that led it to believe the Company’sAustralian business may have been involved in conduct which breachescompetition laws.  Amcor immediatelyinformed the ACCC of the information received and informed the ACCC that itwould provide full cooperation in any investigation which the ACCC undertakes.  Amcor also initiated its own investigation ofthese matters.

 

On December 7, 2004, Amcorannounced that after it had received the information referred to in itsNovember 23 announcement, the Board immediately:

 

•                                          notified the ACCC of the information and advisedthe ACCC that it would cooperate fully with any investigation by the ACCC;

 

•                                          notified the ASX of possible breaches ofcompetition laws; and

 

•                                          instructed its legal advisors to review theavailable information and to conduct interviews with relevant members ofmanagement who may be able to assist in the investigation.

 

In the December 7announcement the Board stated that it had met on December 6, 2004 to receiveand consider an interim report in the matter from its legal advisors.  The Board also resolved to accept offers ofresignation given by each of Mr. Russell Jones (Managing Director of theCompany) and Mr. Peter Sutton (Managing Director, Amcor Australasia) from theiremployment (and any directorships and other positions) with the AmcorGroup.  Mr. Peter Brown retired asManaging Director of Amcor Australasia in October 2003 and became a consultantto the Group.  That consultancy was alsoterminated.

 

The Board announced itsintention that Messrs. Jones and Sutton would receive only their minimum legalentitlements on resignation and that any additional contractual payments(whether by way of accrued performance payments or payments in lieu of noticeor otherwise) would not be made to them.

 

The Board also announcedthe following interim appointments:

 

•                                          Mr. Chris Roberts (Chairman) would become ExecutiveChairman.

 

•                                          Mr. Louis Lachal, who was then the ExecutiveGeneral Manager Operations would become the Acting Chief Operating Officer ofthe Company.  Mr. Lachal has been withthe Amcor Group for 24 years and has worked in a number of divisions, both inAustralia and the United Kingdom.

 

•                                          Mr. Darryl Roberts, who was then the Group GeneralManager Fibre Packaging in Australasia, would become the Acting ManagingDirector of Amcor Australasia.  MrRoberts has extensive experience working within a number of divisions inAustralasia, including 10 years managing the metal can operations.

 

The Board has commenced theprocess of identifying suitable candidates for subsequent appointment to theexecutive positions.

 

The Board’s December 7announcement included the following background information.

 

On September 28, 2004, foursenior executives who had worked in the corrugated box business of the AmcorGroup in Australia resigned.  On November10, 2004, Amcor sought orders in the Federal Court relating to the return ofconfidential information belonging to the Amcor Group and injunctions toprevent use of that information by those former executives.  Subsequently, the Company joined Mr. JimHodgson (former head of its Australia and New Zealand corrugated box business)to the proceeding.  The Federal Courtgranted orders providing for the delivery up of any such confidentialinformation.

 

On the afternoon of November 19,2004, the solicitors for those former executives delivered material to theCompany’s solicitors which suggested that the Company may have been involved inconduct which breached competition laws. As noted above, on November 22, 2004, the Company’s Board met to discussthe matter and resolved to refer the material which it had to the ACCC and tofully cooperate with any investigation which the ACCC may undertake.

 

The Board also resolved that theCompany would urgently undertake its own investigation of the matter.

 

The Company’s investigation is atan early stage.  To date, itsinvestigation has revealed that certain of its officers and employees appear tohave entered into and given effect to arrangements which constituted cartelconduct in the corrugated box business in Australia and New Zealand.  The full nature and extent of the cartel

 

F - 82

----

 

conduct has not yet been ascertained by the Company.

 

The Board is continuing to investigate the full nature and extent of thecartel conduct in the corrugated box business in Australia and NewZealand.  At this stage, the Board is notaware of any cartel conduct affecting any other part of the Company’soperations.  It is to be expected thatthe ACCC, in the course of its investigation, will seek to ascertain whetherany cartel conduct has occurred in any of the Company’s operations other thanits corrugated box business in Australia and New Zealand.

 

The Australian and New Zealand corrugated box business representedapproximately 9% of Group sales revenue and 8% of Group PBITA in the year endedJune 30 2004, 9% of Group sales revenue and 9% of Group PBITA in the year endedJune 30 2003, and 11% of Group sales revenue and 11% of Group PBITA in theyear ended June 30 2002.

 

*Leniency Application – Australia*

 

The ACCC is the statutory authority responsible for administeringAustralia’s anti-trust laws, the Trade Practices Act 1974 (TPA).

 

On November 22, 2004 Amcor applied for leniency pursuant to theACCC’s Leniency Policy for Cartel Conduct (ACCC Leniency Policy).

 

The ACCC Leniency Policy allows for immunity from ACCC initiatedproceedings to the first person involved in a cartel to come forward withinformation about the cartel.  To obtainimmunity, an applicant must meet certain requirements, including the provisionof full co-operation on a continuous basis with the ACCC in its investigationand any ensuing proceedings.

 

In circumstances where the ACCC Leniency Policy does not apply, the ACCCwill consider any application for leniency pursuant to its Cooperation Policyfor Enforcement Matters.

 

The operation of the ACCC Leniency Policy does not in any way exclude orlimit the rights of third parties who claim to have suffered loss or damage asa result of a contravention of the TPA to commence legal proceedings fordamages and other relief against those involved in the contravention.

 

*Leniency Application – New Zealand*

 

The NZCC is the regulatory agency responsible for enforcing New Zealand’santi-trust laws, the Commerce Act 1986 (Commerce Act).

 

On November 29, 2004 Amcor notified the NZCC that the Company mayhave been involved in cartel conduct in New Zealand.  Amcor applied for leniency pursuant to theNZCC’s Leniency Policy for Cartel Conduct (NZ Leniency Policy).  The NZ Leniency Policy allows for immunityfrom NZCC initiated proceedings to the first person involved in a cartel tocome forward with information about the cartel and co-operate fully with theNZCC in its investigation and prosecution of the cartel.  Amcor was granted conditional immunity on December 1,2004.  Pursuant to the NZ LeniencyPolicy, Amcor entered into an agreement with the NZCC under which Amcor isobliged to comply with specified conditions including full cooperation with theNZCC.  The operation of the NZ LeniencyPolicy does not exclude or limit claims by third parties who claim to have sufferedloss or damage as a result of the cartel conduct. Under the Commerce Act, thirdparties may pursue private claims for compensatory or exemplary damages.

 

*Estimated Penalties and Damages – Australia and NewZealand*

 

It is not possible to provide either a reasonable estimate, or a reasonableestimated range, of either the statutory penalties which might be imposed onAmcor or of the amounts, if any, which might become payable by way of damagesto any third parties who might have suffered loss as a result of any cartelconduct in Australia and New Zealand.

 

F - 83

----

 

The following factors (among others) would be relevant to any attemptedassessment of any such estimate or estimated range:

 

•                                         First, a breach of Australia’s relevant anti-trust lawsmay involve the imposition of a civil pecuniary penalty for a corporation of upto $10 million for each breach. Corporations found to be in breach of New Zealand’s relevant anti-trustlaws may face, for each breach, a civil pecuniary penalty up to the greater of:

 

•                                          NZ$10 million; or either

 

•                                          three times the value of any commercial gainresulting from the contravention; or

 

•                                          if the commercial gain cannot be ascertained, 10per cent of the annual turnover of the body corporate and its interconnected bodiescorporate as a result of trading by that body corporate in New Zealand.

 

A court may, in its discretion, choose to impose a penalty for a lesseramount.

 

•                                         Second, at this early stage of its owninvestigation, Amcor is not aware of the full nature and extent of any cartelconduct and is not able to make any reliable assessment of how many breaches ofanti-trust laws may have occurred.  Basedon the limited information which Amcor has received since it first became awareof the cartel conduct on November 19, 2004, Amcor believes that cartelconduct may have occurred in Australia and New Zealand for a number ofyears.  Amcor does not know either whenthe cartel conduct first commenced or how many breaches of anti-trust laws mayhave occurred over a period which is likely to be a number of years.

 

•                                         Third, as referred to above, Amcor has applied forleniency and/or immunity under the ACCC Leniency Policy and the NZCC LeniencyPolicy.  It is not possible at such anearly stage in the investigations being conducted by the ACCC and the NZCC tomake a reasonable assessment of whether or not such leniency/immunityapplications will or will not be ultimately successful, in whole or part, or ofthe financial impact if either of such applications is not successful.

 

•                                         Fourth, Amcor does not know when the ACCC and NZCCwill make a decision as to whether to commence legal proceedings, and, if adecision is taken to commence proceedings, when any such proceedings will becommenced.  Any such legal proceedingsmay not be heard and determined by the courts for a number of years.  Accordingly, no reliable assessment can bemade at present of how many breaches of anti-trust laws may be found by thecourts to have occurred or as to the quantum of any pecuniary penalties whichmay be imposed by the courts.  Equally,no reliable assessment can be made at present of the prospects of success orthe quantum of damages, if any, that may be awarded in any proceedings whichmay be instituted by third parties.

 

Although it is not possible to establish a reasonable estimated range ofeither penalties or damages, there can be no assurance that the penalties ordamages ultimately incurred will not be material to the results of operationsor financial condition of Amcor.

 

F - 84

----

 

**Note33****               RECONCILIATION OFACCOUNTS TO US GAAP**

 

The financial statements of the consolidated entity are prepared inaccordance with Australian GAAP (refer Note 1), which differs in some respectsfrom accounting principles generally accepted in the United States of America (‘USGAAP’).  The financial analyses andreconciliations presented in this note represent the financial informationwhich would be required if US GAAP had been applied instead of Australian GAAP.

 

**Reconciliation to US GAAP**

 

The following is a summary of the major differences to consolidated netincome and consolidated comprehensive income for the years ended June 30,2004, 2003 and 2002 that would be required if US GAAP had been applied insteadof Australian GAAP.  

 
| ** **                                                                                           | ** ** | ** ** | ** ** | **For the Years Ended June 30** | ** ** |
|------------------------------------------------------------------------------------------------------|------------|------------|------------|--------------------------------------|------------|
| ** **                                                                                           | ** ** | ** ** | ** ** | **(in millions of A$)**              | ** ** |
| ** **                                                                                           | ** ** | **Note**   | ** ** | **2004**                             | ** ** | **2003** | ** ** | **2002** | ** ** |
| **Consolidated Statements of Income**                                                                | ** ** | ** ** | ** ** | ** **                           | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                           | ** ** | ** ** | ** ** | ** **                           | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net profit reported using Australian GAAP                                                            |       |       |       | 345.7                                |       | 361.3 |   | 851.7 |   |
| Property, plant and equipment                                                                        |       | 33 (a)     |       | 7.7                                  |       | 8.3 |   | 5.0 |   |
| Provisions                                                                                           |       | 33 (b)     |       | 3.2                                  |       | (8.1 | ) | 4.7 |   |
| Pension plans                                                                                        |       | 33 (c)     |       | 10.8                                 |       | 1.5 |   | 2.7 |   |
| Start-up costs                                                                                       |       | 33 (d)     |       | 0.4                                  |       | (0.4 | ) | (9.2 | ) |
| Goodwill                                                                                             |       | 33 (e)     |       | 127.6                                |       | 136.8 |   | 20.1 |   |
| Employee share schemes                                                                               |       | 33 (g)     |       | (18.0                                | )          | (31.1 | ) | (18.3 | ) |
| Research and development                                                                             |       | 33 (h)     |       | (1.4                                 | )          | (5.5 | ) | — |   |
| Derivatives and hedging activities                                                                   |       | 33 (i)     |       | (14.0                                | )          | (29.5 | ) | 57.0 |   |
| Grant income                                                                                         |       | 33 (j)     |       | (4.3                                 | )          | (5.3 | ) | (2.2 | ) |
| Business combinations                                                                                |       | 33 (k)     |       | (0.8                                 | )          | (11.1 | ) | (72.1 | ) |
| PACRS                                                                                                |       | 33 (l)     |       | (62.4                                | )          | (62.1 | ) | (43.6 | ) |
| Differences in application of GAAP on  deferred taxes                                                |       | 33 (q)     |       | (14.1                                | )          | — |   | — |   |
| Tax effect of above adjustments, net                                                                 |       |       |       | 2.3                                  |       | 12.8 |   | 23.5 |   |
| **Net income according to US GAAP**                                                                  | ** ** | ** ** | ** ** | **382.7**                            | ** ** | **367.6** | ** ** | **819.3** | ** ** |
| **Other comprehensive loss, net of taxes:**                                                          |       |       |       |                                 |       |   |   |   |   |
| Exchange Fluctuations Reserve                                                                        |       |       |       | (137.1                               | )          | (283.8 | ) | (162.0 | ) |
| Equity share of Associate EFR                                                                        |       |       |       | —                               |       | — |   | 0.7 |   |
| Unrealized gains on available for sale  investments, net of tax expense of $0.5 million              |       | 33 (p)     |       | 6.9                                  |       | — |   | — |   |
| Pension plan additional minimum  liability, net of tax benefit of $3.0 million (2003 $13.5 million)  |       | 33 (c)     |       | (6.5                                 | )          | (25.3 | ) | (5.1 | ) |
| Total other comprehensive loss                                                                       |       |       |       | (136.7                               | )          | (309.1 | ) | (166.4 | ) |
| **Comprehensive income according to US GAAP**                                                        | ** ** | ** ** | ** ** | **246.0**                            | ** ** | **58.5** | ** ** | **652.9** | ** ** |
| **Accumulated other comprehensive income  balances (net of taxes):**                                 | ** ** | ** ** | ** ** | ** **                           | ** ** | ** ** | ** ** | ** ** | ** ** |
| Exchange fluctuations reserve                                                                        |       |       |       | (493.4                               | )          | (356.3 | ) | (72.5 | ) |
| Unrealized gains on available for sale  investments, net of tax expense of $0.5 million              |       | 33 (p)     |       | 6.9                                  |       | — |   | — |   |
| Pension plan additional minimum  liability, net of tax benefit of $16.5 million (2003 $13.5 million) |       | 33 (c)     |       | (38.5                                | )          | (32.0 | ) | (6.7 | ) |
| **Total accumulated other comprehensive  income**                                                    | ** ** | ** ** | ** ** | **(525.0**                           | **)**      | **(388.3** | **)** | **(79.2** | **)** |

 

F - 85

----

 
| ** **                                                                | ** ** | **For the Years Ended June 30**                           | ** ** |
|---------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                                | ** ** | **(in millions of A$,  except for share and  per share data)** | ** ** |
| ** **                                                                | ** ** | **2004**                                                       | ** ** | **2003** | ** ** | **2002** | ** ** |
|                                                                      |       |                                                           |       |   |   |   |   |
| **Earnings per share calculation according to  US GAAP**                  |       |                                                           |       |   |   |   |   |
|                                                                      |       |                                                           |       |   |   |   |   |
| Net profit                                                                |       | 382.7                                                          |       | 367.6 |   | 819.3 |   |
| After tax cost of interest on convertible  securities                     |       | 18.5                                                           |       | 26.8 |   | 28.1 |   |
| After tax cost of convertible reset  security distribution                |       | —                                                         |       | — |   | 25.5 |   |
| Amortization of convertible reset  security beneficial conversion feature |       | —                                                         |       | — |   | 5.0 |   |
| Diluted net profit                                                        |       | 401.2                                                          |       | 394.4 |   | 877.9 |   |
|                                                                      |       |                                                           |       |   |   |   |   |
| **Reconciliation of average number of shares**                            |       |                                                           |       |   |   |   |   |
| Basic average number of shares (m’s)                                 |       | 867.1                                                          |       | 835.2 |   | 665.0 |   |
| Impact of dilutive securities (m’s)                                  |       | 56.7                                                           |       | 71.1 |   | 123.1 |   |
| Dilutive average number of shares (m’s)                              |       | 923.8                                                          |       | 906.3 |   | 788.1 |   |
|                                                                      |       |                                                           |       |   |   |   |   |
| Basic earnings per share                                                  |       | $                                                              | 0.44       |   | $ | 0.44 |   | $ | 1.23 |   |
| Diluted earnings per share                                                |       | $                                                              | 0.43       |   | $ | 0.44 |   | $ | 1.11 |   |

 

Excluded fromthe computation of diluted earnings per share above is the following table ofpotential common shares:

 
| ** **                     | ** ** | **(in millions)** | ** ** |
|--------------------------------|------------|-------------------|------------|
| Potential common shares (1)    |       | 92.1              |       | 79.1 |   | — |   |
| Options over common shares (2) |       | —            |       | — |   | 2.0 |   |

 

----

(1)          The7.25% Undated Subordinated Convertible Unsecured Notes, the 6.5% UndatedSubordinated Convertible Unsecured Notes and the Perpetual Amcor Convertible ResetSecurities (PACRS) are considered to be potential common stock and have beenincluded in the computation of diluted earnings per share to the extent theyare dilutive.

 

(2)          Optionsover common shares have been included in the computation of diluted earningsper share when the average market price of common shares exceeds their exerciseprice.

 

F - 86

----

 

The followingare the differences in the consolidated balance sheet, specifically totalassets, as at June 30, 2004 and 2003 that would be required if US GAAP hadbeen applied instead of Australian GAAP.

 
| ** **                                            | ** ** | ** ** | ** ** | **At June 30**     | ** ** |
|-------------------------------------------------------|------------|------------|------------|-------------------------|------------|
| ** **                                            | ** ** | ** ** | ** ** | **(in millions of A$)** | ** ** |
| ** **                                            | ** ** | **Note**   | ** ** | **2004**                | ** ** | **2003** | ** ** |
| ** **                                            | ** ** | ** ** | ** ** | ** **              | ** ** | ** ** | ** ** |
| **Consolidated Balance Sheets**                       | ** ** | ** ** | ** ** | ** **              | ** ** | ** ** | ** ** |
| ** **                                            | ** ** | ** ** | ** ** | ** **              | ** ** | ** ** | ** ** |
| Total Assets reported using Australian  GAAP          |       |       |       | 10,286.4                |       | 9,562.3 |   |
| Property, plant and equipment                         |       | 33 (a)     |       | (11.0                   | )          | (18.2 | ) |
| Pension plans                                         |       | 33 (c)     |       | 82.0                    |       | 74.1 |   |
| Start-up costs                                        |       | 33 (d)     |       | (14.0                   | )          | (21.4 | ) |
| Goodwill                                              |       | 33 (e)     |       | 508.4                   |       | 387.8 |   |
| Employee share schemes                                |       | 33 (g)     |       | (34.4                   | )          | (34.5 | ) |
| Research and development                              |       | 33 (h)     |       | (6.9                    | )          | (5.5 | ) |
| Derivative instruments and hedging  activities        |       | 33 (i)     |       | 11.3                    |       | 29.4 |   |
| Business combinations                                 |       | 33 (k)     |       | (92.1                   | )          | (111.7 | ) |
| PACRS                                                 |       | 33 (l)     |       | 5.6                     |       | 8.4 |   |
| Reclassification of deferred tax balances             |       | 33 (m)     |       | (271.2                  | )          | (225.2 | ) |
| Non-recourse receivables securitization  program      |       | 33 (o)     |       | 197.9                   |       | 190.5 |   |
| Unrealized gains on available for sale  investments   |       | 33 (p)     |       | 7.4                     |       | — |   |
| Differences in application of GAAP on  deferred taxes |       | 33 (q)     |       | 26.2                    |       | 40.4 |   |
| Deferred tax effect of above adjustments              |       |       |       | 31.9                    |       | 25.7 |   |
| **Total Assets according to US GAAP**                 | ** ** | ** ** | ** ** | **10,727.5**            | ** ** | **9,902.1** | ** ** |

 

F - 87

----

 

The followingis a summary of the major adjustments to consolidated shareholders’ equity asat June 2004, 2003 and 2002 that would be required if US GAAP had beenapplied instead of Australian GAAP.

 
| ** **                                                                                     | ** ** | ** ** | ** ** | **At June 30**     | ** ** |
|------------------------------------------------------------------------------------------------|------------|------------|------------|-------------------------|------------|
| ** **                                                                                     | ** ** | ** ** | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                                                     | ** ** | **Note**   | ** ** | **2004**                | ** ** | **2003** | ** ** | **2002** | ** ** |
|                                                                                           |       |       |       |                    |       |   |   |   |   |
| **Consolidated Shareholders’ Equity at Year  End**                                        |       |       |       |                    |       |   |   |   |   |
|                                                                                           |       |       |       |                    |       |   |   |   |   |
| Shareholders’ Equity reported using  Australian GAAP                                      |       |       |       | 4,617.0                 |       | 4,439.8 |   | 4,394.7 |   |
| Property, plant and equipment                                                                  |       | 33 (a)     |       | (181.2                  | )          | (188.9 | ) | (197.1 | ) |
| Provisions                                                                                     |       | 33 (b)     |       | 17.4                    |       | 14.2 |   | — |   |
| Pension plans                                                                                  |       | 33 (c)     |       | 26.5                    |       | 22.2 |   | 46.0 |   |
| Start-up costs                                                                                 |       | 33 (d)     |       | (14.0                   | )          | (21.4 | ) | (21.0 | ) |
| Goodwill                                                                                       |       | 33 (e)     |       | 508.4                   |       | 387.8 |   | 251.0 |   |
| Provision for dividend                                                                         |       | 33 (f)     |       | —                  |       | — |   | 115.2 |   |
| Employee share schemes                                                                         |       | 33 (g)     |       | (34.4                   | )          | (34.5 | ) | (27.4 | ) |
| Research and development                                                                       |       | 33 (h)     |       | (6.9                    | )          | (5.5 | ) | — |   |
| Derivative instruments and hedging  activities                                                 |       | 33 (i)     |       | 2.0                     |       | 22.2 |   | 51.7 |   |
| Grant income                                                                                   |       | 33 (j)     |       | (22.1                   | )          | (17.8 | ) | (12.5 | ) |
| Business combinations                                                                          |       | 33 (k)     |       | (75.9                   | )          | (75.1 | ) | (64.3 | ) |
| PACRS                                                                                          |       | 33 (l)     |       | (591.6                  | )          | (581.6 | ) | (571.8 | ) |
| Unrealized gains on available for sale  investments                                            |       | 33 (p)     |       | 7.4                     |       | — |   | — |   |
| Differences in application of GAAP on  deferred taxes                                          |       | 33 (q)     |       | 10.0                    |       | 23.8 |   | 22.9 |   |
| Income tax effect of above adjustments                                                         |       |       |       | 0.7                     |       | (0.9 | ) | (5.6 | ) |
| **Shareholders’ Equity according to US GAAP**                                             | ** ** | ** ** | ** ** | **4,263.3**             | ** ** | **3,984.3** | ** ** | **3,981.8** | ** ** |
|                                                                                           |       |       |       |                    |       |   |   |   |   |
| **Roll Forward Analysis of Shareholders’  Equity under US GAAP**                          |       |       |       |                    |       |   |   |   |   |
|                                                                                           |       |       |       |                    |       |   |   |   |   |
| Opening shareholders’ equity according to  US GAAP                                        |       |       |       | 3,984.3                 |       | 3,981.8 |   | 2,098.8 |   |
| Net income/(loss) in accordance with US  GAAP                                                  |       |       |       | 382.7                   |       | 367.6 |   | 819.3 |   |
| Decrease/(increase) in employee loans                                                          |       |       |       | 0.1                     |       | (7.1 | ) | (3.3 | ) |
| Additional paid in capital                                                                     |       |       |       | —                  |       | — |   | 11.1 |   |
| Other comprehensive loss – net of  transfers to retained profits for amounts now realised |       |       |       | (71.2                   | )          | (310.6 | ) | (146.6 | ) |
| Employee share scheme compensation  expense                                                    | ** ** | ** ** | ** ** | 18.0                    |       | 31.1 |   | 18.3 |   |
| Ordinary shares issued                                                                         | ** ** | ** ** | ** ** | 216.6                   |       | 162.5 |   | 1,363.8 |   |
| Final 2003 dividend paid 1 October 2003                                                   | ** ** | ** ** | ** ** | (127.6                  | )          | (115.5 | ) | (88.7 | ) |
| Interim 2004 dividend paid 31 March 2004                                                  | ** ** | ** ** | ** ** | (139.7                  | )          | (125.3 | ) | (91.0 | ) |
| Other                                                                                          | ** ** | ** ** | ** ** | 0.1                     |       | (0.2 | ) | 0.1 |   |
| Closing shareholders’ equity according to  US GAAP                                        | ** ** | ** ** | ** ** | **4,263.3**             | ** ** | **3,984.3** | ** ** | **3,981.8** | ** ** |

 

F - 88

----

 

**Note33****               RECONCILIATION OF ACCOUNTS TO US GAAP**

 

**Basisof Presentation**

 

Consolidated Statements of Cash Flows

 

The Consolidated Statements of Cash Flows on F-9 presents bankoverdrafts as a component of cash, which is consistent with Australian GAAP andInternational Accounting Standard No. 7. In accordance with SFAS 95 net activity in bank overdrafts is to bedisclosed as components of cash flow from financing activities.  The effect on the Consolidated Statements ofCash Flows on F-9 of adopting this disclosure would be that cash flow fromfinancing activities would decrease by A$88.7 million for the year ended June 30,2004, increase by A$78.3 million for the year ended June 30, 2003, andincrease by A$11.5 million for the year ended June 30, 2002, respectively.

 

For US GAAP purposes no cash was classified as restricted as at June 30,2004 or June 30, 2003.  As at June 30,2002, $2,118 million was classified as restricted cash and excluded from cashfrom the Consolidated Balance Sheets and Consolidated Statements of Cash Flows.This amount was used as a partial payment for the acquisition of the PETcontainer and closures businesses of Schmalbach-Lubeca, which was made on July 1,2002.

 

Classification of Other Revenue

 

Under Australian GAAP, proceeds from the sale of non-current assets arerecorded as other revenues from ordinary activities and the carrying value ofassets sold is included in expenses. Under US GAAP, the difference between the sales proceeds and thecarrying value of the assets sold would be presented as a net gain or loss andincluded in the determination of operating income.

 

**USGAAP adjustments**

 

(a)                        Property,Plant and Equipment

 

Revaluations

 

Certain land, land improvements and buildings have been revalued by theconsolidated entity at various times in prior financial periods.  These revaluation increments and decrementshave overall increased the carrying value of the assets and accordingly thedepreciation charges have been increased above those which would be required onan historical cost basis.  Where assetshave been devalued below cost, these write-downs have been taken to profit andloss.  In prior years bonus shares (stockdividends) were issued out of the asset revaluation reserve.  US GAAP adjustments eliminate the effects ofthese items.

 

The consolidated entity has applied revised AASB 1041 ‘Revaluation ofNon-current Assets’ and, in accordance with the standard, has elected to applythe cost basis for non-current assets. In respect of land, land improvements and buildings, the consolidatedentity has deemed the cost of these assets to be equal to their carrying valuesas at July 1, 2000.  As aconsequence of making this election on the adoption of AASB 1041, the balanceof the asset revaluation reserve at July 1, 2000 relating to land, landimprovements and buildings is no longer available for asset write-downs.

 

The above election also causes differences in reported gains and losseson the sale of property, plant and equipment. Gains and losses for Australian GAAP are based on consideration lessrevalued amounts net of accumulated depreciation.  For US GAAP purposes, gains and losses aredetermined having regard to depreciated historical cost.

 

Sale and leaseback where substantially all of the use of the propertywas retained

 

Certain properties were sold during the year ended June 30, 2002 andleased back under an operating lease agreement for Australian GAAPpurposes.  For US GAAP purposes, thistransaction did not qualify for sale and leaseback accounting as the salesagreement contained a repurchase option, and other forms of continuinginvolvement.  Accordingly, thetransaction was recorded as a secured borrowing and the properties recorded asan asset, with a corresponding obligation recorded for the proceeds received.For the current financial year, payments made under the relevant agreementshave been apportioned between interest expense and the loan liability.

 

F - 89

----

 

Sale and leaseback transactions where less than substantially all ofthe use of the property was retained

 

Certain properties were sold during the year ended June 30, 2004and leased back under an operating lease agreement for Australian GAAPpurposes.  All of the profit wasrecognised at the date of sale.  For USGAAP purposes, however, as more than a minor part but less than substantiallyall of the use of the property was retained, profit in excess of the presentvalue of the minimum lease payments has been recognised at the date of sale,while the balance has been deferred and will be amortised over the life oflease against the future operating lease payments.

 

The table below outlines the impact on net profit, assets andshareholders’ equity of the above adjustments.

 
| ** **                                           | ** ** | **Years Ended June 30** | ** ** |
|------------------------------------------------------|------------|------------------------------|------------|
| ** **                                           | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                           | ** ** | **Net Profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                           | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Revaluations**                                     |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation effect                                  |       | 0.8                          |       | 0.8 |   | 0.9 |   | 29.4 |   | 28.6 |   | 29.4 |   | 28.6 |   |
| Gain on disposal                                     |       | 8.7                          |       | 7.9 |   | 8.6 |   | — |   | — |   | — |   | — |   |
| Adjustment to revaluation surplus                    |       | —                       |       | — |   | — |   | (203.8 | ) | (212.6 | ) | (203.8 | ) | (212.6 | ) |
|                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Sale and leaseback - substantial**                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation effect/ reinstatement of  asset         |       | (2.4                         | )          | (2.3 | ) | (2.4 | ) | 163.4 |   | 165.8 |   | (7.1 | ) | (4.7 | ) |
| Profit on sale not recognized                        |       | —                       |       | — |   | (3.5 | ) | — |   | — |   | (3.5 | ) | (3.5 | ) |
| Lease rentals not recognized                         |       | 16.3                         |       | 15.7 |   | 15.2 |   | — |   | — |   | 47.2 |   | 30.9 |   |
| Lease interest on sale and leaseback  assets         |       | (13.6                        | )          | (13.8 | ) | (13.8 | ) | — |   | — |   | (41.2 | ) | (27.6 | ) |
|                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Sale and leaseback – less than substantial**  |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Profit on sale not recognized                        |       | (2.1                         | )          | — |   | — |   | — |   | — |   | (2.1 | ) | — |   |
|                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total Property, Plant and Equipment  adjustments** | ** ** | **7.7**                      | ** ** | **8.3** | ** ** | **5.0** | ** ** | **(11.0** | **)** | **(18.2** | **)** | **(181.2** | **)** | **(188.9** | **)** |

 

(b)                       Provisions

 

The following items represent differences in accounting for provisionsbetween Australian and US GAAP. The consolidated entity adopted therequirements of AASB 1044 ‘Provisions, Contingent Liabilities and ContingentAssets’ for the first time on July 1, 2002.

 

Employee provisions

 

The term “provisions” is used in Australian GAAP to designate accruedexpenses with no definitive payment date. This can include such items asemployee leave entitlements not yet taken. Classification between current andnon-current is generally based on management assessments.  For US GAAP purposes, certain post-employmentbenefits had been brought to account in 2001, which were brought to account in2002 for Australian GAAP purposes.

 

During the year ended June 30, 2003, the consolidated entityincreased the provision for wages, salaries, annual leave and sick leave toreflect the remuneration rates the consolidated entity expects to pay.  This requirement is fundamentally consistentwith US GAAP.  However, pursuant to thetransitional requirements of AASB 1028 ‘Employee Entitlements’, the increase inthe provision as at July 1, 2002 was recorded against opening retainedearnings.  For US GAAP purposes, thisincrease in the provision was recorded against net income.

 

F - 90

----

 

Onerous contracts

 

Under Australian GAAP, in accordance with the adoption ofAASB 1044 ‘Provisions, Contingent Liabilities and Contingent Assets’, aprovision for onerous contracts is recognized when the unavoidable costs ofmeeting the consolidated entity’s obligation under these contracts exceeds theeconomic benefits expected to be received. Under US GAAP, this represents future operating losses and therefore theprovision is reversed and contract revenues and expenses are booked insubsequent periods as sales are made under the contract.  Under the transitional arrangements of AASB1044, a provision for onerous contracts was recorded against opening retainedearnings in the year ended June 30, 2003. This provision has been reversed for US GAAP purposes and any subsequentutilization of this Australian GAAP provision is charged to net income for USGAAP purposes.

 

The table below outlines the impact on net profit, assets andshareholders’ equity of the above adjustments.

 
| ** **                                                                           | ** ** | **Years Ended June 30** | ** ** |
|--------------------------------------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                                           | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                                                           | ** ** | **Net Profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                                           | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Employee benefits**                                                                |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Post employment benefits                                                             |       | —                       |       | — |   | 4.7 |   | — |   | — |   | — |   | — |   |
| Charge to opening retained earnings for  Australian GAAP change in accounting policy |       | —                       |       | (2.2 | ) | — |   | — |   | — |   | — |   | — |   |
|                                                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Onerous contracts**                                                                |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Reversal of provision and recognition of  current year expense                       |       | 3.2                          |       | (5.9 | ) | — |   | — |   | — |   | 17.4 |   | 14.2 |   |
|                                                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total Provisions adjustments**                                                     | ** ** | **3.2**                      | ** ** | **(8.1** | **)** | **4.7** | ** ** | **—** | ** ** | **—** | ** ** | **17.4** | ** ** | **14.2** | ** ** |

 

(c)                        Pension Plans

 

Under Australian GAAP the contributions to the various pension plansare recorded as an expense in the income statement.  Under US GAAP an adjustment is made torecognize the measurement principles of SFAS 87 in determining net income andshareholders’ equity (refer Note 26).

 

The consolidated entity is not a party to any material agreements withits employees in respect of post retirement or other compensation benefits(other than pension plans) except for those amounts which are provided for inthe financial statements in accordance with various statutory entitlements.

 

As a result of the acquisition of AFE A/S and Schmalbach-Lubeca,certain liabilities for accrued benefit costs have been recorded for US GAAPpurposes, with a corresponding adjustment to goodwill.

 

The table below outlines the impact on net profit, assets andshareholders’ equity of the above adjustments.

 
| ** **                            | ** ** | **Years Ended June 30** | ** ** |
|---------------------------------------|------------|------------------------------|------------|
| ** **                            | ** ** | **(in millions of A$)**      | ** ** |
| ** **                            | ** ** | **Net Profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                            | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                  |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Pension plans**                     |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepaid/(accrued) pension costs       |       | 10.8                         |       | 1.5 |   | 2.7 |   | 56.8 |   | 59.4 |   | 65.0 |   | 54.2 |   |
| Recognition of minimum liability:     |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income adjustment |       | —                       |       | — |   | — |   | — |   | — |   | (38.5 | ) | (32.0 | ) |
| Intangible assets recognized          |       | —                       |       | — |   | — |   | 9.3 |   | 10.2 |   | — |   | — |   |
| Acquired funds                        |       | —                       |       | — |   | — |   | 15.9 |   | 4.5 |   | — |   | — |   |
|                                  |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total Pension Plan adjustments**    | ** ** | **10.8**                     | ** ** | **1.5** | ** ** | **2.7** | ** ** | **82.0** | ** ** | **74.1** | ** ** | **26.5** | ** ** | **22.2** | ** ** |

 

F - 91

----

 

(d)                       Start-Up Costs

 

Under US GAAP certain start-up costs which relate to one-timeactivities involving the set up of new facilities, products or conducting a newbusiness, must be expensed as incurred under Statement of Position 98-5`Reporting on the Costs of Start-Up Activities’. Under Australian GAAP suchstart-up costs are permitted to be capitalized, and amortized over the life ofthe asset.

 

Included in start up costs in 2002 were $7.0 million of pre-acquisitioncosts related to the acquisition of Schmalbach-Lubeca, which were able to becapitalised under Australian GAAP but expensed for US GAAP.  In 2003 this adjustment continued to bereflected as part of the start-up costs adjustment with a correspondingadjustment to property, plant and equipment. In 2004, however as these pre-acquisition costs form part of thegoodwill on the acquisition of Schmalbach-Lubeca, the adjustment has now beenreflected as part of goodwill.

 

The impact of the above accounting difference on net profit, assets andshareholders’ equity is as follows:

 
| ** **                    | ** ** | **Years Ended June 30** | ** ** |
|-------------------------------|------------|------------------------------|------------|
| ** **                    | ** ** | **(in millions of A$)**      | ** ** |
| ** **                    | ** ** | **Net Profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                    | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                          |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Start up cost adjustments** | ** ** | **0.4**                      | ** ** | **(0.4** | **)** | **(9.2** | **)** | **(14.0** | **)** | **(21.4** | **)** | **(14.0** | **)** | **(21.4** | **)** |

 

(e)                        Goodwill

 

Amortisation of goodwill

 

For Australian GAAP purposes, prior to 1989, goodwill was written offin the year of acquisition.  For US GAAPpurposes this goodwill has been reinstated.

 

Subsequent to 1989 acquired goodwill is amortized in equal instalmentsover a maximum of 20 years for Australian GAAP purposes – refer Note 1(18).  While for US GAAP purposes, up until July 1,2002, certain goodwill with an expected life greater than 20 years waspermitted to be amortized in equal instalments over a maximum of 40 years.  Effective July 1, 2002. the consolidatedentity adopted the requirements of SFAS 142 ‘Goodwill and Intangible Assets’for US GAAP purposes.  In accordance withthe requirements of this standard, amortisation of goodwill ceased, and insteadthe carrying value of goodwill is tested annually for potential impairments.

 

Pre-acquisition costs

 

Included in start up costs in 2002 were $7.0 million of pre-acquisitioncosts related to the acquisition of Schmalbach-Lubeca, which were able to becapitalised under Australian GAAP but expensed for US GAAP.  In 2003 this adjustment continued to bereflected as part of the start-up costs adjustment with a correspondingadjustment to property, plant and equipment. In 2004, however as these pre-acquisition costs form part of thegoodwill on the acquisition of Schmalbach-Lubeca, the adjustment has now beenreflected as part of goodwill.

 

The impact of the above GAAP differences on net profit, assets andshareholders’ equity is as follows:

 
| ** **                                       | ** ** | **Years Ended June 30** | ** ** |
|--------------------------------------------------|------------|------------------------------|------------|
| ** **                                       | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                       | ** ** | **Net profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                       | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                             |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustment for Schmalbach pre-acquisition  costs |       | —                       |       | — |   | — |   | (7.0 | ) | — |   | (7.0 | ) | — |   |
| Reinstatement and amortization of  goodwill      |       | 127.6                        |       | 136.8 |   | 20.1 |   | 515.4 |   | 387.8 |   | 515.4 |   | 387.8 |   |
|                                             |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total Goodwill Adjustments**                   | ** ** | **127.6**                    | ** ** | **136.8** | ** ** | **20.1** | ** ** | **508.4** | ** ** | **387.8** | ** ** | **508.4** | ** ** | **387.8** | ** ** |

 

F - 92

----

 

In accordance with the transitional requirements of SFAS 142, thefollowing table includes the proforma disclosure of net income and earnings pershare, adjusted to exclude the amortization of goodwill for the year ended June 30,2002:

 
| ** **                 | ** **   | ** ** | **For Years Ended June 30**                    | ** ** |
|----------------------------|--------------|------------|-----------------------------------------------------|------------|
| ** **                 | ** **   | ** ** | **(in millions of A$,  except for per share data)** | ** ** |
| ** **                 | ** **   | ** ** | **2004**                                            | ** ** | **2003** | ** ** | **2002** | ** ** |
| Net  Income                | As  reported |       | 382.7                                               |       | 367.6 |   | 819.3 |   |
|                       | Pro forma    |       | 382.7                                               |       | 367.6 |   | 851.2 |   |
| Basic earnings per share   | As  reported |       | $                                                   | 0.44       |   | $ | 0.44 |   | $ | 1.23 |   |
|                       | Pro forma    |       | $                                                   | 0.44       |   | $ | 0.44 |   | $ | 1.28 |   |
| Diluted earnings per share | As  reported |       | $                                                   | 0.43       |   | $ | 0.44 |   | $ | 1.11 |   |
|                       | Pro forma    |       | $                                                   | 0.43       |   | $ | 0.44 |   | $ | 1.15 |   |

 

(f)                          Provisionfor Dividend

 

Prior to July 1, 2002 dividends declared after balance date, butprior to the approval of the financial statements, were recorded as liabilitiesunder Australian GAAP.  Under US GAAP,provisions for dividends are only recognized if they are declared prior tobalance date.

 

On July 1, 2002, the consolidated entity adopted the requirementsof AASB 1044 ‘Provisions, Contingent Assets and Contingent Liabilities’ and asa result, Australian GAAP is now consistent with US GAAP.

 

(g)                       Employee Share/OptionSchemes

 

Under Australian GAAP compensation expense is recognized in relation tothe fair value of shares issued in lieu of bonuses and for all share schemessettled by way of cash payment.  However,compensation is not recognized in relation to other schemes, the details ofwhich are described in Note 19.

 

To recognize compensation expense in accordance with US GAAP, theconsolidated entity has prospectively applied, effective July 1, 2002, therecognition and disclosure requirements of SFAS 123 ‘Accounting for StockCompensation’, as required by SFAS 148 ‘Accounting for Stock Based Compensation– Transition and Disclosure’. Accordingly, compensation expense for all options issued in the currentfinancial year is calculated in accordance with the “fair value” requirementsof SFAS 123 using a Black-Scholes option pricing model.  Where options have been issued subject toperformance hurdle terms and conditions being satisfied, the compensationexpense has been adjusted to reflect the likelihood of hurdle conditions beingmet.  The current period compensationexpense associated with options issued in financial years prior to July 1,2002 is calculated in accordance with the “intrinsic value” requirements of APBOpinion No.25 and related interpretations.

 

F - 93

----

 

Prior to July 1, 2002, the consolidated entity recognizedcompensation expense for all issued options in accordance with APB OpinionNo.25.  Based on the requirements of SFAS148, comparative information has not been restated.

 

Due to the transitional provisions in SFAS 148, the effect of applyingSFAS 123 on US GAAP income in the current period is not representative of theexpected effect on net income in future years. Had compensation expense been determined in accordance with the “fairvalue” provisions in SFAS 123, the consolidated entity’s net income andearnings per share would have been compared to the pro forma amounts indicatedbelow:

 
| ** **                 | ** **   | ** ** | **For Years Ended June 30**                    | ** ** |
|----------------------------|--------------|------------|-----------------------------------------------------|------------|
| ** **                 | ** **   | ** ** | **(in millions of A$,  except for per share date)** | ** ** |
| ** **                 | ** **   | ** ** | **2004**                                            | ** ** | **2003** | ** ** | **2002** | ** ** |
| Compensation Expense       | As  reported |       | 18.0                                                |       | 31.1 |   | 18.3 |   |
|                       | Pro  forma   |       | 18.4                                                |       | 32.5 |   | 20.0 |   |
| Net Income                 | As  reported |       | 382.7                                               |       | 367.6 |   | 819.3 |   |
|                       | Pro  forma   |       | 382.3                                               |       | 366.2 |   | 817.6 |   |
| Basic earnings per share   | As  reported |       | $                                                   | 0.44       |   | $ | 0.44 |   | $ | 1.23 |   |
|                       | Pro  forma   |       | $                                                   | 0.44       |   | $ | 0.44 |   | $ | 1.23 |   |
| Diluted earnings per share | As  reported |       | $                                                   | 0.43       |   | $ | 0.44 |   | $ | 1.11 |   |
|                       | Pro  forma   |       | $                                                   | 0.43       |   | $ | 0.43 |   | $ | 1.11 |   |

 

Costs of Maintenance of Employee Share Schemes and Loans

 

The costs incurred in maintaining these employee share schemes arecharged as a compensation expense for US GAAP reporting purposes.  Under Australian GAAP, these costs are offsetagainst shareholders’ equity.

 

The impact of the above GAAP differences on net profit, assets andshareholders’ equity is presented in the table below.

 

Classification of Employee Loans Granted to Fund ESPP Issues

 

Under Australian GAAP, employee loans are classified as non currentreceivables.  For US GAAP purposes, theloans are off set against shareholders’ equity. The impact of this adjustment is reflected in the table below.

 
| ** **                                  | ** ** | **Years Ended June 30** | ** ** |
|---------------------------------------------|------------|------------------------------|------------|
| ** **                                  | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                  | ** ** | **Net Profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                  | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                        |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Employee Share Schemes**                  |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Compensation expense                        |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Options                                     |       | (7.6                         | )          | (16.4 | ) | (7.7 | ) | — |   | — |   | — |   | — |   |
| Discount on ESPP                            |       | (5.4                         | )          | (9.7 | ) | (6.7 | ) | — |   | — |   | — |   | — |   |
| Shares issued for nil consideration         |       | (1.6                         | )          | (1.1 | ) | (0.4 | ) | — |   | — |   | — |   | — |   |
| Costs of maintenance                        |       | (3.4                         | )          | (3.9 | ) | (3.5 | ) | — |   | — |   | — |   | — |   |
|                                        |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest free loans reclassified            |       | —                       |       | — |   | — |   | (34.4 | ) | (34.5 | ) | (34.4 | ) | (34.5 | ) |
|                                        |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total Employee Share Scheme adjustments** | ** ** | **(18.0**                    | **)**      | **(31.1** | **)** | **(18.3** | **)** | **(34.4** | **)** | **(34.5** | **)** | **(34.4** | **)** | **(34.5** | **)** |

 

F - 94

----

 

(h)                       Research andDevelopment

 

Under Australian GAAP, research and development expenditure that isconsidered to have a demonstrable future economic benefit and commercial valueis capitalized and amortized over the period of time during which the benefitsare expected to arise.  Under US GAAP,research and development costs are generally charged as expenses as incurred,in accordance with SFAS 2 `Accounting for Research and Development Costs’.

 

The impact of the above accounting policy difference on net profit,assets and shareholders’ equity is as follows:

 
| ** **                                                       | ** ** | **Years Ended June 30** | ** ** |
|------------------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                       | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                                       | ** ** | **Net Profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                       | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                                             |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Capitalized research and development  expenditure disallowed** |       | (1.4                         | )          | (5.5 | ) | — |   | (6.9 | ) | (5.5 | ) | (6.9 | ) | (5.5 | ) |

 

(i)                           Derivative Instruments and Hedging Activities

 

The nature of the consolidated entity’s business activities involvesthe management of various financial and market risks, including those relatedto currency exchange rates, interest rates and commodity prices.  The consolidated entity uses derivative financialinstruments to mitigate or eliminate certain of those risks.

 

Under Australian GAAP, derivative financial instruments may have hedgeaccounting treatment applied if the hedging derivatives are effective inreducing the exposure being hedged and are designated as a hedge at theinception of the contract.  Hedgingderivatives are accounted for in a manner consistent with the accountingtreatment of the hedged items.

 

Effective from July 1, 2000, the consolidated entity adopted therequirements of SFAS 133 ‘Accountingfor Derivatives and Hedging Activities’ for US GAAP reconciliation purposesonly.

 

SFAS 133, as amended, standardizes the accounting for derivativeinstruments and hedging activities and requires that derivative instruments berecognized as assets and liabilities in the balance sheet at their fairvalues.  If certain conditions are met,hedge accounting may be applied and the derivative instruments may bedesignated as: (a) a hedge of the exposure to changes in the fair value of arecognized asset, liability or an unrecognized firm commitment (fair valuehedge); (b) a hedge of the exposure to variability of cash flows of arecognized asset, liability or forecasted transaction (cash flow hedge); or (c)a hedge of certain foreign currency exposures.

 

In the case of a qualifying fair value hedge, changes in the value ofthe derivative instruments that have been deemed to be effective are recognizedin current earnings along with changes in the fair value of the designatedhedged item.  In the case of a qualifyingcash flow hedge, changes in the value of the derivative instruments that havebeen effective are recognized in other comprehensive income, until such timethat earnings are affected by the cash flows of the underlying hedgeditem.  In either a fair value hedge or acash flow hedge, net earnings are impacted to the extent the changes in thevalue of the derivative instruments do not offset the changes in the value ofthe hedged items (ineffectiveness).

 

Derivative instruments that are non-designated or do not meet therelevant hedge accounting criteria are accounted for at fair value with gainsand losses recorded in current earnings.

 

The hedge designation requirements under SFAS 133 vary in certainrespects from Australian GAAP and as a result, the consolidated entity has notmet the relevant requirements under US GAAP for cash flow and fair value hedgesto qualify for hedge accounting criteria under US GAAP.  Accordingly, under US GAAP, all cash flow andfair value hedges are accounted for at fair value with gains and losses recordedin current earnings.

 

The impact of the accounting for risk management activities pursuant toSFAS 133 is expected to create a level of ongoing volatility in reportedfinancial results reconciled to US GAAP.

 

F - 95

----

 

In 2002, the consolidated entity purchased a foreign currency hedge tofund the acquisition of Schmalbach-Lubeca. Upon settling the hedge, the consolidated entity realized a gain.  For Australian GAAP purposes, as this wasdesignated as a specific hedge, the gain was applied to the purchaseconsideration and resulted in the recognition of goodwill on the acquisition atthe lower, hedged foreign exchange rate.

 

However, as noted above, for US GAAP reporting purposes theconsolidated entity does not satisfy the relevant hedge accountingcriteria.  Therefore the purchaseconsideration for the Schmalbach-Lubeca acquisition was valued at the relevantmarket rate, and the gain on the hedge was recognised in net income.

 

The tablebelow outlines the impact on net profit, assets and shareholders’ equity of theabove adjustments.

 
| ** **                                                           | ** ** | **Years ended June 30** | ** ** |
|----------------------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                           | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                                           | ** ** | **Net Profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                           | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net market value of derivatives**                                  |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Recognition and movement in the net  market value of derivatives     |       | 6.2                          |       | (13.0 | ) | 5.1 |   | — |   | — |   | (13.2 | ) | (13.2 | ) |
| Net deferred hedge losses brought to  account                        |       | (20.2                        | )          | (16.5 | ) | — |   | (40.6 | ) | (22.5 | ) | (36.7 | ) | (16.5 | ) |
|                                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Deferred gain on hedge**                                           |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Recognition of hedge gain                                            |       | —                       |       | — |   | 51.9 |   | 51.9 |   | 51.9 |   | 51.9 |   | 51.9 |   |
|                                                                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total Derivative Instruments and Hedging  Activities adjustments** | ** ** | **(14.0**                    | **)**      | **(29.5** | **)** | **57.0** | ** ** | **11.3** | ** ** | **29.4** | ** ** | **2.0** | ** ** | **22.2** | ** ** |

 

(j)                           GrantIncome

 

For Australian GAAP purposes, funds from grants have been recognized asincome upon receipt.  Under US GAAP,these funds are deferred and matched against costs on a systematic basis.  The impact of this accounting policy differenceon net profit, assets and shareholders’ equity is as follows:

 
| ** **                              | ** ** | **Years ended June 30  (in millions of A$)** | ** ** |
|-----------------------------------------|------------|---------------------------------------------------|------------|
| ** **                              | ** ** | **Net Profit**                                    | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                              | ** ** | **2004**                                          | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                    |       |                                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Grant income deferred and amortized** | ** ** | **(4.3**                                          | **)**      | **(5.3** | **)** | **(2.2** | **)** | **—** | ** ** | **—** | ** ** | **(22.1** | **)** | **(17.8** | **)** |

 

(k)                        BusinessCombinations

 

The following relates to the Amcor Flexibles Europe (‘AFE’) A/Stransaction which occurred on June 29, 2001, whereby the European Flexibleoperations merged with Danisco Flexible and Akerland & Rausing:

 

Gain on Sale of Assets Adjustment

 

US GAAP required the AFE A/S transaction to be recorded under APBOpinion No. 16 ‘Business Combinations’as a partial sale of Amcor Flexibles Europe and a partial acquisition of theDanisco Flexibles and Ackerlund & Rausing businesses.  For US GAAP purposes, the portion of AmcorFlexibles Europe retained by the consolidated entity remains recorded at itshistorical cost and the portions of Danisco Flexibles and Ackerlund &Rausing purchased by the consolidated entity are recorded at their respectivefair values.  A gain was recognized onthe portion of Amcor Flexibles Europe sold for US GAAP purposes (with acorresponding adjustment to goodwill).

 

F - 96

----

 

Restructuring Provision Adjustments

 

US GAAP required the AFE A/S transaction to be recorded under APB No.16as a partial sale of AFE and a partial acquisition of the Danisco Flexibles andAckerlund and Rausing businesses. Accordingly, only 67% of the restructuring provision related to theacquired businesses is recorded for US GAAP purposes (with a correspondingadjustment to goodwill).  The remainingportion of the restructuring provision has been expensed as incurred under USGAAP.

 

During the year ended June 30, 2004, the remaining portion of theprovision for restructuring the operations of AFE A/S was utilised.  This provision was recorded as a liabilityupon the acquisition of this business for Australian GAAP.  The restructuring activities involved variousplant closures, plant rationalizations and reductions in employee numbers.  While the US GAAP criteria for accruing costsassociated with business restructurings are fundamentally consistent with thoseof Australian GAAP, it contains very specific qualifying criteria, and wherethese criteria were not satisfied an adjustment to the restructuring provisionwas recorded.

 

Other Fair Value Adjustments

 

As noted above, for US GAAP purposes, the AFE A/S acquisition isrecorded under APB No.16 as a partial sale of AFE and a partial acquisition ofthe Danisco Flexibles and Ackerlund and Rausing businesses.  Accordingly, only 67% of the fair valueadjustments relating to the acquired businesses have been recorded for US GAAPpurposes (with a corresponding adjustment to goodwill).

 

The following amounts relate to the July 1, 2003 AFE transaction,whereby the remaining minority interest shareholding was acquired for $165.1million:

 

Minority Interest Acquisition

 

As noted above under ‘Restructuring provision adjustments’ and ‘Otherfair value adjustments’, a portion of these items established for AustralianGAAP against goodwill were disallowed for US GAAP.  Through expensing these items, a cumulative$19.6 million of expenses were attributed to minority interest from the time ofthe initial acquisition on June 29, 2001 through to the acquisition of theminority interest on July 1, 2003. Consequently the goodwill arising under US GAAP on the acquisition ofthe minority interest was $19.6 million higher than under Australian GAAP.

 

The table below outlines the impact on net profit, assets andshareholders’ equity of the above adjustments.

 
| ** **                                                | ** ** | **Years Ended June 30** | ** ** |
|-----------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                                | ** ** | **Net Profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                                      |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **June 29, 2001 AFE Merger**                         |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Gains on sale of assets                                   |       | —                       |       | — |   | — |   | 9.0 |   | 9.0 |   | 9.0 |   | 9.0 |   |
| Restructuring provisions disallowed under  US GAAP        |       | (0.8                         | )          | (11.1 | ) | (62.2 | ) | (96.9 | ) | (96.9 | ) | (75.0 | ) | (74.2 | ) |
| Other fair value adjustments                              |       | —                       |       | — |   | (9.9 | ) | (23.8 | ) | (23.8 | ) | (9.9 | ) | (9.9 | ) |
|                                                      |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total June 29, 2001 AFE Transaction  adjustments** | ** ** | **(0.8**                     | **)**      | **(11.1** | **)** | **(72.1** | **)** | **(111.7** | **)** | **(111.7** | **)** | **(75.9** | **)** | **(75.1** | **)** |
|                                                      |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **July 1, 2003 AFE  Transaction**                    |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Minority interest acquisition                             |       | —                       |       | — |   | — |   | 19.6 |   | — |   | — |   | — |   |
|                                                      |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total June 30, 2003 AFE Transaction  adjustments** | ** ** | **—**                   | ** ** | **—** | ** ** | **—** | ** ** | **19.6** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** |
|                                                      |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total Business Combination adjustments**                | ** ** | **(0.8**                     | **)**      | **(11.1** | **)** | **(72.1** | **)** | **(92.1** | **)** | **(111.7** | **)** | **(75.1** | **)** | **(75.1** | **)** |

 

F - 97

----

 

(l)                           PerpetualNon-cumulative Subordinated Convertible Reset Unsecured Notes (“PACRS”)

 

The PACRS are classified as equity for Australian GAAP purposes.  These instruments are classified as debt forUS GAAP purposes.  In addition, for USGAAP, the PACRS are considered to have beneficial conversion features, as PACRSholders are able to convert the PACRS into Amcor Limited shares at a discountto the market value of Amcor Limited shares. Therefore, the beneficial conversion features have been recorded byallocating a portion of the proceeds equal to their intrinsic value toadditional paid-in capital (equity).  Thedebt discount resulting from this allocation of proceeds to the beneficialconversion features is recognized as interest expense over the minimum periodfrom the date of issuance to the earliest conversion date.  PACRS distributions are treated as interestexpense for US GAAP purposes.  Transactioncosts associated with the PACRS have been offset against equity for AustralianGAAP purposes.  These transaction costsare deferred and amortized over the period from the date of issuance to thefirst reset date for US GAAP purposes.

 

The table below outlines the impact on net profit, assets andshareholders’ equity of the above adjustments.

 
| ** **                                                       | ** ** | **Years Ended June 30** | ** ** |
|------------------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                       | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                                       | ** ** | **Net Profit**               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                       | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** | **2004** | ** ** | **2003** | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                                             |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **PACRS**                                                        |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification of balances                                     |       | —                       |       | — |   | — |   | 13.4 |   | 13.4 |   | (596.6 | ) | (596.6 | ) |
| Amortization of capitalized transaction  costs                   |       | (2.8                         | )          | (2.8 | ) | (2.2 | ) | (7.8 | ) | (5.0 | ) | (7.8 | ) | (5.0 | ) |
| Interest expense recorded as distribution  under Australian GAAP |       | (52.4                        | )          | (52.3 | ) | (36.4 | ) | — |   | — |   | — |   | — |   |
| Beneficial conversion feature                                    |       | —                       |       | — |   | — |   | — |   | — |   | 32.5 |   | 32.5 |   |
| Amortization of beneficial conversion  feature                   |       | (7.2                         | )          | (7.0 | ) | (5.0 | ) | — |   | — |   | (19.7 | ) | (12.5 | ) |
|                                                             |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total PACRS adjustments**                                      | ** ** | **(62.4**                    | **)**      | **(62.1** | **)** | **(43.6** | **)** | **5.6** | ** ** | **8.4** | ** ** | **(591.6** | **)** | **(581.6** | **)** |

 

(m)                     Income Taxes

 

The consolidated entity applies SFAS 109 ‘Accounting for Income Taxes’in preparing its US GAAP information. Accounting for income taxes under Australian GAAP is under the liabilitymethod, and is consistent in all major respects to SFAS 109.

 

The amount and expiration dates for tax losses relating to the portionof the deferred tax asset that is not likely to be realized based on management’sassessment of future taxable income at June 30, 2004 are as follows:

 
| **Amount**               | ** ** | **Expiration  Date** | ** ** |
|--------------------------|------------|----------------------|------------|
| **(in millions of  A$)** | ** ** | ** **           | ** ** |
|                     |       |                 |       |
| 23.0                     |       | June 30,  2005  |       |
| 11.8                     |       | June 30,  2006  |       |
| 15.0                     |       | June 30,  2007  |       |
| 31.1                     |       | June 30,  2008  |       |
| 10.3                     |       | June 30,  2009  |       |
| 11.2                     |       | June 30,  2010  |       |
| 10.8                     |       | June 30,  2011  |       |
| 9.2                      |       | June 30,  2012  |       |
| 9.2                      |       | June 30,  2013  |       |
| 7.2                      |       | June 30,  2014  |       |
| 7.9                      |       | June 30,  2015  |       |
| 13.3                     |       | June 30,  2016  |       |
| 5.8                      |       | June 30,  2017  |       |
| 5.8                      |       | June 30,  2018  |       |
| 5.8                      |       | June 30,  2019  |       |
| 5.8                      |       | June 30,2020    |       |
| 18.9                     |       | Indefinite  life     |       |
| 202.1                    |       | Total                |       |

 

F - 98

----

 

In assessing the realizability of deferred tax assets for US GAAP,management considers whether it is more likely than not that some portion orall of the deferred tax assets will not be realized.  The ultimate realization of deferred taxassets will only be obtainable if:

 

•                  the entities derive futureassessable income of a nature and amount sufficient to enable the benefit ofthe deductions to be realized;

•                  the entities continue to complywith the conditions for deductibility imposed by income tax law; and

•                  changes in income tax legislationdo not adversely affect the ability of the entities to realize the benefits ofthe deductions.

 

Management considers the scheduled reversal of deferred taxliabilities, projected future taxable income, and tax planning strategies inmaking this assessment.  A valuationallowance is provided against the deferred tax asset for the portion of thatasset that is not likely to be realized based on management’s assessment offuture taxable income.  During the yearthere was a decrease in the valuation allowance of $30.7 million (2003 increase$223.8 million).  As at June 30,2004, a valuation allowance of $202.1 million (2003 $232.8 million) has beenprovided against deferred tax assets. This valuation allowance relates to carried forward tax losses.

 

The consolidated entity acquired $78.0 million in carried forward taxlosses as part of the acquisition of the Schmalbach-Lubeca business.  A valuation allowance was provided againstthe full value of these deferred tax assets, based on management’s assessmentthat it was more likely than not that these benefits would not be realized. Ifany of these deferred tax assets are subsequently realized, they will result ina corresponding adjustment to goodwill.  Duringthe year, $14.1 million of these carried forward tax losses were realized.  For Australian GAAP purposes, the recognitionof these utilised losses as a deferred tax asset was included as part of thecurrent year income tax expense.  For USGAAP purposes however, the movement in the valuation allowance relating to therealization of these tax losses has resulted in a corresponding adjustment togoodwill.  The remaining carried forwardtax losses related to the acquisition of the Schmalbach-Lubeca business at June 30,2004 are $63.9 million.  A valuationallowance continues to be provided against the full value of these deferred taxassets, based on management’s assessment that it is more likely than not thatthese remaining benefits will not be realized.

 

The consolidated entity has not recognized a deferred tax liability forthe undistributed earnings of its foreign subsidiaries that arose in 2004 andprior years because the consolidated entity currently does not expect thoseunremitted earnings to reverse and become taxable in the foreseeablefuture.  A deferred tax liability will berecognized when the consolidated entity is no longer able to demonstrate thatit plans to permanently reinvest the undistributed earnings.  The determination of the unrecognizeddeferred tax liability is not practicable.

 

F - 99

----

 

Income tax expense

 

For the year ended June 30, 2004 $355.8 million of the total USGAAP pre tax profit of $520.3 million relates to domestic operations, whilstthe balance of $164.5 million relates to foreign operations.  Income tax expense attributable to incomecalculated in accordance with US GAAP, consists of:

 
| ** **                        | ** ** | **(in millions of A$)** | ** ** |
|-----------------------------------|------------|-------------------------|------------|
| ** **                        | ** ** | **Current**             | ** ** | **Deferred** | ** ** | **Total** | ** ** |
|                              |       |                    |       |   |   |   |   |
| **Year ended June 30, 2004** |       |                    |       |   |   |   |   |
| Domestic                          |       | 11.5                    |       | (5.2 | ) | 6.3 |   |
| Foreign jurisdiction              |       | 109.4                   |       | 7.4 |   | 116.8 |   |
|                              |       | 120.9                   |       | 2.2 |   | 123.1 |   |
|                              |       |                    |       |   |   |   |   |
| **Year ended June 30, 2003** |       |                    |       |   |   |   |   |
| Domestic                          |       | 4.1                     |       | 21.1 |   | 25.2 |   |
| Foreign jurisdiction              |       | 88.4                    |       | (15.9 | ) | 72.5 |   |
|                              |       | 92.5                    |       | 5.2 |   | 97.7 |   |
|                              |       |                    |       |   |   |   |   |
| **Year ended June 30, 2002** |       |                    |       |   |   |   |   |
| Domestic                          |       | 24.7                    |       | 31.1 |   | 55.8 |   |
| Foreign jurisdiction              |       | 1.3                     |       | 39.6 |   | 40.9 |   |
|                              |       | 26.0                    |       | 70.7 |   | 96.7 |   |

 

Income tax expense attributable to income was $123.1 million, $97.7million and $96.7 million for the years ended June 30, 2004, June 30,2003 and June 30, 2002 respectively and differed from amounts computed byapplying the Australian income tax rate of 30% to pre-tax income as a result ofthe following:

 
| ** **                                            | ** ** | **Years Ended June 30** | ** ** |
|-------------------------------------------------------|------------|------------------------------|------------|
| ** **                                            | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                            | ** ** | **2004**                     | ** ** | **2003** | ** ** | **2002** | ** ** |
|                                                  |       |                         |       |   |   |   |   |
| Computed “expensed” tax expense             |       | 156.1                        |       | 144.6 |   | 277.6 |   |
| Increase/(reduction) in income taxes  resulting from; |       |                         |       |   |   |   |   |
| Different overseas tax rates                          |       | 6.9                          |       | 6.2 |   | 6.6 |   |
| Share of associate’s net profit                  |       | —                       |       | — |   | (12.0 | ) |
| Non deductible amortization of PACRS  costs           |       | 2.8                          |       | 2.8 |   | 1.1 |   |
| Capital structures                                    |       | (56.2                        | )          | (55.9 | ) | (36.4 | ) |
| Amortization/write down of goodwill                   |       | (12.5                        | )          | (13.1 | ) | 6.5 |   |
| Employee share schemes                                |       | 5.4                          |       | 9.3 |   | 5.5 |   |
| Change in estimate of prior year tax  provision       |       | (9.3                         | )          | (14.3 | ) | (8.8 | ) |
| Utilisation of tax losses                             |       | (8.8                         | )          | (8.1 | ) | (1.8 | ) |
| Tax benefit on significant items not  recognised      |       | 25.0                         |       | 9.4 |   | (160.4 | ) |
| Other                                                 |       | 13.7                         |       | 16.8 |   | 18.8 |   |
| **Total Income Tax Expense**                          |       | 123.1                        |       | 97.7 |   | 96.7 |   |

 

Income tax expense relates to continuing operations.

 

F - 100

----

 

Deferred Taxes

 

The disclosure of deferred tax assets and liabilities calculated inaccordance with US GAAP and classified into current and non-current balances,as required by SFAS 109, is set out below:

 
| ** **                                               | ** ** | **Years Ended June 30** | ** ** |
|----------------------------------------------------------|------------|------------------------------|------------|
| ** **                                               | ** ** | **(in millions of A$)**      | ** ** |
| ** **                                               | ** ** | **2004**                     | ** ** | **2003** | ** ** |
|                                                     |       |                         |       |   |   |
| Deferred Tax Liabilities                                 |       |                         |       |   |   |
| Current                                                  |       | 50.6                         |       | 24.5 |   |
| Non-Current                                              |       | 352.9                        |       | 334.6 |   |
|                                                     |       | 403.5                        |       | 359.1 |   |
| Composition:                                             |       |                         |       |   |   |
|                                                     |       |                         |       |   |   |
| Plant and equipment, due to differences  in depreciation |       | 304.7                        |       | 300.5 |   |
| Capitalized finance leases                               |       | 0.3                          |       | — |   |
| Prepaid expenses                                         |       | 2.1                          |       | 0.4 |   |
| Inventory/Stereos & Dies                             |       | —                       |       | 3.5 |   |
| Other                                                    |       | 96.4                         |       | 54.7 |   |
|                                                     |       | 403.5                        |       | 359.1 |   |
| Deferred Tax Assets                                      |       |                         |       |   |   |
| Current                                                  |       | 60.4                         |       | 22.7 |   |
| Non-Current                                              |       | 210.8                        |       | 202.5 |   |
|                                                     |       | 271.2                        |       | 225.2 |   |
| Composition:                                             |       |                         |       |   |   |
|                                                     |       |                         |       |   |   |
| Employee benefits provision                              |       | 50.2                         |       | 42.1 |   |
| Insurance/claims and restructuring  provisions           |       | 43.5                         |       | 52.4 |   |
| Carried forward tax losses                               |       | 296.0                        |       | 286.7 |   |
| Accruals                                                 |       | 8.5                          |       | 12.3 |   |
| Unrealized currency differences                          |       | 24.1                         |       | 6.4 |   |
| Other                                                    |       | 51.0                         |       | 58.1 |   |
| Total Gross Deferred Tax Assets                          |       | 473.3                        |       | 458.0 |   |
|                                                     |       |                         |       |   |   |
| Less valuation allowance                                 |       | (202.1                       | )          | (232.8 | ) |
| Total Net Deferred Tax Assets                            |       | 271.2                        |       | 225.2 |   |
| Net Deferred Tax Liability                               |       | 132.3                        |       | 133.9 |   |

 

F - 101

----

 

(n)                       Earnings PerShare

 

The consolidated entity adopted the revised AASB 1027 ‘Earnings PerShare’ on July 1, 2002.  Therequirements of this Australian Accounting Standard are fundamentally consistentwith US GAAP requirements detailed in SFAS 128 ‘Earnings Per Share’.  However, earnings per share results willdiffer between Australian and US GAAP due to the impact of different Australianand US accounting policies on items effecting net income.  In addition to this, the US GAAP accountingtreatment for the PACRS results in a beneficial conversion feature whichimpacts the earnings per share reported under US GAAP.  For Australian accounting purposes, there isno such requirement.

 

(o)                       Non-RecourseReceivables Securitization Program

 

As described in Note 30, the consolidated entity utilizes anuncommitted, multi-currency receivables securitization program in the UnitedKingdom, France, Germany, Spain and the USA. The trade receivables of some of the consolidated entity’s businesses inthese jurisdictions are sold, on a non-recourse basis, into an independentsecuritization conduit, which issues asset-backed commercial paper intoorganized markets.  The aggregate amountof discount on the sale of receivables under this program, which is included inthe income statement, is $5.7 million (2003 – A$4.6 million).

 

Under Australian GAAP these receivables are treated as sold, andtherefore taken off-balance sheet, as the risks and rewards associated with thereceivables are deemed to have transferred to the entity purchasing thereceivables, in whom the consolidated entity has no equity or otherinterest.  This assessment is made basedon the substance of the transaction, as there is no specific Australian GAAPguidance on this issue.

 

For US GAAP purposes, the sale of these receivables is reversed, as thesale has not been made to a substantive third party.  As a result, the receivables are re-instatedand the cash received for the sale of $197.9 million (2003 $190.5 million) istreated as a secured borrowing.

 

(p)                       Unrealised Gainson Available for Sale Investments

 

Under Australian GAAP, investments in listed and unlisted securitiesare recorded at cost, less provision for permanent diminutions in value.  Under US GAAP, listed investments categorizedas “available for sale” in accordance with FAS 115, “Accounting for certaininvestments in debt and equity securities”, are valued at their market value atyear end, with any adjustments being taken through Other Comprehensive Income(OCI).

 

(q)                       Differences inApplication of GAAP on Deferred Taxes

 

This adjustment reflectsthe following items:

 

Acquired tax losses

 

The consolidated entity acquired $78.0 million in carried forward taxlosses as part of the acquisition of the Schmalbach-Lubeca business.  A valuation allowance was provided againstthe full value of these deferred tax assets, based on management’s assessmentthat it was more likely than not that these benefits would not be realized. Ifany of these deferred tax assets are subsequently realized, they will result ina corresponding adjustment to goodwill. During the year, $14.1 million of these carried forward tax losses wererealized.  For Australian GAAP purposes,the recognition of these utilised losses as a deferred tax asset was includedas part of the current year income tax expense. For US GAAP purposes however, the movement in the valuation allowancerelating to the realization of these tax losses has resulted in a correspondingadjustment to goodwill.  The remainingcarried forward tax losses related to the acquisition of the Schmalbach-Lubecabusiness at June 30, 2004 are $63.9 million.  A valuation allowance continues to beprovided against the full value of these deferred tax assets, based onmanagement’s assessment that it is more likely than not that these remainingbenefits will not be realized.

 

Business combination deferred taxes

 

The impact of the GAAP differences on deferred taxes associated withthe adjustments set out in Note 33 (k) ‘Business Combinations’.

 

(r)                          RecentChanges to US GAAP

 

Additional Employer Disclosures about Pensions and other PostRetirement Benefits

 

In December 2003, the FASB issued Statement of FinancialAccounting Standards No. 132 (revised) “Employer Disclosures about Pensions andother Post Retirement Benefits”. This standard requires that companies provideadditional detail concerning their plan assets, benefit obligations, cashflows,benefit costs and other similar relevant information. This statement was madeeffective December 15, 2003.  SeeNote 26 for the additional disclosures required by this statement.

 

F - 102

----