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UNITED STATED

SECURITIES AND EXCHANGECOMMISSION

Washington, D.C.20549

FORM 20-F
| **[ ]**    | ** ** | **Registration Statement pursuant to Section 12(b)  or (g) of the Securities Exchange Act of 1934** |
|------------|------------|-----------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                          |
| or         |
|       |
| **[X]**    | ** ** | **Annual Report pursuant to Section 13 or 15(d) of  the Securities Exchange Act of 1934**           |
| ** ** | ** ** | ** **                                                                                          |
|       |       | **For the fiscal year ended June 30, 2006**                                                         |
| ** ** |
| or         |
|       |
| **[ ]**    | ** ** | **Transition Report pursuant to Section 13 or  15(d) of the Securities Exchange Act of 1934**       |
|       | ** ** | ** **                                                                                          |
| Or         |
|       |
| **[ ]**    | ** ** | **Shell company report pursuant to Section 13 or  15(d) of the Securities Exchange Act of 1934**    |

Date of event requiringthis shell company report ...........

For the transition period from .................................. to ..................................

Commission filenumber: 0 - 18893

| AMCOR LIMITED                                             |
|-----------------------------------------------------------|
| ABN 62 000 017  372                                       |
| (Exact name of  Registrant as specified in its charter)   |
|                                                      |
| NEW SOUTH WALES,  AUSTRALIA                               |
| (Jurisdiction of  incorporation of organisation)          |
| 679 VICTORIA  STREET, ABBOTSFORD, VICTORIA 3067 AUSTRALIA |
| (Address of  principal executive offices)                 |

 

Securities registered orto be registered pursuant to Section 12(b) of the Act.

None

Securities registered orto be registered pursuant to Section 12(g) of the Act.

Ordinary Shares

American DepositaryShares

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

None

Indicate the number ofoutstanding shares of each of the issuer’s classes of capital or common stockas of the close of the period covered by the Annual Report.

OrdinaryShares  890,252,026

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act.
|  | [X] Yes | [ ]        No |   |   |
|--|---------|-------------------------------------------------------|--------|--------|

 

If this report is anannual report or transition report, indicate by check mark if the registrant isnot required to file reports pursuant to Section 13 or 15(d) of the Securitiesexchange Act of 1934.
|  | [ ] Yes | [X]       No |   |   |
|--|---------|-------------------------------------------------|--------|--------|

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bysection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.
|  | [X] Yes | [ ]        No |   |   |
|--|---------|-------------------------------------------------------|--------|--------|

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer or anon-accelerated filer.
| Large accelerated filer | [X] | Accelerated filer | [ ] | Non-accelerated filer                                [ ] |   |
|-------------------------|-----|-------------------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

 

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Indicateby check mark which financial statement item the registrant elected to follow:
|   | [ ] | Item 17 | [X] | Item 18 |   |   |
|--------|-----|---------|-----|---------|--------|--------|

 

Ifthis is an annual report, indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).
|  | [ ] | Yes | [X] | No |   |   |
|--|-----|-----|-----|----|--------|--------|

 

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**TABLE OF CONTENTS**

 
|          |       |        |                                               |                                           | Page           |
|----------|------------|-------------|----------------------------------------------------|------------------------------------------------|----------------|
|     |       |        |                                               |                                           |           |
|          |       |        | Forward-Looking  Statements                        |                                           | 6              |
|     |       |        |                                               |                                           |           |
| *PART I* | ** ** | **ITEM 1**  | Identity of  Directors, Senior Management          |                                           |           |
|     |       |        | and Advisers                                       |                                           | Not Applicable |
|     |       |        |                                               |                                           |           |
|     | ** ** | **ITEM 2**  | Offer Statistics  and Expected Timetable           |                                           | Not Applicable |
|     | ** ** | ** **  |                                               |                                           | ** **     |
|     | ** ** | **ITEM 3**  | Key Information                                    |                                           | 7              |
|     |       |        | A.                                                 | Selected  Financial Data                       |           | 7 |
|     |       |        | B.                                                 | Capitalization and Indebtedness                |           | Not Applicable |
|     |       |        | C.                                                 | Reasons for the Offer and Use of Proceeds      |           | Not Applicable |
|     |       |        | D.                                                 | Risk Factors                                   |           | 11 |
|     |       |        |                                               |                                           |           |   |
|     | ** ** | **ITEM 4**  | Information on the Company                         |                                           | 13             |
|     |       |        | A.                                                 | History and Development                        |           | 13 |
|     |       |        | B.                                                 | Business  Overview                             |           | 16 |
|     |       |        | C.                                                 | Organizational  Structure                      |           | 24 |
|     |       |        | D.                                                 | Property, Plant  and Equipment                 |           | 25 |
|     |       |        |                                               |                                           |           |   |
|     | ** ** | **ITEM 5**  | Operating  and Financial Review and Prospects      |                                           | 26             |
|     |       |        | A.                                                 | Operating  Results                             |           | 30 |
|     |       |        | B.                                                 | Liquidity and  Capital Resources               |           | 43 |
|     |       |        | C.                                                 | Research and  Technology                       |           | 45 |
|     |       |        | D.                                                 | Trend Information                              |           | 45 |
|     |       |        | E.                                                 | Off-Balance  Sheet Arrangements                |           | 46 |
|     |       |        | F.                                                 | Tabular  Disclosure of Contractual Obligations |           | 46 |
|     |       |        |                                               |                                           |           |   |
|     | ** ** | **ITEM 6**  | Directors,  Senior Management and Employees        |                                           | 46             |
|     |       |        | A.                                                 | Directors and  Senior Management               |           | 46 |
|     |       |        | B.                                                 | Compensation                                   |           | 50 |
|     |       |        | C.                                                 | Board Practices                                |           | 53 |
|     |       |        | D.                                                 | Employees                                      |           | 63 |
|     |       |        | E.                                                 | Share Ownership                                |           | 63 |
|     |       |        |                                               |                                           |           |   |
|     | ** ** | **ITEM 7**  | Major  Shareholders and Related Party Transactions |                                           | 74             |
|     |       |        | A.                                                 | Major Shareholders                             |           | 74 |
|     |       |        | B.                                                 | Related Party Transactions                     |           | 74 |
|     |       |        | C.                                                 | Interests of  Experts and Counsel              |           | Not Applicable |
|     |       |        |                                               |                                           |           |   |
|     | ** ** | **ITEM 8**  | Financial  Information                             |                                           | 75             |
|     |       |        | A.                                                 | Financial statements                           |           | 75 |
|     |       |        | B.                                                 | Significant Changes                            |           | 76 |
|     |       |        |                                               |                                           |           |   |
|     | ** ** | **ITEM 9**  | The Offer and  Listing                             |                                           | 77             |
|     | ** ** | ** **  |                                               |                                           |           | ** ** |
|     | ** ** | **ITEM 10** | Additional  Information                            |                                           | 77             |
|     |       |        | A.                                                 | Share Capital                                  |           | Not Applicable |
|     |       |        | B.                                                 | Constitution                                   |           | 78 |
|     |       |        | C.                                                 | Material Contracts                             |           | 80 |
|     |       |        | D.                                                 | Exchange  Controls                             |           | 80 |
|     |       |        | E.                                                 | Taxation                                       |           | 82 |
|     |       |        | F.                                                 | Dividends and Paying  Agents                   |           | Not Applicable |
|     |       |        | G.                                                 | Statements by Experts                          |           | Not Applicable |
|     |       |        | H.                                                 | Documents on Display                           |           | 86 |
|     |       |        | I.                                                 | Subsidiary Information                         |           | Not Applicable |

 

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**TABLE OFCONTENTS (cont’d)**
|            |   | ** **    |                                                                   |   | Page           |
|------------|--------|---------------|------------------------------------------------------------------------|--------|----------------|
| * *   |   | ** **    |                                                                   |   |           |
|            |   | **ITEM 11**   | Quantitative  and Qualitative Disclosures about Market Risk            |   | 87             |
| * *   |   | ** **    |                                                                   |   |           |
| * *   |   | **ITEM 12**   | Description  of Securities other than                                  |   |           |
| * *   |   | ** **    | Equity  Securities                                                     |   | Not Applicable |
| * *   |   | ** **    |                                                                   |   |           |
| *PART II*  |   | **ITEM 13**   | Defaults,  Dividend Arrearages and Delinquencies                       |   | 94             |
| * *   |   | ** **    |                                                                   |   |           |
| * *   |   | **ITEM 14**   | Material  Modifications to the Right of Security                       |   |           |
| * *   |   | ** **    | Holders and  Use of Proceeds                                           |   | 94             |
| * *   |   | ** **    |                                                                   |   |           |
| *PART III* |   | **ITEM 15**   | Controls and Procedures                                                |   | 94             |
| * *   |   | ** **    |                                                                   |   |           |
| * *   |   | **ITEM 16A**  | Audit Committee  Financial Expert                                      |   | 94             |
| * *   |   | **ITEM  16B** | Code of Ethics                                                         |   | 94             |
| * *   |   | **ITEM 16C**  | Principal  Accountant Fees and Services                                |   | 95             |
| * *   |   | **ITEM 16D**  | Exemption  from Listing Standards for Audit Committee                  |   | Not Applicable |
| * *   |   | **ITEM 16E**  | Purchase of  Equity Securities by the Issuer and Affiliated Purchasers |   | 97             |
| * *   |   | ** **    |                                                                   |   |           |
| *PART IV*  |   | **ITEM 17**   | Financial statements                                                   |   | Not Applicable |
| * *   |   | **ITEM 18**   | Financial statements                                                   |   | F1-159         |
| * *   |   | ** **    |                                                                   |   |           |
| * *   |   | **ITEM  19**  | Exhibits                                                               |   | 97             |
| * *   |   | ** **    | 7. Calculation of Basic and Diluted Earnings per Share                 |   | 97             |
| * *   |   | ** **    | 8. List of Subsidiaries of Amcor                                       |   | 97             |
| * *   |   | ** **    | 12.  S.302 Certifications                                              |   | 97             |
| * *   |   | ** **    | 13.  S.906 Certifications                                              |   | 97             |

 

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**DEFINED TERMS**

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

Our fiscal year ends on June 30.  The fiscal year ended June 30, 2006 isreferred to herein as “2005-06” and other fiscal years are referred to in acorresponding manner.  All otherreferences are to calendar years.

“AIFRS” means “Australian equivalents to InternationalFinancial Reporting Standards”.

“IFRS” means International Financial Reporting Standards

“AGAAP” or “Australian GAAP” meansAustralian generally accepted accounting principles prior to the adoption ofAIFRS.

“US GAAP” means United States generally accepted accountingprinciples.

“AASB” means Australian Accounting Standards Board.

“IASB” means International Accounting Standards Board.

“UIG” means the Urgent Issues Group.

“Significant items” means items of revenue and expense included inthe operating profit or loss which are disclosed as significant under AIFRS byreason of their size and effect on the operating profit or loss.  Significant items are not necessarilynon-recurring items.  See Note 7 to theConsolidated Financial Statements.

“Consolidated FinancialStatements” means theaudited consolidated balance sheets of Amcor as of June 30, 2006 and 2005 andthe audited consolidated income statements and statements of cash flows foreach of the one-year periods ended June 30 for the years 2006, and 2005,together with accompanying notes, included and incorporated by referenceherein.

“Comparative Financial Statements” means the audited consolidated balance sheets ofAmcor as of June 30, 2005 and   theaudited consolidated income statements and statements of cash flows for theyear ended June 30, 2005, together with accompanying notes, included andincorporated by reference herein.

“PBITDA excluding significantitems” refers to profitbefore interest, income tax, depreciation and amortization excludingsignificant items.

“PBITA excluding significantitems” refers to profitbefore interest, income tax and amortization excluding significant items.

“PBIT excluding significant items” refers to profit before interest and income taxexcluding significant items.

“ACCC” refers to the Australian Competition and ConsumerCommission.

“NZCC” refers to the New Zealand Commerce Commission.

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## **INTERNATIONALFINANCIAL REPORTING STANDARDS**

Unless otherwise indicated, financial information contained in thisAnnual Report has been prepared in accordance with the requirements of AIFRS,which complies with IFRS in all material respects.  As an Australian registered entity, Amcor wasrequired to prepare its Consolidated Financial Statements in accordance withAIFRS for fiscal years commencing on July 1, 2005.  AIFRS differs in certain significant respectsfrom U.S. generally accepted accounting principles (US GAAP).  For a discussion and quantification of theprinciple differences between AIFRS and US GAAP, as they relate to Amcor andits consolidated subsidiaries see Note 51 to our Consolidated FinancialStatements for the years ended June 30, 2006 and 2005, included in the AnnualReport.

Our previous Annual Reports were prepared in accordance with AGAAP.  For a discussion of the principal differencesbetween AIFRS and AGAAP, as they relate to Amcor and its consolidatedsubsidiaries, see “Item 5. Operating and Financial review and Prospects –Differences between AIFRS and AGAAP”, and Note 50 to the Consolidated FinancialStatements.

## **FORWARD-LOOKINGSTATEMENTS**

Certain statements contained in this Annual Reportconstitute forward-looking statements. Forward-looking statements involvesubjective judgment and analysis and are subject to significant uncertainties,risks and contingencies, many of which are outside the control of, and areunknown to, Amcor.  Forward-lookingstatements can generally be identified by the use of forward-looking words suchas “may”, “will”, “expect”, “intend”, “plan”, “seeks”, “estimate”, “anticipate”,“believe”, “continue”, or similar words.

No representation, warranty or assurance (express orimplied) is given or made in relation to any forward-looking statement by anyperson (including Amcor).  In addition,no representation, warranty or assurance (express or implied) is given inrelation to any underlying assumption or that any forward looking statementswill be achieved.  Actual future eventsmay vary materially from the forward looking statement and the assumptions onwhich the forward looking statements are based. Given these uncertainties, readers are cautioned not to place unduereliance on such forward looking statements.

In particular, we caution you that these forward lookingstatements are based on management’s current economic predictions andassumptions and business and financial projections.  Amcor’s business is subject to uncertainties,risks and changes that may cause its actual results, performance orachievements to differ materially from any future results, performance orachievements expressed or implied by these forward-looking statements.  The factors that may affect Amcor’s futureperformance include, among others:

-                    changes in the legal and regulatory regimes in which Amcor operates;

-                    changes in behaviour of Amcor’s major customers;

-                    changes in behaviour of Amcor’s major competitors;

-                    the impact of foreign currency exchange rates;

-                    general changes in the economic conditions of the major markets in whichAmcor operates.

These forward looking statements speak only as of thedate of this Annual Report.  Subject toany continuing obligations under applicable law or any relevant stock exchangelisting rules, Amcor disclaims any obligation or undertaking to publicly updateor revise any of the forward looking statements in this Annual Report, whetheras a result of new information, or any change in events, conditions orcircumstances on which any such statement is based.

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**ITEM 3         KEY INFORMATION**

**A.                        Selected Financial Data**

The following table presents selected consolidated financial data.  This selected consolidated financial data shouldbe read together with “Item 5. Operating and Financial Review and Prospects”and our Consolidated Financial Statements and the notes thereto that areincluded elsewhere in this Annual Report. For the first time in 2005-06, the financial statements have beenprepared in accordance with International Financial Reporting Standards (IFRS)as adopted by Australia (AIFRS) and, as such, the basis of preparation isdifferent to that of the most recent comparative year’s annual financialreport.  Compliance with AIFRS ensuresthat the financial statements comply with IFRS. The 2004-05 comparatives have been restated accordingly.  Unlessotherwise indicated, all amounts are presented in accordance with AIFRS.  AIFRS as it applies to the consolidated groupis consistent with IFRS in all material respects.

The selected consolidated financial data appearingbelow as of and for each of the two years ended June 30, 2006 and 2005 has beenextracted or derived from our audited Consolidated Financial Statements and theNotes thereto.  Periods prior to 2005(except required US GAAP information) have not been presented as such financialinformation was prepared in accordance with AGAAP and is therefore not requiredto be included because it is not comparable to the AIFRS information providedbelow.  For more information relating tothe transition from AGAAP to AIFRS, see Note 50 to the Consolidated FinancialStatements.  AIFRS differs in certainrespects to US GAAP.  See Note 51 to theConsolidated Financial Statements for a discussion and quantification of thesignificant differences between AIFRS and US GAAP as they apply to Amcor forthe periods presented.

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The followingselected consolidated financial data should be read in conjunction with, and isqualified in its entirety by reference to, the Consolidated FinancialStatements, including Notes thereto.

**SelectedFinancial Data Prepared in Accordance with AIFRS**
| Year ended June 30                                                                         | ** **   | **2006**                                                                                    | ** **   | **2005**     | ** **   |
|-----------------------------------------------------------------------------------------------------------|--------------|---------------------------------------------------------------------------------------------|--------------|--------------|--------------|
| ** **                                                                                                | ** **   | **(In millions, except ratios and   per share amounts)** | ** **   |
| ** **                                                                                                | ** **   | ** **                                                                                  | ** **   |
| ** **                                                                                                | ** **   | **(in A$, except as stated in US$)**                          | ** **   |
| ** **                                                                                                |         |                                                                                        |         |         |         |
| **Consolidated Income Statement Data:**                                                                   |         |                                                                                        |         |         |         |
| ** **                                                                                                |         |                                                                                        |         |         |         |
| Sales revenue from continuing operations                                                                  |         | 11,041.9                                                                                    |         | 10,646.1     |         |
|                                                                                                      |         |                                                                                        | *** *** | *** *** | *** *** |
| Profit before related income tax expense -  continuing operations                                         |         | 508.9                                                                                       |         | 350.0        |         |
|                                                                                                      |         |                                                                                        |         |         |         |
| Profit before related income tax expense                                                                  |         | 465.0                                                                                       |         | 331.0        |         |
|                                                                                                      |         |                                                                                        |         |         |         |
| Net profit from continuing operations                                                                     |         | 416.6                                                                                       |         | 277.6        |         |
|                                                                                                      |         |                                                                                        |         |         |         |
| Net profit for the financial year                                                                         |         | 379.2                                                                                       |         | 258.4        |         |
|                                                                                                      |         |                                                                                        |         |         |         |
| Dividends declared per share in (A$)                                                                      |         | $0.34                                                                                       |         | $0.34        |         |
| Dividends declared per share in (US$)(1)                                                                  |         | $US 0.25                                                                                    |         | $US 0.22     |         |
|                                                                                                      | *** *** | *** ***                                                                                | *** *** | *** *** | *** *** |
| **Earnings per Share for Profit From Continuing  Operations**                                             | *** *** | *** ***                                                                                | *** *** | *** *** | *** *** |
| Basic                                                                                                     |         | $0.44                                                                                       |         | $0.24        |         |
| Diluted                                                                                                   |         | $0.43                                                                                       |         | $0.24        |         |
|                                                                                                      | *** *** | *** ***                                                                                | *** *** | *** *** | *** *** |
| **Earnings per Share**                                                                                    | *** *** | *** ***                                                                                | *** *** | *** *** | *** *** |
| Basic                                                                                                     |         | $0.40                                                                                       |         | $0.22        |         |
| Diluted                                                                                                   |         | $0.39                                                                                       |         | $0.22        |         |
|                                                                                                      | *** *** | *** ***                                                                                | *** *** | *** *** | *** *** |
| **Per American Depository Share (“ADS”);**                                                      |         |                                                                                        |         |         |         |
|                                                                                                      |         |                                                                                        |         |         |         |
| **Earnings per ADS**                                                                                      |         |                                                                                        |         |         |         |
| Basic                                                                                                     |         | $1.60                                                                                       |         | $0.88        |         |
| Diluted                                                                                                   |         | $1.56                                                                                       |         | $0.88        |         |
|                                                                                                      |         |                                                                                        |         |         |         |
| Dividends declared per ADS (A$)                                                                           |         | $1.36                                                                                       |         | $1.36        |         |
| Dividends declared per ADS (US$) (1)                                                                      |         | $US 0.92                                                                                    |         | $US 0.88     |         |
|                                                                                                      |         |                                                                                        |         |         |         |
| **Consolidated Balance Sheet Data (at period end):**                                                      | ** **   | ** **                                                                                  | ** **   | ** **   | ** **   |
| ** **                                                                                                | ** **   | ** **                                                                                  | ** **   | ** **   | ** **   |
| Total assets                                                                                              |         | 10,155.5                                                                                    |         | 10,459.1     |         |
| Net assets                                                                                                |         | 3,572.0                                                                                     |         | 3,978.0      |         |
| Total long-term obligations (including finance  leases but excluding subordinated convertible securities) |         | 2,084.9                                                                                     |         | 1,917.3      |         |
| Capital stock (excluding long term debt)(2)                                                               |         | 464.2                                                                                       |         | 301.1        |         |
| Number of shares  (thousands)                                                                             |         | 890,252                                                                                     |         | 878,183      |         |

 

(1)           Dividendshave been translated into U.S. dollars at the noon buying rate on the date ofpayment.

(2)           Includesundated subordinated convertible securities which have no maturity dates.  These notes are subordinated to all otherobligations of Amcor except for issued capital.

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**SelectedFinancial Data Prepared in Accordance with US GAAP**
| Year ended June 30                                                                         | ** **   | **2006**                                                                                  | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
|-----------------------------------------------------------------------------------------------------------|--------------|-------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| ** **                                                                                                | ** **   | **(In millions, except ratios and per share amounts)** | ** ** |
| ** **                                                                                                | ** **   | **(In A$, except as stated in US$)**                        | ** ** |
| **Consolidated  Income Statement Data:**                                                                  | *** *** | *** ***                                                                              |       |     |       |     |       |     |       |     |       |
|                                                                                                      | *** *** | *** ***                                                                              |       |     |       |     |       |     |       |     |       |
| Sales revenue                                                                                             |         | 11,439.3                                                                                  |       | 11,099.6 |       | 10,405.9 |       | 10,709.9 |       | 7,472.4  |       |
|                                                                                                      |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Income from  continuing operations                                                                        |         | 320.8                                                                                     |       | 242.2    |       | 348.2    |       | 407.8    |       | 809      |       |
|                                                                                                      |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Net income                                                                                                |         | 154.6                                                                                     |       | 205.7    |       | 364.3    |       | 355.5    |       | 797.1    |       |
|                                                                                                      |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| **Earnings  per Share**                                                                                   |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Income from  continuing operations:                                                                       |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Basic                                                                                                     |         | $0.36                                                                                     |       | $0.28    |       | $0.40    |       | $0.49    |       | $1.21    |       |
| Diluted (1)                                                                                               |         | $0.36                                                                                     |       | $0.28    |       | $0.40    |       | $0.48    |       | $1.09    |       |
|                                                                                                      |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Net Income:                                                                                               |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Basic                                                                                                     |         | $0.18                                                                                     |       | $0.23    |       | $0.42    |       | $0.43    |       | $1.20    |       |
| Diluted (1)                                                                                               |         | $0.18                                                                                     |       | $0.23    |       | $0.41    |       | $0.42    |       | $1.08    |       |
|                                                                                                      |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| **Per  American Depository Share (“ADS”);**                                                     |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| **Earnings  per ADS**                                                                                     |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| ** **                                                                                                |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Income from  continuing operations:                                                                       |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Basic                                                                                                     |         | $1.44                                                                                     |       | $1.10    |       | $1.61    |       | $1.95    |       | $4.86    |       |
| Diluted (1)                                                                                               |         | $1.44                                                                                     |       | $1.10    |       | $1.61    |       | $1.92    |       | $4.36    |       |
|                                                                                                      |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Net Income:                                                                                               |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Basic                                                                                                     |         | $0.72                                                                                     |       | $0.92    |       | $1.68    |       | $1.70    |       | $4.79    |       |
| Diluted                                                                                                   |         | $0.72                                                                                     |       | $0.92    |       | $1.66    |       | $1.69    |       | $4.34    |       |
| ** **                                                                                                |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| ** **                                                                                                |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| **Consolidated  Balance Sheet Data (at period end):**                                                     |         |                                                                                      |       |     |       |     |       |     |       |     |       |
|                                                                                                      |         |                                                                                      |       |     |       |     |       |     |       |     |       |
|                                                                                                      |         |                                                                                      |       |     |       |     |       |     |       |     |       |
| Total assets                                                                                              |         | 10,536                                                                                    |       | 10,772   |       | 10,774   |       | 10,000   |       | 9,010    |       |
| Total long-term obligations (including finance  leases but excluding subordinated convertible securities) |         | 2,085                                                                                     |       | 2,496    |       | 2,543    |       | 1,770    |       | 2,058    |       |
| Capital stock  (excluding long term debt)(2)                                                              |         | 464                                                                                       |       | 301      |       | 332      |       | 446      |       | 543      |       |
| Net assets                                                                                                |         | 4,052                                                                                     |       | 3,884    |       | 4,169    |       | 3,923    |       | 3,948    |       |
| Number of shares  (millions)                                                                              |         | 890                                                                                       |       | 878.2    |       | 878      |       | 848.2    |       | 822.6    |       |
|                                                                                                      |         |                                                                                      |       |     |       |     |       |     |       |     |       |

 

(1)                                 Includesundated subordinated convertible securities, partly-paid ordinary shares andPerpetual Amcor Convertible Reset Securities (PACRS).

(2)                                 Includesundated subordinated convertible securities which have no maturity dates.  These notes are subordinated to all otherobligations of Amcor except for issued capital.

Refer to Note 25 of the Consolidated FinancialStatements for details of the repurchase of the undated subordinatedconvertible securities and the PACRS.  Inaddition to this Amcor announced on November 20, 2006 that 94.5 percent of theundated subordinated convertible securities were converted into equity.  This has resulted in the issue ofapproximately 43 million Amcor ordinary shares. Amcor has redeemed theremaining notes at their face value of A$12.6 million.

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**Exchange Rates**

A majority of Amcor’srevenue and earnings is derived from assets and operations outside ofAustralia, and those assets, revenue and earnings are denominated in foreigncurrencies. Most of these are denominated either in US dollars or Euros.Therefore, because Amcor presents its financial statements in A$, appreciationof the A$ against the US$ or the Euro will adversely affect the A$ amount ofthose assets, revenue and earnings. In addition, fluctuations in the exchangerate between A$ and US$ or Euros will affect the US$ or Euro equivalent of theA$ price of our shares on the ASX and the US$ or Euro value of any cashdistributions paid on the shares in A$.

Fluctuations in theA$/US$ exchange rate will affect the US$ equivalent of the A$ price of OrdinaryShares on the Australian Stock Exchange Limited (ASX) and, as a result, arelikely to affect the market price of our American Depository Shares (ADSs) inthe United States.  Such fluctuationswould also affect the US$ amounts received by holders of ADSs on conversion bythe depositary of cash dividends paid in A$ on the Ordinary Shares underlyingthe ADSs (see Item 3D – Risk Factors).

In this Annual Report, unless otherwise specifiedor the context otherwise requires, Australian dollar amounts are denoted by “A$”,Euro amounts are denoted by € and United States dollar amounts are denoted by “US$”.For convenience, certain A$ amounts have been translated into US$ amounts atthe exchange rate specified. These translations are indicative only and do notmean that the A$ amounts could be converted to US$ at the rate indicated.

On December 12, 2006, the noon buying rate was US$0.7846 = A$1.00.

Thehigh and low exchange rates for the six months preceding the date of this reportwere:
| Month: | ** ** | **Nov-06** | ** ** | **Oct-06** | ** ** | **Sep-06** | ** ** | **Aug-06** | ** ** | **Jul-06** | ** ** | **Jun-06** | ** ** |
|--------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
|   |       |       |       |       |       |       |       |       |       |       |       |       |       |
| High   |       | 0.7883     |       | 0.7743     |       | 0.7704     |       | 0.7677     |       | 0.7674     |       | 0.7516     |       |
|   |       |       |       |       |       |       |       |       |       |       |       |       |       |
| Low    |       | 0.7622     |       | 0.7434     |       | 0.7461     |       | 0.7574     |       | 0.7416     |       | 0.7290     |       |

 

For each of the periods indicated, the relevantnoon buying rates for cable transfers of US$ payable in Australian dollars ascertified for customs purposes by the Federal Reserve Bank of New York, were:
| Fiscal Year: | ** ** | **2005-06** | ** ** | **2004-05** | ** ** | **2003-04** | ** ** | **2002-03** | ** ** | **2001-02** | ** ** |
|-------------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|
|              |       |        |       |        |       |        |       |        |       |        |       |
| Average (1)       |       | 0.7475      |       | 0.753       |       | 0.7164      |       | 0.5891      |       | 0.5242      |       |
|              |       |        |       |        |       |        |       |        |       |        |       |
| Period-end        |       | 0.7423      |       | 0.7624      |       | 0.6947      |       | 0.6714      |       | 0.5644      |       |

 

(1)              Theaverage of the closing buying rates on the last day of each month during theyear.

**B.                            Capitalizationand Indebtedness**

Not applicable

**C.                            Reasonsfor the Offer and the Use of Proceeds**

Not applicable

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**D.                         RiskFactors**

**RiskFactors**

# In addition to the otherinformation contained in this Annual Report, investors in our securities shouldcarefully consider the risks described below. Our financial condition or results of operations, or the trading pricesof our securities could be materially adversely affected by any of these risks.

The followingdiscussion contains a number of forward-looking statements.  Please refer to the “Forward-LookingStatements” discussion at the front of this Annual Report for cautionaryinformation.

# ***GeneralEconomic Conditions***

Amcor’s business may be affected by generaleconomic conditions within Australia and globally (including, for example,government fiscal, monetary and regulatory policies, interest rates, tax rates,foreign exchange rates, oil prices, inflation and the industrial relationsenvironment). Changes in the economic conditions in markets in which we operatemay result in customers changing spending patterns and their level of generalconsumption, which may have a material adverse effect on our operating andfinancial performance.

***Rawmaterials price increases may reduce net income***

Many of the rawmaterials used by the Company are commodities purchased from third parties.Principal examples are recovered paper, aluminium and resin. Prices of thesecommodities are subject to substantial fluctuations that are beyond the Company’scontrol and can adversely affect profitability. Even though many of the Company’slong-term contracts with customers permit limited price adjustments to reflectincreased raw material costs and, in addition, the Company can seek to increaseprices in an effort to offset increases in raw materials costs, suchadjustments may not occur quickly enough, or be sufficient to prevent amaterially adverse effect on net income and cash flow.

***Energycost increases may reduce net income***

In all businessunits, but particularly in the Amcor PET Packaging and the Amcor Flexiblesbusinesses, the increasing cost of energy and energy related inputs have asignificant impact.  Unlike the limitedraw material cost recovery under many of the Company’s contracts, there islittle or no ability for the Company to recover other cost increases, includingenergy, under current contracts.

Energy costincreases that cannot be recovered through higher selling prices may reduce netincome.  Because any opportunity to passon increased costs is normally at the expiration of contracts, which have termsof up to five years in duration, there is a risk that energy cost increases maynot be recovered in a timely manner, or at all.

***The Company may encounter difficultiesarising from integrating acquisitions, restructuring operations or closing ordisposing of facilities.***

Amcor hascompleted acquisitions, closed non-performing facilities, sold non-core assetsand otherwise restructured operations in an effort to improve cost competitivenessand profitability.  Some of theseactivities are ongoing, and there is no guarantee that any such activities willnot divert the attention of management or disrupt the Company’s operations, orthose of the Company’s subsidiaries. Moreover, production capacity, or theactual amount of products produced, may be reduced as a result of theseactivities.

# ***Technology***

Weoperate in highly competitive business segments. Our industry continues tochange in response to technological innovations and other factors. We cannotpredict with certainty the changes that may affect our competitiveness. Inparticular, Polyethylene Terephthalate (which we will refer to as PET) productdesign and development may be subject to rapid technological change. We cannotpredict whether technological innovations will make some of our products,production processes or distribution techniques wholly or partially obsolete.If this were to occur, we may be required to invest significant resources tofurther adapt to the changing competitive environment. In such a case theinvestments could negatively affect our profitability and results ofoperations.

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# ***Exchange Rates***

Weare exposed to movement in exchange rates of foreign currencies – mainly theUS$ and the Euro. The negative impact of a stronger Australian dollar, however,has a limited effect as there is not a significant repatriation of net profitfrom Amcor’s overseas businesses to Australia. The 2005-06 profit attributable to members of Amcor Limited of A$351.3million translated at exchange rates of the USD, Euro, Singapore, New Zealandand Canadian dollars at June 30, 2005 would result in a A$1.3 million lowerprofit for the year ended June 30, 2006.

# ***Laws and Regulations***

Ouroperations could be affected by government actions such as controls on prices,new forms of taxation and increased government regulation in the countries inwhich we operate. We also operate in some countries that pose political risksincluding civil unrest, nationalization and changes in laws and policy. These politicalrisks could have an adverse impact on the profitability of our operations.

Competition LawInvestigations 

The ACCC and the NZCC are continuing theirinvestigations of conduct by Amcor that raised concerns under Australiancompetition laws.  Amcor has been grantedconditional immunity by the ACCC and NZCC in accordance with their relevantleniency policies for cartel conduct. See Item 8, “Financial Information – Legal Proceedings” for furtherinformation.

As a result of this grant of immunity Amcor does notexpect to incur any pecuniary penalties arising out of the ACCC investigationsor the NZCC investigations.

The granting of immunity by the ACCC and the NZCC doesnot exclude or limit the rights of third parties who claim to have sufferedloss or damage to initiate legal proceedings against Amcor.  It is not possible at present to provideeither a reasonable estimate, or a reasonable estimate range of any amountswhich might become payable by way of damages to any third parties who mighthave suffered loss as a result of any cartel conduct in New Zealand.

As of the date ofthis Annual Report, two such claims have been filed.  On April 11, 2006, Jarra Creek CentralPackaging Shed Pty Ltd filed a class action claim in the Federal Court ofAustralia against Amcor Ltd, Amcor Packaging (Australia) Ltd and FibreContainers (Queensland) Pty Ltd alleging cartel behaviour and seekingdeclarations, injunctions and unspecified damages.  On December 15, 2006, Cadbury Schweppes fileda proceeding in the Federal Court of Australia against Amcor Limited and AmcorPackaging (Australia) Pty Ltd alleging cartel behaviour  and seeking damages and rectification ofcertain supply contracts.  Although theamount claimed totals approximately $120 million, certain of the claimsoverlap.  These two claims  contain allegations only.  These are not admissions by any party andevidence will have to be proved in court. Amcor is defending these two claims and in regards to the class actionhas brought a cross-claim against those Visy companies which arerespondents to the ACCC penalty proceedings, claiming contribution to anydamages which may be awarded against Amcor in the class action.

Consequently, itis too early for Amcor to form any view on the outcome of the litigation in relationto both of these claims.  Equally, noreliable assessment can be made at present of the prospects of success or thequantum of damages, if any, that may be awarded in either these proceedings orany other proceedings which may be instituted by third parties.

Although it is notpossible at present to establish a reasonable estimated range of damages, therecan be no assurance that any damages ultimately incurred will not be materialto the results of operations or financial condition of Amcor.

***Impactof Proposed Tax Law Changes***

Amcor operates in 49 taxjurisdictions 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.

***Environmental***

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Amcor’sworldwide manufacturing operations are subject to extensive environmental regulation.We believe 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.

***Goodwill—A significant write down of goodwill would have a materialadverse effect on our reported results of operations and net worth***

As part of the adoption ofAIFRS we no longer amortize goodwill, but we review our goodwill balance forimpairment at least once a year. Goodwill is tested as part of the cash-generating unit to which itrelates.  If the recoverable amount of acash-generating unit is less than its carrying amount, the company recognizesan impairment loss for the cash-generating unit.  These methods include the use of aweighted-average cost of capital to calculate the present value of the expectedfuture cash flows of our cash generating units.  Future changes in thecost of capital, expected cash flows, or other factors may cause our goodwillto be impaired, resulting in a non-cash charge against results of operations towrite down these assets for the amount of the impairment.  If asignificant write down is required, the charge would have a material adverseeffect on our reported results of operations and net worth.

## **ITEM 4      INFORMATION ON 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 of the Company**

# ***General***

Amcor Limited wasincorporated 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 December 12, 2006, our marketcapitalization was approximately A$6,688 million.

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 hasimplemented a major program of expansion that resulted in a shift away fromsole reliance on pulp and paper products in Australia and the development of adiversified and integrated international packaging and paper company. Amcor hasgrown through a combination of acquisitions, “greenfield” developments wheresuitable acquisitions could not be obtained and expansion of capacity ofexisting businesses.

After a two year rationalizationand restructuring program in 1997-98 and 1998-99, when a number of non-core orunder-performing businesses were disposed of Amcor embarked upon the following:

·                  In April 2000,after shareholder and court approval Amcor demerged its paper manufacturing andfine paper distribution businesses (Paperlinx), and

·                  In May 2001,Amcor announced its intention to sell its 50% investment in Kimberly-ClarkAustralia Pty Ltd (KCA).

The demerger and sale ofKCA were strategic initiatives intended to enable Amcor to realize its goal ofbecoming a leading global packaging company by enhancing its ability to pursueopportunities to further develop businesses in new products, services andmarkets.

·                  In April 2001,Amcor merged its European flexible packaging business with the Europeanflexible packaging operations of Danisco Flexible and the majority ofoperations of Akerlund and Rausing, and

·                  In July 2002,Amcor acquired Schmalbach-Lubeca’s PET and closures businesses, and

·                  In August 2003,Amcor acquired Rexam’s healthcare flexibles packaging operations.

These were key steps inimplementing this strategy.

**Amcor’sStrategy**

Amcor’saim is to be a global leader in the packaging industry, targeting specificsegments predominantly in the food and beverage industries.

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InAustralia and New Zealand, Amcor has a broad product offering and is the numberone or number two supplier in most segments in which it participates.

Outsideof Australia and New Zealand, Amcor’s strategy is to be a leader in specificmarket sectors, including:

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

·                  PET bottlesand jars for beverage and food applications;

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

·                  distributionof packaging products and related goods; and

·                  plastic andmetal closures.

Amcorbelieves that all these market sectors are attractive because they exhibit oneor more of the following key characteristics:

·                  prospects ofhigher than industry average growth;

·                  the abilityto create value-added products and services, which provide the opportunity forAmcor to differentiate itself from its competitors; and

·                  the abilityfor Amcor to establish a leading presence, either regionally or globally.

Amcorimplemented this strategy through a number of transactions that have reshapedit over recent years.

The strategy overthe past few years has been to build a solid foundation and the businesses arewell positioned in their respective markets.  Amcor’s strategy over the next few years is to build on this andtransform the group into a leaner and more dynamic organization.  This coincides with the appointment of a newChief Executive Officer and Managing Director, Ken MacKenzie, effective July 1,2005.

The key elementsof this strategy are:

·                  ensuring thebusinesses have strong market positions;

·                  developing acustomer and market focus;

·                  continuousimprovement in lowering costs; and

·                  beingmore disciplined in the use of capital.

Implementing thisstrategy will require high quality people. An extensive program is being implemented across the company to developskills and improve capabilities that will ensure Amcor has the calibre ofpeople needed to deliver ongoing success.

# ***CapitalExpenditure and Divestures***

Since July 1, 2003we have made the following principal acquisitions, divestures and capitalinvestments:

AmcorWhite Cap European Closures Sale 

InJune 2006, Amcor completed the sale of the Amcor White Cap business in Europeto Silgan Holdings Inc..  The remainingsites outside Europe will close upon satisfactory completion of specificclosing conditions pursuant to the purchase agreement.  The proceeds from the sale of the Europeanbusiness was €185.8 million.

CustomPET Expansion in North America

Amcorannounced in May 2006, that its PET Packaging operation in North America isconstructing a new custom PET blowmolding plant, dedicated to the supply ofPepsiCo heat set containers, primarily for the Gatorade product.

Theplant will be located in Wytheville, Virginia, adjacent to a recentlyconstructed PepsiCo facility.  Amcor’snew blow molding operation is scheduled to be in production by March 2007 withan initial annual capacity in excess of one billion units.  The overall project cost is expected to beUS$80 million.

China****Tobacco Packaging Expansion

InJanuary 2005, Amcor acquired 80 million new shares, representing a 16.7% equityinterest, at HK$2.50 per share in Vision Grande Group Holdings Limited (VisionGrande) for a cost of HK$200 million (approximately A$34 million).  Vision Grande has been listed on the HongKong Stock Exchange since March 2004 and is a leading supplier of tobaccopackaging in China with operations in Shenzhen, Nanjing and Kunming.

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InFebruary 2006, Amcor acquired a further 233.77 million shares in Vision Grande’s,bringing the total equity interest up to 44% of the issued capital of VisionGrande.

This was achievedthrough the following transactions:

·                  The sale ofAmcor’s two China tobacco packaging operations in exchange for 121.1 millionVision Grande shares with assumed share price of HK$4.20 per share;

·                  Allotment andissue of 16.67 million new Vision Grande shares at HK$4.20 per share to Amcor;and

·                  Afurther allotment of 96 million shares at HK$2.50 per share to Amcor.

InMarch 2006, Amcor’s investment in Vision Grande was diluted to 40.1% by VisionGrande acquisition of the remaining 68.5% equity interests in World GrandHoldings Ltd in exchange for Vision Grande shares.

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

In November 2003,Amcor entered into an agreement to purchase the PET injection and blow mouldingassets of Embotelladoras Arca S.A. de C.V. (Arca) with an initial supplyagreement of eight years to supply bottles to Arca. Amcor purchased the PET onsite injection and blow molding assets of Arca for approximately A$60 millionwhich is payable in yearly instalments throughout the life of the supplyagreement.

Acquisitionof Rexam’s Healthcare Flexibles Packaging Operations

InOctober 2003, Amcor purchased Rexam plc’s (Rexam) healthcare flexibles businessfor A$327.1 million. The business, which had annual sales of approximatelyA$390 million in 2003, has ten plants in six countries — four in the UnitedStates and one each in England, Ireland, France, Singapore, Brazil and PuertoRico.

Purchaseof Amcor Flexibles Europe Minorities

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

**Other Recent Developments**

Competition LawInvestigations

The ACCC and theNZCC are continuing their investigations of conduct by Amcor that raisedconcerns under Australian and New Zealand competition laws.  Amcor has been granted conditional immunityby the ACCC and NZCC in accordance with their relevant leniency policies forcartel conduct.  See Item 8, “FinancialInformation – Legal Proceedings” for further information.

PRIDES conversion

The PRIDES were anissue in November 1996 of US$ 230 million 7.25% undated subordinatedconvertible notes. The notes were convertible into ADR’s from November 1996 toNovember 2006, had no maturity date and were only redeemable after November2006 and then only at Amcor Ltd’s option. In July, 2006 Amcor Ltd announced theintention to redeem any PRIDES that remained outstanding at the date theredemption option became available in November 2006 and to undertake anon-market buy-back program to purchase an equal number of shares as issued as aresult of PRIDES conversions.

Up to June 2006, US$48.4 million of the PRIDES had converted into 10.1 million shares. Theseconversions primarily took place during May and June 2006. In the period fromJuly to November 2006 holders of a further US$ 169.0 million of PRIDES exercisedtheir right to convert resulting in the issue of 32.9 million additionalordinary shares. In total the conversions generated the issue of 43.0 million sharesand left USD 12.6 million of PRIDES to redeem at face value in November 2006

In August 2006,Amcor commenced the share buy-back program. To the end of November 2006,approximately 12 million shares have been bought back. Given the continuationof current trading conditions it is expected that the buy-back of the 43.0million shares issued under the PRIDES conversions will be completed by June2007.

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As at 31 December2006 the conversion of the PRIDES did not have a material effect on the balancesheet of the consolidated entity.  Withthe buy-back program being financed through debt there is effectively areplacement of one balance sheet debt facility with drawings under another.

**B.                        BusinessOverview**

***General Overview of Our Business***

Amcoroperates its business through five main divisions:

*AmcorPET Packaging*manufactures Polyethylene Terephthalate (PET)packaging for a broad range of predominantly beverage, food products and non-foodproducts including carbonated soft drinks, water, juices, sports drinks,milk-based beverages, spirits and beer, sauces, dressings, spreads, personalcare items as well as plastic caps for a wide variety of applications.

*Amcor Australasia*manufactures a broad range of packaging items throughout Australia and NewZealand.  This includes corrugated boxes,cartons, folding cartons; steel and aluminium cans for foods, beverages andhousehold products; until August 2006, when this business was divested, PETplastic jars and bottles; plastic and metal closures; glass wine bottles;multiwall sacks, cartonboard; paper and paper recycling.

*AmcorFlexibles*is a manufacturer of flexible and film packaging inthe food and beverage and pharmaceutical sectors, including confectionery,coffee, fresh food and dairy, as well as high value-added medical applications.Amcor Flexibles also manufactures speciality folding cartons for tobacco,confectionery and cosmetics.

On July 1, 2005, theconsolidated entity changed the identification of its segments to combine thepreviously reported “Rentsch and Closures” segment with Amcor Flexibles. Thischange in segments is a result of changes in the management structure andreporting to the CEO, increasingly common infrastructure, includingco-location, resourcing and similar technologies.

*AmcorSunclipse* operates distribution and manufacturing units.  The distribution unit purchases, warehouses,sells and delivers a wide variety of products. The business manufactures corrugated and other mostly fibre basedspecialty product packaging including ‘point of sale” displays.

*AmcorAsia* is a supplier of tobacco carton packaging and flexibleplastic packaging for the food and industrial markets in Asia.

AtJune 30, 2006, Amcor had approximately 24,538 employees at 209 manufacturingplants and 42 distribution facilities in 36 countries and 104,433 shareholders.

The manufacturingplants by business are as follows:
| Amcor PET Packaging |   | 82 plants* in 21  countries                              |
|---------------------|--------|----------------------------------------------------------|
| Amcor  Australasia  |   | 65 plants in 2  countries                                |
| Amcor Flexibles     |   | 46 plants in 19  countries                               |
| Amcor Sunclipse     |   | 11 plants and 42  distribution facilities in 2 countries |
| Amcor Asia          |   | 5 plants in 3 countries                                  |

* Includes all on-siteblowing and injection facilities.

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The table below shows a breakdown of our sales revenueby geographic and industry category for the last two financial years. See alsoItem 5, “Operating and Financial Review and Prospects” for a discussion ofrevenue performance during the last two years and Note 4 of the FinancialStatements Segment Information for a breakdown of sales for each materialcountry for the years ended June 30, 2006 and June 30, 2005.
| ** ** |
|------------|

 
|                                           | ** ** | **Year Ended June 30,** | ** ** |
|-------------------------------------------|------------|----------------------------------------|------------|
| ** **                                | ** ** | **(in A$ millions)**         | ** ** |
|                                           | ** ** | **2006**                               | ** ** | **2005** | ** ** |
| **Geographic  Segments**                  |       |                                   |       |   |   |
|                                      |       |                                   |       |   |   |
| Australia &  New Zealand              |       | 2,557.7                                |       | 2,566.3 |   |
| Europe                                    |       | 3,448.3                                |       | 3,547.5 |   |
| North America                             |       | 3,806.4                                |       | 3,425.9 |   |
| Latin America                             |       | 1,024.5                                |       | 895.7 |   |
| Asia                                      |       | 205.0                                  |       | 210.7 |   |
| Sales revenue  from continuing operations |       | 11,041.9                               |       | 10,646.1 |   |
| Discontinued  operations                  |       | 397.4                                  |       | 453.5 |   |
|                                      |       | 11,439.3                               |       | 11,099.6 |   |
|                                      |       |                                   |       |   |   |
| **Business  Segments**                    |       |                                   |       |   |   |
|                                      |       |                                   |       |   |   |
| PET Packaging                             |       | 4,048.9                                |       | 3,696.4 |   |
| Australasia                               |       | 2,560.9                                |       | 2,571.7 |   |
| Flexibles                                 |       | 2,978.6                                |       | 2,971.2 |   |
| Sunclipse                                 |       | 1,292.1                                |       | 1,218.7 |   |
| Asia                                      |       | 174.5                                  |       | 182.2 |   |
| Inter-segment  eliminations & other   |       | (13.1                                  | )          | 5.9 |   |
| Sales revenue  from continuing operations |       | 11,041.9                               |       | 10,646.1 |   |
| Discontinued  operations                  |       | 397.4                                  |       | 453.5 |   |
|                                      |       | 11,439.3                               |       | 11,099.6 |   |

 

***AmcorPET Packaging***

*Products*

Amcor PET Packaging is the world’s largest producer ofPET (polyethylene terephthalate) containers mostly for

the consumer products industry. It is headquartered inAnn Arbor, Michigan (USA), employs 6,100 people at 82 sites, comprising 46manufacturing locations and 36 on-site injection and blowing facilities - in 21countries.

It produces PET containers and preforms for a widevariety of food and beverage applications, and also supplies PET containers tothe personal care, household chemical and agro-chemical industries.

*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 southern hemisphere.  In addition, there is a slight increase indemand in preparation for the major December holidays.  Offsetting these are demand patterns forother products, including foods and juices, with demand sometimes heaviest inharvest seasons.

*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 resinis available 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 of regionally produced andimported resins is employed.  Supply hasstabilized from the damage to the petrochemical industry in the Gulf Coast ofthe United States during the 2005 hurricane season.

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*Competitive Position*

Amcor PET Packaging is one of the few major PETconverters that supplies 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 smallercompetitors are producers of food, dairy, personal care, pharmaceutical andhousehold products containers.

In Latin America, the competition is morefragmented.  The major converters holdapproximately 50% of the market.  Thereare smaller competitors that are very strong in specific countries, but are notpan-regional.  There is also asignificant percentage of self-manufacturing. Consolidation in Latin Americacontinues as small competitors are acquired.

In Europe, the major converters make up around 45% ofthe 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.

*Patents and Licences*

Amcor PETPackaging holds approximately 120 patents in the U.S.. Many of theseinnovations are also patented in our major markets outside the US, especiallyin Europe and Brazil.  The bulk of thesepatents are held for the competitive advantage of our business, and our incomefrom licensing is marginal.

Amcor PETPackaging has a significant relationship with Yoshino Kogyosho, a Japanesepackaging company from whom we license heat set technology.

Over the years,this relationship has grown to a strategic partnership, with technicalinformation and innovations shared between our two companies exceeding thescope of the original contract.  Thisrelationship has been mutually beneficial.

***AmcorAustralasia***

*Products*

Amcor Australasia is the most diverse of the group’sbusiness units and supplies a broad array of packaging items across thecomplete Amcor product range.  Itsproducts include corrugated boxes, cartons and folding cartons, steel andaluminium cans for food, beverages and household products, flexible packaging,plastic and metal closures, glass wine bottles, multiwall sacks, paper,cartonboard and paper recycling.  Withheadquarters in Camberwell, Victoria (Australia) it has 65 plants throughoutAustralia and New Zealand and approximately 6,400 employees.

Amcor announced on August 23, 2006, a substantialrestructuring to the fibre packaging business in Australasia.  The program is expected to take 4 years tocomplete. The main components of this plan involve assessment of a new paperrecycling mill, to be located in Botany, New South Wales, the closure of thesmall recycling paper mill, located in Spearwood, Western Australia andsubstantial restructuring in the corrugated box plants.  This will involve the closure of the plant atBox Hill, Victoria, and the upgrading of the two remaining Victorian plants.

AmcorAustralasia had a turnover of over A$2.5 billion in 2005-06, of which 93%related to sales within Australia and New Zealand.  Approximately 12% of the paper manufacturinggroup’s sales relates to exports into South East Asian countries.  The metals and flexibles businesses have someexport sales within the Pacific region and some small volumes to South EastAsia and the U.S. For these businesses, export sales represent only 10% and 6%respectively of the total sales of each business.  The corrugated, carton and glass businesseshave no significant export sales.

AmcorAustralasia participates in most packaging segments and, therefore, suppliespackaging to most manufacturing sectors in Australia and New Zealand. Its mainmarket, however, is the food and beverage industry, with approximately 70% oftotal sales made to this market.

*Seasonality*

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TheAustralasian packaging market is not subject to large seasonal swings indemand, given the high 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 15% higherthan average.

Freshfruit and produce is a major part of the Australasian food industry and theCorrugated Fibre Box and Food Can businesses have significant sales into thatmarket.  While individual crops withinthis segment have seasonal peaks, the product range of the industry and AmcorAustralasia’s broad customer base means that individual seasons do not have asignificant overall impact.

*Raw Materials*

RawMaterials of the business 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 is cyclical, as the supply/demand balance is affectedby the large changes in supply brought on by new, high capacity paper mills asopposed to more gradual, market driven changes in demand. This cycle tends torun over a period of several years. In Australasia, the industry is somewhatinsulated from these movements, as there is a good supply of virgin fibre fromthe domestic forest industry and a well developed recycling industry to supplyrecycled fibres. Fibre prices have therefore remained relatively stable inrecent years. Furthermore, when increases have occurred in the past, it hasgenerally been possible to recover them from the market.

Themain raw materials of the plastic packaging businesses are petroleum based andwith a reasonable correlation to the price of crude oil, are more volatile thanfibre prices.  In these businesses, theimpact of changing raw material prices in the main is passed on to customersthrough “rise and fall” pricing contract clauses wherever possible. This isgenerally achieved with the larger and more sophisticated customers, with whomwe have long term contracts 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.

Themain raw materials of the metal packaging businesses are steel and aluminium.Both of these materials are subject to world pricing movements and aluminium inparticular is traded globally.  Theimpact of changes in these raw material prices is also passed on to customersthrough rise and fall clauses wherever possible.

*Competitive Position*

Australasiais a relatively small market in global terms, with a relatively small number ofmajor competitors. These factors allow market research to provide a reasonablyaccurate picture of our market position. Such market research is conducted on a regular basis by a small centralmarketing team and Amcor Australasia is also a member of several industryassociations.

Broadly,the Australasian packaging market is mature and has limited growth prospects.  Within packaging however, some segments suchas flexible packaging, wine bottles and plastic bottles and closures havegrowth opportunities.  Others, whileprofitable, are either static or in decline due to substitution from otherpackaging and from the industry life cycle of products.

Excesscapacity exists in most packaging segments and most major competitors continueto replace old equipment with state of the art technology.  At the sametime, our customers continue to find attractive returns difficult to achieve asthe major supermarket chains seek greater market power and continue to increasedemands upon their suppliers.  The concentration in the retail sector hasrisen, with the two major supermarket chains increasing their market share from65% to approximately 80% in the last eight to ten years.

To meet thiscompetitive business environment, Amcor Australasia focuses on productleadership, growth of niche food and 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.

*Patents and Licences*

Amcor Australasia has an extensive portfolioof over 100 patents and over 200 trademarks and registereddesigns.  Many of these intellectualproperty rights are registered in both Australia and New Zealand and aselected few also have international registrations.  Historically, patents and designs have been heldfor the competitive advantage of our business and current income from licensinghas been minimal, but Amcor Australasia is now actively pursuing revenueopportunities in this area, including through collaboration with otherinternational Amcor divisions.

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Several businesses are also party to a number oftechnical assistance agreements with international manufacturers, especiallyin metal packaging.  These provideaccess to new technology in terms of both product design and manufacturingprocesses.  In particular, AmcorGlass pays an annual fee to Heye Glass of Europe, under a Technical AssistanceAgreement that allows Amcor to use their technical knowledge,including their recuperative furnace technology.

***AmcorFlexibles***

Amcor Flexibles is one of the world’s largestsuppliers of both flexible and tobacco packaging. It has three operatingdivisions: Amcor Flexibles Food, Amcor Flexibles Healthcare and Amcor Rentschand Amcor Flexibles Eastern Europe.  Thebusiness has 8,482 employees, 46 plants and supplies a wide range of productsto the food, beverage and healthcare markets. This includes fresh and chilled foods such as meat, fish, bread, produceand dairy; processed foods such as confectionery, snack foods, coffee and readymeals, as well as tobacco and high-value added medical applications, hospitalsupplies, pharmaceuticals and personal care products. It also supplies tobaccopackaging and speciality folding cartons to the cosmetic and confectionerymarkets.

The Food Flexibles business predominantly consists ofthe plants serving the processed, fresh and chilled food markets in WesternEurope.

Formed in April 2006, Amcor Flexibles Healthcareincorporates Amcor’s flexible packaging activities in the Americas andhealthcare packaging plants in Europe.  AmcorFlexibles Healthcare is a global leader in flexible packaging for the medicaland pharmaceutical markets. Headquartered in Chicago, USA, it has over 2,200 employees and 16manufacturing facilities in 10 countries. In addition, the group coordinates strategy and commercial activity withthe flexible healthcare activities in Asia.

Amcor Rentsch has leadership of Amcor’s global tobaccopackaging business and the Amcor Flexibles operations in Eastern Europe.  The Eastern European flexibles business consistsof a plant in Poland and a new greenfield plant in Novgorod, Russia, locatedadjacent to the tobacco packaging plant.

*Products*

Amcor Flexibles isactive in providing high quality flexible packaging and supplies a wide rangeof food and beverage markets including confectionery, coffee, fresh food, dairyand healthcare applications.  Itstechnological capabilities include gravure and flexographic printing, coatingand lamination, extrusion, metallizing, micro-perforation pouch and bag makingand die cut lids.

The businesssupplies a wide range of products to the food, beverage and healthcaremarkets.  This includes fresh and chilledfoods such as meat, fish, bread, produce and dairy; processed foods such asconfectionery, snack foods, coffee and ready meals, as well as tobacco and highvalue added medical applications, hospital supplies, pharmaceuticals andpersonal care products.

Most demand forflexible packaging is made to order, as each customer has very specificrequirements for each product it is packaging. The customer selects a bespoke product based on a number ofconsiderations: cost, functionality, shelf life, machinability and “look andfeel”.  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 productsmay often be packaged very differently, whilst different products may bepackaged with similar packaging.  On thedemand-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 portfolioare by their nature seasonal, for example ice cream and snacks, whichexperience a growth in sales during warm weather, while products such as coffeewill have slower sales during this type of weather.  In terms of freshproduce, these products are packed during specific crop seasons and, as such,show higher sales during these periods.  Given Amcor Flexibles position asa predominantly European business, July and August are slower months as thereare manufacturing shut downs and holiday periods for certain European countriessuch as France and Sweden.

*Raw Materials*

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The principal rawmaterials 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.  Rawmaterials generally have a wide range of applications across our products andhave numerous suppliers with which Amcor has established relationships.

The principal raw material for the Amcor Rentschdivision is fibreboard, in both roll and sheet stock. Key customers control thepurchase price of these raw materials and consequently our supply contractstypically have full raw material cost movement and price adjustment mechanisms.

*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 termsof sales and service capability for medical packaging.  The Company has aEuropean leadership position in Dairy, Produce and Beverage marketsegments.  Within other key segments suchas Confectionery, Snacks and Processed Food it holds the number twoposition.  With 38 plants in Europe, Amcor Flexibles has a largemanufacturing footprint which enables it to not only service its Pan-Europeancustomers, but also to provide local or regional production for nationalcustomers.

There is a very highdegree of supply-side substitutability in the sense that manufacturers offlexible packaging with one set of characteristics can readily produce flexiblepackaging displaying a different set of characteristics. Amcor Flexibles seeksto distinguish itself from its competitors through innovation, product quality,safety, focus on customer service and its ability to deliver global packagingsolutions to its customers.

The Amcor Rentsch operating division conducts businessthrough entry into medium term supply contracts, with typical terms of 1 to 4years.  In Europe, our principal market,four competitors have over 75% of the market. The tobacco industry hasextremely demanding quality requirements, which raises the barriers to entry.

*Patents and Licences*

Innovationis a key component of Amcor Flexibles strategy to be an industry leader and itinvests significant 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 which facilitates theefficient development of new concepts and the filing of appropriate patents toensure protection.

AmcorFlexibles currently holds 110 patents. Patents are held for a wide variety of process improvements and newproducts.  Patents are held both at anational and regional level as appropriate.

As noted, Amcor Flexibles technicalcapabilities include gravure and flexographic printing, coating and lamination,extrusion, metallising, micro-perforation pouch and bag making and die cutlids.

***AmcorSunclipse***

*Products*

Amcor Sunclipse, based in California, is Amcor’s NorthAmerican distribution and corrugated manufacturing unit.  It produces packaging products to complementits distribution services and has over 2,100 employees, 42 distribution andredistribution centres throughout the USA and Mexico and 11 manufacturinglocations.

The distribution unit is a major supplier tobusinesses throughout North America and purchases, warehouses, sells anddelivers a wide variety of packaging products and equipment and industrial andjanitorial supplies. The manufacturing division produces corrugated sheets andconverts them into boxes for use throughout the business. It also designs andproduces other specialty packaging products including ‘Point of Purchase’displays and other items tailored to customers’ requirements.

*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 February,after the holidays.

 

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Raw Materials

The threecorrugated sheet manufacturers presently rely on three major suppliers fortheir paper roll stock. However, over ten other minor supply relationships arein place. Many of these minor suppliers have far reaching capabilities. Thiscreates a healthy competitive environment even in a market that has experiencedsome tightness after an extended three to four year period of abundant supply.The distribution group has access to numerous suppliers for all its productsboth domestic and overseas.

There is exposureto typical raw material or finished goods supply price movements. These areinitiated for a variety of reasons, such as supply conditions tightening and/orincreases in the price of oil and labour. The business has shown an ability topass on these costs to customers, as the price increases usually impact thecompetition 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 long term suppliers also work on an order by order basis,although there are some supply agreements in place with our major corrugatedrollstock suppliers. The company does not rely on patents, exclusive licensesor contracts.

***Amcor Asia***

Amcor Asia has five plants in three countries with itshead office located in Singapore. It produces tobacco packaging and flexiblepackaging, including high value added medical packaging. The business hasresponsibility for Amcor’s 40.1% ownership of the Hong Kong publicly listedcompany Vision Grande and 16.7% ownership in K Laser China Group Co. Ltd, asubsidiary of the Taiwan publicly listed K Laser Technology Inc.

In December 2005, Amcor announced it had elected toincrease its ownership in Vision Grande from 16.7% to 44%, by way of thecontribution to Vision Grande of its two tobacco packaging operations in China,exercising its previously granted option over Vision Grande shares and takingup an issue of new shares. These transactions were approved by shareholders ofVision Grande in February 2006. In May 2006, Vision Grande purchased theremaining 68.5% of World Grand Holdings Limited that it did not previously own.Part of the purchase price was an issue of shares to the previous owners ofWorld Grand Holdings Limited. Following this transaction, Amcor’s ownership inVision Grande is 40.1%. In May 2006, Mr Billy Chan, the Managing Director ofAmcor Asia, was appointed Executive Chairman of Vision Grande, and Mr PeterDowning and Mr David Hodge, also executives of Amcor, were appointed to theVision Grande Board.  Vision Grande GroupHoldings Ltd changed its name to AMVIG Holdings Limited effective November 1, 2006.

Tobacco packagingin Asia is a market segment where Amcor supplies three major internationalcigarette manufacturers together with the monopoly of the State run industrywithin China, Thailand and other Asian countries. The dominance of these threeinternational cigarette manufacturers creates strong pricing pressure as theybenchmark packaging prices around the world.

The flexible packaging business consists of a medicalflexible plant in Singapore and two plants in China focused on the foodbusiness. During the year, a new blown film extruder was installed in theSingapore plant to serve the growing medical packaging market.

Flexiblespackaging is a growing segment in Asia as the cost base is significantly lowerthan in the Europe or US. However the majority of specialized flexiblepackaging for Asia is still supplied by European or US manufacturing.

Raw materials are sourced throughout theworld with Amcor Asia directly affected by both world prices (driven by supplyand demand) and foreign currency exchange fluctuations.

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**Environmental and OtherRegulations**

The regulatory constraints on Amcor’s businessesinclude compliance with the following:

·                                                                                          the provisions of various jurisdictions’corporate regulations;

·                                                                                          trade practices and consumer protection legislation;

·                                                                                          labor legislation;

·                                                                                          the provisions of various jurisdictions’anti trust legislation;

·                                                                                       numerous laws relating to workers’compensation and rehabilitation, occupational health and safety and dangerousgoods handling;

·                                                                                          environmental regulations of variouskinds; and

·                                                                                          listing rules of home jurisdiction.

TheACCC and the NZCC are continuing their investigations of conduct by Amcor thatraised concerns under Australian and New Zealand competition laws.  Amcor has been granted conditional immunityby the ACCC and NZCC in accordance with their relevant leniency policies forcartel conduct.  See Item 8, “FinancialInformation – Legal Proceedings” for further information.

Amcor’s aim is to ensure that no one who works forAmcor is ever injured. This applies equally to employees, contractors andvisitors.  Amcor’s “No Injuries” programis supported by extensive procedures and subject to regular managementreview.  The Board is responsible forregular monitoring of safety and health performance and compliance withassociated regulations.

During the 2005-06 year, Amcor must regrettably advisethat one contractor was fatally injured at an Amcor site in July 2005.  A contractor, who had entered a water supplywell on the Amcor Flexibles site in Barcelona to inspect a pump, fell and couldnot be revived when he was retrieved from the well.

Management has been working with the family andco-workers to provide as much support as possible. The accident was fullyinvestigated, in conjunction with the authorities, and corrective measures havebeen conveyed to all Amcor businesses.

Amcor is committed to achieving a high standard ofenvironmental performance. Its operations are subject to significantenvironmental regulation in all countries in which it maintains a presence.

The Board is responsiblefor regular monitoring of environmental exposures and compliance withenvironmental regulations.  To enable itto meet its responsibilities of oversight, the Board has established aninternal reporting process.  Environmentalperformance is reported from each site up through management to the Board on aregular basis.  Compliance with therequirements of environmental regulations and with the specific requirements ofsite environmental licenses was substantially achieved across all operations.

As part of this process,the Board is responsible for overseeing:

·               implementation of environmentalmanagement plans in operating areas which may have a significant environmentalimpact;

·                  identifying where remedial actions arerequired and implementing action plans; and

·                  regular monitoring of regulatoryrequirements.

There was however an environmental prosecution in2005-06 for one significant breach due to a diesel spill into a local creekfrom Amcor Fibre Packaging’s Box Hill Plant in Victoria, Australia.  This spill occurred in September 2004 and wasthe result of decanting of fuel from a diesel storage tank.  At the completion of the decanting procedurea pump discharge delivery hose was not placed back in the correct position causinga large quantity of diesel to pollute the creek.  A number of ducks were also injured or killedby the spill.  The company pleadedguilty, was convicted and ordered to pay A$60,000 to help establish a wildlifeeducation, rehabilitation and resource information centre.

During the past year there were also two othersignificant incidents.  The Amcor FibrePackaging Fairfield Mill was fined for a river water release while a spill ofink from the St. Regis Bates Keon Park plant in Melbourne, Australia entered alocal creek.  In both cases managementcooperated fully with the authorities and made improvements to minimize thepotential for incidents to occur in the future.

Amcor complies with a number of food and medicalpackaging standards such as EN 868 for medical packing produced within Europe,standards published by the Agricultural Development Advisory Service (ADAS),The American Institute of Baking (AIB), the British Retail Consortium (BRC) andUS Food and Drug Administration (FDA).

 

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Amcor, like all corrugated suppliers, continues toprepare for the implementation of the Radio Frequency Identification Directive(RFID) tagging requirements. This is a mandatory U.S. Department of Defenserequirement for corrugated boxes sold to the military branch of the U.S.government effective January 1, 2007. The company presently has a number ofsmall contracts with the U.S. government.

**C.****                                                                ****Organisational Structure**

The chart set out belowdescribes our organizational structure as at June 30, 2006.

Amcor’s Significant Subsidiaries as at June30, 2006 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%                                               |

 

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**D.****                                                                ****Property, Plant and Equipment**

AtJune 30, 2006, Amcor operated manufacturing and distribution facilities in the36 countries listed in the following table.
| Geographic Region    | ** ** | **Number of Manufacturing  Facilities *** | ** ** | **Number of Distribution  Facilities** | ** ** |
|---------------------------|------------|----------------------------------------------------------|------------|--------------------------------------------------|------------|
|                      | ** ** | ** **                                               | ** ** | ** **                                       | ** ** |
| Argentina                 |       | 2                                                        |       | -                                                |       |
| Australia                 |       | 51                                                       |       | -                                                |       |
| Belgium                   |       | 3                                                        |       | -                                                |       |
| Brazil                    |       | 11                                                       |       | -                                                |       |
| Canada                    |       | 3                                                        |       | -                                                |       |
| China                     |       | 2                                                        |       | -                                                |       |
| Colombia                  |       | 6                                                        |       | -                                                |       |
| Denmark                   |       | 3                                                        |       | -                                                |       |
| Ecuador                   |       | 1                                                        |       | -                                                |       |
| El Salvador               |       | 1                                                        |       | -                                                |       |
| Finland                   |       | 2                                                        |       | -                                                |       |
| France                    |       | 6                                                        |       | -                                                |       |
| Germany                   |       | 4                                                        |       | -                                                |       |
| Honduras                  |       | 1                                                        |       | -                                                |       |
| India                     |       | 1                                                        |       | -                                                |       |
| Ireland                   |       | 1                                                        |       | -                                                |       |
| Italy                     |       | 2                                                        |       | -                                                |       |
| Malaysia                  |       | 1                                                        |       | -                                                |       |
| Mexico                    |       | 12                                                       |       | 4                                                |       |
| Morocco                   |       | 1                                                        |       | -                                                |       |
| The Netherlands           |       | 1                                                        |       | -                                                |       |
| New Zealand               |       | 14                                                       |       | -                                                |       |
| Norway                    |       | 1                                                        |       | -                                                |       |
| Peru                      |       | 1                                                        |       | -                                                |       |
| Philippines               |       | 1                                                        |       | -                                                |       |
| Poland                    |       | 2                                                        |       | -                                                |       |
| Portugal                  |       | 5                                                        |       | -                                                |       |
| Puerto Rico               |       | 1                                                        |       | -                                                |       |
| Russian  Federation       |       | 2                                                        |       | -                                                |       |
| Singapore                 |       | 2                                                        |       | -                                                |       |
| Spain                     |       | 11                                                       |       | -                                                |       |
| Sweden                    |       | 1                                                        |       | -                                                |       |
| Switzerland               |       | 3                                                        |       | -                                                |       |
| United Kingdom            |       | 12                                                       |       | -                                                |       |
| United States of  America |       | 36                                                       |       | 38                                               |       |
| Venezuela                 |       | 2                                                        |       | -                                                |       |
|                      |       | 209                                                      |       | 42                                               |       |

 

* 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.

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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** | ** ** |
|--------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                             | ** ** | ** **                            | ** ** |
| ** **                                             | ** ** | **2006**                              | ** ** | **2005** | ** ** |
| ** **                                             | ** ** | **A$M**                               | ** ** | **A$M** | ** ** |
| Gross capital expenditure                              |       | 486                                   |       | 647 |   |
| Proceeds on disposal of property, plant and  equipment |       | 33                                    |       | 77 |   |
| Net Capital  expenditure                               |       | 453                                   |       | 570 |   |

 

In 2005-06, themajor items of capital expenditure included PET directing expenditure to themore technically demanding custom beverage business and the installation of SAPmanagement information system across the Australian corrugated business.

In 2004-05, themajor items of capital expenditure included the second glass furnace at Gawlerin South Australia and the consolidation and upgrading of the Burgos plants inSpain.

**ITEM 5   OPERATINGAND FINANCIAL REVIEW AND PROSPECTS**

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.

Over the past fewyears Amcor’s performance has been negatively impacted by rising oil and energyrelated costs, not fully recovered in selling prices.  Past performance is unlikely to be anindication of future earnings absent steady conditions, which have not beenpresent over the past couple of years.

***NewAccounting Principles***

For the firsttime, we are required to prepare our Consolidated Financial Statements for theyear ended June 30, 2006 in accordance with Australian International FinancialReporting Standards (AIFRS).  In allmaterial respects AIFRS complies with International Financial ReportingStandards (IFRS).  Our 2006 ConsolidatedFinancial Statements also include Comparative Financial Statements for 2005,prepared in accordance with AIFRS. Material effects on net profit, financial position and cash flowsresulting from transition from AGAAP to AIFRS are shown in the reconciliationin the Notes to the Consolidated Financial Statements, Notes 1(z) and Note 50.

***CriticalAccounting Policies and Estimates*** (refer to ConsolidatedFinancial Statements Note 1 Accounting Policies)

Our Consolidated Financial Statements prepared in accordance with AIFRS,and the reconciliation of our Consolidated Financial Statements from AIFRS toUS GAAP, are affected by accounting methods, assumptions and estimates that weuse as bases for the preparation of our Consolidated Financial Statements andreconciliations.  We have identified thefollowing critical accounting estimates and related assumptions anduncertainties inherent in our AIFRS accounting policies that we believe areessential to an understanding of the underlying Consolidated FinancialStatements under AIFRS, and their reconciliation to US GAAP.

In developing accounting policies, in addition to AIFRSrequirements, we also consider industry practice. Where there is no conflictwith AIFRS we also consider the suitability of accounting policies under USGAAP.  This reduces the number ofAIFRS/US GAAP reconciliation differences required to be adjusted in Note 51 ofthe Consolidated Financial Statements.

We believe the following are the critical accountingpolicies and estimates used in the preparation of our AIFRS financialstatements:

·                  Thetesting for impairment of assets;

·                  Thetesting for impairment of goodwill;

·                  Income taxrelated assumptions and estimates; and

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·                  The calculationof annual pension costs and related assets and liabilities.

*Impairment of assets*

The determinationof impairment for property, plant and equipment, and goodwill involves the useof estimates that include, but are not limited to, the cause, timing and amountof the impairment.  Impairment is basedon a large number of factors, such as changes in competitive positions,expectations of growth, increased cost of capital, current replacement costs,increases in cost of inputs, and other factors which may indicate impairment.  An asset is considered impaired whenrecoverable amount is less than the carrying value.  Recoverable amount is determined as thehigher of fair value less costs to sell and value in use.  In calculating value in use, the cash flowsinclude projections of cash inflows and outflows from continuing use of theasset and cash flows associated with disposal of the asset.  The cash flows are estimated for the asset inits current condition.  In assessingvalue in use, the estimated cash flows are discounted to their present valueusing a pre-tax discount rate that reflects the current market assessments ofthe risks specific to the asset or group of assets (Cash Generating Unit(CGU)).  The identification of impairmentindicators, the estimation of future cash flows and the determination of fairvalues of assets (or groups of assets) requires management to make significantestimates and judgments concerning the identification of impairment indicators,earnings before interest and tax, growth rates, applicable discount rates,useful lives and residual values. There was A$66.8 million impairment underAIFRS in 2006 (2005:A$232.1 million).

Refer Note 1(i) ofthe Consolidated Financial Statements for further details regarding theaccounting policy regarding ‘Impairment of assets’. Under US GAAP, each periodmanagement considers whether there are any indicators that long lived assetsare not recoverable.  For those assets tobe held and used the impairment assessment is first made on an undiscountedbasis.  Any impairment is then measuredby comparing the asset’s carrying value to its fair value.  No impairment is recorded when theundiscounted cash flow assessment exceeds the carrying value.  An impairment loss is measured as the excessof the carrying amount over the asset’s fair value, being either market valueor the sum of discounted future cash flows or other valuation techniques, usingmarket assumptions.  Refer Note 51 to theConsolidated Financial Statements.for differences recorded under this policy

Managementbelieves that this policy is critical to the financial statements, particularlywhen evaluating Amcor’s assets for impairment. Varying results of this impairment analysis are possible due to thesignificant estimates and judgments involved.

*Impairmentof Goodwill*

Amcor tests, at least annually, whether goodwill hassuffered any impairment, in accordance with the accounting policy stated inNote 1(i) and (s) of the Consolidated Financial Statements.  The recoverable amounts of CGU’s have beendetermined based on the higher of net selling price and value-in-usecalculations.  These calculations requirethe use of assumptions, including forecast earnings before interest and tax,growth rates and discount rates.  Referto Note 21 of the Consolidated Financial Statements for details of theseassumptions and the potential impact of changes to these assumptions. There wasNil impairment under AIFRS in 2006 (2005:A$6.3 million).

Under US GAAP goodwill is reviewed for impairment atthe reporting unit level, at least annually or whenever events or changes incircumstance indicate that the recoverability of the carrying amount should beassessed.  The Company follows a two stepapproach to measuring the impairment of goodwill under US GAAP.  Firstly the fair value and the carryingamount of the reporting unit including goodwill is compared.  Goodwill is considered to be impaired if thefair value of the reporting unit is less that the book value.  Secondly, the goodwill impairment is measuredas the excess of the carrying amount of goodwill over its implied fairvalue.  The implied fair value ofgoodwill is determined by calculating the fair value of the various assets andliabilities included in the reporting unit in the same manner as goodwill isdetermined in a business combination. The impairment charge is included in operating income.  Refer Note 51 to the Consolidated FinancialStatements.for differences recorded under this policy

The assumptions are management’s best estimates basedon current and forecasted market conditions. Changes in economic and operating conditions impacting these assumptionscould result in additional impairment charges in future periods.

Managementbelieves that this policy is critical to the Consolidated Financial Statements,particularly when evaluating the Amcor’s goodwill for impairment.  Varying results of this analysis are possibledue to the significant estimates and judgments involved in the Company’sevaluations.

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*Income Taxes*

Amcor is subject to income taxes in Australia andforeign jurisdictions.  Significantjudgment is required in determining the worldwide provision for income taxes.There are many transactions and calculations relating to the ordinary course ofbusiness for which the ultimate tax determination is uncertain. Amcorrecognizes liabilities for anticipated tax audit issues based on estimates ofwhether additional taxes will be due. Where the final tax outcome of thesematters is different from the amounts that were initially recorded, suchdifferences will impact the current and deferred tax provisions in the periodin which such determination is made.

In addition,deferred tax assets are recognized only to the extent that it is probable thatfuture taxable profits will be available against which the assets can beutilized.  Amcor’s assumptions regardingfuture realization may change due to future operating performance and otherfactors.

Refer to Note51(i) of the Consolidated Financial Statements for an explanation of differencesbooked between AIFRS and US GAAP relating to income taxes.

*Retirement Benefit Obligations*

A liability or asset in respect of defined benefitsuperannuation plans is recognised in the balance sheet, and is measured as thepresent value of the defined benefit obligation at the reporting date plusunrecognized actuarial gains (less unrecognized actuarial losses) less the fairvalue of the superannuation fund’s assets at that date and any unrecognizedpast service cost. The present value of the defined benefit obligation is basedon expected future payments which arise from membership of the fund to thereporting date, calculated annually by independent actuaries.  Consideration is given to expected futurewage and salary levels, experience of employee departures and periods ofservice.

Expected future payments are discounted using marketyields at the reporting date on either national government bonds (in countrieswhere there is a deep market in high quality corporate bonds) with terms tomaturity and currency that match, as closely as possible, the estimated futurecash outflows.

Actuarial gains and losses arising from experienceadjustments and changes in actuarial assumptions are charged or credited toequity.

Referto Note 1(w) to the Consolidated Financial Statements for further details ofthe accounting policy relating to retirement benefit obligations.  Refer Note 32 of the Consolidated Financial Statementsfor details of the key assumptions used in determining the accounting for theseplans.  The following are the mainassumptions used :

·                  discount rate;

·                  rate of inflation;

·                  expected return on plan assets;

·                  future salary increases; and

·                  medical cost trend rates (in the case of non-pensionhealth plans).

These assumptions have a significant impact on the calculations and anyadjustments arising therefrom.

If the discount rate were to differ by 10% from management’s estimates,the carrying amount of pension obligations would be an estimated A$68.8 millionlower or A$80.0 million higher.  Inaddition, a one-half percentage point change in the actuarial assumptionregarding the expected return on plan assets would result in a change ofapproximately A$3.3 million in pre-tax pension expense for the year ended June30, 2006.  In addition, changes in externalfactors, including fair value of plan assets, could result in possible futurechanges to the amount of the pension obligations recognised in the balancesheet.

Under US GAAP the cost ofproviding defined benefit pension plans is determined on a consistent basiswith AIFRS, except that actuarial gains and losses are recognisedsystematically through net income.  Thenet assets or liabilities arising from pension plans are measured consistentwith AIFRS.  Refer to Note 51 tothe Consolidated Financial Statements for differences recorded under thispolicy.

**Differencesbetween AIFRS and AGAAP**

Commencing withour fiscal year beginning July 1, 2005, we are required to prepare ourConsolidated Financial Statements in accordance with AIFRS.  The opening AIFRS consolidated balance sheetwas prepared for the period beginning July 1, 2004 (date of transition to AIFRSin accordance with IFRS 1, “First-time Adoption of International FinancialReporting Standards, (IFRS 1).  A summaryof certain of the differences in the preparation of our Consolidated FinancialStatements on the basis of IFRS from that previously reported under AGAAP canbe found in the Note 1(z) and Note 50 of the Consolidated Financial Statements.

 

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The followingexceptions available under IFRS 1 were applied to the transition from AGAAP toAIFRS:

*(a)**Business Combinations*.  Amcor elected not to apply AASB 3 *Business**Combinations*retrospectively to past business combinations (business combinations thatoccurred before the date of transition to AIFRS, ie July 1, 2004). As a resultof this:

·                  the same classification of the business combinationwas maintained, as an acquisition by the legal acquirer, as in its previousAGAAP financial report.

·                  all assets and liabilities recognized at the date oftransition to AIFRS that were acquired or assumed in a past businesscombination were not adjusted, other than:

§     some financial assets and financialliabilities derecognized under previous AGAAP; and

§     assets, including goodwill, andliabilities that were not recognized in the acquirer’s consolidated balancesheet under AGAAP and also would not qualify for recognition under AIFRS in theseparate balance sheet of the acquiree.

Changesin the recognition of assets and liabilities on the transition to AIFRS werereflected in retained earnings.

·                  The carrying amount of goodwill in the opening AIFRSbalance sheet was the carrying amount under previous AGAAP on July 1, 2004.

*(b)**Fair value**orrevaluation as**deemed cost. *Amcor elected to apply AASB 1 First-time adoption of AustralianEquivalents to International Financial Reporting Standards and measuredproperty, plant and equipment at the date of transition to AIFRS at its deemedcost.  As a result the Asset RevaluationReserve recognised under AGAAP was transferred to retained earnings.  For Amcor this resulted in a decrease in theasset revaluation reserve and an increase in retained earnings by A$136.9million.

*(c)**Cumulative translationdifferences*.  Amcor elected toapply AASB 121 *The Effects of Changesin Foreign Exchange Rates*. AASB 121 requires an entity:

(a) toclassify some translation differences as a separate component of equity; and

(b) on disposal of a foreign operation, to transferthe cumulative translation difference for that foreign operation (including, ifapplicable, gains and losses on related hedges) to the income statement as partof the gain or loss on disposal.

Amcor did not need to comply with these requirementsfor cumulative translation differences that existed at July 1, 2004, as Amcorelected to deem the cumulative translation differences for all foreignoperations to be zero at July 1, 2004. As a result the gain or loss on a subsequent disposal of any foreignoperation shall exclude translation differences that arose before July 1, 2004,and shall include later translation differences.

For Amcor, at July 1, 2004, an amount of A$486 millionwas reclassified from Exchange Fluctuation Reserve to retained earnings.

*(d) Financial Instruments:*Amcor elected to only apply the financialinstruments standards, AASB 132 Financial Instruments: Disclosure andPresentation and AASB 139 Financial Instruments: Recognition and Measurementfrom July 1, 2005.    Refer toNote 1(z) of the Consolidated Financial Statements for the impact ofadopting AASB 132 and AASB 139 at July 1, 2005.

*(e) Share-based payment transactions*.Amcor elected to apply AASB 1First-time adoption of Australian Equivalents to International FinancialReporting Standards and not recognise an expense for those optionsgranted under Amcor employee share option plans before November 7, 2002, andthat vested by January 1, 2005.

*(f) Decommissioning liabilities included in thecost of property, plant and equipment.*  Amcor elected not to add or deduct from thecost of the asset to which the decommissioning liability relates, the specifiedchanges in a decommissioning, restoration or similar liability and the adjusteddepreciable amount of the asset for changes in such liabilities that occurredbefore July 1, 2004.  Liabilities weremeasured as at July 1, 2004 in accordance with AASB 137 *Provisions,Contingent Liabilities and Contingent Assets*.  In addition the amount that would have beenincluded in the cost of the related asset when the liability first arose, wasestimated by discounting the liability to that date using Amcor’s best estimateof the historical risk-adjusted discount rate(s) that would have applied forthat liability over the intervening period. The accumulated depreciation on that amount was calculated, as at July1, 2004, on the basis of the current estimate of the useful life of the asset,using Amcor’s depreciation policy.

 

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**Results of Operations**

The following discussion is based on Amcor’sConsolidated Financial Statements as prepared under AIFRS.  A discussion of the differences between AIFRSand US GAAP, and the impact of those differences on the Consolidated FinancialStatements, is set out in Note 51 of the Consolidated Financial Statements.

AIFRS Results of Operations

Amcor’s senior management and Board primarily reviewresults on a PBIT before significant items basis and believe it is the mostinformative and reliable gauge for measuring and understanding trends across adiverse range of businesses.

We believe thatthe non-GAAP performance measure of PBIT before significant items on aconsolidated basis used by Amcor is useful to investors and other users of ourFinancial Statements for the following reasons:

1)              The measure of PBITbefore significant items allows users to analyse and understand the ongoingtrading operations of Amcor.  Thefeedback of users of our financial statements is that this measure providesinsights and information which allows them to assess the historical and likelyongoing earnings and cash flows of our businesses.  It also aligns with management’s focus on theongoing likely sustainable or ongoing earnings. It ensures that the amounts associated with business integration andrestructuring expenses are easily distinguishable to both users and managementfrom the key ongoing results of the businesses.

2)              PBIT beforesignificant items provides a clear measurement of the underlying economicperformance of the businesses in the Amcor Group.  Significant items such as businessintegration and restructuring expenses are usually associated with a relativelysmall number of plants within a particular business.  Thus, the inclusion of such costs canotherwise distort the historical and likely ongoing operating performancemeasures of that business and the overall Amcor Group.

3)              In respect ofthe significant items identified, Amcor discloses the nature and estimated costto the business over the anticipated period of the restructuring.  Depending upon when such decisions are madeas well as the extent of the restructuring to be undertaken, it is generallythe case that a restructuring will span two reporting periods.  It is generally unlikely that theannouncement and the restructure activity could occur within the one reportingperiod.  Therefore the publicannouncement of restructuring activity is designed to provide the market withtransparency as to how long the activity is anticipated to take and theexpected financial cost.  The significantitems are identified in Note 7 of the Consolidated Financial Statements.

4)              Manyinvestors and securities analysts have indicated to us that they prefer to seeand analyse the ongoing continuing results of the Amcor Group’sbusinesses.  They prefer to be providedwith information that dissects the total GAAP result into management analysisthat identifies the business integration and restructuring costs separatelyfrom the ongoing trading operations of the business.  In a global company like Amcor, while theremay be business integration or restructuring costs that occur over one or moreyears, they are often associated with new acquisitions or the restructuring andclosure of specific plants.  These arenot the same plants being restructured each year.  As a result, management believes it isprobable that the financial impact of the particular restructuring or businessintegration costs will disappear or become immaterial within a near-term finiteperiod.

5)              Theremoval of these restructuring and business integration items and thediscussion by management of PBIT excluding significant items enables thereader of our financial statements to understand the returns being generated bythe ongoing trading of the relevant business. Year on year comparisons based on this measure allows investors andother users of our financial statements to assess how management is managingthe relevant businesses and whether management is improving the core value ofthose businesses.

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# ***Consolidated Results of Operations***

|                                 | ** ** | ** **                             | ** ** | ** **                                       | ** ** |
|---------------------------------|------------|----------------------------------------|------------|--------------------------------------------------|------------|
| ** **                      | ** ** | **Sales**                              | ** ** | **PBIT before significant items** | ** ** |
| ** **                      | ** ** | ** **                             | ** ** | ** **                                       | ** ** |
| ** **                      | ** ** | **Year Ended June 30,** | ** ** | ** **                                       | ** ** |
| ** **                      | ** ** | **2006**                               | ** ** | **2005**                                         | ** ** | **2006** | ** ** | **2005** | ** ** |
| ***Business  Segments (1)***    |       |                                   |       |                                             |       |   |   |   |   |
| Amcor PET  Packaging            |       | 4,048.9                                |       | 3,696.4                                          |       | 245.0 |   | 259.8 |   |
| Amcor  Australasia              |       | 2,560.9                                |       | 2,571.7                                          |       | 262.4 |   | 315.8 |   |
| Amcor Flexibles                 |       | 2,978.6                                |       | 2,971.2                                          |       | 188.4 |   | 190.4 |   |
| Amcor Sunclipse                 |       | 1,292.1                                |       | 1,218.7                                          |       | 65.1 |   | 54.7 |   |
| Amcor Asia                      |       | 174.5                                  |       | 182.2                                            |       | 29.8 |   | 23.1 |   |
| Other                           |       | (13.1                                  | )          | 5.9                                              |       | (42.6 | ) | (52.3 | ) |
|                            |       |                                   |       |                                             |       |   |   |   |   |
| Total sales  revenue            |       | 11,041.9                               |       | 10,646.1                                         |       |   |   |   |   |
|                            |       |                                   |       |                                             |       |   |   |   |   |
| Discontinued  operations        |       | 397.4                                  |       | 453.5                                            |       | 27.6 |   | 30.3 |   |
|                            |       |                                   |       |                                             |       |   |   |   |   |
| Significant items before tax    |       |                                   |       |                                             |       | (64.1 | ) | (324.4 | ) |
|                            |       |                                   |       |                                             |       |   |   |   |   |
| Profit before  interest and tax |       |                                   |       |                                             |       | 711.6 |   | 497.4 |   |
| Net finance costs               |       |                                   |       |                                             |       | (246.6 | ) | (166.4 | ) |
| Income tax                      |       |                                   |       |                                             |       | (85.8 | ) | (72.6 | ) |
| Net profit after  tax           |       |                                   |       |                                             |       | 379.2 |   | 258.4 |   |
| Members of Amcor Limited        |       |                                   |       |                                             |       | 351.3 |   | 245.3 |   |
| Minority  interests             |       |                                   |       |                                             |       | 27.9 |   | 13.1 |   |

 

(1)              Theindividual business segments’ profit results refer to profit before interestand tax, before significant items (PBIT before significant items).

*Sales*

Sales revenue for 2005-06 was A$11,041.9 million. Thiswas an increase of 3.7% from 2004-05 sales revenue of A$10,646.1 million andprimarily due to rising raw material costs that were passed through tocustomers.  This increase occurred acrossall divisions however the largest impacts were in Amcor PET Packaging withrising PET resin costs and in the Amcor Flexibles division where there weresubstantial increases across a broad range of substrates.  Sales in Amcor Australasia were down 0.4% dueto a reduction in volume in the fibre operations.

Thetotal 2005-06 sales revenue, including discontinued operations, of A$11,439.3million translated at exchange rates of the USD, Euro, Singapore, New Zealandand Canadian dollars at June 30, 2005 would result in A$38.8 million highersales revenue for the 2005-06 year.  Thisis mainly caused by the strengthening $A against the Euro in Flexibles, offsetby a smaller weakening in the $A against the USD.

*Cost of sales*

Cost of sales increased from A$8,853.3 million in2004-05 to A$9,329.9 million in 2005-06, an increase of 5.4%.  This reflects an increase in raw materialcosts, higher oil and energy costs offset by cost savings through rationalisationand restructuring initiatives.

*Gross Profit*

Gross profit as a percentage of sales decreased from 16.8%in 2005 to 15.5% in 2006 mainly due to the price erosion in the Australasianfibre business combined with high raw material and energy costs not fullyrecovered from customers across the PET and Flexibles business groups.

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*Netfinance costs*

Amcor’s netfinance costs excluding discontinued operations, increased by 50.7%, fromA$160.7 million in 2004-05 to A$242.2 million in 2005-06.   Finance income increased by 6.4% in 2005-06from A$20.4 million in 2004-05 to A$21.7 million in 2005-06.  Finance expenses increased by 45.7% in 2005-06from A$181.1 million in 2004-05 to A$263.9 million in 2005-06.  The increase in finance expenses wasprincipally due to the PACRS coupon payment of A$57.8 million being treated asinterest in 2005-06 and as a dividend payment in 2004-05 as required underAIFRS and AGAAP respectively.  In addition,there was an increase in average interest rate on approximately A$500 millionof floating rate debt in 2005-06 of 1.5% compared to the average rate in2004-05.  Other increases in financecosts related to the credit rating downgrade received in 2005-06.

*Significant Items before tax*

Significant items beforetax related to the following:

·                  In 2005-06, theacquisition of further equity interests in Vision Grande resulted in fair valuegains on derivative instruments associated with the acquisition of A$32million, and a profit on the sale of the Group’s China based tobacco packagingplants to Vision Grande of A$52.3 million. The significant item recognised under AIFRS relating to the acquisition ofVision Grande in relation to the fair value gains on derivatives is $32 millionlower under US GAAP due to certain instruments included in the acquisitionaccounting not being recognised as derivative instruments under US GAAP. Inaddition, the profit on sale of  thetobacco packaging plants is A$2.6 million lower under US GAAP. This is due tothe additional gain recognised under AIFRS on dilution of Amcor’s interest notbeing recognised for US GAAP.

·                  Amcor also recognised as asignificant item in 2005-06 a gain of A$12.5 million which resulted from theincrease in Amcor’s share of Vision Grande’s net worth as a result of an equityissue by the associate.  As the netassets and the carrying value of Vision Grande are different under US GAAP, theprofit on dilution of Amcor’s shareholding in Vision Grande was A$9.9 millionhigher under US GAAP.

·                  PET businessintegration and restructuring initiatives continued in 2005-06 and relatedsignificant expenses decreased from (A$51.8) million in 2004-05 to (A$10.1)million in 2005-06.  The 2005-06expenditure related to the closure of two Mexican plants and restructuringactivities in Poland.  The 2004-05expenditure related to the closure of plants in Merrimack, United States, AquasCalientes, Mexico and Turkey.

·                  Flexibles marketsector rationalisation expenditure involves a program over two to three yearsto rationalize the business.  Relatedexpenditure was A$34.2 million in 2004-05 and included a further A$53.7 million in 2005-06.  In 2005-06, this expense included the closureof Colodense, in Bristol, United Kingdom, and Hochheim, Germany plants and the2004-05 expense the closure of the Envi plant in Holland.

·                  In 2005-06, theAsian business segment disposed of the corrugated, sacks and closuresbusinesses at a significant loss of A$7.2 million.

·                  In 2005-06, theClosures business was restructured and disposed of at a loss of A$18.6million.  This business is recognised asa discontinued operation in the Consolidated Financial Statements included inItem 18.

·                  In 2005-06,asset impairments included impairments of A$8.3 million in PET, A$18.2 millionin Flexibles, the Closures business segment of A$15.5 million and impairmentsof A$24.8 million in Asia.  In 2004-05asset impairments related to PET A$49.9 million, Australasia A$108.7million,Flexibles A$23.2 million, Asia A$44.2 million and Corporate assets of A$6.1million.

·                  In2005-06, onerous leases expenses at PET and Corporate were A$6 million andA$1.8 million respectively and pension curtailment gains of A$1.9 million andA$1.4 million were recognized.

*Income Tax*

Amcor’s income tax rate in 2005-06, before significantitems of 21%, remained relatively consistent with the 2004-05 effective taxrate of 21.7%.

Amcor’s income tax benefit on significant items in2005-06 of A$25.3 million decreased as compared to a benefit of A$58.6 millionin 2004-05.  The 2005-06 tax benefit fromsignificant items resulted from tax benefits on restructuring expenses andasset impairments.  The significantincome of A$96.8 million from the Vision Grande transaction in 2005-06 did notcreate a tax expense.

*Profitafter tax and after significant items*

Amcor’s AIFRS netprofit after tax and significant items increased 47% from A$258.4 million in2004-05 to A$379.2 million in 2005-06.

Amcor’s US GAAPnet profit after tax and significant items decreased by 23% from A$205.7million in 2004-05 to A$158.2 million in 2005-06.

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*Lossfrom discontinued operations*

The loss fromdiscontinued operations of A$37.4 million in 2006 compared to A$19.2 millionloss in 2005 is a result of the disposal of the White Cap Metal Closuresbusiness effective June 2006 and the disposal of the Asian Corrugated businesseffective February 2006.  Financialinformation related to these discontinued operations is set out in Note 12 tothe Consolidated Financial Statements.

The US GAAP loss fromdiscontinued operations differs from AIFRS by A$152.5 million in the year ended30 June 2006 primarily as a result of exchange fluctuation reserve amountsrelating to the White Cap Metal Closures business and the Asian Corrugatedbusiness.  Under US GAAP these amountsare recognised in net income as part of the disposal.  Under AIFRS these amounts were transferred toretained earnings as part of the transition to AIFRS on July 1, 2004.

*Dividend*

A final dividend ofA$0.17 per share (franked to 15%) was declared on all fully paid ordinaryshares registered as at September 7, 2006, and paid on September 29, 2006. Thefinal dividend, combined with the interim dividend of A$0.17 per share,represented an annual dividend of A$0.34 per share. This was consistent withthe 2004-05 dividend of A$0.34 per share.

***Amcor PET Packaging***
|                                     | ** ** | **Year ended June 30,** | ** ** | ** **  | ** ** |
|-------------------------------------|------------|----------------------------------------|------------|-------------|------------|
| ** **                          | ** ** | **2005-06**                            | ** ** | **2004-05** | ** ** | **Change** | ** ** |
| ** **                          | ** ** | ** **                             | ** ** | ** **  | ** ** | **%** | ** ** |
| ** **                          | ** ** | **A$M**                                | ** ** | **A$M**     | ** ** | ** ** | ** ** |
| Sales                               |       | 4,048.9                                |       | 3,696.4     |       | 9.6 |   |
| PBIT excluding significant  items   |       | 245                                    |       | 259.8       |       | (5.7) |   |
| Signficant items before  income tax |       | (22.5)                                 |       | (107.3)     |       |   |   |

 

PET Group Amcor PET Packaging had a mixed year in2005-06 with good performances in North America and Europe offset by adisappointing result in Latin America, mainly due to a poor performance inMexico.

PBIT excluding significant items was down 5.7% from2004-05 to A$245 million in 2005-06.

Significant items in 2005-06 were a loss of US$16.8million (before tax), of which US$6.7 million was a cash outlay. Significantitems were related to the restructuring activities for the operation in Poland,two plant closures in Mexico, and administration cost reductions and businessstreamlining activities in Europe and Latin America.

Volumes for the year were up 5.9% in 2005-06 to 36.1billion units. Custom containers were up 26.6% in 2005-06 and are now 20% oftotal volume.

The2005-06 sales revenue of A$4,048.9 million translated at exchange rates of theUSD, Euro, and Canadian dollars at June 30, 2005 would result in A$53.2 millionlower sales revenue for the June 06 year. This is mainly caused by the weakening in the Australian dollar againstthe US dollar in 2005-06.

A key issue for the business in 2005-06 has been therecovery of inflationary costs, primarily rapidly rising energy costs. In2005-06 energy represents over 15% of non-material operating costs and this hasrisen sharply over the past 12 months.

Traditionally, industry contracts have not recapturedenergy cost movements, and consequently the business had substantialunder-recovery that impacted earnings. As contracts are renewed, energy costrecovery clauses are being included as part of standard commercial terms.However, it will take time to implement this across the entire business.

The annualized run rate for the higher energy costs in2005-06 was around US$20 - 25 million. It is estimated that these increasedcosts negatively impacted earnings for the 2005-06 year by between US$10 - 15million with a significant proportion occurring in the second half.

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North America

In North America, volumes were up 8.8% for the 2005-06year after being up 15.5% for the first half of the year. This growth waspredominately due to a 26% increase in custom containers and a particularly hotsummer in July and August 2005, that assisted volumes in the carbonated softdrink (CSD) and water segment in the first half of the year.  Lower volume growth in the second half of theyear reflected the decision by Coca-cola to self-manufacture in Canada and the NorthwestUS.

The increase in the custom business was a result ofstrong growth in the isotonic beverage sector, together with ongoing expansionin the diversified product segment, including the liquor and personal caremarkets. The business reached agreement with PepsiCo to build a new US$80million plant at Wytheville, Virginia, for hot-fill Gatorade containers on anear-site basis to PepsiCo’s plant at that location. This plant is expected tocommence operations by March 2007.

The business has successfully commercialized the newpanel-less heatset container, PowerFlexTM. This patented design is currentlybeing introduced into the market by a number of iced tea and functionalbeverage customers and additional manufacturing capacity is being installed to meetthis growth.

Volumes also benefited from the first full year of anon-site facility for a major juice producer and a near-site facility forprivate label hot-filled juice products. Also assisting the volume increasewere the custom expansion at the Franklin plant in Indiana and the expansion ofthe heatset gallon capacity in three locations.

The North American business strategy is to continue tosupport growth in the custom segment, backed by long-term contracts thatrecognise the technology and value that exist in its heat-set products. Thecompany is budgeting US$120 million in capital expenditure in the 2006-07 yearto support this growth. A key component of this will be the new plant atWytheville. Other key projects include heat-set capacity expansion on the WestCoast and PowerFlexTM capacity installation in key markets.

In the water and CSD segments, volume growth was 3%for the 2005-06 year after being up 9% for the first half of the year. Followingthe Coca-Cola decision to pursue self-manufacturing in the US Northwest andCanada, effective January 2006, the business closed three plants in Canada.Much of the equipment was relocated to other sites, mainly in North America.

The business is being very selective in new investmentin the CSD and water segments. New capital spending is supported bysatisfactory long-term contracts that reflect Amcor’s need to recoverinflationary cost increases, particularly energy.

Latin America

In 2005-06, the business in Latin America achievedoverall volume growth of 10% and growth in custom containers of 37% albeit offa low base. The region has favourable demographics, increasing income percapita and ongoing replacement of glass with PET will continue to support thishigher overall growth.

The business in Mexico had a disappointing 2005-06year with earnings down substantially from 2004-05. The issues werepredominately around management, footprint, manufacturing efficiencies andsupply chain.  A number of plants had lowoperating efficiencies which resulted in subcontracting out production andincreasing the logistics and warehousing costs. In March 2006, a new General Manager was appointed with the initialfocus to develop a turnaround program for the business. The key elements ofthis program include closing two small blow-moulding facilities and reviewingthe entire supply chain to reduce handling, transport and warehousingcosts.  The business will continue toobtain manufacturing and technical support from the North Americaoperations.  Although the operationsexperienced a loss in 2005-06, they are currently operating at break even.Substantial improvement is anticipated in 2006-07, however the full yearbenefits from the turnaround plan, expected to be around A$20.1 million perannum, will not be realised until 2007-08.

The businesses in Argentina and Brazil experiencedsubstantially lower reported earnings for the 2005-06 year with unfavourablecurrency movements.  In both countries,there was considerable inflationary cost pressure (inflation in Argentina was13% and in Brazil was 10%) that was not fully recovered in the market.

In Argentina, the 2004-05 PBIT excluding significantitems was positively affected by substantial export volumes to Brazil. This didnot continue in 2005-06 and a major customer commenced importing products froma neighbouring country to take advantage of cross-border tax benefits. Thebusiness in Argentina is a well-run organisation with a solid business base andsatisfactory returns, however the very favourable conditions in 2004-05 are notlikely to be repeated.

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Europe

In Europe, volumes were up 1.3% on a continuingbusiness basis. At the end of the 2004-05, the plant in Turkey was closed sothat the actual volume movement was a reduction of 3%.

Across the business there was good growth in theUnited Kingdom, driven by increases in the water and custom beverage segmentsas well as good progress in expanding the diversified product business. Thevolumes in Continental Europe were flat in 2005-06 compared with 2004-05, witha reduction in Germany offset by growth in Spain, while France was steady in2005-06 compared to 2004-05.

In 2005-06, the custom plant at Brecht, Belgium alsohad stable volumes, and it is currently transitioning a number of products frommultilayer to monolayer barrier technology.

During the 2005-06 year, the plant in Poland wasdownsized to reflect a smaller business base. The management team has decidedto exit the market there and recently reached agreement to sell the business toa competitor.

In 2005-06, the PET recycling facility at Beaune, Francehad another year of solid performance.

In 2005-06, the key issue for the business in Europewas the recovery of increased energy costs. In the United Kingdom and much ofContinental Europe, energy costs rose substantially and it was difficult topass these increases on to customers.  Ascontracts are renewed, energy cost recovery will be included as a standardclause. However, this process will take time to be fully implemented.

In an environment of flat volumes and rising energycosts, manufacturing performance in 2005-06 was excellent and profits wereahead of 2004-05. The management team in this region did an excellent job inmanaging costs and capital to maximise earnings in a challenging businessenvironment.

PET Group Outlook

The outlook for the PET packaging business is for amodest improvement in earnings in the 2006-07 year. Rising costs, particularlyenergy, will severely dampen the first half earnings, compared to the sameperiod last year. As the year progresses the turnaround in Mexico and theimproved recovery of energy cost increases will improve earnings, but the fullbenefit of these improvements will likely be evident beginning in the 2007-08year.

***Amcor Australasia***
|                                     | ** ** | **Year ended June 30,** | ** ** | ** **  | ** ** |
|-------------------------------------|------------|----------------------------------------|------------|-------------|------------|
| ** **                          | ** ** | **2005-06**                            | ** ** | **2004-05** | ** ** | **Change** | ** ** |
| ** **                          | ** ** | ** **                             | ** ** | ** **  | ** ** | **%** | ** ** |
| ** **                          | ** ** | **A$M**                                | ** ** | **A$M**     | ** ** | ** ** | ** ** |
| Sales                               |       | 2,560.9                                |       | 2,571.7     |       | (0.4) |   |
| PBIT excluding  significant items   |       | 262.4                                  |       | 315.8       |       | (16.9) |   |
| Signficant items before  income tax |       | 0.0                                    |       | (108.7)     |       |   |   |

 

The Australasian business had a difficult year in2005-06 with PBIT excluding significant items, down 16.9% to A$262.4 million.

Across the business units the rigid, flexibles andglass operations produced solid results in 2005-06 with overall improvedearnings.

Offsetting these good performances was a difficult2005-06 year in most aspects of the Fibre operations. This business hasundergone significant change over the past twelve months including theappointment of a new management team. This team has developed a comprehensive turnaround plan, that will aimto deliver substantial improvement in earnings over the next few years and,ultimately, reposition the business to achieve Amcor’s target return oninvestment.

The2005-06 sales revenue of A$2,560.9 million, included amounts translated atexchange rates of the New Zealand dollar. Using the exchange rates of New Zealand dollars at June 30, 2005, wouldresult in A$14.3 million higher sales revenue for the 2005-06 year.  This is mainly caused by the strengthening Australiandollar against the New Zealand dollar in the 2005-06 year.

In the short term, however, the current trend inearnings is expected to continue.

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- 36 -

 

Fibre Division

*Sales*

The corrugated box business had a difficult 2005-06year with overall volumes declining by 5% from 2004-05. In Australia secondhalf of 2005-06, volumes declined by 5.5% from 2004-05 after being down justover 4% in the first half of 2005-06. In New Zealand, 2005-06 volumes were downby just over 5% in the second half of the year after being flat in the firsthalf.

The 2005-06 decline in volume in Australia was due tosome loss of volume to competition in the first half and in New Zealand thedecline was due to the loss of the Fonterra contract in the second half.Overall the business was affected by general market softness and some specificindustry issues.

In particular, the fruit and produce sector was downnearly 9% in the second half of 2005-06 and 5.5% for the full 2005-06 year.This was caused by the following factors:

·                  the impact ofcyclone Larry in Northern Queensland that destroyed the banana crop andseverely impacted a number of other produce sectors. Amcor has a large marketshare in this higher quality product segment. The lower volumes will have acontinuing impact on earnings in the 2006/07 year; and

·                  continuinggrowth in the use of returnable plastic crates (RPC).

The industrial segment continues to be impacted by anincrease in manufactured goods being produced offshore resulting in a declinein volumes of 5% in 2005-06 compared to 2004-05.

In the grocery segment, in 2005-06, there wascontinued growth in imports of filled products with customers relocatingoffshore and retailers increasing imports for house brands. Overall the grocerysegment PBIT excluding significant items was 6% lower in 2005-06 compared to2004-05.

The market dynamics in New Zealand changedsubstantially during the 2005-06 year, with an aggressive drive by competitorsto secure additional volume leading to a loss of some accounts and substantialprice reductions to retain business.

New Zealand volumes were down 3% overall in 2005-06compared to 2004-05. The kiwifruit season was much improved in 2005-06 on theprevious year with volume up 31% in 2005-06, but this was offset by a poorapple/pear season (down 16% in 2005-06). Meat volume was up 14% in 2005-06, onthe back of higher kill rates and an improved export market. Dairy volume wasdown 19% in 2005-06, as the business lost a major customer in Fonterra at theend of the first half with the impact on volumes not commencing until March2006.

In carton converting, volumes in 2005-06 were down 8%across Australasia. Demand was weaker in the Australian grocery and tobaccosegments in 2005-06. Some business was lost in 2005-06 as customers relocatedoffshore.

*Operations*

*Corrugated and Cartons*

During the 2005-06 year, a SAP management informationsystem was installed across the Australian corrugated business on astate-by-state roll-out. This had the effect of creating some operationaladjustments as the system was implemented in each state, resulting in extracosts and reduced efficiencies. Although this was an impact in the 2005-06year, SAP will be of substantial benefit going forward in improving service anddelivery performance.

The corrugated business also faced a number ofinflationary cost pressures through the 2005-06 year which it could not fullyrecover in the market place.

As a result of the above factors, gross margins, whichwere largely unchanged in the first half on 2005-06, declined in the secondhalf on 2005-06. This was particularly so in Queensland and New Zealand.

Earnings and margins in 2005-06 were also lower in thefolding carton business predominantly due to lower volumes.

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- 37 -

 

*Paper*

The paper manufacturing operations consist of therecycled paper mills that produce paper for the corrugated box business, andthe carton board mill which supplies board to the folding carton segment.

The recycling mills had a difficult 2005-06 year withdomestic volumes down 5% from 2004-05, while export volumes were 28% higher butat lower margins in 2005-06 compared to 2004-05.

Operating costs increased during the 2005-06 year dueto input price increases and higher plant costs. These were not recovered inthe marketplace.

In 2005-06 sales by the cartonboard mill in Petrie,Queensland, to both Amcor’s folding carton business and to external domesticcustomers were lower than in 2004-05 due to market conditions and the loss ofsales to Carter Holt Harvey. Import prices of board continue to put pressure ondomestic selling prices.  Average priceswere around 3% lower in the 2005-06 year and are expected to be lower again inthe 2006-07 year.

In 2005-06, export cartonboard volumes were up 30%from 2004-05 but prices in Australian dollar terms were lower than the previousyear.

*Sales and Marketing organisation*

During the 2004-05 year the corrugated business madesubstantial changes in the sales and marketing functions. The national salesstructure put in place in 2002 reverted back to a regional structure. Anadditional 16 sales people have been employed to better service the needs ofcustomers, and there has been a substantial change in the senior management ofthe sales team. For the coming 2006-07 year there is an extensive program tobuild capability and to increase effectiveness in this area.

*Turnaround Plan*

During the past 12 months the new management team hasdeveloped a comprehensive turnaround plan that has the primary objectives of:

·                  loweringthe cost base;

·                  improvingoperating efficiencies; and

·                  upgradingcommercial sales and marketing skills.

The key components of this plan include:

*Corrugated*

Announced in 2005-06, and currently being implemented,is the reduction from three corrugated plants to two in the Queensland market,through the relocation of the corrugator and converting equipment from West Endto Rocklea. As part of this project new equipment is being installed atRocklea. Following the closure of the West End site, Amcor will be the low costproducer in that market. In Victoria the operations will reduce from threecorrugated sites to two, with the announcement of the closure of the site atBox Hill. The two remaining corrugated operations in Victoria will be upgradedto further improve competitiveness.

In New South Wales the new management team isfinalizing a review of operation. This is likely to involve some restructuringand plant upgrades to reduce costs.

*Paper*

After an extensive review process it has been decidedto undertake a detailed feasibility study for a new paper recycling mill atBotany, New South Wales.

The new mill would be targeted for completion in the2009-10 financial year.  As part of thisreview the recycled paper mill at Spearwood, Western Australia was closed inSeptember 2006.

In the cartonboard segment there has been an extensivereview of the Petrie cartonboard mill in Queensland. The mill is globallycost-competitive in reel production, however the sheet conversion process willbe restructured to reduce costs.

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- 38 -

 

*Cartons*

In the folding carton segment, a new, larger formatprinting machine and conversion equipment will be installed at Botany to lowerthe cost base and enable targeting of new growth opportunities. This will alsoenable the transfer of some work from NSW to operations in Victoria and Queenslandto improve overall efficiencies.

*Summary of Benefits*

This turnaround plan is expected to deliver low-costcorrugated manufacturing operations with an excellent geographic coverage. Thenew recycled paper mill will aim to deliver the lowest cost position inAustralasia in recycled paper and the cartonboard mill will have a globallycompetitive cost base.

These initiatives are estimated to have a net cost ofaround A$300 million and deliver cost reductions of A$60 to A$80 million perannum. The timing for these improvements will be spread over the next few yearswith expected cost reductions in 2007-08 of around A$40 million.

Flexibles Division

The flexibles business had a solid 2005-06 year withimproved earnings and returns. The division consists of four operating units:polyethylene, laminations, New Zealand flexibles and multiwall sacks.

In 2005-06, the polyethylene business continues toimprove, with volumes up slightly and improved earnings and returns.  A new flexographic press was installed in Queenslandin 2005-06, and a further press is to be installed in Victoria in 2006-07 tomeet ongoing growth in the market.  Therewas some difficulty in recovering all the resin price increases, particularlyin the commodity products.

The laminations business had a difficult 2005-06 yearwith softness in the confectionery segment and a slowing in growth in the pouchmarket. The rationalisation from two sites to one in New South Wales wassuccessfully completed and this will improve operating efficiencies in thatmarket. Two new gravure machines were commissioned in Victoria and New SouthWales, in the last quarter of the 2005-06 year, and these will assist inimproving earnings in the 2006-07 year.

The business in New Zealand had a challenging 2005-06year, with aggressive pricing in the market making it difficult to recoverresin price increases. A new extrusion line and flexographic press werecommissioned during the second half of the 2005-06 year, and new volume tosupport this investment has been secured which will assist earnings in the2006-07 year.

The multiwall sack business had a good 2005-06 year,with improved earnings and returns. There has been substantial productrationalization and plant restructuring which has improved the cost base andoperating efficiencies. New patented product developments for the dairy andfood ingredients markets were contributors to the increased PBIT excludingsignificant items.

In summary, the Australasian flexibles business hasundergone substantial rationalization and re-capitalization in 2005-06 withfour new printing/co-extrusion machines installed across three states, as wellas two in New Zealand. These machines will improve quality, reduce costs andensure the business continues to offer improved value propositions to ourcustomers. It is expected that this business will deliver solid growth in salesand earnings over the next few years.

Rigid Division

The aluminium beverage can business produced anothersolid result in 2005-06 with both earnings and returns ahead of the 2004-05year. Volumes increased 6% in 2005-06 compared to 2004-05, mainly due to growthin the multipack soft drink segment. The ready-to-drink alcoholic sector alsoachieved additional volumes in 2005-06, although growth in this sector hasmoderated from the high levels of the past few years.

The closures operations had a more difficult 2005-06year, with earnings lower due to price pressures and plant inefficienciesrelated to capital investment to support growth.  Going forward, the business is expected tobenefit from growth in wine screw caps, custom moulded plastic closures andsports cap segments.  The food can and aerosolcan businesses achieved good earnings growth in 2005-06 in a challenging marketenvironment, given the substantial increases in the price of tin plate in thefirst half of the 2005-06 year.

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- 39 -

 

The glass wine bottle operation had another strongyear in 2005-06, with increased earnings as the second glass furnace moved tofull capacity. Ongoing sound productivity and a full year’s production from thesecond furnace is expected to deliver continued improvement in earnings for the2006-07 year.

Australasian Group Outlook

The outlook for the Australasian business is forsubstantially lower earnings in 2006-07 as the second half run rate of 2005-06continues into this year.   Beyond2006-07, this business has substantial upside in the corrugated and flexiblesoperations, with new capital and improved operating efficiencies delivering alower cost base.

***Amcor Flexibles***
|                                     | ** ** | **Year ended June 30,** | ** ** | ** **  | ** ** |
|-------------------------------------|------------|----------------------------------------|------------|-------------|------------|
| ** **                          | ** ** | **2005-06**                            | ** ** | **2004-05** | ** ** | **Change** | ** ** |
| ** **                          | ** ** | ** **                             | ** ** | ** **  | ** ** | **%** | ** ** |
| ** **                          | ** ** | **A$M**                                | ** ** | **A$M**     | ** ** | ** ** | ** ** |
| Sales                               |       | 2,978.6                                |       | 2,971.2     |       | 0.3 |   |
| PBIT excluding  significant items   |       | 188.4                                  |       | 190.4       |       | (1.0) |   |
| Signficant items before  income tax |       | (71.9)                                 |       | (57.4)      |       |   |   |
|                                |       |                                   |       |        |       |   |   |

 

The flexibles business had a solid year overall in2005-06 despite difficult circumstances with PBIT excluding significant itemsup 2.6% to €115.6 million in local currency but down 1% to A$188.4 million.

The sales and PBIT excluding significant items shownin the table above for both 2004-05 and 2005-06 do not include the contributionfrom those parts of the White Cap Closures operations where the sale has beencompleted or will be completed in the near future. The earnings from thesebusinesses are included in the discontinued businesses disclosure.

Significant items were A$71.9 million (before tax) in2005-06, predominantly for the closure of two plants in the processed foodsector, the loss on the sale of the White Cap Closures business, and assetwritedowns. The cash component of the significant items in 2005-06 was A$17.9million.

The2005-06 sales revenue of A$2,978.6 million translated at exchange rates of theEuro at June 30, 2005, would result in A$87.6 million higher sales revenue forthe June 30, 2006 year.  This is mainlycaused by the strengthening $A against the Euro.

Food Flexibles

The Food Flexibles business predominantly consists ofthe plants serving the processed and fresh food markets in Western Europe. Itcoordinates the food packaging strategy with the flexibles operations in otherregions.

Sales were up 1.4% in 2005-06 to €970.8 million,although volumes were lower. There was solid progress in earnings in 2005-06due mainly to an ongoing improvement in the processed food business.

Resin costs increased substantially through the secondhalf of 2005-06 and, although by year-end the costs had largely been recovered,there was a lag in recovery in some sectors, particularly where films are asubstantial component of the finished product.

In the bread, produce and frozen food sectors, the2005-06 first half difficulties that arose in the United Kingdom bread bagplants with strong customer demand exceeding capacity, eased in the second halfof 2005-06 as new equipment purchased in 2005 became fully operational. Thisbusiness should continue to improve in the 2006-07 year.

The chilled food sector had a mixed 2005-06 year, withgood results in a number of market segments, especially yoghurt, which saw goodsales growth, being offset by ongoing disappointing results from the plant inLund, Sweden, and competitive pricing in the meat and fish packagingcategories. The Lund improvement plan is addressing its remaining operationaland strategic issues.

The chilled food sector has a substantial productinnovation pipeline based around enhanced shelf life, easy-opening andre-sealable features that will assist in delivering improved margins over thenext few years.

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- 40 -

 

The processed food sector had a substantially stronger2005-06 year, with earnings and returns well up on the 2004-05 year.  It is developing strong commercial strategiesfocusing on attractive segments such as coffee, ready meals and liquidbeverages.  As a result of theseinitiatives, the processed food business should deliver returns in excess ofthe cost of capital in the 2006-07 year.

The closure of the plant in the United Kingdom isproceeding to schedule and the business transfer program has commenced.  Production ceased in November 2006. Keypieces of equipment will be transferred to other Amcor sites, including Russia.

For the plant closure in Germany, the social plan hasbeen agreed and business transfers have commenced. Production will finish byNovember 2006.  The planned benefit fromthe closure of these two plants is €10 million and will be fully realized inthe 2007-08 year.

The major challenges for the food flexibles businessin the 2006-07 year are the recovery of non-resin cost increases, particularlyaluminium foil, energy and wages, tighter management of working capital and thecontinuing delivery of improvements in under-performing plants.  With oil prices remaining high, it isanticipated there will be further pressure on raw material prices that willneed to be recovered in the marketplace.

Healthcare

Formed in April 2006, Amcor Flexibles Healthcareincorporates Amcor’s flexible packaging activities in the Americas andhealthcare packaging plants in Europe. Amcor Flexibles Healthcare is a globalleader in flexible packaging for the medical and pharmaceutical markets.Headquartered in Chicago, USA, it has over 2,200 employees and 16 manufacturingfacilities in 10 countries. In addition, the group coordinates strategy andcommercial activity with flexible healthcare activities in Asia. Overall saleswere €523 million in 2005-06, up 7.5% on the previous 2004-05 year.

Healthcare Americas

Sales increased 9% in 2005-06 through a combination ofthe commercialization of new products, the impact of pass through of higher rawmaterial costs and targeted volume increases.

Despite raw material supply and cost volatility in2005-06, which was particularly accentuated by hurricanes Rita and Katrina, thebusiness was able to maintain continuity of customer supply.

Improved operational performance, particularly inreducing waste, combined with good sales growth to deliver higher earnings in2005-06.

The business has commenced work on the installation ofa new press and laminator. This investment will serve to support the growthstrategy of the business by increasing its offerings in selected attractivesegments while leveraging strong European technologies and customerrelationships.

Healthcare Europe

Sales increased 8% in 2005-06 compared to 2004-05through growth in the medical, pharmaceutical and personal care segments as wellas the passthrough of raw material price increases.

The business had a mixed result for the 2005-06 yearwith strong performance across a number of plants offset by a poor result atone site.  This poor performance is beingaddressed through a focus of key resources on increasing export sales,decreasing the plant’s cost base and improving its operating efficiencies.

Amcor Flexibles Healthcare’s outlook for the 2006-2007year is positive, anticipating continued sales growth and improved earnings inEurope.

Rentsch

Amcor Rentsch has leadership of Amcor’s global tobaccopackaging business and the Amcor Flexibles operations in Eastern Europe. Salesfor the 2005-06 year were up 13.8% from 2004-05 to €348.1 million.

The folding carton business, which predominatelysupplies the tobacco industry, had a sound result in 2005-06 with earningsslightly ahead of the previous 2004-05 year.

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- 41 -

 

Sales were higher for the 2005-06 year, althoughgrowth was lower in the second half as the pull forward of demand into thefirst half due to tax increases in Western Europe was not repeated in thesecond half. There was continued sales growth in Eastern Europe due in part tothe full year impact of additional capacity installed in Russia in October2004.

Over the past 10 years, cigarette production hasprogressively moved from Western Europe to Eastern Europe to more closely matchproduction with consumption on a country basis. This trend is ongoing and Amcorhas benefited from being a first mover into Eastern Europe and Russia.

The new high-speed press installed in France inSeptember 2005 continued to improve operating efficiencies as the yearprogressed, although it is still not fully loaded.

Graphic health warnings on tobacco packaging arestarting to be introduced in Europe, with Belgium implementing the EU Directivefrom 2007. Preparing the business for the transition is requiring progressiveupgrading of the presses with additional colour printing stations.  This program is ongoing.

The outlook for the folding carton business is foranother solid year in 2006-07. The Eastern European flexibles business consistsof the plant in Poland and the new greenfield plant in Novgorod, Russia,located adjacent to the tobacco packaging plant. The business in Polanddelivered improving results as the year progressed and the new plant in Russiahas received strong customer support. A second press relocated from theColodense plant in the United Kingdom, which is closing, will be installed overthe next 12 months to meet the continued growth in demand.  It is expected that the new flexibles plantin Russia will make a modest profit in the 2006-07 year.

Flexibles Group Outlook

The outlook for the flexibles business is for positivebenefits from the restructuring in processed foods and improving performance atunderperforming plants to be partially offset by rising input costs and ongoingvolatility in resin-based raw material costs.

Overall, earnings are expected to be moderatelyhigher.

***Amcor Sunclipse***
|                                     | ** ** | **Year ended June 30,** | ** ** | ** **  | ** ** |
|-------------------------------------|------------|----------------------------------------|------------|-------------|------------|
| ** **                          | ** ** | **2005-06**                            | ** ** | **2004-05** | ** ** | **Change** | ** ** |
| ** **                          | ** ** | ** **                             | ** ** | ** **  | ** ** | **%** | ** ** |
| ** **                          | ** ** | **A$M**                                | ** ** | **A$M**     | ** ** | ** ** | ** ** |
| Sales                               |       | 1,292.1                                |       | 1,218.7     |       | 6.0 |   |
| PBIT excluding  significant items   |       | 65.1                                   |       | 54.7        |       | 19.0 |   |
| Signficant items before  income tax |       | -                                      |       | -           |       | - |   |

 

Amcor Sunclipse had a strong 2005-06 year with PBITexcluding significant items up 19% from A$54.7 million to A$65.1 million and up18.6% from US$41.0 to US$48.6 million in local currency.

Sales for the 2005-06 year were up 6% to A$1,292.1million in 2005-06 and up 5.6% to US$965 million in local currency due to acombination of increased raw material costs and increased volumes.

There were no significant items.

Over the past 12 to 18 months, Amcor Sunclipse hasundertaken a number of projects to ensure its processes and systems areappropriate in this new environment of continued rising input costs. Thebusiness has been focused on:

·                  recoveringcost increases in the market in a timely manner;

·                  customerand product profitability; and

·                  improvingback-office capabilities to enhance customer service and reduce costs via a newbusiness services centre.

The success of these programs was evident in theimprovement of operating margins which was achieved despite substantial costincreases for raw materials, energy and freight. Linerboard costs increased onthree separate occasions between November 2005 and May 2006 by US$30, US$40 andUS$50 per short tonne. These increases were passed through to customers withminimal impact on margins.

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During the 2005-06 year there were numerous increasesin costs for plastic-based products, such as stretch wrap and protectivepackaging, and these were also successfully passed on to customers. Freightcosts also increased substantially. The business applied freight surcharges tomany accounts, ensuring these costs were largely recovered.

An important element in developing new sales has beenthe growth in the number of sales people via the Amcor Sunclipse trainingprogram. At June 2006, there were 125 additional sales trainees active in thefield compared to 47 at June 2005. These additional people had a positiveimpact, especially in the second half, that should continue in the 2006-07year.

During 2004-05 and 2005-06, Amcor Sunclipse moved themajority of its back-office functions out of California to the lower-cost locationof Tempe, Arizona. This transition caused some disruption, however progress hasbeen achieved in the second half of the 2005-06 year in reducing workingcapital and improving customer service.

Sunclipse Outlook

The outlook for Amcor Sunclipse remains positive. The2006-07 year has started well, and provided economic conditions do notdeteriorate, earnings are expected to be higher than in 2005-06.

***Amcor Asia***
|                                     | ** ** | **Year ended June 30,** | ** ** | ** **  | ** ** |
|-------------------------------------|------------|----------------------------------------|------------|-------------|------------|
| ** **                          | ** ** | **2005-06**                            | ** ** | **2004-05** | ** ** | **Change** | ** ** |
| ** **                          | ** ** | ** **                             | ** ** | ** **  | ** ** | **%** | ** ** |
| ** **                          | ** ** | **A$M**                                | ** ** | **A$M**     | ** ** | ** ** | ** ** |
| Sales                               |       | 174.5                                  |       | 182.2       |       | (3.9) |   |
| PBIT excluding  significant items   |       | 29.8                                   |       | 23.1        |       | 29.0 |   |
| Signficant items before  income tax |       | 93.8                                   |       | (9.6)       |       |   |   |

 

Amcor Asia had a solid 2005-06 year with improvedearnings across most of the continuing businesses. The earnings for thebusiness reported in the 2005-06 PBIT excluding significant items linecomprises an operating PBIT before significant items of Sing$24.7 million andan equity accounted profit after tax of Sing$12.0 million. The lattercontribution is predominantly from the investment in the Hong Kong publiclylisted company Vision Grande.

The sales, PBIT excluding significant items andaverage funds employed for both 2004-05 and 2005-06 does not include thecontribution for the corrugated operations sold during the 2005-06 year. ThePBIT excluding significant items for these businesses is included in thediscontinued businesses disclosure.

Returns, measured as PBIT excluding significant itemsover average funds employed, were 12.7% in 2005-06, however this measureincludes the equity accounted profit after tax of Vision Grande and hence isnot strictly comparable to the returns measure for the other business units.

During the 2005-06 year, the business underwentsubstantial change. In February 2006, the sale of the corrugated, sacks andclosures business was announced, for a combined value of around Sing$16million. In aggregate, the businesses sold were loss making for the 2005-06year.

In December 2005, Amcor announced it had elected toincrease its ownership in Vision Grande from 16.7% to 44%, via the injection ofits two tobacco packaging operations in China, exercising its previouslygranted option over Vision Grande shares and taking up an issue of new shares.These transactions were approved by shareholders of Vision Grande in February2006.

In May, Vision Grande purchased the remaining 68.5% ofWorld Grand Holdings Limited that it did not previously own. Part of thepurchase price was an issue of shares to the previous owners of World GrandHoldings Limited. Following this transaction, Amcor’s ownership in VisionGrande is 40.1%.

On August 14, 2006, Vision Grande announced that itsunaudited first half results were up 20.7% to HK$83.5 million. Amcor’s equityaccounted share of the full year earnings from Vision Grande was Sing$10.8million. Amcor received dividends of Sing$7.2 million from Vision Grande duringthe 2005-2006 year.

The tobacco packaging business outside of Chinaconsists of two plants in Singapore and Malaysia. The 2005-06 year’s PBITexcluding significant items also included eight months’ contribution from thetwo plants in China which were divested to Vision Grande. Overall, in 2005-06,the tobacco packaging plants delivered an improved result with good salesgrowth.

 

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The flexible packaging business consists of a medicalflexible plant in Singapore and two plants in China focused on the foodbusiness.

During the 2005-06 year, a new blown film extruder wasinstalled in the Singapore plant to serve the growing medical packaging market.

The flexibles plants in China continue to deliversolid returns in 2005-06. The business is currently relocating the Zhongshanplant in southern China to new premises with improved facilities to enablefurther growth.

The significant itemsrecognised under AIFRS relating to Vision Grande are A$24.6 million lower underUS GAAP.  This is due to thefollowing: certain instruments included in the acquisition accounting not beingrecognised as derivative instruments under US GAAP; a difference in thepartial gain recognised on the sale of subsidiaries to Vision Grande; and adifference in the gain recognised on dilution of Amcor’s interest in VisionGrande.

Outlook for Asia

The wholly owned tobacco packaging and flexiblesplants continue to deliver solid results and should improve earnings in the2006-07 year.

## **B.****                            Liquidityand Capital Resources**

Amcor believesthat its future net cash flows from operating activities and existing creditfacilities should be sufficient to fund all of its existing business needs forthe foreseeable future, including currently anticipated capital expenditure,debt repayments and other contingent liabilities.

As indicated inthe following table, Amcor has expended significant funds on capitalexpenditure projects and acquisitions over the past two fiscal years.
|                                                          | ** ** | **Year Ended June 30,**                         | ** ** |
|----------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                               | ** ** | **2005-06**                                                    | ** ** | **2004-05** | ** ** |
| ** **                                               | ** ** | **(In A$ millions, except   percentages)** | ** ** |
|                                                     |       |                                                           |       |   |   |
| Capital expenditure                                      |       | 486                                                            |       | 647 |   |
| Acquisitions                                             |       | 67                                                             |       | 46 |   |
| Gearing: net debt/net debt and shareholders’ equity |       | 47%                                                            |       | 51% |   |
| Total liabilities as %  of total assets                  |       | 65%                                                            |       | 62% |   |

 

Capital expenditurecommitments and contingent liabilities at June 30, 2006, were A$141.5 millionand A$12.9 million, respectively. Acquisition expenditure in 2005-06 of A$67million included the further investments in Vision Grande.

Amcor ensures that adequate back-up funding facilitiesare in place to cover the risk of a loss of credit support or a general marketdisruption. Amcor has arranged back-up facilities to support sources of workingcapital funding.

Undrawn committed bank facilities available to Amcorat June 30, 2006, totalled A$1,366.5 million.

The following table summarizes the major committed anduncommitted facilities as at June 30, 2006:

·      aA$320 million committed bi-lateral multi-currency term loan facility (undrawnat June 30, 2006, A$320 million), maturing September 2007; and

·      aA$300 million committed multi-currency term loan facility (fully drawn at June30, 2006, A$300 million), maturing December 2007; and

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- 44 -

 

·      aUS$1,250 million committed syndicated revolving multi-currency loan facility(undrawn US$700 million),, maturing June 2007 (Tranche B) and June 2011(Tranche A); and

·      aA$600 million uncommitted promissory note facility (undrawn A$510 million);and

·      aUS$400 million uncommitted commercial paper program (undrawn US$311 million);and

·      aUS$200 million uncommitted multi-currency Euronote facility (undrawn US$200million).

Amounts drawn under the committed facilities incur amargin over the applicable LIBOR or bank bill rate, based on the Amcor Limitedcredit rating.  Commitment fees are charged on either the full or undrawnportion of each facility.  The uncommitted facilities incur a margin ofbetween 3 to 15 basis points over the applicable LIBOR or bank bill rate,depending on size, tenor and demand.  Members of each dealer panel arepaid an incentive and paying agent fee on each settled promissory or commercialpaper issue.

Total borrowingsincreased from A$2,477 million at June 30, 2005 to A$2,775 million at June 30,2006. Net of cash and short-term deposits, net debt was A$2,875.8 million as atJune 30, 2005 compared with net debt of A$3,125.6 million at June 30, 2006.

Amcor’sdebt profile for its last two fiscal years is shown below:
|                                                                                               | ** ** | **Year Ended June 30,**                         | ** ** |
|-----------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                                                    | ** ** | **2005-06**                                                    | ** ** | **2004-05** | ** ** |
| ** **                                                                                    | ** ** | **(In A$ millions, except   percentages)** | ** ** |
|                                                                                          |       |                                                           |       |   |   |
| Long-term debt (excluding undated subordinated  convertibles but including finance leases)(1) |       | 2,084.9                                                   |       | 1,917.3  |   |
| Net debt/(cash surplus)(2)                                                                    |       | 3,125.60                                                       |       | 2,875.80 |   |
| Average interest  rate(3)                                                                     |       | 5.54%                                                          |       | 4.94% |   |

 

(1)   Non-currentliabilities (i.e. debt which is due to be repaid more than twelve months afterbalance date).

(2)   Current and non-current bankand other borrowings, current and non-current lease liabilities andsubordinated convertible notes net of cash and deposits.

(3)  Includes an interest rates of subordinatedconvertible securities.

By keeping a proportion of variable-rate debt, Amcorwas able to maintain the average interest rate paid on all borrowings in2005-06 at 5.54% (2004-05 – 4.94%). Net interest cover at 3.1 times is lowerthan at June 30, 2005 (4.4 times) and is well within the prudential limitestablished by Amcor’s Board of Directors. Balance sheet gearing (net debt as aproportion of net debt plus shareholders’ equity) was 47% at June 30, 2006,compared with 51% as at June 30, 2005.

Amcor retains Standard & Poor’s and Moody’sInvestor Services to provide an independent rating of its creditworthiness.This provides a current assessment of the Group’s overall financial capacity tomeet its financial obligations. Current credit ratings for Amcor are asfollows:
| Short-term: | A-2 (Standard & Poor’s)   |
|-------------|------------------------------------|
|        | P-2 (Moody’s)                 |
| Long-term:  | BBB (Standard & Poor’s)   |
|        | Baa1 Stable Outlook (Moody’s) |

 

Amcor believes that having an investment grade ratingdelivers a conservative capital structure, retains financial flexibility,provides a buffer through the business cycle and allows good access to capitalas required.

Amcor believesthat it maintains a high level of liquidity including positive working capital,cash balances and substantial credit facilities (described above). Totalworking capital at June 2005 was A$1,209 million compared with A$977 million atJune 2006.  This was a decrease of A$232million.  This decrease included themovement in working capital in the discontinued operations.  These discontinued businesses carried A$130million in working capital.

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The following table setsforth Amcor’s cash flow information for the last two fiscal years:
|                                                            | ** ** | **Year Ended June 30,** | ** ** |
|------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                 | ** ** | **2005-06**                            | ** ** | **2004-05** | ** ** |
| ** **                                                 | ** ** | **(In A$ millions)**         | ** ** |
| Net cash inflow from operating activities                  |       | 964.1                                  |       | 901.8 |   |
| Net cash outflow from investing activities                 |       | (247.0)                                |       | (599.9) |   |
| Net cash outflow from financing activities                 |       | (870.7)                                |       | (197.6) |   |
| Net increase/(decrease) in cash and cash equivalents  held |       | (153.6)                                |       | 104.0 |   |

 

Operating cashflow improved by A$62.3 million in 2005-06 compared to 2004-05 due to animproved in net cashflow received from customer and paid to suppliers of A$125.5million, and a reduction in income taxes paid of $36.4 million, offset by anincrease in finance expenses paid.

The decrease incash outflow from investing activities in 2005-06 reflects lower levels ofexpenditure on acquisitions and capital and A$297.5 million in proceedsreceived on disposal of the White Cap metal closures business.

Net cash outflowfrom financing activities has increased in 2005-06 mainly due to the netproceeds from borrowings and repayment in debt of A$627.3 million.

Issued share capital increased from 878.2 millionOrdinary Shares outstanding at June 30, 2005 to 890.3 million Ordinary Sharesoutstanding at June 30, 2006 due primarily to the conversion to ordinary sharesof convertible securities of 18.2 million shares (refer F-78) less the sharebuy-back of 8.2 million shares.

OnMay 25, 2006 (April 19, 2005) the company completed the on market buy-back of8,187,171(2005: 2,205,000) fully paid ordinary shares, representing 0.93%(2005: 0.25%) of ordinary shares on that date. The total consideration of shares bought back on market was A$57,836,513(2005: A$15,442,612) being an average, including incidental costs, of A$7.06(2005: A$7.00) per share.

## **C.****                            Researchand Technology**

Research andDevelopment continues to be an integral part of Amcor’s strategy.  There is a global coverage with centres inEurope, North America and Australasia. These centers are responsible for provision of product innovation,technical support, design and intellectual property management.

The centerssupport their specific region and businesses as well as combining resources ona number of joint projects.  Furthermore,there is exchange of information between the groups to ensure that localsolutions are made known to other relevant groups.  During 2005-06 Amcor spent approximately A$37million on research. This compares with A$39.7 million in 2004-05.

Amcor Researchand Technology has led the generation of packaging related intellectualproperty in key food and beverage segments through:

·      Strategictechnology platforms for leadership and innovation;

·      Developmentof technology roadmaps of market trends and emerging technologies;and

·      Crossfunctional teams including customers and global Amcor division focusedon high value projects.

Amcor is asignificant owner of registered intellectual property, with in excess of 400different patents, 400 trade marks and 200 registered designs.  Many of these are registered in more than onecountry, consequently multiplying the number of patent, trademarks andregistered designs owned by Amcor; for example, Amcor owns more than 1,000individual patents.  Amcor has alsoregistered the Amcor trade mark in more than 60 countries as part of itsobjective to be a globally recognized brand.

**D.****                            TrendInformation**

Relevanttrends are discussed for Amcor as a whole and for each business in Item 5A “OperatingResults”.

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- 46 -

 

**E.****                            Off-BalanceSheet Arrangements**

There are no significant off balance sheet arrangements.

**F.****                            TabularDisclosure of Contractual Obligations**

***Contractual and Commercial Commitments as at June 30, 2006***

*Contractual and Commercial Commitments*
|                                                | ** ** | **Not later**        | ** ** | **1 and 3** | ** ** | **3 and 5** | ** ** | **later than** | ** ** | **TOTAL**  | ** ** |
|------------------------------------------------|------------|---------------------------|------------|-----------------------|------------|-----------------------|------------|---------------------|------------|------------|------------|
| ** **                                     | ** ** | **than 1 year** | ** ** | **years**             | ** ** | **years**             | ** ** | **5 years**    | ** ** | ** ** | ** ** |
| Capital  Expenditure (1)                       |       | 141.3                     |       | 0.2                   |       | -                     |       | -                   |       | 141.5      |       |
| Finance Leases  (2)                            |       | 9.8                       |       | 33.7                  |       | 19.3                  |       | 10.1                |       | 73.0       |       |
| Operating Leases  (3)                          |       | 125.8                     |       | 193.5                 |       | 111.4                 |       | 176.7               |       | 607.4      |       |
| Other  Expenditure (4)                         |       | 64.7                      |       | 54.6                  |       | 8.8                   |       | 15.7                |       | 143.8      |       |
| Long-Term Debt                                 |       | -                         |       | 299.4                 |       | 826.1                 |       | 901.6               |       | 2,027.1    |       |
| Interest on Debt  (5)                          |       | 139.5                     |       | 187.7                 |       | 163.0                 |       | 110.9               |       | 601.1      |       |
| Pension Benefit  Obligations (6)               |       | 37.7                      |       | 87.0                  |       | 95.9                  |       | 42.8                |       | 263.4      |       |
| Payments under  forward exchange contracts (7) |       | 211.1                     |       | 17.7                  |       | -                     |       | -                   |       | 228.8      |       |
| Commodity  contracts (7)                       |       | 38.3                      |       | 1.0                   |       | -                     |       | -                   |       | 39.3       |       |
| **TOTAL**                                      |       | 768.2                     |       | 874.9                 |       | 1,224.5               |       | 1,257.8             |       | 4,125.4    |       |

 
| (1)    | Capital expenditure for plant and equipment  contracted but not provided for.                                                                                                         |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                  |
| (2)    | Amcor leases equipment under finance leases expiring  from one to 20 years. At the end of the lease term we have the option to  purchase the equipment at an agreed residual.         |
|   |                                                                                                                                                                                  |
| (3)    | Amcor leases motor vehicles, plant and equipment and  property under operating leases. Leases generally provide us with a right of  renewal at which time all terms are renegotiated. |
|   |                                                                                                                                                                                  |
| (4)    | Expenditure contracted but not provided for covering  supplies and services to be provided.                                                                                           |
|   |                                                                                                                                                                                  |
| (5)    | Interest commitments based on June 30, 2006 debt and  facility maturity terms.                                                                                                        |
|   |                                                                                                                                                                                  |
| (6)    | Expected contributions by the company for defined  benefit liabilities, based on actuarial recommendation of contributions as at  June 30, 2006.                                      |
|   |                                                                                                                                                                                  |
| (7)    | Represents the gross $A equivalent of foreign  exchange and commodity contract commitments.                                                                                           |

 

**ITEM 6****                 DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES**

**A.****                             Directors and Senior Management**

***Details of the Directors inoffice at the date of this Annual Report are:***

***C I(Chris) Roberts****BCom*

**Independent Non-Executive Director and Chairman**

*Current term expires in October 2007.*

Substantial knowledge of fast-movingconsumer products, where the packaging component is significant, gained through executive roles in Australia, NewZealand, the United Kingdom and Indonesia. Currently a director of AustralianAgricultural Company Ltd (since June 2001), Director of The Centre forIndependent Studies (since August 2004) and Deputy Chairman since March 2006.Director of Control Risks Group Limited (since October 2006). Former rolesinclude Chairman and Managing Director of Arnotts Ltd (January 1996-January1999), Managing Director of Orlando Wyndham Wines Ltd (October 1987-December1990), Chairman of Email Ltd (June 1999-February 2001), Director of TelstraCorporation Ltd (December 1991-November 2000), Chairman of Winifred WestSchools Ltd (February 2003-March 2004) and Director of MLC Life Ltd (August1992- February 1995). Former Director of Petaluma Wines (February 1999-December2001) and Cockatoo Ridge Wines Ltd (January 2002-May 2006). Chairman ofExecutive and Nomination Committees, member of the Human Resources Committeeand Superannuation Committee. Previously a member of the Audit and ComplianceCommittee from 1 July 2004 to 7 December 2005. Director since February 1999 —appointed Chairman 2000. Appointed Executive Chairman from December 2004 toJune 2005. Continues as Non-Executive Chairman from July 2005.

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***K N(Ken) MacKenzie****BEng*

***ManagingDirector and Chief Executive Officer***

*Appointment ratified at the 2005 AGM. Notice Period– 12 Months.*

Mr MacKenzie has extensive experience across all of Amcor’s majorpackaging business segments in the Americas, Australia, Asia and Europe. JoinedAmcor 1992.

Former positions: Group ManagingDirector, Amcor Rentsch and Closures 2001-2005; Group General Manager AmcorFlexibles Australasia 1999-2001; General Manager Corporate Sales and Marketing,Amcor Containers Packaging 1997-1999; Senior finance and operational roles,Amcor PET Packaging North America 1992-1997; Prior to joining Amcor, ManagerManufacturing Strategy Practice, Accenture 1987-1992. Member of Executive and Human Resources Committees.Appointed Managing Director and CEO July 2005.

***R K (Keith) Barton ****BSc, PhD, FTSE, FAICD.*

***IndependentNon-Executive Director***

*Currentterm expires in October,2009.*

As a former ManagingDirector of James Hardie Industries Ltd (April 1993-October 1999) and ExecutiveDirector CSR Ltd (January 1990-March 1993), Dr Barton has gained broadmanagement experience in manufacturing in Australia and internationally.Currently Director of Air Liquide Australia Ltd (since December 2004), ColesMyer Ltd (since July 2003), Tower Ltd (since October 2001, Chairman sinceJuly1, 2006) and Vision Australia (since November 2004). Previously director ofGoodman Fielder Ltd (Chairman) (March 2002-April 2003). Member of Executive andAudit and Compliance Committees. Director since November 1999.

***G J(John) Pizzey****BEng (Chem), Dip. Mgt., FIE Aust. FAICD, FAIM.*

***IndependentNon-Executive Director***

*Current term expires in October 2009.*

Extensive knowledge of the international resources industry and generalmanagement. Formerly Executive Vice President and Group President PrimaryProducts for Alcoa Inc. Chairman of London Metal Exchange. Currently a Directorof Iluka Resources Ltd (since November 2005), St Vincent’s Institute of MedicalResearch (since April 2004) and Ivanhoe Grammar School (since November 2003).Previous directorships held; WMC Resources Ltd (November 2003-June 2005), Alcoaof Australia (April 1999-December 2003), ION Limited (in administration)(October 1999-August 2005), Chairman 2004- 2005, Range River Gold LimitedChairman 2004-April 2006, London Metal Exchange Limited (UK) (1997-December2003), London Metal Exchange Holdings Limited (UK) (December 2002-December2003), International Aluminium Institute Ltd (UK) (1998-December 2003), andvarious subsidiaries of Alcoa Inc (USA) (1994-2003). Member of Executive, HumanResources, and Nomination Committees. Chairman of the Amcor SuperannuationFund. Director since September 2003.

 

***E J J(Ernest) Pope****BSc*

***IndependentNon-Executive Director***

*Current term expires in October2008.*

Broad internationalexperience over 38 years in the food and beverage manufacturing industries,including senior executive positions based in Australia, the Philippines, USA,New Zealand and Switzerland, plus extensive business travel and directresponsibilities over many years throughout Europe, Asia, South Africa and theMiddle East. This includes 22 years with the Nestlé Group (1983-March 2005) and16 years with Kraft Foods Limited (1967-1982). Former roles include ManagingDirector Nestlé Australia, President and CEO Nestlé Purina Asia-Pacific, Africaand the Middle East region. Currently Chairman of Golden Circle Limited (sinceMay 2005) and a Director of Alesco Corporation Limited (since December 2004).Appointed Director of Foodbank NSW Ltd, February 2006. Formerly a director withthe Nestlé Group on various boards in Australasia, South Africa and Asia(retired March 2005) and Southcorp Limited (October 2003-May 2005). Also aformer Director of the Grocery Manufacturers of Australia and then a Founderand Director of the Australian Food and Grocery Council. Member of HumanResources and Nomination Committees. Elected to the Amcor Board of Directors atthe AGM on October 27, 2005.

***J G(John) Thorn****FCA*

***IndependentNon-Executive Director***

*Current term expires in October 2008.*

A partner withPricewaterhouseCoopers for over 20 years, serving major local and internationalcompanies. National Managing Partner of the Australian firm of PWC from 2001until retiring from that position in September 2003. Extensive globalexperience, in particular in the Asia Pacific region, in audit, accounting,corporate governance and international management groups. Director of CaltexAustralia Limited (since June 2004), National Australia Bank Limited (sinceOctober 2003) (Audit Committee Chairman) and Salmat Limited (since September2003). Chairman Audit and Compliance Committee (since February 2005) and memberof the Superannuation Committee. Director since December 2004.

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- 48 -

 

***G A(Geoff) Tomlinson ****BEcon.*

***IndependentNon-Executive Director***

*Currentterm expires in October 2007*

With extensive experiencein, and exposure to, the financial services industry in Australia andinternationally, Mr Tomlinson is a former Group Managing Director of NationalMutual Holdings Ltd (October 1992-September 1998). Currently Chairman ofProgrammed Maintenance Services Limited (since August 1999) and Dyno Nobel Ltd(since February 2006), Director of National Australia Bank Ltd (since March2000). Formerly Chairman of Neverfail Spring Water Ltd (April 1999-September2003), Director of Pineapplehead Ltd (March 2000-June 2002), Chairman of ReckonLtd (June 1999-August 2004) and Chairman of Funtastic Ltd (May 2000-May 2006),Deputy Chairman of Hansen Technologies Ltd (March 2000-May 2006) and Directorof Mirrabooka Investments Ltd (February 1999-April 2006). Chairman of the HumanResources and Superannuation Committees and member of the Audit and ComplianceCommittee. Director since March 1999.

***In addition to the ExecutiveDirector of Amcor noted above, details of the Executive Officers of Amcor whoare not Directors at the date hereof are as follows:***

**GerardBlatrix,Managing Director, Amcor Flexibles Food**Joined Amcor in 2001 following the acquisition of Danisco andAckerlund & Rausing flexible packaging business. Appointed to current rolein April 2006. Term of agreement – Open. Notice Period: 12 months. Previous positions within Amcor include: Managing Director AmcorFlexibles Fresh Food 2003-2006, Managing Director Amcor Flexibles SouthernEurope 2001-2003. Other senior positions in the packaging industry prior tojoining Amcor include; Managing director of the French company and ManagingDirector of the European Business Unit Healthcare and Technical applications,VAW Flexible (1996-2001); and various plant management positions andManufacturing Director in the Food Division Europe with Crown Cork & Seal(1987 – 1996).

**E.E.(Eric) Bloom**B.ScME, MBA

**Presidentand Chief Executive Officer, Amcor Sunclipse North America**

Joined Amcor in 1995 andappointed to current position in 2002. Term of agreement - Open. Notice Period:6 months.

Previously Research and Development Design Engineer,Director and later Vice President of Manufacturing. Previous seniormanufacturing roles held at Fortune Brands and Black and Decker. Director ofNational Paper Trade Association (NPTA).

**PeterBrues, B. Comm.,**CA**President, Amcor Flexibles Healthcare**Joined Amcor 1994 and appointed to current position in April, 2006.Term of agreement – Open. Notice Period: 12 months Former positions: PresidentAmcor Flexibles Americas 2003-2006; Vice President Operations, Amcor FlexiblesEurope 2001-2003; Vice President Strategic Development, Amcor Ltd 2000-2001;Director Operations, Amcor Flexibles North America 1998-2000; Chief FinancialOfficer, Amcor Twinpak North America 1996-1998; Corporate Controller, AmcorTwinpak North America 1994-1996; Prior to joining Amcor, Senior Associate, KPMG1990-1994.

**Chan ChewKeak (Billy)**CEng (UK), MBA

**ManagingDirector, Amcor Asia**

Joined Amcor in 1993 andappointed to current position in 1998.

Term of agreement - Open. Notice Period: 12 months.Ten years experience with Carnaud Metal box including Managing Director andManaging Director AMB Packaging Pte Ltd

**JerzyCzubak, MA,**MBA.**Managing Director, Amcor Rentsch & Amcor Flexibles Eastern Europe**Joined Amcor in 1994 as Managing Director of Amcor Rentsch, Poland.Term of Agreement – Open.  Notice Period:12 Months. Other positions: Managing Director, Amcor Flexibles, Poland;Managing Director Amcor Rentsch, Eastern Europe; Operations Director AmcorRentsch Europe. Appointed to current role in May 2005.

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- 49 -

 

** **

**W.P.(Peter) Day**LLB (Hons), MBA, FCA (UK & Aust), FCPA

**ExecutiveGeneral Manager Finance**

Joined Amcor in 2001 andappointed Executive General Manager Finance in June 2001. Term of agreement -Open. Notice Period: 6 months.

Previously Executive Director Finance Bonlac FoodsLimited. Former deputy chairman of the Australian Securities and InvestmentsCommission (ASIC). Former Chairman of the Australian Accounting StandardsBoard. Member of International Accounting Standards Board’s Working Group on PerformanceReporting

**R (Ron)Delia **BSc (Marketing) MBA

**ExecutiveGeneral Manager Operations Development**

Joined Amcor in September2005 and appointed to current position in 2005. Term of agreement – Open.Notice Period: 6 months.

Extensive experience in working with globalmanufacturing and packaging businesses. Previously Associate Principal withMcKinsey & Company and Senior Sales Representative with Pechiney (nowAlcan).

**Steve Keogh,**B.Comm (Economics)**Executive General Manager  HumanResources**Joined Amcor in January 2006. Term of agreement – Open. NoticePeriod: 12 months.

Previouslyheld a number of senior HR management roles within BHP Billiton, the world’slargest diversified resources company. During his career with BHP Billiton, Mr.Keogh worked in Australia and the USA in senior Human Resources positions inthe minerals and steel businesses and was appointed Vice President HR for BHPMinerals in 2000. Following the merger of BHP and Billiton in 2001, Mr. Keoghheld HR responsibilities for significant parts of that organisation, includingsenior executive resourcing projects and executive remuneration for the BHPBilliton Group. Mr. Keogh has extensive experience in international HRmanagement.

**L.J.(Lou) Lachal**BSc,B.Bus**.**

**ManagingDirector Amcor Australasia**

Joined Amcor in 1980 andappointed to current position in July 2005. Term of agreement - Open. NoticePeriod: 12 months.

Extensive experience in working overseas and with adiversified international business.  Previous positions in Amcor includeGeneral Manager Commercial, Amcor Packaging; Deputy Managing Director AmcorPackaging (Europe) Ltd; Commercial Director Amcor Packaging (Europe) Ltd; MillManager Broadford. Appointed Group General Manager Commercial Operations inApril 1998. Chief Financial Officer from July 2000 to June 2001, ExecutiveGeneral Manager Operations from July 2001 to December 2004, and Acting ChiefOperating Officer from December 2004  toJune 2005.

**W.J.(William) Long**BSc.BA

**President,Amcor PET Packaging**

Joined Amcor in 2002 andappointed to current position in 2002. Term of agreement - Open. Notice Period:12 months.

Previously held various positions withinSchmalbach-Lubeca, including President & CEO of Plastic Containers Americasand was previously Vice President and General Manager for Latin America atJohnson Controls Inc. prior to its sale to Schmalbach-Lubeca in 1997. AtJohnson Controls he had also been Vice President of Sales and Marketing USA PETand Director of Operations PET Europe, responsible for the start-up of JCI’sPET business there in the early 1990’s. Prior to this, he held various regionaland plant management positions in various cities across the US in businessesbought and merged into the Johnson Control Inc. Group.

**J F(Julie) McPherson**DipLaw SAB, M AppFin., LLM

**GroupGeneral Counsel and Company Secretary**

Company Secretary sinceApril 2005.  Term of agreement – Open.Notice Period: 6 months.

As both a lawyer andinvestment banker, Mrs McPherson has broad experience in corporate governance,finance and commerce. Prior to joining Amcor, she has held executive, legal andcommercial positions, including Company Secretary and General Counsel atGoodman Fielder, and Deputy Managing Director of Dresdner Kleinwort Bensen.Admitted as a solicitor in Victoria and NSW and admitted to practice in theHigh Court. Formerly a partner of a major national law firm. Member of the LawCommittee of Australian Institute of Company Directors since July 2006.

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** **

**J.V.(John) Murray **B.E(Chem), B.Ec.

**ExecutiveGeneral Manager Corporate Affairs**

Joined Amcor in 1999 andappointed to current position in 1999. Term of agreement - Open. Notice Period:6 months.

Previously Investor Relations Manager with NationalMutual Holdings, Analyst for National Mutual Funds Management. Previouspositions include Chemical Engineer with Alfa-Laval and institutional dealerfor stockbroker AC Goode.

**I.G.(Ian) Wilson**LLB(Hons), LLM

**StrategicDevelopment Director**

Joined Amcor in 2000 andappointed to current position in 2000. Term of agreement - Open. Notice Period:6 months.

Extensive experience in international mergers andacquisitions, strategy development, finance and law from 14 years in investmentbanking with UBS and 6 years in private legal practice with Baker and McKenzie.

Executive Officers serve at the discretion of theDirectors.  No family relationship exists between any Director orExecutive Officer and any other Director or Executive Officer.

**B.****                            Compensation**

The aggregate amount ofremuneration paid by Amcor during the year ended June 30, 2006 to all Directorsand Executive Officers, as a group, was A$17.1 million. This amount includesretiring allowance accrual for non-executive Directors of A$0.5 million.

Retirement agreements have beenentered into between Amcor and five of the non-executive Directors that providefor the payment of benefits upon cessation of their respective directorships ascovered in Rule 55 of Amcor’s Constitution. Details of accrual allocations arenoted in the remuneration table below.

Retiring allowance agreementshave not been offered to any Non-Executive Director appointed after June 30,2003.

The Company contributes tosuperannuation plans operated by the Company for the Managing Director andExecutive Officers of the Company.  TheCompany contributes at rates determined by an actuary as being necessary andsufficient to ensure the overall financial soundness of the plan.  The aggregate amount set aside by the Companyduring 2005-06 and included in the aggregate amount of remuneration ofDirectors and Executive Officers above, was A$0.9 million.

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Detailsof the nature and amount of each major element of the emoluments of eachdirector of the Company and each of the named officers of the Company and Amcorduring 2005-06 are set out below:

2005/06
|                                                | ** ** | ** ** | ** ** | **Primary**                           | ** ** | **Post Employment** | ** ** | **Share based payments** | ** ** | ** **                   | ** ** |
|------------------------------------------------|------------|------------|------------|---------------------------------------|------------|--------------------------|------------|------------------------------------|------------|------------------------------|------------|
|                                                | ** ** | ** ** | ** ** | **Base Salary &  Fees** | ** ** | **Bonus**                | ** ** | **Special  Incentive**(4)          | ** ** | **Non-  Monetary  Benefits** | ** ** | **Super  contributions** | ** ** | **Retirement/  Resignation  benefits** | ** ** | **Share  Appreciation  Rights** | ** ** | **Options and  Rights** | ** ** | **Shares** | ** ** | **Total  Remuneration** | ** ** |
|                                           |       |       |       |                                  |       |                     |       |                               |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Directors**                                  | ** ** | ** ** | ** ** | ** **                            | ** ** | ** **               | ** ** | ** **                         | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |
|                                           |       |       |       |                                  |       |                     |       |                               |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| C I Roberts                                    |       | 2006       |       | 304,500                               |       |                     |       |                               |       | 135,582                      | ** ** | 27,405 |   | 231,795 | **2** |   |   |   |   |   |   | 699,282 |   |
|                                           |       | 2005       |       | 831,217                               | **1**      | ** **               |       |                               |       | 119,082                      |       | 23,940 |   | 177,772 | **2** |   |   |   |   |   |   | 1,152,011 |   |
| K N MacKenzie                                  |       | 2006       |       | 1,300,000                             | **5**      | 646,000                  |       | 170,000                            |       | 206,423                      |       | 195,000 |   | -     |   |   |   | 382,293 |   |   |   | 2,899,716 |   |
| Chief Executive Officer  and Managing Director |       | 2005       |       | 658,617                               |       | 299,671                  |       | 263,447                            |       | 197,635                      |       | 168,104 |   | -     |   |   |   | 130,181 |   |   |   | 1,717,655 |   |
| R K Barton                                     |       | 2006       |       | 128,000                               |       |                     |       |                               |       | 35,049                       | ** ** | 11,520 |   | 68,033 | **2** |   |   |   |   |   |   | 242,602 |   |
|                                           |       | 2005       |       | 119,536                               |       |                     |       |                               |       | 32,933                       | ** ** | 10,758 |   | 78,941 | **2** |   |   |   |   |   |   | 242,168 |   |
| G J Pizzey                                     |       | 2006       |       | 168,578                               |       |                     |       |                               |       | 45,193                       |       | 15,172 |   | -     |   |   |   |   |   |   |   | 228,943 |   |
|                                           |       | 2005       |       | 140,000                               |       |                     |       |                               |       | 38,049                       |       | 12,600 |   | -     |   |   |   |   |   |   |   | 190,649 |   |
| J G Thorn                                      |       | 2006       |       | 182,800                               |       |                     |       |                               |       | 48,749                       |       | 16,452 |   | -     |   |   |   |   |   |   |   | 248,001 |   |
| *Appointed Dec 8 2004*                         |       | 2005       |       | 85,023                                |       |                     |       |                               |       | 23,175                       |       | 7,652 |   | -     |   |   |   |   |   |   |   | 115,850 |   |
| G A Tomlinson                                  |       | 2006       |       | 142,000                               |       |                     |       |                               |       | 38,549                       | ** ** | 12,780 |   | 102,316 | **2** |   |   |   |   |   |   | 295,645 |   |
|                                           |       | 2005       |       | 114,000                               |       |                     |       |                               |       | 31,549                       | ** ** | 10,260 |   | 64,647 | **2** |   |   |   |   |   |   | 220,456 |   |
| EJJ Pope                                       |       | 2006       |       | 107,449                               |       |                     |       |                               |       | 28,935                       |       | 9,670 |   | -     |   |   |   |   |   |   |   | 146,054 |   |
| *Appointed Oct 27 2005*                        |       | 2005       |       | -                 |       |                     |       |                               |       | -        |       | -     |   | -     |   |   |   |   |   |   |   | -     |   |
| E A Alexander                                  |       | 2006       |       | 49,032                                |       |                     |       |                               |       | 13,244                       | ** ** | 4,413 |   | 747,120 | **2, 3** |   |   |   |   |   |   | 813,809 |   |
| *Retired Oct 27 2005*                          |       | 2005       |       | 128,800                               |       |                     |       |                               |       | 35,249                       | ** ** | 11,592 |   | 90,700 | **2** |   |   |   |   |   |   | 266,343 |   |
| D C K Allen                                    |       | 2006       |       | 41,290                                |       |                     |       |                               |       | 11,309                       | ** ** | -     |   | 587,339 | **2, 3** |   |   |   |   |   |   | 639,938 |   |
| *Retired Oct 27 2005*                          |       | 2005       |       | 112,000                               |       |                     |       |                               |       | 31,049                       | ** ** | -     |   | 77,350 | **2** |   |   |   |   |   |   | 220,401 |   |
| R H Jones                                      |       | 2006       |       | -                 |       |                     |       |                               |       | -        |       | -     |   | -     |   |   |   |   |   |   |   | -     |   |
| Chief Executive Officer  and Managing Director |       | 2005       |       | 597,826                               |       |                     |       |                               |       | 286,437                      |       | 137,500 |   | 567,399 |   |   |   |   |   | 36,727 |   | 1,625,889 |   |
| *Retired Dec 7 2004*                           | * *   | * *   | * *   | * *                              | * *   | * *                 | * *   | * *                           | * *   | * *                     | * *   | * * | * * | * * | * * | * * | * * | * * | * * | * * | * * | * * |   |
| * *                                       | * *   | * *   | * *   | * *                              | * *   | * *                 | * *   | * *                           | * *   | * *                     | * *   | * * | * * | * * | * * | * * | * * | * * | * * | * * | * * | * * |   |
| TOTAL                                          |       | 2006       |       | 2,423,649                             |       | 646,000                  |       | 170,000                            |       | 563,033                      |       | 292,412 |   | 1,736,603 |   | - |   | 382,293 |   | -     |   | 6,213,990 |   |
|                                           |       | 2005       |       | 2,787,019                             |       | 299,671                  |       | 263,447                            |       | 795,158                      |       | 382,406 |   | 1,056,809 |   | - |   | 130,181 |   | 36,727 |   | 5,751,422 |   |

 

(1)   Includes higher duties allowance whilst in the role of ExecutiveChairman (December 8, 2004 to June 30, 2005).

(2)   Represents the increase in the non-executive director’s retirementallowance accrual for the year.

Retirementallowance accrual (exclusive of superannuation) to June 30, 2006 of A$2,328,199is allocated as follows -

-       C I Roberts   A$1,343,514

-       G A Tomlinson   A$510,522

-       R K Barton   A$474,133

(3)   E A Alexander and D C Allen retired from the Board of Directors onOctober 27, 2005 and were paid accrued retirement allowances of A$705,855 andA$533,265 respectively.

(4)   The special incentive bonus is a payment for meeting specific costreduction objectives in the previous financial year, part payment of which wasdeferred until April 2006 to ensure permanent nature of cost reductioninitiatives.

(5)   Base salary increased from A$1,200,000 to A$1,500,000 with effect fromMarch 1, 2006 following a detailed review by the Board; annual review nowintended on October 1, 2006 as with all other Senior Executives.

The fair value of the options is calculated atthe date of grant using a Black-Scholes model and allocated to each reportingperiod evenly over the period from grant date to vesting date.     The value disclosed above is the portionof the fair value of the options allocated to this reporting period.

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|                                               | ** ** | ** ** | ** ** | **Base Salary &  Fees** | ** ** | **Bonus**                 | ** ** | **Special  Incentive**(1) | ** ** | **Non-  Monetary  Benefits** | ** ** | **Super  contributions**  | ** ** | **Retirement/  Resignation  benefits** | ** ** | **Share  Appreciation  Rights** | ** ** | **Options and  Rights** | ** ** | **Shares**                | ** ** | **Total  Remuneration** | ** ** |
|-----------------------------------------------|------------|------------|------------|---------------------------------------|------------|---------------------------|------------|---------------------------|------------|------------------------------|------------|---------------------------|------------|----------------------------------------|------------|---------------------------------|------------|------------------------------|------------|---------------------------|------------|-------------------------|------------|
|                                          |       |       |       |                                  |       |                      |       |                      |       |                         |       |                      |       |                                   |       |                            |       |                         |       |                      |       |                    |       |
| **Senior Executives (excluding directors)**   | ** ** |       | ** ** | ** **                            | ** ** | ** **                | ** ** | ** **                | ** ** | ** **                   | ** ** | ** **                | ** ** | ** **                             | ** ** | ** **                      | ** ** | ** **                   | ** ** | ** **                | ** ** | ** **              | ** ** |
|                                          |       |       |       |                                  |       |                      |       |                      |       |                         |       |                      |       |                                   |       |                            |       |                         |       |                      |       |                    |       |
| E E Bloom                                     |       | 2006       |       | 636,218                               | **2**      | 391,274                   |       | 85,889                    |       | 50,897                       |       | 16,073                    |       | -                  |       | -           |       | 76,982                       |       | -     |       | 1,257,333               |       |
| *President and CEO, Amcor Sunclipse*          |       | 2005       |       | 600,080                               | **2**      | 105,014                   |       | 150,020                   |       | 58,701                       |       | 15,577                    |       | -                  |       | -           |       | 95,239                       |       | -     |       | 1,024,631               |       |
| C K Chan                                      |       | 2006       |       | 597,791                               | **3**      | 478,760                   |       | -     |       | 60,547                       |       | 4,009                     |       | -                  |       | -           |       | 76,982                       |       | -     |       | 1,218,089               |       |
| *Managing Director, Amcor Asia*               |       | 2005       |       | 583,717                               | **3**      | 179,114                   |       | -     |       | 59,491                       |       | 8,928                     |       | -                  |       | -           |       | 95,937                       |       | -     |       | 927,187                 |       |
| G S James ^                                   |       | 2006       |       | 918,768                               | **4**      | 250,476                   |       | 139,153                   |       | 173,451                      |       | 117,977                   |       | 372,678                                |       | -           |       | 110,583                      |       | -     |       | 2,083,086               |       |
| *Managing Director Amcor Flexibles*           |       | 2005       |       | 927,070                               | **4**      | 176,143                   |       | 231,768                   |       | 121,269                      |       | 247,379                   |       | -                  |       | -           |       | 128,308                      |       | -     |       | 1,831,937               |       |
| *Retired June 30 2006*                        | * *   |       | * *   | * *                              | * *   | * *                  | * *   | * *                  | * *   | * *                     | * *   | * *                  | * *   | * *                               | * *   | * *                        | * *   | * *                     | * *   | * *                  | * *   | * *                | * *   |
| L J Lachal *^                                 |       | 2006       |       | 700,000                               |       | 227,500                   |       | 105,000                   |       | 63,539                       |       | 176,691                   | **7**      | -                  |       | -           |       | 119,643                      |       | 141,128                   |       | 1,533,501               |       |
| *Managing Director Amcor Australasia*         |       | 2005       |       | 717,391                               | **5**      | 125,543                   |       | 179,348                   |       | 60,878                       |       | 114,783                   |       | -                  |       | -           |       | 115,952                      |       | 237,138                   |       | 1,551,033               |       |
| W J Long ^                                    |       | 2006       |       | 738,347                               | **2**      | 318,778                   |       | 105,478                   |       | 31,104                       |       | 149,700                   | **6**      | -                  |       | 82,500                          |       | 144,184                      |       | -     |       | 1,570,091               |       |
| *President and CEO Amcor PET Packaging*       |       | 2005       |       | 700,093                               | **2**      | 126,017                   |       | 175,023                   |       | 73,840                       |       | 19,672                    |       | -                  |       | 82,500                          |       | 182,296                      |       | -     |       | 1,359,441               |       |
| W P Day *                                     |       | 2006       |       | 640,000                               |       | 214,500                   |       | 97,500                    |       | 83,500                       |       | 64,000                    |       | -                  |       | -           |       | 168,009                      |       | 8,728                     |       | 1,276,237               |       |
| *Executive General Manager Finance*           |       | 2005       |       | 610,000                               |       | 131,150                   |       | 152,500                   |       | 79,000                       |       | 61,000                    |       | -                  |       | -           |       | 166,510                      |       | 104,738                   |       | 1,304,898               |       |
| I G Wilson *^                                 |       | 2006       |       | 701,713                               | **4**      | 338,963                   |       | 107,041                   |       | 211,196                      |       | -     |       | -                  |       | 9,437                           |       | -        |       | 8,728                     |       | 1,377,078               |       |
| *Strategic Development Director*              |       | 2005       |       | 663,370                               | **4**      | 132,675                   |       | 165,842                   |       | 177,097                      |       | -     |       | -                  |       | 56,625                          |       | -        |       | 104,738                   |       | 1,300,347               |       |
| J V Murray *                                  |       | 2006       |       | 551,125                               |       | 122,430                   |       | 83,475                    |       | 53,121                       |       | 156,798                   | **7**      | -                  |       | -           |       | 100,805                      |       | 108,028                   |       | 1,175,782               |       |
| *Executive General Manager Corporate Affairs* |       | 2005       |       | 535,000                               |       | 88,275                    |       | 133,750                   |       | 35,878                       |       | 85,600                    |       | -                  |       | -           |       | 97,114                       |       | 204,038                   |       | 1,179,655               |       |
|                                          |       |       |       |                                  |       |                      |       |                      |       |                         |       |                      |       |                                   |       |                            |       |                         |       |                      |       |                    |       |
| **Former Senior Executives**                  | ** ** |       | ** ** | ** **                            | ** ** | ** **                | ** ** | ** **                | ** ** | ** **                   | ** ** | ** **                | ** ** | ** **                             | ** ** | ** **                      | ** ** | ** **                   | ** ** | ** **                | ** ** | ** **              | ** ** |
|                                          | ** ** |       | ** ** | ** **                            | ** ** | ** **                | ** ** | ** **                | ** ** | ** **                   | ** ** | ** **                | ** ** | ** **                             | ** ** | ** **                      | ** ** | ** **                   | ** ** | ** **                | ** ** | ** **              | ** ** |
| P S Wilson *^                                 |       | 2006       |       | 364,051                               |       | -     |       | -     |       | 91,164                       |       | 90,315                    |       | 1,219,510                              |       | -           |       | 50,403                       |       | 58,378                    |       | 1,873,821               |       |
| *Executive General Manager*                   |       | 2005       |       | 560,000                               |       | 106,400                   |       | 224,000                   |       | 105,878                      |       | 89,600                    |       | -                  |       | -           |       | 97,114                       |       | 204,038                   |       | 1,387,030               |       |
| * Human  Resources & Operating Risk* | * *   |       | * *   | * *                              | * *   | * *                  | * *   | * *                  | * *   | * *                     | * *   | * *                  | * *   | * *                               | * *   | * *                        | * *   | * *                     | * *   | * *                  | * *   | * *                | * *   |
| * Retired  December 31 2005*             | * *   |       | * *   | * *                              | * *   | * *                  | * *   | * *                  | * *   | * *                     | * *   | * *                  | * *   | * *                               | * *   | * *                        | * *   | * *                     | * *   | * *                  | * *   | * *                | * *   |
|                                          |       |       |       |                                  |       |                      |       |                      |       |                         |       |                      |       |                                   |       |                            |       |                         |       |                      |       |                    |       |
| TOTAL                                         |       | 2,006      |       | 5,848,013                             |       | 2,342,681                 |       | 723,536                   |       | 818,519                      |       | 775,563                   |       | 1,592,188                              |       | 91,937                          |       | 847,591                      |       | 324,990                   |       | 13,365,018              |       |
|                                          |       | 2,005      |       | 5,896,721                             |       | 1,170,331                 |       | 1,412,251                 |       | 772,032                      |       | 642,539                   |       | -                  |       | 139,125                         |       | 978,470                      |       | 854,690                   |       | 11,866,159              |       |

 

* Represents thefive highest paid executives of the Company.

^ Represents the five highest paid executives ofthe Consolidated Group.

(1)          The special incentive bonus is a payment formeeting specific cost reduction objectives in the previous financial year, partpayment of which was deferred until April 2006 to ensure permanent nature ofcost reduction initiatives.

(2)          Paid in US$, converted at A$1:US$0.7466.

(3)          Paid in SG$, converted at A$1:SGD$1.2288.

(4)          Paid in GBP$, converted at A$1:GBP$0.4202.

(5)          Acting Chief Operating Officer in 2005.

(6)          Includes contributions to a US SupplementaryEmployer Retirement Plan.

(7)           Includesamounts reported in accordance with AASB 119 employee benefits – provision ofdefined benefits for L L Lachal and J V Murray of A$64,691 and A$68,618respectively.

The fair value of the options is calculated atthe date of grant using a Black-Scholes model and allocaated to each reportingperiod evenly over the period from grant date to vesting date.     The value disclosed above is the portionof the fair value of the options allocated to this reporting period.

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The terms and condition of each grant ofoptions affecting remuneration are as follows:
|                     | ** ** | **Price of** | ** ** | **Risk free**  | ** ** | ** **   | ** ** | ** **          | ** ** | ** **     | ** ** | ** **   | ** ** | ** **       | ** ** |
|---------------------|------------|-------------------|------------|---------------------|------------|--------------|------------|---------------------|------------|----------------|------------|--------------|------------|------------------|------------|
| ** **          | ** ** | **Expiry**        | ** ** | **Fair value** | ** ** | **Exercise** | ** ** | **shares on**  | ** ** | **Estimated**  | ** ** | **interest** | ** ** | **Date**         | ** ** |
| **Grant Date** | ** ** | **Date**          | ** ** | **per option** | ** ** | **price**    | ** ** | **grant date** | ** ** | **volatility** | ** ** | **rate**     | ** ** | **Exercisable**  | ** ** |
| November 1, 2002    |       | November 1, 2012  |       | $2.00               |       | 8.20         |       | 8.17                |       | 20.00          | %          | 5.43         | %          | November 1, 2005 |       |
| October 13, 2003    |       | November 1, 2012  |       | $2.43               |       | 8.20         |       | 8.96                |       | 20.00          | %          | 5.67         | %          | November 1, 2005 |       |
| March 24, 2004      |       | March 24, 2010    |       | $1.27               |       | 7.87         |       | 7.87                |       | 20.00          | %          | 5.12         | %          | March 24, 2007   |       |
| August 2, 2004      |       | August 2, 2010    |       | $1.03               |       | 6.84         |       | 6.84                |       | 20.00          | %          | 5.62         | %          | August 2, 2007   |       |
| October 27, 2005    |       | December 31, 2010 |       | $0.98               |       | 6.78         |       | 6.69                |       | 20.00          | %          | 5.40         | %          | January 1, 2008  |       |
| October 27, 2005    |       | June 30, 2011     |       | $1.01               |       | 6.78         |       | 6.69                |       | 20.00          | %          | 5.40         | %          | July 1, 2008     |       |
| October 27, 2005    |       | December 31, 2011 |       | $1.03               |       | 6.78         |       | 6.69                |       | 20.00          | %          | 5.40         | %          | January 1, 2009  |       |

 

Fordetails of remuneration plans for directors and senior executives refer to Note39 of the Consolidated Financial Statements.

**C.****                           ****Board Practices**

# **Role of the Board**

The Board of Directors ofAmcor Limited is responsible for the corporate governance of the company. TheBoard guides and monitors the business and affairs of Amcor Limited on behalfof the shareholders by whom they are elected and to whom they are accountable.

The directors areresponsible to the shareholders for the performance of the company in both theshort and the longer term and seek to balance sometimes competing objectives inthe best interests of the Amcor Group as a whole. Their focus is to enhance theinterests of shareholders and other key stakeholders and to ensure the Group isproperly managed. The Board operates in accordance with the broad principlesset out in its charter which is available from the corporate governanceinformation section of the Company website.

Day-to-day management ofthe Group’s affairs and the implementation of the corporate strategy and policyinitiatives are formally delegated by the Board to the Chief Executive Officerand executive management. Responsibilities are set out in the Group’s delegatedauthority policy and these delegations are reviewed on an annual basis.

**Responsibilities**

The responsibilities of theBoard include:

·      setting the strategic goals of the Company and for oversight of themanagement of the Company and direction of its business strategy, with theultimate aim being an increase in shareholder value;

·      providing strategic direction for, and approving, the Company’s businessstrategies and objectives;

·      monitoring the operational and financial position and performance of theCompany;

·      oversight of identifications of the principal risks faced by the Companyand taking reasonable steps designed to ensure that appropriate internalcontrols and monitoring systems are in place to manage and, to the extentpossible, reduce the impact of these risks;

·      ensuring that financial and other reporting mechanisms are put in placeby the Chief Executive Officer which result in adequate, accurate and timelyinformation being provided to the Board and the Company’s shareholders and thefinancial market as a whole being fully informed of all material developmentsrelating to the Company;

·      appointing and, where appropriate, removing the Managing Director,approving other key executive appointments and planning for executivesuccession;

·      overseeing and evaluating the performance of the Managing Director, andother senior executives, having regard to the Company’s business strategies andobjectives;

·      reviewing and approving remuneration for the senior executives of the Company;

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·      approving the Company’s budgets and business plans and monitoring themanagement of the Company’s capital, including the progress of any majorcapital expenditures, acquisitions or divestitures;

·      establishing procedures to ensure that financial results areappropriately and accurately reported on a timely basis in accordance with alllegal and regulatory requirements;

·      adopting appropriate procedures to ensure compliance with all laws,governmental regulations and accounting standards;

·      approving, and reviewing, the Company’s internal compliance procedures,including any codes of conduct and taking all reasonable steps to ensure thatthe business of the Company is conducted in an open and ethical manner; and

·      reviewing and amending the Board and Committee Charters.

**Board Processes**

To ensure that theseresponsibilities are upheld and executed to the highest level, the Board hasestablished the following Board committees:

·      Audit and Compliance;

·      Human Resources;

·      Executive;

·      Nomination; and

·      Superannuation.

Each of these committeeshas written mandates and operating procedures in place which are reviewed on aregular basis. The Board has also established a framework for the management ofthe consolidated entity including a system of internal control, a business riskmanagement process and the establishment of appropriate ethical standards. Thefull Board currently holds seven scheduled meetings during the year plusstrategy meetings and any extraordinary meetings that may be necessary to addressany significant matters that may arise. The agenda for meetings is prepared inconjunction with the Chairman, Managing Director and Chief Executive Officerand Company Secretary. Standing items include the Managing Director’s report,business group Managing Directors’ reports, financial reports, strategicmatters and governance and compliance issues. All submissions are circulated inadvance to allow the Board time to review and give due consideration to eachreport. Executives are regularly involved in Board discussions and directorshave other opportunities to interact with management and employees duringvisits to business units and plants both locally and overseas. However thenon-executive directors have a private session at each Board meeting at whichmanagement is not present.

**Director Education**

Amcor has in place a formalprocess to educate new directors about the nature of the business, currentissues, the corporate strategy and the expectations of Amcor concerningperformance of directors.

Directors also have theopportunity to visit Amcor facilities and meet with management to gain a betterunderstanding of business operations. Directors are given access to continuingeducation opportunities to update and enhance their skills and knowledge.

**Independent Professional Adviceand Access to Company Information**

Each director has the rightof access to all relevant company information and to the Company’s executivesand, subject to prior consultation with and approval from the Chairman, mayseek independent professional advice from a suitably qualified advisor at theCompany’s expense.

The director must consultwith an advisor suitably qualified in the relevant field and obtain theChairman’s approval of the fee payable for the advice before proceeding withthe consultation. A copy of the advice received by the director is madeavailable for all other members of the Board.

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**Composition of the Board Members**

Details of the members ofthe Board, their experience, expertise, qualifications, term of office andindependent status are noted above. The composition of the Board is determinedusing the following principles:

·      a minimum of seven directors, with a broad range of expertise bothnationally and internationally;

·      a majority of independent non-executive directors;

·      a majority of directors having extensive knowledge of the Company’sindustries, and those who do not, having extensive expertise in significantaspects of financial reporting and risk management of large companies;

·      a non-executive independent director as Chairman;

·      enough directors to serve on Board committees without overburdening thedirectors or making it difficult for them to fully discharge theirresponsibilities; and

·      directors are subject to re-election at least every three years (exceptfor the Managing Director and Chief Executive Officer).

The Board seeks to ensure that:

·      at any point in time, its membership represents an appropriate balancebetween directors with experience and knowledge of the Group and directors withan external or fresh perspective; and

·      the size of the Board is appropriate to facilitate effective discussionand efficient decision-making.

**Directors’ Independence**

The Board has adoptedspecific principles in relation to directors’ independence. These state that tobe deemed as independent, a director must not be a member of management andwho:

·      holds less than 5% of the voting shares of the Company and is not anofficer of, or otherwise associated, directly or indirectly, with a shareholderof more than 5% of the voting shares of the Company;

·      has not within the past three years been employed in an executivecapacity by the Company or another group member, or been a director afterceasing to hold any such employment;

·      has not within the past three years been a principal or employee of amaterial* professional adviser or a material consultant to the Company oranother group member;

·      is not a material supplier or customer of the Company or another groupmember, or an officer of or otherwise associated, directly or indirectly, witha material supplier or customer;

·      has no material contractual relationship with the Company or anothergroup member other than as a director of the Company;

·      is free from any interest and any business or other relationship whichcould, or could reasonably be perceived to, materially interfere with thedirector’s ability to act in the best interests of the Company; and

·      has the ability to devote the necessary time to the important tasksentrusted to him/her as a director of the consolidated entity.

In accordance with recentdevelopments in corporate governance, this year the Board have agreed to limitthe tenure for directors to 10 years, to ensure directors remain demonstrablyindependent, which is the classification on which shareholders can reliablyrely to represent their interests.

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*The Board considers ‘material’ in this context, where any director relatedbusiness relationship has represented, or is likely in future to represent thelesser of at least 5% of the relevant segment’s or the director-relatedbusiness’s revenue. The Board considered the nature of the relevant industries’competition and the size and nature of each director related businessrelationship, in arriving at this threshold.

**Term of Office Held by Each Director**

The term of office held byeach director is outlined in the Directors’ profiles in Item 6.A of thisdocument.

**Commitment**

The Board held eleven boardmeetings during the year ended June 30, 2006. Two of those meetings were heldat operational sites of the company and a full tour of the facilities wasincluded as part of the visits.

Non-executive directors areexpected to spend a reasonable time each year preparing for, and attending,board and committee meetings and associated activities.

It is the Company’spractice to allow its executive directors to accept appointments outside thecompany with prior written approval of the Board. No appointments of thisnature were accepted during the year ended June 30, 2006.

The commitments ofnon-executive directors are considered by the nomination committee prior to thedirector’s appointment to the board of the company and are reviewed each yearas part of the annual performance assessment. Prior to appointment or beingsubmitted for re-election, each non-executive director is required tospecifically acknowledge that they have and will continue to have the timeavailable to discharge their responsibilities to the company.

**Nomination Committee**

The Nomination Committeeoversees the appointment and induction process for directors and committeemembers, and the selection, appointment and succession planning process of theCompany’s Managing Director and Chief Executive Officer. The Committee makesrecommendations to the Board on the appropriate skill mix, personal qualities,expertise and diversity of each position. When a vacancy exists or there is aneed for particular skills, the Committee, in consultation with the Board,determines the selection criteria based on the skills deemed necessary. TheCommittee identifies potential candidates with advice from an externalconsultant where appropriate. The Board then appoints the most suitablecandidate.

Board appointees must standfor election at the next annual general meeting of shareholders.

This year the Chairman in conjunctionwith the Nomination Committee conducted a formal review of the effectiveness ofthe Board, its committees, individual directors and senior executives. Thisreview was conducted in the form of a questionnaire and has resulted in anumber of new initiatives being implemented for the coming year.

The Committee has in thepast been made up of all Board members and as noted in the Nomination CommitteeCharter, must have a minimum of three members, a majority of which will beindependent directors. However, from August 2006 the Committee will operatewith only three members to encourage efficient decision-making in relation tothe detailed examination of selection and appointment practices of theorganisation in accordance with Principle 2 of the Australian Stock Exchange’sGood Corporate Governance Recommendations.

The names of the members asat the date of this report are set out below:

Nomination Committee:

C I Roberts (Chairman) –Independent Non-Executive Director

G J Pizzey – IndependentNon-Executive Director

E J J Pope* – IndependentNon-Executive Director

** E JJ Pope joined the committee on October 27, 2005*

As the Nomination Committeecomprised the full Board for the past year any matters referred to theNomination Committee during the year were dealt with by the Board. The termsand conditions of the appointment and retirement of nonexecutive directors areset out in correspondence to the relevant party, including expectations forattendance and preparation for all Board meetings, appointments to otherBoards, the procedures for dealing with conflicts of interest, and theavailability of independent professional advice.

 

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Further details of theNomination Committee’s charter and policies, including those for appointingdirectors, are available on the Company’s website.

**Executive Committee**

The Executive Committeedeals with matters referred to it by the Board or with urgent matters which maynot be deferred until the next meeting of the Board. The Board confirms theactions of this Committee at its next meeting.

A majority of the Committeemust be independent. As at the date of this report, the names of the membersare set out below:

Executive Committee:

C I Roberts (Chairman) –Independent Non-Executive Director

R K Barton – IndependentNon-Executive Director

G J Pizzey* – IndependentNon-Executive Director

K N MacKenzie – ExecutiveDirector

** G JPizzey joined the Committee on February 21, 2006.*

All other non-executivedirectors receive the Executive Committee agendas and papers and are encouragedto attend meetings of the Executive Committee as available. The Committee meteight times during the year.

**Human Resources Committee**

The Human ResourcesCommittee reviews and makes recommendations to the Board on remunerationpackages and policies applicable to the Managing Director and Chief ExecutiveOfficer, senior executives and directors themselves. It is also responsible forthe company’s policies and procedures for retention of senior management,incentive performance schemes, reviewing executive development leadership andsuccession plans, and reviewing human resource plans for each business. Themajority of members must be independent.

The Human ResourcesCommittee’s charter is available on the Company’s website. The names of themembers of the Committee are set out below:

Human Resources Committee:

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

K N MacKenzie – ManagingDirector and Chief Executive Officer

G J Pizzey – IndependentNon-Executive Director

E J J Pope* – IndependentNon-Executive Director

C I Roberts* – IndependentNon-Executive Director

** E JJ Pope and C I Roberts joined the Committee on December 9, 2005.*

Although the ManagingDirector and Chief Executive Officer is a member of this committee, he willnot:

(a) vote on mattersrelating to the remuneration of executive officers of the Company, and

(b) attend meetings or voteon matters regarding his own remuneration

The Human ResourcesCommittee meets as and when required. The Committee met four times during theyear.

**The Audit and ComplianceCommittee**

The Audit and ComplianceCommittee has a documented charter approved by the Board.

All members must beindependent nonexecutive directors. The Chairman may not be the Chairman of theBoard. The Committee advises on the establishment and maintenance of aframework of internal control and appropriate ethical standards for themanagement of the Company. The names of the members of the Committee are setout below.

Audit and ComplianceCommittee:

J G Thorn, FCA (Chairman) –Independent Non-Executive Director

R K Barton, BSc, PhD, FTSE,FAICD – Independent Non-Executive Director

G A Tomlinson*, BEcon –Independent Non-Executive Director

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* G A Tomlinsonjoined the Committee on November 1, 2005.

 

The internal and externalauditors, the Managing Director and Chief Executive Officer and the ExecutiveGeneral Manager Finance, are invited to Audit and Compliance Committee meetingsat the discretion of the Committee.

The Audit and ComplianceCommittee is required under the charter to meet quarterly and otherwise asnecessary.

This year, the Committeemet nine times during the year. The external auditor met with the Audit andCompliance Committee seven times during the year without management beingpresent.

The Audit and ComplianceCommittee’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.

**Superannuation Committee**

In April 2006, aSuperannuation Committee of the Board was formed for a limited period to assistthe Board in fulfilling its responsibility for oversight of superannuationmatters affecting the Company. The Committee’s purpose is to oversee thedeficit and related asset and liability issues regarding superannuationobligations of the company in each relevant jurisdiction in which the companyoperates.

The Committee has adocumented Charter which is available on the Company’s website. Its membershipconsists of three Independent Non-Executive directors. The Committee meets atleast quarterly and additional meetings occur as required.  The names of the members of the Committee areset out below.

Superannuation Committee:

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

J G Thorn – IndependentNon-Executive Director

C I Roberts – IndependentNon-Executive Director

**Risk Management**

**Oversight of the Risk ManagementSystem**

The Board oversees theestablishment, implementation, and annual review of the Company’s riskmanagement. A formalised Risk Assessment and Management Framework forassessing, monitoring and managing strategic operational and financial risksfor the consolidated entity was put in place in 2005 to ensure that Amcor isundertaking appropriate risk management of its operations.

The Audit and ComplianceCommittee reports to the Board on the status of the risk management system,which is aimed at ensuring risks are identified, assessed and appropriately managed.Major risks arise from such matters as actions by competitors, governmentpolicy changes, the impact of exchange rate movements on the price of rawmaterials and sales, difficulties in sourcing raw materials, environment,occupational health and safety, property, financial reporting, financialmarkets and the purchase, development and use of information systems.

**Risk Management and Complianceand Control**

The Board is responsiblefor oversight of the overall internal control framework, but recognizes that nocost-effective internal control system will preclude all errors andirregularities. The Board’s policies on internal governance control arecomprehensive and include in addition to financial planning and reportingprocedures and the use of internal and external auditors: a Code of Conduct andEthics, a Delegated Authority Policy, a Fraud Policy and a WhistleblowerPolicy. Details of these are available on the Company’s website. The Companystrives to ensure that its products are of the highest standard. Towards thisaim, each of its business segments have highly developed quality systems whichare based on the internationally accepted ISO 9000 series and meet all theextensive customer requirements.

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**Financial Reporting**

The Chief Executive Officerand the Executive General Manager Finance have declared in writing to the Boardthat the Company’s financial reports have been properly maintained and presenttrue and fair value, are founded on a sound system of risk management andinternal compliance and control which implements the policies adopted by theBoard in accordance with Principles 4 and 7 of the ASX Principles of GoodCorporate Governance. Implementation of the AIFRS has been a key focus for theGroup and the Board established a project team and has monitored progress toensure a smooth transition to AIFRS reporting, beginning with the half yearended December 31, 2005. The consolidated entity has fully complied with thereporting requirements of AIFRS for the half year to December 31, 2005 and thefinancial year to June 30, 2006.

**Environmental Regulation**

Amcor is committed toachieving a high standard of environmental performance. Its operations aresubject to significant environmental regulation in all countries in which itmaintains a presence.

The Board is responsiblefor the regular monitoring of environmental exposures and compliance withenvironmental regulations. As part of this process, the Board is responsiblefor overseeing:

·      implementationof environmental management plans in operating areas which may have asignificant environmental impact;

·      identifying where remedialactions are required and implementing action plans; and

·      regular monitoring ofregulatory requirements.

To enable it to meet itsresponsibilities of oversight, the Board has established an internal reportingprocess. Environmental performance is reported from each site up throughmanagement to the Board on a regular basis. Compliance with the requirements ofenvironmental regulations and with specific requirements of site environmentallicences was substantially achieved across all operations except for thefollowing:

·                  The Amcor Fibre Packaging Fairfield Mill wasfined for a river water release while a spill of ink from the Amcor St. RegisBates Keon Park plant in Australia entered a local creek. In both cases,management co-operated fully with the authorities and have made improvements tominimise the potential for incidents to occur in the future.

·                  This year the Company has been prosecutedfor one significant breach with a diesel spill into a local creek from AmcorFibre Packaging’s Box Hill Plant. Full details of the incident and subsequentprosecution are as follows:

**Court Order Funds Environmental Works**

On December 1, 2005, at Ringwood Magistrates’Court, in Victoria, Australia, Amcor Packaging (Australia) Pty Ltd (the “defendant”)pleaded guilty to a water pollution charge brought by the EnvironmentalProtection Authority (EPA) in relation to a spill of diesel to Gardiners Creek,Box Hill South, in Victoria, Australia, on or about September 6, 2004. Thespill was a result of a decanting of fuel exercise from a diesel storage tankon Monday September 6, 2004, from the defendant’s Box Hill premises.

At the completion of the decanting procedure, apump discharge delivery hose was not placed back in the correct positioncausing a large quantity of diesel to pollute Gardiners Creek. A number ofducks were also injured or killed by the spill. The Ringwood Magistrates’ Courtconvicted the defendant and ordered it to pay A$60,000 to Help for WildlifeInc. for the establishment of a unique, all purpose wildlife education,rehabilitation and resource information centre within the Shire of Nillumbik.This wildlife centre will encompass a Rescue, Rehabilitation and Educationfacility. Amcor has since changed its procedures to prevent a recurrence ofthis incident.

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**Assessmentof Effectiveness of Internal Controls and Risk Management**

The internal auditorsassist the Board in ensuring compliance with the internal controls and riskmanagement programs by regularly reviewing the effectiveness of the complianceand control systems noted above. The Audit and Compliance Committee isresponsible for approving the program of internal audit visits to be conductedeach financial year and for the scope of the work to be performed on a regularbasis.

**Internal Control and theSarbanes-Oxley Act**

Amcor’s directors acceptthe responsibility for oversight of the effectiveness of the Group’s internalcontrol environment. In order to effectively discharge this responsibility theyhave long established a number of assurance functions (including the internalaudit function) to independently review the control environment and provideregular reports to directors’ and management committees. These reports andassociated recommendations are considered and acted upon to maintain orstrengthen the control environment. In 2004, the directors further strengthenedthe control environment by refining existing processes for identifying, evaluatingand managing the significant risks faced by the Group. The refined approach torisk assessment and management was aimed at:

·                  improving the coordination of riskassessment and risk management by building on existing risk managementactivities;

·                  ensuring risk exposures are escalated to theBoard more effectively and consistently and providing the Board with acomprehensive view of the risks faced;

·                  helping management better understandbarriers to the success of initiatives for growth and sustainable development;and

·                  improving corporate flexibility inpreparation for increased complexity and diversity in the Group.

Amcor is committed to theproactive recognition and anticipation of risks to ensure that the threatsposed to achieving corporate objectives are minimized, thus ensuring thateffective advantage is taken of business opportunities. In recent years, theinternational business community has seen an escalation in regulation designedto strengthen corporate governance and expand management accountability. Onesuch piece of legislation is the U.S. Sarbanes-Oxley Act 2002. Section 404 ofthe Act requires Amcor management to formally assert the adequacy of internalcontrols over financial reporting as at June 30, 2007, and annually thereafter.The external auditors are required to annually attest to, and report on,management’s assessment in accordance with auditing standards.

To comply with therequirements of the Sarbanes-Oxley Act, management initiated a project in 2003and established a central team to co-ordinate efforts to document and testcontrols over financial reporting operating throughout the Group. Project teamswere established around the world and have been documenting controls in keyprocesses and testing their effectiveness in order to support management’sconclusion on the adequacy of internal controls over financial reporting.

**Ethical Standards**

All directors, managers andemployees are expected to act with the utmost integrity and objectivity,striving at all times to enhance the reputation and performance of the Company.Every employee has a nominated supervisor to whom they may refer any issuesarising from their employment. Alternatively, employees may use theWhistleblower procedures in place. The Board reviews the Code of Conduct andEthics regularly and processes are in place to promote and communicate thesepolicies.

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**Conflict of Interest**

Directors must keep theBoard advised, on an ongoing basis, of any interest that could potentiallyconflict with those of the Company. The Board has developed procedures toassist directors to disclose potential conflicts of interest and, each year,all independent directors complete independence declarations. Where the Boardbelieves that a significant conflict exists for a director on a Board matter,the director concerned does not receive the relevant Board papers and is notpresent at the meeting whilst the matter is considered.

Details of director-relatedentity transactions with the Company are set out in Note 39 of the ConsolidatedFinancial Statements.

**Code of Conduct and WhistleblowerPolicy**

The Company has advisedeach director, manager and employee that they must comply with the CorporateCode of Conduct and Ethics Policy. The Policy may be viewed on the Company’swebsite and includes a whistleblower policy. Under this policy an AmcorWhistleblower Service was introduced in December 2004 to facilitate reportingof potential misconduct within the Company.

This facility enablesemployees to report potential misconduct in the form of theft, fraud,dishonesty, illegal activity, harassment, unethical behaviour and workplacesafety hazards, to a third party who is responsible for coordinating theinvestigation of issues raised on behalf of the Company and the Whistleblower.Employees who report suspected inappropriate conduct are protected frombullying, harassment or discrimination when they make reports in good faith.

At June 30, 2006, therewere 61 reports recorded since the service was introduced. These reports revolvearound human resources, financial, procedural and criminal issues. Each ofthese reports have been investigated thoroughly and appropriate action taken asnecessary.

This year, as an extensionof the Whistleblower facility, a Third Party Complaints email and free postfacility has been set up on the Company’s website to enable third parties suchas suppliers, consumers, contractors and customers to report potentialmisconduct within the organisation.

The Code of Conduct andEthics Policy also reiterates that bribery of any form is unacceptable. Thishas been reinforced to co-workers via articles published in the global employeepublication.

**Fraud Policy**

During the year, theCompany introduced a revised Fraud Policy. This document outlines the Amcor CorporateFraud Framework and Policy, covering responsibilities and strategies toidentify fraud within the Amcor Group, reporting of fraud and recoveringlosses. This policy applies to all activities, employees and otherrepresentatives of Amcor globally.

**Trading in General CompanySecurities by Directors and Employees**

Amcor has revised its ShareTrading Policy outlining trading by directors and employees in securities ofAmcor Limited. Key elements of the policy are outlined below:

·                  Any director and employee who has pricesensitive information relating to Amcor which has not been published or whichis not otherwise generally available, may not deal in Amcor securities, advise,procure or encourage another person to deal in Amcor securities, or pass oninformation to any other person who may use the information to deal in Amcorsecurities.

·                  Amcor has limited the times when directorsand employees may buy or sell securities. These periods are limited to a periodof four weeks after the release of the half year results, full year results andthe holding of the annual general meeting.

·                  Directors and employees must not engage inhedging arrangements (including, for example, the use of put and call optionsor derivative instruments) over unvested securities issued pursuant to anyemployee or director option or share plan. In addition, hedging over vestedsecurities must comply with the Share Trading Policy.

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·                  It is recognized that individualcircumstances may require a person to dispose of securities outside the specifiedwindows. In such cases any director or employee is required to seek the priorapproval of the Company Secretary who may approve the transaction or, incertain circumstances, seek approval from the Executive General Manager HumanResources or the Chairman of the Board. The Share Trading Policy is reproducedin full on the Company’s website.

**Communication with ShareholdersTimely and Balanced Disclosure**

The Board providesshareholders with information using a comprehensive Continuous Disclosure Policy,which includes identifying matters that may have a material effect on the priceof the Company’s securities, notifying them to the ASX, posting relevantinformation on the Company’s website, and issuing media releases. The policy isavailable on the Company’s website. Additional communications with shareholdersinclude:

·                  The Concise Report, which is distributed toall shareholders (unless a shareholder has specifically requested not toreceive the document), and includes relevant information about the operationsof the consolidated entity during the year, changes in the state of affairs anddetails of future developments.

·                  The Full Year Financial Report is availableto all shareholders should they request it.

·                  The half-yearly report which contains summarizedfinancial information and a review of the operations of the consolidated entityduring the period.

·                  The half-year financial report is lodgedwith the Australian Securities and Investments Commission and the ASX, and issent to any shareholder who requests it.

·                  Any proposed major changes in theconsolidated entity which may impact on share ownership rights are submitted toa vote of shareholders.

·                  All announcements made to the market, andrelated information (including information provided to analysts or the mediaduring briefings), are placed on the Company’s website after they are releasedto the ASX.

·                  Analyst briefings and general meetings arewebcast and recordings placed on the Company’s website.

·                  Notices of meetings and associatedexplanatory material are placed on the Company’s website; and

·                  The external auditors attend the Annual GeneralMeeting to answer any questions concerning the audit and the content of theauditors’ report.

All of the aboveinformation, including that of the previous three years, is made available onthe consolidated entity’s website within one day of public release, and isemailed to all shareholders who lodge their email contact details with theCompany. Information on lodging email addresses with the Company is availableon the Company’s website. The Board encourages full participation ofshareholders at the annual general meeting, to ensure a high level ofaccountability and identification with the Company’s strategy and goals.Important issues are presented to the shareholders as single resolutions. Theshareholders are requested to vote on matters such as the appointment andaggregate remuneration of directors, the granting of options and shares todirectors and changes to the Constitution. A copy of the Constitution isavailable to any shareholder who requests it.

***eTree***

In March 2006, Amcor joinedwith many other major Australian corporations and commenced its support of theenvironmental initiative eTree. Under this program, Amcor shareholders can helpreduce paper usage and company costs by electing to receive all shareholderinformation (including the Annual Report) online. For every email addressregistered on www.eTree.com.au/amcor, A$2 is donated to Landcare Australia onthe shareholders behalf to support native reforestation and restorationprojects in Australia and New Zealand. Amcor has already helped to facilitatethe planting of more than 8,000 native trees via this initiative.

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**D.                            Employees**
|                                                               | ** ** | **As at June 30** | ** ** |
|---------------------------------------------------------------|------------|----------------------------------|------------|
| **Employee Numbers by Industry Segments** | ** ** | **2006**                         | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                                    | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Amcor PET  Packaging                                          |       | 6,042                            |       | 6,161 |   | 5,880 |   |
| Amcor  Australasia                                            |       | 6,406                            |       | 6,510 |   | 6,757 |   |
| Amcor Flexibles  Europe                                       |       | 8,482                            |       | 9,967 |   | 10,323 |   |
| Amcor Sunclipse                                               |       | 2,176                            |       | 2,105 |   | 2,204 |   |
| Amcor Asia                                                    |       | 1,339                            |       | 2,400 |   | 2,833 |   |
| Corporate/Other                                               |       | 93                               |       | 100 |   | 333 |   |
|                                                          |       |                             |       |   |   |   |   |
| **TOTAL**                                                     | ** ** | **24,538**                       | ** ** | **27,243** | ** ** | **28,330** | ** ** |
| ** **                                                    | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |

 

**E. ****Share Ownership**

The following table sets forth,as at October 31, 2006, the relevant interest of each director and executiveofficer in the share capital of the Company as notified by the Directors to theAustralian Stock Exchange.
| Name                                                                | ** **   | **Number of   Shares Owned** | ** **   |
|---------------------------------------------------------------------|--------------|---------------------------------------------|--------------|
| *** ***                                                        | *** *** | *** ***                                | *** *** |
| *Fully  Paid Ordinary Shares*                                       | * *     | * *                                    | * *     |
| C I Roberts                                                         |         | 164,670                                     |         |
| K N MacKenzie                                                       |         | 11,972                                      |         |
| E A Alexander     **** Retired as of October 27 2005 |         | ***34,558                                   |         |
| D C K Allen  Retired as of October 27 2005                          |         | ***61,246                                   |         |
| R K Barton                                                          |         | 33,899                                      |         |
| G J Pizzey                                                          |         | 18,181                                      |         |
| G A Tomlinson                                                       |         | 43,282                                      |         |
| J G Thorn                                                           |         | 10,380                                      |         |
| E J J Pope                                                          |         | 5,731                                       |         |
| I G Wilson                                                          |         | 62,085                                      |         |
| L J Lachal *                                                        |         | 223,469                                     |         |
| W P Day                                                             |         | 34,492                                      |         |
| W J Long                                                            |         | 100                                         |         |
| G S James  (Retired June 30 2006)                                   |         | ***300                                      |         |
| J V Murray                                                          |         | 413,285                                     |         |
| E E Bloom                                                           |         | 1,000                                       |         |
| C K Chan**                                                          |         | 40,000                                      |         |

 

* L J Lachal also hold20,000 partly paid shares paid to one cent

** C K Chan also holds50,000 partly paid shares paid to five cents

***Represents holdings onretirement

**** E A Alexandersold 50,000 partly paid shares, paid to five cents, on her retirement from theAmcor Board.

The aggregate of the fully paidordinary shares in the above table represents approximately 0.1% of the company’sfully paid ordinary shares.

As of October 31, 2006, executiveofficers and employees had been issued with 7,196,090 ordinary sharesrepresenting approximately 0.8% of issued capital, under employee sharepurchase plans.

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

CEO and Senior Executive STI and LTI plans

This element of CEO and SeniorExecutives’ package is made up of two components – short term incentives andlong term incentives.  These areconsidered to be important elements of employee remuneration, providingtangible incentives for executives to improve the Company’s global short andlong term performance and deliver sustained shareholder value.

Amcor has operated short and longterm incentive plans for a number of years and the table below summarizes thestatus of each such plan.  Status isdescribed as either active or dormant.  Aplan is active to the extent that awards have been made under the plan inrelation to the year ended June 30, 2006 (current year).  A plan is dormant to the extent that noawards have been made in relation to the current year.  Dormant plans may have existing entitlement(e.g. awards not yet fully vested).
| Plan name               | ** ** | **Plan description**                                                       | ** ** | **Date introduced** | ** ** | **Status**                        |
|-------------------------|------------|----------------------------------------------------------------------------|------------|---------------------|------------|-----------------------------------|
|                    |       |                                                                       |       |                |       |                              |
| STI                     |       | Short Term Incentive -                                                     |       | No specific date    |       | Active                            |
|                    |       | Cash based annual incentive plan                                           |       |                |       |                              |
| LTIP                    |       | Long Term Incentive Plan -                                                 |       | Oct 2005            |       | Active                            |
|                    |       | Umbrella long term incentive plan                                          |       |                |       |                              |
| ESOP                    |       | Employee Share Ownership Plan                                              |       | 1985                |       | Dormant with existing entitlement |
| ESOP Parlty paid shares |       | Senior executive plan whereby                                              |       | 1985                |       | Dormant with existing entitlement |
|                    |       | partly paid shares are issued.                                             |       |                |       |                              |
| ESPP                    |       | Employee Share Purchase Plan                                               |       | 1985                |       | Dormant with existing entitlement |
| EISP                    |       | Broad based employee share                                                 |       | 1985                |       | Dormant with existing entitlement |
|                    |       | incentive plan                                                             |       |                |       |                              |
| SERSP                   |       | Senior Executive Retention Share Plan                                      |       | 1985                |       | Dormant with existing entitlement |
| SERPP                   |       | Senior Executive Retention Payment Plan                                    |       | 1985                |       | Dormant with existing entitlement |
| SESP                    |       | Senior Executive Share Plan -                                              |       | 2001                |       | Dormant with existing entitlement |
|                    |       | Shares received in lieu of STI payment                                     |       |                |       |                              |
| SEPP                    |       | Senior Executive Payment Plan -

Entitlements received in lieu of STI plan |       | 2001                |       | Dormant with existing entitlement |

 

**Short Term Incentives (STI)**

A short term incentive may beawarded to the CEO and Senior Executives subject to achievement of performanceconditions consisting of pre-determined financial and non-financial objectives.Objectives can vary from year to year but the combination of financial and nonfinancial key performance indicators ensure that a significant proportion ofthis variable reward is only available when value has been created forshareholders through the delivery of key elements of the business strategy.

At the start of each year, theframework governing individuals’ objectives is set and reviewed by the HumanResources Committee. The Committee also sets the maximum potential payout underthe STI Plan, and minimum levels of performance to trigger payment of STI.Following the end of the year, each individual’s performance is assessedagainst KPI’s, reviewed by the Board’s Human Resources Committee which providesits  recommendation to the Board for itsapproval as to the appropriate level of payout to the extent that targets aremet.  If no targets are met, a zero STIis determined. Incentives (bonuses) are payable in cash in September each year.

For the year ended June 30, 2006,the structure of the STI was based on achieving a range of key financial andnon-financial objectives using a balanced scorecard approach. The balancedscorecard approach ensures transparency of assessment and consistency acrossthe Senior Executives. Objectives included those concerning safety, financialoutcomes, growth and customer goals.

In addition to the performancecriteria discussed above, in the event of termination of employment prior toSTI being determined and paid, STI is only payable to Senior Executives subjectto the CEO’s discretion. The Chairman has similar discretion with regard to theSTI entitlement of the CEO. Overall discretions are also reserved to ensurethat performance is assessed with regard to quality and other value-basedcriteria. These discretions may potentially either reduce or eliminate STIpayments as appropriate.

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The CEO and a number of seniorexecutives received a special payment in April 2006. This special paymentrelated to an incentive for performance achieved against specific costreduction objectives in the previous financial year; part-payment of which wasdeferred until April 2006 to ensure that achievements were sustained.

**Long Term Incentives (LTI)**

Amcor’s remuneration objectiveincludes the need to retain and motivate high performing talent in the longterm. The Company facilitates this by putting in place LTI Schemes which helpfocus the executives on the long term performance of the company and sustainedshareholder value creation.

***2005 Options andPerformance***

***Rights to CEO***

At the 2005 Annual GeneralMeeting, shareholders approved the grant of 750,000 options and 300,000performance rights to the CEO. These rewards are exercisable in three tranches:each tranche comprising 250,000 Options and 100,000 Rights. These will besubject to the performance conditions described in the original terms of issue,having separate vesting periods and separate expiry dates. The vesting periodsand expiry dates for each Tranche are set out in the following table:
| Tranche | ** ** | **Vesting period**                  | ** ** | **Expiry date**   |
|---------|------------|-------------------------------------|------------|-------------------|
| 1       |       | January 1, 2008 - December 31, 2009 |       | December 31, 2010 |
| 2       |       | July 1, 2008 - June 30, 2010        |       | June 30, 2011     |
| 3       |       | January 1, 2009 - December 31, 2010 |       | December 31, 2011 |

 

The performance hurdles are basedon a pro rata performance scale for options and performance rights to vestdepending on the highest percentile reached by the Average Amcor TotalShareholder Return (TSR) relative to the Average Comparator TSR for each of therelevant stocks in the comparator group each month during the vesting period.The Comparator group of companies comprise the S&P/ASX100 Index as at July1, 2005, excluding Amcor and companies in the following industry categories:

·                  Financial ex-Property Trust

·                  Property Trusts

·                  Resources

·                  Telecommunications Services

·                  Media Sectors and industry groups.

The performance hurdles for theCEO were chosen after extensive consultation with a number of shareholders andgovernance advisory groups on the basis that they are transparent andmeasurable against objective data.

***Long Term Incentive Awardsfor Senior Executives***

Awards have been made to SeniorExecutives and other talented executives in respect of the financial year endedJune 30, 2006. Under the same terms and conditions as approved for the CEOabove In addition to the performance criteria discussed above, forfeitureconditions and provision relating to termination of employment exist. In theevent of termination of employment of plan participants, the Board retainsoverall discretion.

***Hedging of Long TermIncentives***

In accordance with Amcor’sgeneral share trading policy and the LTI plan rules, participants areprohibited from engaging in hedging arrangements over unvested securitiesissued pursuant to any employee or director share plan.

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**Dormant Short Term and Long TermIncentive Plans**

**Short Term Incentive Plans (SESP& SEPP)**

In some circumstances, under theSenior Executive Share Plan (‘SESP’) Senior Executives may be entitled toreceive all or part of their STI payment in shares. The SESP focuses on SeniorExecutives in Australia and the United Kingdom.

The Board may nominate specificemployees who report directly to the CEO, or employees who report directly tothose people, as being eligible to participate. Prior to the end of eachfinancial year, eligible employees may elect to receive fully paid ordinaryshares in lieu of part or all of any STI payment which they may receive inrespect of that financial year.

The value of any shares which theCompany decides to issue to eligible employees will be based on the simpleaverage of the closing price of Amcor Limited shares on each trading day forthe relevant financial year, unless the Company decides to alter the method forcalculating this value in response to anomalous circumstances.  The shares will be issued at the time when thecash bonus is payable and the shares may not be disposed of by the employee fora period of 10 years in Australia and five years in the United Kingdom, unlessthe employee ceases employment or the directors decide otherwise prior to theexpiry of the restriction period. Any right or interest in the shares will beforfeited if the employee has acted fraudulently in relation to the affairs ofthe Company during the restriction period. The shares subject to the SESP carryfull dividend entitlements and voting rights.

The Senior Executive Payment Plan(SEPP) is based on the SESP but is utilised for Board-nominated specificemployees in New Zealand, Poland, Switzerland, Belgium and the USA who reportdirectly to the CEO, or employees who report directly to those people. ThisPlan is considered to be the equivalent of the SESP and enables the Company tooffer employees in these circumstances (where the Share Plan is unavailable),entitlements in lieu of part or all of an employee’s entitlement to a cashbonus for the relevant financial year.

The value of each Planentitlement is equal to the value of one Amcor Limited share (plus the value ofaccrued dividends). Plan entitlements may be converted into a cash paymentafter the 10-year restriction period has expired, provided that the employeehas not acted fraudulently during this time.

Both the SESP and the SEPP canonly be issued if the Senior Executive meets the STI performance hurdles as setout above. The Plan operates to provide Senior Executives the opportunity toshare in the growth in value of the Company and to encourage them to improvethe longterm performance of the Company and its returns to  shareholders. This Plan also helps to attractand retain skilled and experienced Senior Executives and provide them with anincentive to have a greater involvement and focus on the longer term goals ofthe Company. The Board determines which Senior Executives may participate inthis Plan. This is done by the CEO in conjunction with senior managementnominating to the Human Resources Committee high performing employees toparticipate in either the SESP or the SEPP Plans. The Human Resources Committeethen makes recommendations to the Board.

**Long Term Incentive Plans (ESOPand ESPP)**

A number of Long Term IncentivePlans exist that are now dormant but may or may not have unvested entitlementsremaining. In particular, Amcor also has two long term incentive umbrella Plansin place, the Employee Share/Option Plan (ESOP) and the Employee Share PurchasePlan (ESPP) which have provided long term incentives for executives. ThesePlans are cited as all existing executives carry shares under these Plans andthey can be reactivated at any time. In countries where the Company is unableto issue shares or options, entitlement Plans may be implemented.

***Employee Share/Option Plan(ESOP)***

In 1985, the Company establishedthe Employee Share/Option Plan (‘ESOP’). Options granted under the ESOP couldbe issued upon such terms and conditions as the directors of the Companydetermined from time to time.

Options issued under sub-Plans ofESOP were aimed to reward excellence and encourage Senior Executives to focuson improving the longer term performance of the Company by achieving certainGroup return on average funds invested targets, which were based on budgetedreturn on average funds invested (for full allocation) or current cost ofcapital plus 0.5% (for 50% allocation). Performance outcomes between thesetargets were calculated linearly.

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The method used in assessingwhether or not the performance condition was met was as follows. A paper waspresented to the Human Resources Committee on the Plan. The Committeeconsidered and reviewed the actual outcomes of performance conditions achievedfor the financial year against the targets set. The Committee then recommendedto the Board, which made the final determination, whether any options were tovest based on the criteria set out above.

The reason this method was chosenwas because it was transparent and measurable against objective data. Theoptions would be exercisable at a price equal to the closing stock market shareprice of Amcor Limited shares traded on the Australian Stock Exchange at thedate on which the options were granted or a weighted average market priceduring a period up to and including the date of grant.

Options were granted under theESOP at no consideration and carry no dividend entitlement or voting rightsuntil they are exercised to ordinary shares on a one-for one basis.

Options may be exercised at anytime after three years from the date of issue and prior to their term, whichmay either be five, six or 10 years.

***Employee Share PurchasePlan (ESPP)***

In 1985, the Company establishedthe Employee Share Purchase Plan (‘ESPP’). Sub-Plans were derived from the ESPPand the Sub-Plan applicable to Senior Executives is set out below:

***Senior Executive RetentionShare Plan (SERSP) and Senior Executive Retention Payment Plan (SERPP)***

Under the SERSP, the Board maynominate certain Senior Executives as being eligible to receive fully paidordinary shares in part satisfaction of their remuneration for the relevantfinancial year. The number of shares issued is entirely at the Board’sdiscretion. The shares may not be disposed of by the employee for a restrictedperiod of up to five years, unless the employee ceases employment three yearsafter the shares were issued.

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 restriction period for cause or poor performance. Theshares subject to the SERSP carry full dividend entitlements and voting rights.Rather than involving performance hurdles, these retention shares are used toreward outstanding levels of previous performance, with the intention to retainkey Senior Executives.

The Board may nominate certainemployees in Belgium, New Zealand, Poland, Switzerland and the USA as being eligibleto participate in an equivalent SERPP. In these circumstances, instead of fullypaid ordinary shares, entitlements are issued in part satisfaction of anemployee’s remuneration for the relevant financial year. The value of each Planentitlement is linked to the performance of Amcor Limited shares (and the valueof accrued dividends in some cases). Plan entitlements may be converted into acash payment after the five year restriction period has expired, provided thatthe employee has not been dismissed for cause or poor performance during thistime. If the employee voluntarily ceases employment within four or five yearsfrom the date the Plan entitlements were issued, the employee forfeits 40% or20% of their Plan entitlements (respectively).

The CEO, in conjunction withsenior management, makes recommendations to the Human Resources Committee nominatinghigh performing employees to receive retention shares or the equivalent. TheCommittee reviews the recommendations and if approved makes a recommendation tothe Board which finally determines whether the incentives are granted.

When granted, these plans operateto provide senior executives with the opportunity to share in the growth invalue of the Company and will encourage them to improve the long-termperformance of the Company and its returns to shareholders. This Plan alsohelps to attract and retain skilled and experienced senior executives andprovide them with incentive to have a greater involvement and focus on the longerterm goals of the Company.

----

- 68 -

 

***Other Legacy Plans***

Amcor has two legacy plans thatare no longer in operation but which still have entitlements outstanding.
| Legacy Plans              | ** ** | **Brief Summary**                                       | ** ** | **Last issued** |
|---------------------------|------------|---------------------------------------------------------|------------|-----------------|
|                      |       |                                                    |       |            |
| ESOP Partly Paid  Shares  |       | The shares are partly paid and were                     |       | 1996            |
| (Senior  Executive Plan)  |       | (Senior Executive Plan) issued at market                |       |            |
|                      |       | price at the time of issue.                             |       |            |
|                      |       | Partly paid shares remaining have either                |       |            |
|                      |       | been paid to one cent or five cents, being              |       |            |
|                      |       | the first call. The call outstanding only               |       |            |
|                      |       | becomes payable on termination, death                   |       |            |
|                      |       | or at the directors’ discretion. These shares      |       |            |
|                      |       | do not carry dividend entitlements unless               |       |            |
|                      |       | determined otherwise by the directors.                  |       |            |
|                      |       | Awards were not subject to specific                     |       |            |
|                      |       | performance hurdles as this was not                     |       |            |
|                      |       | market practice at this time.                           |       |            |
|                      |       | Refer Note 48 of the Consolidated Financial Statements. |       |            |
|                      |       |                                                    |       |            |
| Employee  Incentive Share |       | Under the EISP, which is a Sub-Plan of                  |       | 2003            |
| Plan                      |       | (Broadly-Based Plan) ESPP described                     |       |            |
| (Broadly-Based  Plan)     |       | above, shares have been                                 |       |            |
|                      |       | offered for the benefit of all full-time                |       |            |
|                      |       | employees, permanent part-time employees                |       |            |
|                      |       | and executive directors of the Company                  |       |            |
|                      |       | with more than twelve months’ service.             |       |            |
|                      |       | The number of shares offered depended                   |       |            |
|                      |       | upon the Company’s increase in earnings            |       |            |
|                      |       | per share. Refer Note 48 of the Consolidated Financial  |       |            |
|                      |       | Statements for more information.                        |       |            |

 

----

- 69 -

 

***Options***

As at October 31, 2006, thenumber of options over ordinary shares held by Executive Officers in thecompany are set out below;
| Name          | ** ** | **Underlying  Options Owned   Owned** | ** ** | **Exercise Price   A$** | ** ** | **Expiration Date** |
|---------------|------------|---------------------------------------|------------|-------------------------|------------|---------------------|
|          |       |                                  |       |                    |       |                |
| W P Day       |       | 222,500                               |       | 7.87                    |       | March 24, 2010      |
|          |       | 215,000                               |       | 6.84                    |       | August 2, 2010      |
|          |       | 100,000                               |       | 6.78                    |       | December 31, 2010*  |
| L J Lachal    |       | 178,000                               |       | 7.87                    |       | March 24, 2010      |
|          |       | 129,000                               |       | 6.84                    |       | August 2, 2010      |
|          |       | 120,000                               |       | 6.78                    |       | December 31, 2010*  |
| W J Long      |       | 300,000                               |       | 7.30                    |       | July 1, 2007        |
|          |       | 44,000                                |       | 8.20                    |       | November 1, 2012    |
|          |       | 178,000                               |       | 7.87                    |       | March 24, 2010      |
|          |       | 172,000                               |       | 6.84                    |       | August 2, 2010      |
|          |       | 120,000                               |       | 6.78                    |       | December 31, 2010*  |
| J V Murray    |       | 133,500                               |       | 7.87                    |       | March 24, 2010      |
|          |       | 129,000                               |       | 6.84                    |       | August 2, 2010      |
|          |       | 90,000                                |       | 6.78                    |       | December 31, 2010*  |
| K N MacKenzie |       | 88,000                                |       | 8.20                    |       | November 1, 2012    |
|          |       | 89,000                                |       | 7.87                    |       | March 24, 2010      |
|          |       | 86,000                                |       | 6.84                    |       | August 2, 2010      |
|          |       | 250,000                               |       | 6.78                    |       | December 31, 2010*  |
|          |       | 250,000                               |       | 6.78                    |       | June 30, 2011*      |
|          |       | 250,000                               |       | 6.78                    |       | December 31, 2011*  |
| E E Bloom     |       | 44,000                                |       | 8.20                    |       | November 1, 2012    |
|          |       | 89,000                                |       | 7.87                    |       | March 24, 2010      |
|          |       | 86,000                                |       | 6.84                    |       | August 2, 2010      |
|          |       | 90,000                                |       | 6.78                    |       | December 31, 2010*  |
| C K Chan      |       | 44,000                                |       | 8.20                    |       | November 1, 2012    |
|          |       | 89,000                                |       | 7.87                    |       | March 24, 2010      |
|          |       | 86,000                                |       | 6.84                    |       | August 2, 2010      |
|          |       | 90,000                                |       | 6.78                    |       | December 31, 2010*  |
| I G Wilson    |       | 100,000                               |       | 6.78                    |       | December 31, 2010*  |
|          |       | 100,000                               |       | 6.78                    |       | June 30, 2011*      |
|          |       | 100,000                               |       | 6.78                    |       | December 31, 2011*  |
| G James       |       | Nil                                   |       |                    |       |                |
| P W Wilson    |       | Nil                                   |       |                    |       |                |

 

*Final number subject to TSR related performanceconditions.

----

- 70 -

 

**Analysis of Movements in Options and Rights**

Details of options and rights over ordinary shares inthe company provided as remuneration to the CEO and Senior Executives are setout below.  When exercisable, each optionand right is convertible into one ordinary share of Amcor Limited.  Further information on the options and rightsis set out in Note 39 to the Consolidated Financial Statements.
| Name                                        | ** **   | **Number of options and rights   granted during the year** | ** **   | **Number of options and rights vested during  the year** | ** **   |
|---------------------------------------------|--------------|----------------------------------------------------------------------------------------------------|--------------|---------------------------------------------------------------------------------------------|--------------|
| *** ***                                | *** *** | ***2006***                                                                                         | *** *** | ***2005***                                                                                  | *** *** | ***2006*** | *** *** | ***2005*** | *** *** |
| ***Executive  Directors of Amcor Limited*** |         |                                                                                               |         |                                                                                        |         |   |   |   |   |
| K N MacKenzie                               |         | 1,050,000                                                                                          |         | 100,000                                                                                     |         | 88,000 |   | 5,000 |   |
| ***Senior  Executives***                    |         |                                                                                               |         |                                                                                        |         |   |   |   |   |
| P S Wilson                                  |         | -                                                                                                  |         | 150,000                                                                                     |         | - |   | - |   |
| W P Day                                     |         | -                                                                                                  |         | 250,000                                                                                     |         | - |   | 50,000 |   |
| I G Wilson                                  |         | -                                                                                                  |         | -                                                                                           |         | - |   | - |   |
| L J Lachal                                  |         | -                                                                                                  |         | 150,000                                                                                     |         | - |   | - |   |
| J V Murray                                  |         | -                                                                                                  |         | 150,000                                                                                     |         | - |   | - |   |
| W J Long                                    |         | -                                                                                                  |         | 200,000                                                                                     |         | 44,000 |   | 100,000 |   |
| G S James                                   |         | -                                                                                                  |         | 150,000                                                                                     |         | 44,000 |   | 20,000 |   |
| C K Chan                                    |         | -                                                                                                  |         | 100,000                                                                                     |         | 44,000 |   | 20,000 |   |
| E Bloom                                     |         | -                                                                                                  |         | 100,000                                                                                     |         | 44,000 |   | 12,500 |   |

 

----

- 71 -

**Shares Provided on Exercise of Options**

Details of ordinary shares in the company provided asa result of the exercise of remuneration options to the CEO and SeniorExecutives together with the amounts paid per ordinary share at the date ofexercise are set out below:
| Name                                        | ** ** | **Date of exercise of  options** | ** ** | **Amount paid per  share A$** | ** ** | **Number of ordinary shares issued on  exercise of options during the year** | ** ** |
|---------------------------------------------|------------|-------------------------------------------------|------------|----------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                  | ** ** | ** **                                      | ** ** | ** **                                   | ** ** | **2006**                                                                                                                       | ** ** | **2005** | ** ** |
| ***Executive  Directors of Amcor Limited*** |       |                                            |       |                                         |       |                                                                                                                           |       |   |   |
| K N MacKenzie                               |       | Aug  23, 2004                                   |       | A$6.47                                       |       | -                                                                                                                              |       | 10,000 |   |
| K N MacKenzie                               |       | Aug  31, 2004                                   |       | A$5.16                                       |       | -                                                                                                                              |       | 8,000 |   |
| K N MacKenzie                               |       | June  27, 2005                                  |       | A$6.03                                       |       | -                                                                                                                              |       | 80,000 |   |
| K N MacKenzie                               |       | June  27, 2005                                  |       | A$6.02                                       |       | -                                                                                                                              |       | 5,000 |   |
| ***Senior  Executives***                    |       |                                            |       |                                         |       |                                                                                                                           |       |   |   |
| P S Wilson                                  |       | Sept  1, 2004                                   |       | A$6.47                                       |       | -                                                                                                                              |       | 50,000 |   |
| P S Wilson                                  |       | Oct  29, 2004                                   |       | A$5.43                                       |       | -                                                                                                                              |       | 50,000 |   |
| P S Wilson                                  |       | Sept  13, 2005                                  |       | A$5.16                                       |       | 40,000                                                                                                                         |       | - |   |
| P S Wilson                                  |       | Sept  28, 2005                                  |       | A$5.10                                       |       | 200,000                                                                                                                        |       | - |   |
| W P Day                                     |       | Nov  1, 2004                                    |       | A$6.02                                       |       | -                                                                                                                              |       | 50,000 |   |
| W P Day                                     |       | Nov  1, 2004                                    |       | A$6.62                                       |       | -                                                                                                                              |       | 100,000 |   |
| I G Wilson                                  |       | -                                               |       |                                         |       | -                                                                                                                              |       | - |   |
| LJ Lachal                                   |       | Sept  14, 2005                                  |       | A$5.16                                       |       | 24,000                                                                                                                         |       | - |   |
| J V Murray                                  |       | Sept  6, 2004                                   |       | A$5.43                                       |       | -                                                                                                                              |       | 50,000 |   |
| J V Murray                                  |       | Sept  6, 2004                                   |       | A$6.47                                       |       | -                                                                                                                              |       | 20,000 |   |
| J V Murray                                  |       | Sept  14, 2005                                  |       | A$5.16                                       |       | 16,000                                                                                                                         |       | - |   |
| J V Murray                                  |       | Oct  3, 2005                                    |       | A$5.10                                       |       | 200,000                                                                                                                        |       | - |   |
| W J Long                                    |       | -                                               |       |                                         |       | -                                                                                                                              |       | - |   |
| G S James                                   |       | June  7, 2006                                   |       | A$6.02                                       |       | 20,000                                                                                                                         |       | - |   |
| C K Chan                                    |       | Sept  2, 2004                                   |       | A$6.47                                       |       | -                                                                                                                              |       | 40,000 |   |
| C K Chan                                    |       | Sept  8, 2005                                   |       | A$5.16                                       |       | 32,000                                                                                                                         |       | - |   |
| C K Chan                                    |       | Sept  21, 2005                                  |       | A$5.10                                       |       | 100,000                                                                                                                        |       | - |   |
| C K Chan                                    |       | Sept  21, 2005                                  |       | A$6.02                                       |       | 20,000                                                                                                                         |       | - |   |
| E Bloom                                     |       | Aug  25, 2004                                   |       | A$6.47                                       |       | -                                                                                                                              |       | 25,000 |   |
| E Bloom                                     |       | Sept  12, 2005                                  |       | A$5.16                                       |       | 20,000                                                                                                                         |       | - |   |
| E Bloom                                     |       | Sept 29, 2005                                   |       | A$5.10                                       |       | 125,000                                                                                                                        |       | - |   |

 

No amounts areunpaid on any shares issued on the exercise of options.

----

- 72 -

**Analysis of OptionsGranted as Remuneration**

Details of the vesting profile of the options grantedas remuneration to the CEO and Senior Executives are detailed below:
|                                        | ** ** | **Options** | ** ** |
|----------------------------------------|------------|-------------|------------|
| **Name**                               | ** ** | **Number**  | ** ** | **Year granted** | ** ** | **Vested  %** | ** ** | **Lapsed %**

**(a)** | ** ** | **Financial  years in which  options may  vest** | ** ** | **Minimum  total value  of grant yet  to vest  A$ (b)** | ** ** | **Maximum  total value  of grant yet  to vest  A$ (c)** | ** ** |
| **Executive  Directors of  Amcor Ltd** |       |        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| K N MacKenzie                          |       | 50,000      |       | November  1, 2002 |   | 88% |   | 12% |   | June  30, 2006 |   | nil |   | 88,000 |   |
|                                   |       | 50,000      |       | October  13, 2003 |   | 88% |   | 12% |   | June  30, 2006 |   | nil |   | 106,920 |   |
|                                   |       | 100,000     |       | March  24, 2004 |   | - |   | 11% |   | June  30, 2007 |   | nil |   | 113,030 |   |
|                                   |       | 100,000     |       | August  2, 2004 |   | - |   | 14% |   | June  30, 2008 |   | nil |   | 88,580 |   |
|                                   |       | 250,000     |       | October  27, 2005 |   | - |   | - |   | June  30, 2010 |   | nil |   | 245,000 |   |
|                                   |       | 250,000     |       | October  27, 2005 |   | - |   | - |   | June  30, 2010 |   | nil |   | 252,500 |   |
|                                   |       | 250,000     |       | October  27, 2005 |   | - |   | - |   | June  30, 2010 |   | nil |   | 257,500 |   |
| **Senior  Executives**                 |       |        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| W P Day                                |       | 250,000     |       | March  24, 2004 |   | - |   | 11% |   | June  30, 2007 |   | nil |   | 282,575 |   |
|                                   |       | 250,000     |       | August  2, 2004 |   | - |   | 14% |   | June  30, 2008 |   | nil |   | 221,450 |   |
| G S James                              |       | 50,000      |       | November  1, 2002 |   | 88% |   | 12% |   | June  30, 2006 |   | nil |   | 88,000 |   |
|                                   |       | 150,000     |       | March  24, 2004 |   | - |   | 11% |   | June  30, 2007 |   | nil |   | 169,545 |   |
|                                   |       | 150,000     |       | August  2, 2004 |   | - |   | 14% |   | June  30, 2008 |   | nil |   | 132,870 |   |
| L J Lachal                             |       | 200,000     |       | March  24, 2004 |   | - |   | 11% |   | June  30, 2007 |   | nil |   | 226,060 |   |
|                                   |       | 150,000     |       | August  2, 2004 |   | - |   | 14% |   | June  30, 2008 |   | nil |   | 132,870 |   |
| W J Long                               |       | 50,000      |       | November  1, 2002 |   | 88% |   | 12% |   | June  30, 2006 |   | nil |   | 88,000 |   |
|                                   |       | 200,000     |       | March  24, 2004 |   | - |   | 11% |   | June  30, 2007 |   | nil |   | 226,060 |   |
|                                   |       | 200,000     |       | August  2, 2004 |   | - |   | 14% |   | June  30, 2008 |   | nil |   | 177,160 |   |
| J V Murray                             |       | 150,000     |       | March  24, 2004 |   | - |   | 11% |   | June  30, 2007 |   | nil |   | 169,545 |   |
|                                   |       | 150,000     |       | August  2, 2004 |   | - |   | 14% |   | June  30, 2008 |   | nil |   | 132,870 |   |
| P S Wilson                             |       | 150,000     |       | March  24, 2004 |   | - |   | 11% |   | June  30, 2007 |   | nil |   | 169,545 |   |
|                                   |       | 150,000     |       | August  2, 2004 |   | - |   | 14% |   | June  30, 2008 |   | nil |   | 132,870 |   |
| E E Bloom                              |       | 50,000      |       | November  1, 2002 |   | 88% |   | 12% |   | June  30, 2006 |   | nil |   | 88,000 |   |
|                                   |       | 100,000     |       | March  24, 2004 |   | - |   | 11% |   | June  30, 2007 |   | nil |   | 113,030 |   |
|                                   |       | 100,000     |       | August  2, 2004 |   | - |   | 14% |   | June  30, 2008 |   | nil |   | 88,580 |   |
| C K Chan                               |       | 50,000      |       | November  1, 2002 |   | 88% |   | 12% |   | June  30, 2006 |   | nil |   | 88,000 |   |
|                                   |       | 100,000     |       | March  24, 2004 |   | - |   | 11% |   | June  30, 2007 |   | nil |   | 113,030 |   |
|                                   |       | 100,000     |       | August  2, 2004 |   | - |   | 14% |   | June  30, 2008 |   | nil |   | 88,580 |   |

 

a)              The % lapsed represents the reduction from themaximum number of options available to vest due to highest level performancecriteria not being achieved.

b)             The minimum value of options yet to vest isA$nil due to the fact the exercise price may be above the market price of Amcorshares.

c)              The maximum value of options yet to vest isthe number granted less the number lapsed and valued at the fair value of theoption at grant date using a Black-Scholes model.

----

- 73 -

Further details relating to options are set out below:
|                                       | ** ** | **A  Value at grant  date  A$** | ** ** | **B  Value at  exercise date  A$** | ** ** | **C  Value at lapse  date  A$** | ** ** | **D  Total of columns A-C  A$** | ** ** |
|---------------------------------------|------------|-------------------------------------------|------------|----------------------------------------------|------------|-------------------------------------------|------------|------------------------------------------------|------------|
| **Executive  Directors of Amcor Ltd** |       |                                      |       |                                         |       |                                      |       |                                           |       |
| K N MacKenzie                         |       | 755,000                                   |       | -                                            |       | 14,420                                    |       | 769,420                                        |       |
|                                  |       |                                      |       |                                         |       |                                      |       |                                           |       |
| **Senior  Executives**                |       |                                      |       |                                         |       |                                      |       |                                           |       |
| E E Bloom                             |       | -                                         |       | 224,150                                      |       | 14,420                                    |       | 238,570                                        |       |
| C K Chan                              |       | -                                         |       | 221,120                                      |       | 14,420                                    |       | 235,540                                        |       |
| W P Day                               |       | -                                         |       | -                                            |       | 36,050                                    |       | 36,050                                         |       |
| G S James                             |       | -                                         |       | 10,600                                       |       | 21,630                                    |       | 32,230                                         |       |
| L J Lachal                            |       | -                                         |       | 36,240                                       |       | 21,630                                    |       | 57,870                                         |       |
| W J Long                              |       | -                                         |       | -                                            |       | 28,840                                    |       | 28,840                                         |       |
| J V Murray                            |       | -                                         |       | 350,160                                      |       | 21,630                                    |       | 371,790                                        |       |
| P S Wilson                            |       | -                                         |       | 373,200                                      |       | 21,630                                    |       | 394,830                                        |       |

 

A = The value atgrant date calculated in accordance with AASB 2 *Share-based Payment*of options granted during the year aspart of remuneration.

B = The value atexercise date of options that were granted as part of remuneration and wereexercised during the year.

C = The value at lapse date of options that weregranted as part of remuneration and that lapsed during the year.

----

- 74 -

**ITEM 7                  MAJORSHAREHOLDERS AND RELATED PARTY TRANSACTIONS**

## **A.                             Major Shareholders**

TheCompany is not directly or indirectly owned or controlled by anothercorporation or by any foreign government.   To our knowledge, basedon substantial shareholder notices filed with the Australian Stock Exchange asof August, 2006, the following table identifies those shareholders who beneficiallyown 5% or more of our ordinary shares and their holdings as of the date oftheir last respective notices.
| Shareholder                       | ** ** | **Fully Paid Ordinary Shares** | ** ** | **Percentage of Total Shares** | ** ** |
|-----------------------------------|------------|-----------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                        | ** ** | ** **                                    | ** ** | ** **                                    | ** ** |
| Mondrian  Investment Partners (1) |       | 67,329,189                                    |       | 7.66                                          |       |
|                              |       |                                          |       |                                          |       |
| Maple-Brown  Abbott               |       | 71,020,832                                    |       | 8.09                                          |       |
|                              |       |                                          |       |                                          |       |
| Capital Group Companies  Inc      |       | 62,516,006                                    |       | 7.10                                          |       |

 

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.
| Date of Notice | ** ** | **Name of Shareholder**             | ** ** | **% of Voting Shares at Year-end** | ** ** |
|--------------------------|------------|-----------------------------------------------|------------|-------------------------------------------------------------|------------|
| March 12, 2003           |       | Delaware  International Advisers Ltd          |       | 6.73                                                        |       |
| June 4, 2003             |       | Commonwealth  Bank of Australia               |       | 5.03                                                        |       |
| June 5, 2003             |       | Commonwealth  Bank of Australia               |       | Ceased  to be substantial shareholder                       |       |
| January 15, 2004         |       | Delaware  International Advisers Ltd          |       | 7.76                                                        |       |
| April 30, 2004           |       | Delaware  International Advisers Ltd          |       | 10                                                          |       |
| September 27,  2004      |       | Mondrian  Investment Partners Limited (1)     |       | 7.66                                                        |       |
| November 30,  2004       |       | Capital  Group Companies Inc                  |       | 5.02                                                        |       |
| December 30.  2004       |       | Maple-Brown  Abbott Ltd                       |       | 5.02                                                        |       |
| January 24, 2005         |       | Schroder  Investment Management Australia Ltd |       | 5.2                                                         |       |
| February 24,  2005       |       | Maple-Brown  Abbott Ltd                       |       | 6.04                                                        |       |
| March 31, 2005           |       | Schroder  Investment Management Australia Ltd |       | Ceased  to be substantial shareholder                       |       |
| May 5, 2005              |       | Maple-Brown  Abbott Ltd                       |       | 7.04                                                        |       |
| September 5,  2005       |       | Maple-Brown  Abbott Ltd                       |       | 6.09                                                        |       |
| December 22,  2005       |       | Capital  Group Companies Inc                  |       | 6.05                                                        |       |
| February 16, 2006        |       | Capital Group Companies  Inc                  |       | 7.1                                                         |       |

(1) - Previously Delaware International Advisors Ltd

**B.                            RelatedParty Transactions**

Loanshave been provided by the Company to, or for the benefit of, certain Directorswho are Executives and Executive Officers.  The aggregate amount of loansoutstanding as at September 28, 2005 was A$30,000. No interest is charged onthese loans.  (See Note 39 to the Consolidated Financial Statements fordetails on loan repayments).  During the year the Company cancelled aguarantee, in favour of RH Jones for a loan of A$0.4 million. Due to therestrictions of the Sarbanes-Oxley Act of 2002 in the U.S., no loans have beenmade or extended to Directors and Executive Officers since July 1, 2002.

UnderAmcor’s Employee Share Plans which are described in Item 6, interest-free loansare made available to eligible employees to acquire shares, which are repaidover time by dividends received on the shares. In the past these interest-freeloans have been made available to Directors and Executive Officers of Amcor toacquire shares. However, due to Sarbanes-Oxley restrictions Directors andExecutive Officers will no longer receive this interest-free loan.

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NoDirector or Executive Officer of the Company (or any relative or spousethereof) has any interests in any material transactions of Amcor which wereeffected by the Company or any of its subsidiaries since the current orimmediately preceding financial year or were effected by the Company or any ofits subsidiaries during an earlier financial year and remain in any respectoutstanding at the date hereof.  Directors and Executive Officers of Amcorhave participated in past issues of shares under Employee Share Plans which aredescribed in Item 6.

Essential Marketing Pty Ltd isa company that supplies various services to the consolidated entity.  The company is owned by the daughter of G SJames, a member of the other key managements personnel.  Transactions are based on normal terms andconditions.  For the year ended June 30,2006, $532,937 (2005: 605,671) was recognized as expenses for the provision ofgoods supplied at cost and marketing services.

**C.                            Interestsof Experts and Counsel**

Not Applicable

## **ITEM 8                  FINANCIALINFORMATION**

## **A.                            Financialstatements**

Amcor’sConsolidated Financial Statements are included as Item 18.

## ***Legal Proceedings***

**Competition Law Investigations**

*Leniency Application – Australia*

On December 21, 2005, the ACCC commenced legalproceedings in the Federal Court of Australia against certain Visy Group companiesand executives. The proceedings are in respect of alleged cartel conduct in theAustralian corrugated packaging industry. The ACCC alleges that the Visy Groupcompanies (being Amcor’s competitors) and executives engaged in conduct in thecorrugated fibreboard container industry that was anti-competitive, includingengaging in price fixing and market sharing, in contravention of section 45 ofthe Australian Trade Practices Act 1974.

The ACCC also announced on December 21, 2005, thatAmcor and its former senior executives have to date received immunity fromlegal proceedings by the ACCC. The immunity was granted in accordance with theterms of the ACCC’s Leniency Policy for Cartel Conduct (June 2003): seehttp://www.accc.gov.au/content/index.phtml/itemId/459479. Accordingly, Amcor isnot the subject of any proceedings by the ACCC for a pecuniary penalty orotherwise for any alleged cartel conduct. The immunity is conditional uponcontinuing full cooperation from Amcor and its former senior executives in providinginformation to the ACCC about the alleged cartel.  As a result of this grant of immunity Amcordoes not expect to incur any pecuniary penalties arising out of the ACCCinvestigations.

Third Party ClaimsAustralia

Jarra CreekCentral Packaging Shed Pty Ltd filed a class action claim in the Federal Courtof Australia on April 11, 2006 against Amcor Ltd, Amcor Packaging (Australia)Ltd and Fibre Containers (Queensland) Pty Ltd alleging cartel behaviour andseeking declarations, injunctions and unspecified damages.

This class actionfiled in the Federal Court contains allegations only.  These are not admissions by any party andevidence will have to be proved in court. Amcor is defending the claims made in the class action.  In the event that Amcor is not whollysuccessful in defending the class action, Amcor has cross-claimed againstthose Visy Group companies, which are respondents to the ACCC penaltyproceeding, claiming contribution for any damages which may be awarded againstAmcor  in the class action.

On December 15,2006, Cadbury Schweppes filed a proceeding in the Federal Court of Australiaagainst Amcor Limited and Amcor Packaging (Australia) Pty Ltd alleging cartelbehaviour between Amcor and Visy(and related contract claims) and seeking damagesand rectification of certain supply contracts. Although the amount claimed totals approximately A$120 million, certainof the claims overlap.

The CadburySchweppes action filed on December 15, 2006, appears to adopt portions of theACCC’s proceedings in relation to the corrugated business.  These allegations in the ACCC proceeding areyet to be proved in court and have been denied by Visy.  The Cadbury Schweppes action also allegesadditional cartel conduct affecting certain supply contracts with Amcor andother matters in relation to various Amcor businesses.  These extended allegations appear to bewidely speculative. 

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Amcor will bevigorously defending these allegations and is considering making application tothe Court for a strike-out at the appropriate time. The issues of liability andloss are extremely complex and need to be established as a basis forcompensation. As the litigation could take some years it is too early for Amcorto form any view on the probable outcome. It is therefore not currentlypossible to establish a reasonable estimate of the financial impact of theultimate outcome, if any.

*Leniency Application – New Zealand*

The NZCC is the regulatory agency responsible forenforcing New Zealand’s anti-trust laws, the Commerce Act 1986 (“Commerce Act”).

On November 29, 2004 Amcor notified the NZCC that theCompany may have 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 Leniency Policy does notexclude or limit claims by third parties who claim to have suffered loss ordamage as a result of any cartel conduct. Under the Commerce Act, third parties may pursue private claims forcompensatory or exemplary damages.

*Estimated Damages – New Zealand*

As a result of the grant of conditional immunity,Amcor does not expect to incur any pecuniary penalties arising out of the NZCCinvestigation.  It is not possible atpresent to provide either a reasonable estimate, or a reasonable estimate rangeof any amounts which might become payable by way of damages to any thirdparties who might have suffered loss as a result of any cartel conduct in NewZealand.

Other

There are otheroutstanding court proceedings, claims and possible claims against companies inthe Amcor Group, arising in the ordinary course of business, the aggregateamount of which 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 “RiskFactors”.

## ***Dividend Policy***

Amcorhas not published a formal dividend policy. Interim and final dividends are determined at the discretion of theDirectors.

## **B.                            SignificantChanges**

Nosignificant changes have occurred since the date of the Consolidated FinancialStatements, except for those disclosed in Note 49 to the Consolidated FinancialStatements Events Subsequent to Balance Date.

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**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.  Amcor ADSs each representing four OrdinaryShares and evidenced by American Depositary Receipts (“ADRs”), for whichJPMorgan Chase Bank is the Depositary, are quoted on the NASDAQ National MarketSystem.  In addition to these ADRs, as ofJune 30, 2006, there were 3,549 shareholders whose registered addresses aresituated in the United States holding in total 1,679,704 Amcor Ordinary Shares,which is equivalent to 0.19% of Amcor’s issued share capital.

The following table sets out, forthe periods indicated, the respective highest and lowest prices for Amcor ADSsas traded on the NASDAQ National Market System (with each ADS representing fourOrdinary Shares) and for Amcor’s Ordinary Shares reported on any trading day onthe Australian Stock Exchange Limited.
|                         | ** ** | ** **      | ** ** | **American Depositary  Shares** | ** ** | **Ordinary Shares** | ** ** |
|-------------------------|------------|-----------------|------------|--------------------------------------|------------|--------------------------|------------|
| ** **              | ** ** | ** **      | ** ** | **High**                             | ** ** | **Low**                  | ** ** | **High** | ** ** | **Low** | ** ** |
| ** **              | ** ** | ** **      | ** ** | **$US**                              | ** ** | **$US**                  | ** ** | **A$ ** | ** ** | **A$ ** | ** ** |
|                    | ** ** | ** **      | ** ** | ** **                           | ** ** | ** **               | ** ** | ** ** | ** ** | ** ** | ** ** |
| July 2001 to  June 2002 |       |            |       | 16.8                                 |       | 11.07                    |       | 9.1 |   | 5.69 |   |
|                    |       |            |       |                                 |       |                     |       |   |   |   |   |
| July 2002 to  June 2003 |       |            |       | 22.2                                 |       | 17.04                    |       | 8.86 |   | 7.76 |   |
|                    |       |            |       |                                 |       |                     |       |   |   |   |   |
| July 2003 to  June 2004 |       |            |       | 25.69                                |       | 17.9                     |       | 9.16 |   | 6.51 |   |
|                    |       |            |       |                                 |       |                     |       |   |   |   |   |
| 2004-05                 |       | First  Quarter  |       | 21.19                                |       | 18.75                    |       | 7.53 |   | 6.65 |   |
|                    |       | Second  Quarter |       | 24.35                                |       | 19.9                     |       | 7.9 |   | 6.68 |   |
|                    |       | Third  Quarter  |       | 24.46                                |       | 21.81                    |       | 7.67 |   | 6.95 |   |
|                    |       | Fourth  Quarter |       | 23.11                                |       | 19.52                    |       | 7.35 |   | 6.26 |   |
|                    |       |            |       |                                 |       |                     |       |   |   |   |   |
| 2005-06                 |       | First  Quarter  |       | 22.23                                |       | 19.70                    |       | 7.27 |   | 6.41 |   |
|                    |       | Second  Quarter |       | 22.23                                |       | 19.29                    |       | 7.58 |   | 6.38 |   |
|                    |       | Third  Quarter  |       | 22.94                                |       | 20.00                    |       | 7.74 |   | 6.76 |   |
|                    |       | Fourth  Quarter |       | 22.00                                |       | 18.75                    |       | 7.48 |   | 6.40 |   |
|                    |       |            |       |                                 |       |                     |       |   |   |   |   |
| 2005-06                 |       | June            |       | 20.23                                |       | 18.75                    |       | 6.89 |   | 6.40 |   |
| 2006-07                 |       | July            |       | 21.16                                |       | 19.91                    |       | 7.03 |   | 6.67 |   |
|                    |       | August          |       | 20.61                                |       | 18.30                    |       | 6.85 |   | 6.15 |   |
|                    |       | September       |       | 22.24                                |       | 19.55                    |       | 7.54 |   | 6.50 |   |
|                    |       | October         |       | 22.80                                |       | 20.95                    |       | 7.59 |   | 6.86 |   |
|                    |       | November        |       | 23.80                                |       | 21.63                    |       | 7.54 |   | 6.95 |   |

 

The last reported sale of our ordinary shares on December 12, 2006 onthe ASX was A$7.35 . The last reported sale of our ADSs on December 12, 2006 onNASDAQ was US$23.03.

**ITEM 10                ADDITIONALINFORMATION**

**A.                            ShareCapital**

Notapplicable

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## **B.                            Constitution**

The following providesinformation on the material provisions of Amcor’s constitution. A full copy ofAmcor’s constitution as amended in 2004, is filed with the SEC as Exhibit 1 to20-F filed December 23, 2004.

Certaininformation in the constitution on Directors is also included in Item 6, “Directors,Senior Management and Employees”.

## **GeneralMeetings**

By a resolution of the Board,Amcor may call a general meeting of the Company. No shareholder may convene ageneral meeting except where entitled under the Corporations Act 2001 to do so.Where a general meeting has been called, notice of the meeting may be given inthe form and manner the Board thinks fit. All provisions of the constitution asto general meetings apply to any special meeting of any class of shareholderswhich may be held under the operation of this Constitution or the CorporationsAct 2001.

Thebusiness of an annual general meeting is to consider the accounts and reportsrequired by the Corporations Act 2001 to be laid before the meeting, to electDirectors in the place of those retiring under this constitution, whenrelevant, to appoint an auditor and to transact any other business which, underthis Constitution, is required to be transacted at any annual general meeting.

Threeshareholders must be present to form a quorum. No business may be transacted ata meeting, except the election of a Chairman and the adjournment of themeeting, unless a quorum is present.

## **Votes ofShareholders**

Shareholdersmay vote at a meeting of the Company in person, by proxy or attorney.Shareholders must vote on a show of hands unless a poll is called. A poll maybe called either before a vote is taken or before or immediately after thevoting results on a show of hands are declared. A poll may be demanded by ashareholder under the Corporations Act 2001 (and not otherwise) or by theChairman.

## **Powers of theBoard**

Themanagement and control of the business and affairs of Amcor are vested in theBoard, including raising or borrowing money, guaranteeing debts or obligationsof any person, providing security for a debt and authorizing persons in whosefavour debenture, mortgage or other security is executed to make calls onshareholders in respect of uncalled capital.

Exceptwhere a Director is restrained by the Corporations Act 2001, a Director may bepresent at a meeting of the Board while the matter in which the Director has aninterest is being considered and may vote in respect of that matter.

Asremuneration for services, each non-executive Director is to be paid out of thefunds of the Company a sum determined by the Board, but the aggregateremuneration paid to all non-executive Directors in any year may not exceed anamount fixed by Amcor in general 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.

Allunclaimed dividends may be invested or otherwise made use of by the Board forthe benefit of Amcor until claimed or otherwise disposed of according to law.

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# ***Preference Shares***

IfAmcor at any time proposes to issue preference shares, the preference sharesconfer on the holders a right to receive out of the profits of the Companyavailable for dividend a preferential dividend at the rate or of the amount andon the basis determined by the Board at the time of issue of the preferenceshares.

Thepreference shares are to confer on the holders the right on redemption and, ina winding up, to payment in cash in priority to any other class of shares ofthe amount paid on each of the preference shares and the amount equal to theaggregate of any dividends accrued but unpaid.

Thepreference shares do not confer on the holders any further rights toparticipate in assets or profits of Amcor.

## **PartialTakeovers**

Where a partial takeover offer is made, a contract to accept the offeris prohibited until an Approving Resolution is passed. An Approving Resolutionis to be voted on at a meeting, convened and conducted by Amcor and is taken tohave been passed if more than one-half of eligible votes are in favour of theresolution; otherwise it is rejected.

**Exemption from NASDAQ regulations**

AmcorLimited is a company organized under the laws of Australia, which is consideredits “home country”.  The Company isadmitted to the Official List of ASX and its securities are quoted on ASX.  As the Company is also listed on NASDAQ, theCompany is also required to comply with the requirements of the NASDAQ.  The Company intends to follow home countrypractices in lieu of the requirements set forth in:

1.               NASDAQ Marketplace Rule 4350(f) (the NASDAQ QuorumRequirement); and

2.               Rule 4350(i) (the NASDAQ Shareholder ApprovalRequirements).

TheNASDAQ Quorum Requirement requires that the minimum quorum for any meeting ofholders of the company’s common stock must be no less than 33 1/3% of theissuer’s outstanding shares.  Incomparison section 249T of the Australian Corporations Act 2001 (theCorporations Act) only requires a quorum of two members for a meeting ofshareholders.  Under section 135(2) ofthe Corporations Act 2001, the quorum requirement can be replaced or modifiedby a company’s constitution.  The Company’sConstitution states that it requires a quorum of three members.  A quorum of three members for a meeting ofshareholders is not prohibited by Australian law.

TheNASDAQ Shareholder Approval Requirements mandate that a company must obtainprior shareholder approval in the case of an issuance of securities (other thanin a public offering) when:

(a)                        a stock option or purchase plan of a listed issueris to be established or materially amended or other equity compensationarrangement made or materially amended pursuant to which options or stoack maybe acquired by officers, directors, employees or consultants, unless theissuance is one that falls within the parameters of certain exceptions (Rule4350(i)(1)(A));

(b)                       an issuance or potential issuance of securitieswould result in a “change of control”  ofthe issuer, which may be deemed to occur if an investor or group of investorsacquires, or obtains the right to acquire, 20% of more of the common stock (orsecurities convertible into or exercisable for common stock) or the votingpower of an issuer on a post-transaction basis (Rule 4350(i)(1)(B));

(c)                        the issuance is related to the acquisition of thestock or assets of another company if; (a) any director, officer or substantialshare holder has a 5% or greater interest (or such persons collectively have a10% or greater interest) in the company or assets to be acquired or in theconsideration to be paid in the transaction or series of related transactions;and (b) the present or potential issuance of common stock, or securitiesconvertible into or exercisable for common stock could result in an increase inoutstanding common shares or voting power of 5% of more before the issuance(Rule 4350(i)(1)(C)(i));

(d)                       the issuance is related to the acquisition of thestock or assets of another company if the issuance is 20% of more of commonstock or voting power outstanding before the issuance (Rule 4350(i)(1)(C)(ii));or

(e)                        the sale, issuance or potential issuance by theissuer (together with sales by officers, directors, or substantial shareholdersof the company) of common stock or securities convertible into or exercisablefor common stock is at a price less than the greater of book or market valueand equal to 20% of more of the common stock or voting power outstanding beforeissuance (Rule 4350(i)(1)(D)).

TheASX Listing Rules have comparable requirements to those set out in Rules4350(i)(1)(A), (C)(i), (C)(ii) and (D) of the NASDAQ Shareholder ApprovalRequirements; specifically the obligations in Listing Rule 7 (changes incapital and new issues) and Listing Rule 10 (transactions with persons in aposition of influence).  In addition, Chapter6 of the Corporations Act 2001 has a comparable requirement to that set out inRule 4350(i)(1)(B) of the NASDAQ Shareholder Approval Requirements;specifically, where there would be an issuance of securities to a person andits associates representing more than 20% of the voting power of an issuer on apost transaction basis.

 

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**C.         Material Contracts**

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, 2004 tothe date of this report.

## **D.                           ****Exchange Controls and Other Limitations AffectingSecurity Holders**

(a)           TheAustralian Banking (Foreign Exchange) Regulations and other Australianlegislation and regulations control the import and export of capital andremittance of payments involving non-residents of Australia.  Amcor is not restricted from receiving fundsinto, or transferring funds from Australia to the credit of non-residents ofAustralia, but in certain cases is required to:

·                  withhold Australian taxes:

·                  lodge a report of the transaction details.

(b)         Corporations Act 2001

The Act prohibits a person (including a corporation)from acquiring a relevant interest in issued voting shares in a listed company(or an unlisted company with more than 50 members) if, after the acquisition,the voting power in the company of that person or any other person increases:

·                  from 20% or below to more than 20%; or

·                  from a starting point that is above 20% and below 90%.

Relevant Interest

Aperson is considered to have a relevant interest in a security if they (whethersolely or jointly, directly or indirectly, whether enforceable or not andirrespective of certain restrictions and restraints on such powers and othermatters and things specified in the Act):

·                  Are the holder of the security;

·                  Have power to exercise, or control the exercise of, a right to voteattached to the security; or

·                  Have power to dispose of, or control the exercise of, a power to disposeof, the security.

TheAct also deems that a person acquires a relevant interest in voting shares in acompany if:

·                  Securities in which the person already had a relevant interest becomevoting shares in the company; or

·                  There is an increase in the number of votes that may be cast on a pollattached to voting shares that the person already had a relevant interest in.

Inthese circumstances, the acquisition of the relevant interest will occur whenthe securities become voting shares or the number of votes increases.

Voting Power

Aperson’s voting power in a company is determined as follows:
| Person’s and Associate’s  votes |     x 100 |
|-------------------------------------------|-------------------------------|
| Total votes in  Company                   |

where:

·                  ‘Person’s and Associate’s votes’ is the total number of votes attachedto all the voting shares in the company (if any) that the person or anassociate has a relevant interest in; and

·                  ‘Total votes in the Company’ is the total number of votes attached toall voting shares in the company.

TheAct provides that the number of votes attached to a voting share in a companyis the maximum number of votes that can be cast in respect of the share on apoll:

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·                       on the election of a director of the company (if the election ofdirectors is determined by the casting of votes attached to voting shares); or

·                       on the adoption or amendment of the company’s constitution (if theelection of directors is not determined by the casting of votes attached tovoting shares).

Exceptions to the Prohibition

Exceptions to this prohibition are outlined in section611 of the Act.  Some of the moresignificant exceptions are:

·                  Section 611 (item 1) permits a person who proposes to becomeentitled to more than 20 percent of the voting shares of a company to make aformal takeover offer to the shareholders of the target company to acquiretheir shares.  Separate takeover schemesare required for each class of shares sought.

·                  Under Section 611 (item 2), a person (either alone or together withothers) can acquire in excess of 20 percent of a company’s voting shares by anon-market purchase during a bid period. The bid must be for all the voting shares in the bid class and beunconditional or only conditional on the happening of an event which entitlesthe bid to be withdrawn under sections 652C(1) or (2).

·                  Under Section 611 (item 7), a person (either alone or together withothers) is permitted to acquire shares in excess of 20 percent of acompany’s issued capital where that company has agreed to the acquisition by aresolution passed at a general meeting at which no votes were cast in relationto the resolution in respect of any shares held by the acquirer and theirassociates or the persons (if any) from whom the acquisition is to be made andtheir associates.

·                  Under Section 611 (item 9), a person who has been entitled to19 percent or more of the target company’s voting power for a continuousperiod of not less than six months is permitted to acquire voting power in thecompany which is no more than 3 percentage points higher than they had6 months before the acquisition.

(c) Amendments to the Income Tax Assessment Act(Cth) 1936 and the Income Tax Assessment Act (Cth) 1997

Australiahas introduced, effective July 1, 2005, conduit foreign income rules whichrepresent a new way for accessing dividend withholding tax relief for anexpanded range of foreign income that is on-distributed to foreign investors.

Therules are non-compulsory, but are of particular interest to non-residentshareholders who receive unfranked dividends from Australian companies, becausedividends which are fully franked can be paid free from withholding tax.

Thesenew conduit foreign income rules contain a broad range of income which can bedistributed to non-resident shareholders free from withholding tax.  Thetypes of income that qualify under these new rules and be included in the newconduit foreign income account are foreign income that is not taxable inAustralia when derived by an Australian resident corporate tax entity. This will include:

·                  non-portfolio dividends (i.e. dividends paidto shareholders who have shareholdings in excess of 10%);

·                  foreign branch income

·                  capital gains relating to the sale of activeoffshore companies (to the extent that exemption applies)

·                  foreign income against which a foreign taxcredit applies.

Australiancompanies can now declare dividends out of their conduit foreign incomeaccount.  No withholding tax is payable in Australia on that portion of anydividend that is paid from the conduit foreign income account.

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**E.                     ****Taxation**

***Australian Taxation***

The following summary discusses the Australian tax consequences ofowning ADSs or Ordinary Shares.  Thesummary is not exhaustive and is based on law in force as of the date of thisAnnual Report.  Holders of ADSs areadvised to consult their own tax advisers as to the tax and stamp dutyconsequences of their ownership of and dealings in ADSs and Ordinary Shares.

Under the current double taxation convention between Australia and theUnited States, dividends paid by Amcor to a United States resident shareholderof Amcor, including an ADS holder, who is not deemed to be an Australianresident for tax purposes, and does not have a permanent establishment in Australiaor perform in Australia independent personal services from a fixed basesituated in Australia, will be subject to a maximum Australian withholding taxof 15 percent of such gross dividend.

The applicable rates of dividend withholding tax are as follows:

·                  0% for 80% or greater shareholders

·                  5% for 10% or greater shareholders

·                  15% for others

To the extent that withholding tax is paid, this is a final tax and noother Australian tax would be payable.

Dividends paid to non-residents of Australia will not attract Australianwithholding tax to 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.

A holding period requirement applies when assessing the entitlement ofshareholders to franking credits. Franking credits will be denied on dividends payable on shares, anddistributions 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 test focuses on arrangements (share investments and related hedges)which remove 70% or more of downside and upside risk in relation to the shares.

Dividends paid to United States residents which are not franked (or arepartly franked) will, subject to the comments below, attract withholding tax atthe rates listed above on the unfranked amount.

Unfranked dividends paid to non-residents of Australia are, in certaincircumstances, wholly or partly exempt from Australian withholding tax.  Where the unfranked dividend is paid out ofprofits derived by Amcor from qualifying foreign dividends, withholding taxwill not be payable on any foreign dividend account (“FDA”) amount specified ina notice provided by Amcor to shareholders.

Since the introduction of the imputation system, 31 dividenddistributions have been made by Amcor, all of which have been at least partlyfranked.  Of the more recent dividenddistributions, the dividend paid in September 2005 was franked to 22% thedividend paid in March 2006 was franked to 15%. Amcor has provided and will continue to provide all shareholders withnotices which specify the franked and unfranked amount of each dividend and theamount (if any) of dividend withholding tax deducted.

Amcor is obliged to deduct tax at the highest marginal rate plus theMedicare Levy (currently 48.5%) from unfranked dividends or interest paid toinvestors resident in Australia who have not supplied the Company with a taxfile number or exemption form. Collection of tax file number information is authorized by, and its useand disclosure is strictly regulated by, the Tax Laws and Privacy Act.

A United States citizen who is a resident of Australia, or a UnitedStates corporation which is a resident of Australia (by reason of carrying onbusiness in Australia and having its voting power controlled by shareholderswho are residents of Australia, or being managed or controlled in Australia)may be liable to pay Australian income tax in respect of the profit or capitalgain (if any) derived upon the disposal of ADSs or Ordinary Shares.  Under current Australian tax laws, no tax ispayable in respect of the disposal of ADSs or Ordinary Shares held bynon-residents of Australia except:

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(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).

Any taxable unindexed capital gain on ADSs or Ordinary Shares acquiredon 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.

Notwithstanding that the profit or gain upon the disposal of the ADSs orOrdinary Shares is assessable in Australia in the circumstances of (a) or (b)above, if the vendor is a resident of the United States, then depending on thecircumstances of the case, relief from Australian tax may nevertheless beavailable under the current double taxation convention referred to above.

No stamp duty is payable on Australian share transfers. In addition,under current Australian tax law, no Australian State or Federal estate duty orother inheritance taxes will be payable in respect of ADSs or Ordinary Sharesupon the death of a holder thereof, regardless of the holder’s domicile.  For capital gains purposes, the death of theholder will only produce a deemed disposal, if the ADSs or Ordinary Shares arebequeathed to a tax exempt person or if the deceased was an Australianresident, the ADS or Ordinary Shares are bequeathed to a non-resident, and theADS or Ordinary Shares did not fall within the meaning of a taxable Australianasset as referred to in paragraph (b) above. In all other circumstances, the liability for tax on any gain iseffectively transferred to the deceased’s legal representatives orbeneficiaries, subject to those matters referred to above.  Such deemed disposal or a disposalsubsequently by the beneficiary will have the consequences set out above.

### ***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 discussion isbased on the tax laws of the United States, including the Internal Revenue Codeof 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 “Treaty”), 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 should consultyour 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.

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The discussionrelating to U.S. tax consequences only applies to you if you hold your ADRs 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 ADRs 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 ADRs 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. federalincome tax purposes if you hold ADRs evidencing ADSs, you will be treated asthe owner of the underlying Ordinary Shares represented by those ADRs, andexchanges of Ordinary Shares for ADRs, and ADRs for Ordinary Shares, generallywill not be subject to United States federal income tax.

#### Taxation ofDividends

Subject to the passiveforeign investment company (“PFIC”) rules discussed below, if you are a U.S.holder you must include in your gross income the gross amount of any dividend(or other distribution, other than certain distributions in redemption of ADSsor Ordinary Shares or distributions of our capital stock or rights to subscribefor our capital stock) paid (before reduction for Australian withholding taxes)by us out of our current or accumulated earnings and profits (as determined forUnited States federal income tax purposes).  If you are a non-corporate U.S. holder, dividends paid to you in taxableyears beginning before January 1, 2011 that constitute qualified dividendincome will be taxable to you at a maximum tax rate of 15% provided that youhold the shares or ADSs for more than 60 days during the 121-day periodbeginning 60 days before the ex-dividend date and meet other holding periodrequirements.  Dividends we pay withrespect to the shares or ADSs generally will be qualified dividend income.

You must includeany Australian tax withheld from the dividend payment in this gross amount eventhough you do not in fact receive it. The dividend is taxable to you when you, in the case of shares, or theDepositary, in the case of ADSs, receive the dividend, actually orconstructively.

The dividend willnot be eligible for the dividends-received deduction generally allowed toUnited States corporations in respect of dividends received from other UnitedStates corporations. Distributions in excess of current and accumulatedearnings and profits, as determined for United States federal income taxpurposes, will be treated as a non-taxable return of capital to the extent ofyour basis in the ADSs or Ordinary Shares and thereafter as capital gain.

The amount of thedividend 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 and will not be eligible for the special tax rate applicable toqualified dividend income.  Such gain orloss will generally be income or loss from sources within the United States forforeign tax credit limitation purposes.

Subject to certainlimitations, the Australian tax withheld in accordance with the Treaty and paidover to Australia will be creditable against the U.S. holder’s United Statesfederal income tax liability. Special rules apply in determining the foreigntax credit limitation with respect to dividends that are subject to the maximum15% tax rate.  Dividends will be incomefrom sources outside the United States. Dividends paid in taxable years beginning before January 1, 2007 generallywill be “passive” or “financial services” income, and dividends paid in taxableyears beginning after December 31, 2006 will, depending on your circumstances,be “passive” or “general” income which, in either case, is treated separatelyfrom other types of income for purposes of computing the foreign tax creditallowable to you.  No United Statesforeign tax credit will be allowed to U.S. holders of Ordinary Shares or ADSsin respect of any personal property or similar tax imposed by Australia (or anytaxing authority thereof or therein).

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Distributions ofadditional 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.

Taxation ofCapital 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 capital gain orloss for United States federal income tax purposes in an amount equal to thedifference between the U.S. dollar value of the amount realized and your taxbasis (determined in U.S. dollars) in such Ordinary Shares or ADSs.  Capital gain of a noncorporate U.S. holderthat is recognized in taxable years beginning before January 1, 2011 isgenerally taxed at a maximum rate of 15% where the holder has a holding periodgreater than one year.  The gain or losswill be income or loss from sources within the United States for foreign taxcredit limitation purposes.

#### PFIC Rules

We believe thatour 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,and a U.S. holder would be treated as if such holder had realized such gain andcertain “excess distributions” ratably over the holder’s holding period for theOrdinary Shares or ADSs and would be taxed at the highest tax rate in effectfor each such year to which the gain was allocated, together with an interestcharge in respect of the tax attributable to each such year.  With certain exceptions, your shares or ADSswill be treated as stock in a PFIC if we were a PFIC at any time during yourholding period in your shares or ADSs. Dividends that you receive from us will not be eligible for the specialtax rates applicable to qualified dividend income if we are treated as a PFICwith respect to you either in the taxable year of the distribution or thepreceding taxable year, but instead will be taxable at rates applicable toordinary income.

**F.****                                                                 ****Dividends and Paying Agents**

Not applicable.

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

Not applicable.

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

It is possible to read and copydocuments referred to in this Annual Report on Form 20-F that have been filedwith the Securities and Exchange Commission (“SEC”) at the SEC’s publicreference room located at 100 F Street NE, Mail Stop 5100, Washington, DC 20549.  Please telephone the SEC at 1-800-SEC-0330 oraccess the SEC website (www.sec.gov) for further information.

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

Not applicable.

----

- 87 -

## **ITEM 11****                                              QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

The discussion belowcontains certain forward-looking statements. See comments regarding “ForwardLooking Statements” on page 6 of this report.

Amcor’s activities exposeit to a variety of financial risks; market risk (including currency risk,equity securities price risk, commodity price risk, interest rate risk,employee share plan risk); credit risk and liquidity risk.

Amcor’s overall riskmanagement program seeks to minimise potential adverse effects on the financialperformance of the Company.  Amcornegotiates appropriate commercial terms or uses derivative financialinstruments such as foreign exchange contracts and interest rate swaps to hedgecertain risk exposures.

Risk management iscarried out by Amcor Treasury under policies approved by the Board ofDirectors.  Amcor Treasury identifies,evaluates and hedges financial risks in close co-operation with theconsolidated entity’s business groups. The Board provides written principles for overall risk management, aswell as written policies covering specific areas, such as mitigating foreignexchange, interest rate and credit risks, use of derivative financialinstruments and investing excess liquidity.

***Interest Rate Risk Exposures***

Amcor is exposedto movements in interest rates under various debt facilities.  By monitoring global interest rates and,where appropriate, hedging interest rate exposures or borrowing at fixedinterest rates, the company is able to manage the Company’s interest rate risk.

The Group alsomanages its interest-rate risk by using floating-for-fixed interest rateswaps.  Interest rate swaps and forwardrate agreements allow the consolidated entity to swap floating rate borrowingsinto fixed rates and vice-versa.

Each contractinvolves quarterly or semi-annual payment or receipt of the net amount ofinterest.  Floating rates are based oninterest rate settings in the currencies concerned plus the Company’s creditmargin.

The Company mayalso enter into interest rate options to reduce the impact of changes ininterest rates on floating rate long-term debt. There were no interest rate options outstanding at June 30, 2006 (2005:Nil).

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- 88 -

Exposure to interest rate risk and the effectiveweighted interest rate for classes of financial assets and liabilities is setout below:
| 2005-06                 | ** ** | ** **                               | ** ** | **Fixed interest maturing in:** | ** ** | ** **                                  | ** ** | ** **                                  | ** ** | ** **                                  | ** ** |
|-------------------------|------------|------------------------------------------|------------|------------------------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|
| ** **              | ** ** | ** **                               | ** ** | ** **                                     | ** ** | ** **                                  | ** ** | ** **                                  | ** ** | ** **                                  | ** ** |
| ** **              | ** ** | **Floating   interest   rate** | ** ** | **1 year or   less**            | ** ** | **Over 1 to 2   years** | ** ** | **Over 2 to 3   years** | ** ** | **Over 3 to 4   years** | ** ** | **Over 4 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** | ** ** | **A$M** | ** ** | **A$M** | ** ** | **A$M** | ** ** | ** ** | ** ** |
| ** **              | ** ** | ** **                               | ** ** | ** **                                     | ** ** | ** **                                  | ** ** | ** **                                  | ** ** | ** **                                  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Financial Assets        |       |                                     |       |                                           |       |                                        |       |                                        |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| Cash                    |       | 96.6                                     |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | 96.6 |   | 2.30 | % |
| Receivables             |       | 17.3                                     |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | 1,691.9 |   | 1,709.2 |   | - |   |
|                    |       | 113.9                                    |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | 1,691.9 |   | 1,805.8 |   | 2.30 | % |
| Financial  Liabilities  |       |                                     |       |                                           |       |                                        |       |                                        |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| Payables                |       | -                                        |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | 2,107.7 |   | 2,107.7 |   | - |   |
| Bank and other  loans   |       | 1,004.5                                  |       | 6.1                                            |       | 51.6                                        |       | -                                           |       | -                                           |       | - |   | 161.7 |   | 5.1 |   | 1,229.0 |   | 4.93 | % |
| Commercial paper        |       | 211.0                                    |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | 211.0 |   | 5.56 | % |
| US$ Notes          |       | -                                        |       | -                                              |       | -                                           |       | -                                           |       | 54.0                                        |       | - |   | 621.1 |   | - |   | 675.1 |   | 5.58 | % |
| Eurobond                |       | -                                        |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | 595.5 |   | - |   | - |   | 595.5 |   | 4.44 | % |
| Leases                  |       | -                                        |       | 8.3                                            |       | -                                           |       | -                                           |       | 22.3                                        |       | 34.1 |   | - |   | - |   | 64.7 |   | 6.48 | % |
| Subordinated            |       |                                     |       |                                           |       |                                        |       |                                        |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| convertible  securities |       | -                                        |       | 464.2                                          |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | 464.2 |   | 8.41 | % |
|                    |       | 1,215.5                                  |       | 478.6                                          |       | 51.6                                        |       | -                                           |       | 76.3                                        |       | 629.6 |   | 782.8 |   | 2,112.8 |   | 5,347.2 |   | 5.54 | % |

 

Therewere no interest rate or cross currency swaps outstanding at June 30, 2006.

----

- 89 -

 
| 2004-05                             | ** ** | ** **                               | ** ** | **Fixed interest maturing in:** | ** ** | ** **                                  | ** ** | ** **                                  | ** ** | ** **                                  | ** ** |
|-------------------------------------|------------|------------------------------------------|------------|------------------------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|
| ** **                          | ** ** | ** **                               | ** ** | ** **                                     | ** ** | ** **                                  | ** ** | ** **                                  | ** ** | ** **                                  | ** ** |
| ** **                          | ** ** | **Floating   interest   rate** | ** ** | **1 year or   less**            | ** ** | **Over 1 to 2   years** | ** ** | **Over 2 to 3   years** | ** ** | **Over 3 to 4   years** | ** ** | **Over 4 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** | ** ** | **A$M** | ** ** | **A$M** | ** ** | **A$M** | ** ** | ** ** | ** ** |
| ** **                          | ** ** | ** **                               | ** ** | ** **                                     | ** ** | ** **                                  | ** ** | ** **                                  | ** ** | ** **                                  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Financial Assets                    |       |                                     |       |                                           |       |                                        |       |                                        |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| Cash                                |       | 210.8                                    |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | 210.8 |   | 1.54 | % |
| Receivables                         |       | 19                                       |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | 1,824.70 |   | 1,843.70 |   | - |   |
|                                |       | 229.8                                    |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | 1,824.70 |   | 2,054.50 |   | 1.54 | % |
| Financial  Liabilities              |       |                                     |       |                                           |       |                                        |       |                                        |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| Payables                            |       | -                                        |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | 2,027.6 |   | 2,027.6 |   | - |   |
| Bank and other  loans               |       | 1,187.1                                  |       | 2.0                                            |       | 3.7                                         |       | 0.9                                         |       | 7.7                                         |       | - |   | - |   | 6.7 |   | 1,208.1 |   | 4.22 | % |
| Commercial paper                    |       | 307.7                                    |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | 307.7 |   | 4.64 | % |
| US$ Notes                      |       | -                                        |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | 52.5 |   | 603.3 |   | - |   | 655.8 |   | 5.58 | % |
| Eurobond                            |       | -                                        |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | 554.5 |   | - |   | 554.5 |   | 4.44 | % |
| Leases                              |       | 0.7                                      |       | 2.2                                            |       | 3.3                                         |       | -                                           |       | -                                           |       | 71.7 |   | 0.5 |   | - |   | 78.4 |   | 6.56 | % |
| Distributions  payable              |       | -                                        |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | 8.7 |   | 8.7 |   | - |   |
| Subordinated                        |       | -                                        |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | - |   |   |   |
| convertible  securities             |       | -                                        |       | -                                              |       | 301.1                                       |       | -                                           |       | -                                           |       | - |   | - |   | - |   | 301.1 |   | 7.25 | % |
|                                |       | 1,495.5                                  |       | 4.2                                            |       | 308.1                                       |       | 0.9                                         |       | 7.7                                         |       | 124.2 |   | 1,158.3 |   | 2,043.0 |   | 5,141.9 |   | 4.94 | % |
| Interest rate  swaps/FRAs           |       |                                     |       |                                           |       |                                        |       |                                        |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| US$                                 |       | (6.1                                     | )          | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | - |   | 7.65 | % |
| Euro                                |       | (480.0                                   | )          | 480.0                                          |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | - |   | 4.81 | % |
| A$                                  |       | 480.0                                    |       | (480.0                                         | )          | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | - |   | -5.67 | % |
|                                |       | (6.1                                     | )          | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | - |   | 4.90 | % |
| Cross Currency  Interest Rate Swaps |       |                                     |       |                                           |       |                                        |       |                                        |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| A$                                  |       | 607.3                                    |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | 607.3 |   | 5.77 | % |
| Euro                                |       | (607.3                                   | )          | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | (607.3 | ) | (2.05 | %) |
| A$                                  |       | 116.0                                    |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | 116.0 |   | 6.37 | % |
| CA$                                 |       | (116.0                                   | )          | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | (116.0 | ) | (3.4 | %) |
|                                |       | -                                        |       | -                                              |       | -                                           |       | -                                           |       | -                                           |       | - |   | - |   | - |   | - |   | 4.06 | % |

 

*** ***

***Foreign Currency Exchange Rate Risk***

Foreign exchange riskarises when future commercial transactions and recognized assets andliabilities are denominated in a currency that is not the functional currencyof the entity within the consolidated entity. The consolidated entity operates internationally and is exposed toforeign exchange risk arising from currency exposures mainly to the US dollarand Euro.

In relation totransactional foreign currency exposures, Amcor’s policy is to hedge all netforecast or actual foreign currency exposures greater than A$100,000, whereexposures are measured as forecast or actual transactional cash flows incurrencies other than the functional currency of the business.

Accounts payableand borrowings include amounts repayable in foreign currencies shown at theirAustralian dollar equivalents.  Allmaterial foreign currency liabilities are hedged or matched by equivalentassets in the same currencies, such matching representing a natural hedge.  Cross currency interest rate swaps allow theconsolidated entity to swap long term Australian denominated borrowings intoforeign currencies to hedge the investment in entities with functionalcurrencies which are not the reporting currency of the parent entity.

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The following table sets out the gross value to bereceived under foreign currency contracts, the weighted average contractedexchange rates and the settlement periods of contracts outstanding as at June30:
|                      | ** ** | **2006**                    | ** ** | **2005**                    | ** ** | **2006**                    | ** ** | **2005**                    | ** ** |
|----------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| ** **           | ** ** | **Weighted   Average** | ** ** | **Weighted   Average** | ** ** | **Contract   Amounts** | ** ** | **Contract   Amounts** | ** ** |
| ** **           | ** ** | **Rate**                    | ** ** | **Rate**                    | ** ** | **A$m**                     | ** ** | **A$m**                     | ** ** |
|                 |       |                        |       |                        |       |                        |       |                        |       |
| Buy Contracts        |       |                        |       |                        |       |                        |       |                        |       |
| 0-12 months          |       |                        |       |                        |       |                        |       |                        |       |
| CAD                  |       | -            |       | 0.94                        |       | -                           |       | 1.0                         |       |
| CHF                  |       | 0.90                        |       | 0.91                        |       | 0.5                         |       | 1.2                         |       |
| DKK                  |       | 4.35                        |       | 4.70                        |       | 9.9                         |       | 14.5                        |       |
| EUR                  |       | 0.59                        |       | 0.60                        |       | 76.8                        |       | 50.2                        |       |
| GBP                  |       | 0.40                        |       | 0.40                        |       | 15.3                        |       | 8.4                         |       |
| JPY                  |       | -            |       | 76.54                       |       | -                 |       | 3.4                         |       |
| NZD                  |       | -            |       | 1.09                        |       | -                 |       | 0.9                         |       |
| PLN                  |       | 2.37                        |       | -            |       | 1.6                         |       | -                 |       |
| SEK                  |       | 5.42                        |       | 5.80                        |       | 13.4                        |       | 13.2                        |       |
| USD                  |       | 0.75                        |       | 0.76                        |       | 93.6                        |       | 75.0                        |       |
| More than 12  months |       |                        |       |                        |       |                        |       |                        |       |
| EUR                  |       | 0.59                        |       | 0.61                        |       | 16.1                        |       | 2.5                         |       |
| USD                  |       | 0.75                        |       | 0.75                        |       | 1.6                         |       | 4.3                         |       |
|                 |       |                        |       |                        |       |                        |       |                        |       |
| Sell Contracts       |       |                        |       |                        |       |                        |       |                        |       |
| 0-12 months          |       |                        |       |                        |       |                        |       |                        |       |
| CAD                  |       | 0.82                        |       | -            |       | 73.3                        |       | -                           |       |
| CHF                  |       | 0.91                        |       | 0.97                        |       | 0.2                         |       | 5.7                         |       |
| DKK                  |       | 4.35                        |       | 4.70                        |       | 5.6                         |       | 5.1                         |       |
| EUR                  |       | -            |       | 0.61                        |       | -                 |       | 0.7                         |       |
| GBP                  |       | 0.40                        |       | 0.41                        |       | 13.2                        |       | 22.1                        |       |
| NOK                  |       | 4.58                        |       | 5.12                        |       | 4.9                         |       | 6.0                         |       |
| NZD                  |       | 1.15                        |       | 1.08                        |       | 70.7                        |       | 29.5                        |       |
| SEK                  |       | 5.41                        |       | 5.78                        |       | 2.3                         |       | 2.8                         |       |
| USD                  |       | 0.73                        |       | 0.76                        |       | 74.4                        |       | 28.7                        |       |

 

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- 91 -

***Commodity Risk***

Amcor is exposed to commodity price risk, particularly for resin, andmanages this by passing the risk contractually to customers to the maximumextent possible.  In the case ofaluminium, some hedging is undertaken based on customer instructions, and allrelated risks, benefits and costs are passed onto the customer.  The following table sets out the gross valueto be received under commodity swap contracts, the weighted average contractedLondon Metals Exchange rates and the settlement periods of contractsoutstanding as at the year ended June 30:
|                                      | ** ** | **2006**                            | ** ** | **2005**                            | ** ** | **2006**                    | ** ** | **2005**                    | ** ** |
|--------------------------------------|------------|-------------------------------------|------------|-------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| ** **                           | ** ** | **Average   Fixed Price** | ** ** | **Average   Fixed Price** | ** ** | **Contract   Amounts** | ** ** | **Contract   Amounts** | ** ** |
| **US$ denominated   contracts** | ** ** | ** **                          | ** ** | ** **                          | ** ** | **A$m**                     | ** ** | **A$m**                     | ** ** |
| **Buy Contracts**                    | ** ** | ** **                          | ** ** | ** **                          | ** ** | ** **                  | ** ** | ** **                  | ** ** |
| 0-12 months                          |       |                                |       |                                |       |                        |       |                        |       |
| ALU                                  |       | 2,599.6                             |       | 1,828.30                            |       | 13.8                        |       | 29.4                        |       |
| Over 1 to 2 years                    |       |                                |       |                                |       |                        |       |                        |       |
| ALU                                  |       | 2,785.0                             |       | -                                   |       | 1.0                         |       | -                           |       |
|                                 |       |                                |       |                                |       |                        |       |                        |       |
| **A$ denominated   contracts**  |       |                                |       |                                |       |                        |       |                        |       |
| **Buy Contracts**                    |       |                                |       |                                |       |                        |       |                        |       |
| 0-12 months                          |       |                                |       |                                |       |                        |       |                        |       |
| ALU                                  |       | 3,715.0                             |       | -                                   |       | 24.5                        |       | -                           |       |

 

***Employee Share Plan Risk***

In relation to the cash settled Employee Share PlanOptions, the Employee Bonus Payment Plan and the Senior Executive RetentionPayment Plan, the Company is exposed to movements in the value of theunderlying ordinary shares of Amcor Limited. For all such entitlements offered, the Company has hedged its exposureby entering into cash settled equity share option or equity share swapcontracts that mirror the terms and conditions of the employee benefit.

----

- 92 -

The following table sets out the expiry or vestingdate (if applicable), the outstanding option/share hedged contract positionsand the hedged price of the contracts as at June 30:
| **2006 Equity Share Option**       | ** ** | ** **          | ** ** | ** **   | ** ** | ** **       |   |
|---------------------------------------------------|------------|---------------------|------------|--------------|------------|------------------|--------|
| **“American” Contracts**           | ** ** | ** **          | ** ** | ** **   | ** ** | **Average**      |   |
| ** **                                        | ** ** | **Expiry**          | ** ** | **Contract** | ** ** | **hedged**       |   |
|                                                   | ** ** | **date**            | ** ** | **amounts**  | ** ** | **price $** |   |
| One year or less                                  |       | September  11, 2006 |       | 50,000       |       | 8.28             |   |
|                                              |       | March  24, 2007     |       | 17,800       |       | 7.87             |   |
| More than one year but not more than   five years |       | July  1, 2007       |       | 160,000      |       | 7.40             |   |
|                                              |       | August  2, 2007     |       | 21,500       |       | 6.84             |   |
|                                              |       | September  11, 2007 |       | 50,000       |       | 8.28             |   |
|                                              |       | September  12, 2007 |       | 100,000      |       | 7.20             |   |
|                                              |       | September  11, 2008 |       | 50,000       |       | 8.28             |   |
|                                              |       | March  24, 2010     |       | 289,250      |       | 7.87             |   |
|                                              |       | August  2, 2010     |       | 348,300      |       | 6.84             |   |
| More than five years                              |       | November 1, 2012    |       | 457,600      |       | 8.20             |   |

 
| **Equity Share Swap Contracts**   | ** ** | ** **   | ** ** | ** **   | ** ** | **Average**      | ** ** |
|--------------------------------------------------|------------|--------------|------------|--------------|------------|------------------|------------|
| ** **                                       | ** ** | **Vesting**  | ** ** | **Contract** | ** ** | **hedged**       | ** ** |
| ** **                                       | ** ** | **date**     | ** ** | **amounts**  | ** ** | **price $** | ** ** |
| Vested                                           |       | December-03  |       | 5,000        |       | 7.11             |       |
|                                             |       | December-04  |       | 16,800       |       | 7.11             |       |
|                                             |       | December-05  |       | 105,800      |       | 7.11             |       |
| One year or less                                 |       | July-06      |       | 50,000       |       | 7.11             |       |
|                                             |       | October-06   |       | 8,000        |       | 7.11             |       |
|                                             |       | February-07  |       | 198,400      |       | 7.11             |       |
| More than one  year but not more than five years |       | July-07      |       | 20,000       |       | 7.11             |       |
| More than five  years                            |       | September-11 |       | 8,410        |       | 7.11             |       |
|                                             |       | September-12 |       | 28,315       |       | 7.11             |       |
|                                             |       | September-13 |       | 17,425       |       | 7.11             |       |

                                                                                                
| **2005 Equity Share Option** | ** ** | ** **          | ** ** | ** **   | ** ** | **Average** | ** ** |
|---------------------------------------------|------------|---------------------|------------|--------------|------------|-------------|------------|
| **“American” Contracts**     | ** ** | **Expiry**          | ** ** | **Contract** | ** ** | **hedged**  | ** ** |
| ** **                                  | ** ** | **date**            | ** ** | **amounts**  | ** ** | **price $** | ** ** |
| One year or less                            |       | September  12, 2005 |       | 100,000      |       | 7.20        |       |
|                                        |       | June  29, 2006      |       | 55,132       |       | 6.06        |       |
| Over one to five  years                     |       | September  11, 2006 |       | 50,000       |       | 8.28        |       |
|                                        |       | September  12, 2006 |       | 200,000      |       | 6.47        |       |
|                                        |       | March  23, 2007     |       | 17,800       |       | 7.87        |       |
|                                        |       | July  1, 2007       |       | 280,000      |       | 7.40        |       |
|                                        |       | August  2, 2007     |       | 25,000       |       | 6.84        |       |
|                                        |       | September  11, 2007 |       | 50,000       |       | 8.28        |       |
|                                        |       | September  12, 2007 |       | 100,000      |       | 7.20        |       |
|                                        |       | September  11, 2008 |       | 50,000       |       | 8.28        |       |
|                                        |       | March  24, 2010     |       | 351,550      |       | 7.87        |       |
| More than five  years                       |       | August  2, 2010     |       | 420,000      |       | 6.84        |       |
|                                        |       | November 1, 2012    |       | 517,000      |       | 8.20        |       |

 
| **Equity Share Swap Contracts** | ** ** | ** **   | ** ** | ** **   | ** ** | **Average** | ** ** |
|------------------------------------------------|------------|--------------|------------|--------------|------------|-------------|------------|
| ** **                                     | ** ** | **Vesting**  | ** ** | **Contract** | ** ** | **hedged**  | ** ** |
| ** **                                     | ** ** | **date**     | ** ** | **amounts**  | ** ** | **price $** | ** ** |
| Vested                                         |       | December-03  |       | 5,000        |       | 7.11        |       |
|                                           |       | December-04  |       | 16,800       |       | 7.11        |       |
| One year or less                               |       | December-05  |       | 171,000      |       | 7.11        |       |
| Over one to five  years                        |       | July-06      |       | 50,000       |       | 7.11        |       |
|                                           |       | October-06   |       | 8,000        |       | 7.11        |       |
|                                           |       | February-07  |       | 210,100      |       | 7.11        |       |
|                                           |       | July-07      |       | 50,000       |       | 7.11        |       |
|                                           |       | September-11 |       | 8,410        |       | 7.11        |       |
|                                           |       | September-12 |       | 28,315       |       | 7.11        |       |
|                                           |       | September-13 |       | 17,425       |       | 7.11        |       |

 

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- 93 -

***Credit Risk***

Amcor has nosignificant concentrations of credit risk. In order to control any exposure which may result from non-performanceby counterparties, financial assets, other than trade receivables, and hedgingcontracts are only entered into with a range of major banks with a minimum longterm credit rating of A- by Standard & Poor’s.  In addition, the Amcor Board must approvethese banks for use, and specific internal guidelines have been establishedwith regard to limits, dealing and settlement procedures.

*FinancialInstruments*

The maximum creditrisk on financial assets of the Company, other than investments in shares, isgenerally the carrying amount of receivables, net of impairment losses.

Amcor minimises itsconcentrations of credit risk by undertaking transactions with a large numberof customers and counterparties in various countries.  The Company has policies in place to ensurethat sales of products and services are made to customers with an appropriatecredit history.   There is no materialexposure to any individual customer.

*DerivativeFinancial Instruments*

The credit riskexposure arising from derivative financial instruments is the sum of allcontracts with a positive replacement cost. For derivative financial instruments, the maximum credit exposure is theamount contracted to be received by Amcor when settlement occurs.

**Net Fair Values**

OnBalance Sheet Financial Instruments

Instruments traded onorganised markets are valued by reference to market prices prevailing atbalance date.  The net fair value ofother monetary financial assets and financial liabilities approximates theircarrying value.

Thecarrying amounts and net fair values of financial assets and liabilities as atJune 30:
|                                                | ** ** | **Carrying** | ** ** | **Net Fair** | ** ** | **Carrying** | ** ** | **Net Fair** | ** ** |
|------------------------------------------------|------------|--------------|------------|--------------|------------|--------------|------------|--------------|------------|
|                                           | ** ** | **Amount**   | ** ** | **Value**    | ** ** | **Amount**   | ** ** | **Value**    | ** ** |
| ** **                                     | ** ** | **2006**     | ** ** | **2006**     | ** ** | **2005**     | ** ** | **2005**     | ** ** |
|                                           | ** ** | **A$M**      | ** ** | **A$M**      | ** ** | **A$M**      | ** ** | **A$M**      | ** ** |
|                                           |       |         |       |         |       |         |       |         |       |
| **Financial  Assets**                          | ** ** | ** **   | ** ** | ** **   | ** ** | ** **   | ** ** | ** **   | ** ** |
|                                           |       |         |       |         |       |         |       |         |       |
| Cash assets                                    |       | 97.0         |       | 97.0         |       | 210.8        |       | 210.8        |       |
| Receivables                                    |       | 1,709.2      |       | 1,709.2      |       | 1,843.7      |       | 1,843.7      |       |
| Other financial  assets                        |       |         |       |         |       |         |       |         |       |
|                                           |       | 290.8        |       | 426.0        |       | 48.4         |       | 91.7         |       |
|                                           |       |         |       |         |       |         |       |         |       |
| **Financial  Liabilities**                     | ** ** | ** **   | ** ** | ** **   | ** ** | ** **   | ** ** | ** **   | ** ** |
|                                           |       |         |       |         |       |         |       |         |       |
| Payables                                       |       | 2,107.7      |       | 2,107.7      |       | 2,027.6      |       | 2,027.6      |       |
| Bank and other  loans                          |       | 1,229.0      |       | 1,229.0      |       | 1,208.1      |       | 1,208.1      |       |
| Commercial paper                               |       | 211.0        |       | 211.0        |       | 307.7        |       | 307.7        |       |
| US$Notes                                       |       | 675.1        |       | 623.4        |       | 655.8        |       | 651.8        |       |
| Eurobond                                       |       | 595.5        |       | 589.3        |       | 554.5        |       | 578.0        |       |
| Lease  liabilities                             |       | 64.7         |       | 64.7         |       | 78.4         |       | 78.4         |       |
| Distributions  payable                         |       | -            |       | -            |       | 8.7          |       | 8.7          |       |
| Undated  subordinated   convertible securities |       |         |       |         |       |         |       |         |       |
|                                           |       | 464.2        |       | 464.7        |       | 301.1        |       | 316.2        |       |

 

The eurobond and undated subordinated convertiblesecurities are readily traded in organised markets.

----

- 94 -

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

Not Applicable.

**ITEM 13****                DEFAULTS DIVIDEND ARREARAGES AND DELINQUENCIES**

None.

**ITEM 14****                MATERIAL MODIFICATIONS TO THE RIGHT OF SECURITY** **HOLDERS AND USE OFPROCEEDS**

None.

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

As required by Rule 13a-15 under the Securities Exchange Act of 1934, asamended, (the “Exchange Act”), our management, with the participation of theChief Executive Officer and Chief Financial Officer, evaluated theeffectiveness of the Company’s disclosure controls and procedures as at June30, 2006, the Company’s disclosure controls and procedures were (1) designed toensure that material information relating to the Company, including itsconsolidated subsidiaries, is accumulated and communicated to our management,including our Chief Executive Officer and Chief Financial Officer, asappropriate to allow timely decisions regarding required disclosure, and (2)effective, in that they provide reasonable assurance that information requiredto be disclosed by the Company in the reports that we file or submit under theExchange Act is recorded, processed, summarized and reported within the timeperiods specified in the SEC’s rules and forms.

There are inherent limitations to the effectiveness of any system ofdisclosure and internal controls, including the possibilities of faultyjudgements or mistakes by management, fraud, or the intentional circumventionof controls by individual acts or the collusion of two or more people.  Accordingly, even an effective disclosure andinternal control system can provide only reasonable assurance with respect todisclosures and financial statement preparations.  See item 8 “Financial Information – LegalProceedings”.

There were no changes in our internal control over financial reportingduring the period covered by this Annual Report that have materially affected,or are reasonably likely to materially affect, our internal control overfinancial reporting.

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

TheBoard of Directors has determined that Mr John Thorn is an “audit committeefinancial expert” and that Mr Thorn is independent as is defined in the NASDAQlisting standards. Although the Board has determined that this individual hasthe requisite attributes defined under the rules of the SEC, hisresponsibilities are the same as those of the other audit committee members. Heis not an auditor or an accountant, does not perform “field work” and is not a full-timeemployee. The SEC has determined that an audit committee member who isdesignated as an audit committee financial expert will not be deemed to be an“expert” for any purpose as a result of being identified as an audit committeefinancial expert. The Audit and Compliance Committee is responsible foroversight of management in the preparation of Amcor’s financial statements andfinancial disclosures. The Audit and Compliance Committee relies on theinformation provided by management and the external auditor. The Audit andCompliance Committee does not have the duty to plan or conduct audits todetermine Amcor’s financial statements and disclosures are complete andaccurate.

## **ITEM 16B****                                       CODE OF ETHICS**

## Amcor has adopted a code ofethics that applies to all employees of the Company. The code of ethics isreferred to as the Amcor Limited Corporate Code of Conduct and Ethics Policyand can be accessed on the Company’s website: **www.amcor.com**.  There were two additions made to the policyduring the year ending June 30, 2006, focusing on ‘Facilitation payments’ and ‘Where to go for assistance’.

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- 95 -

**ITEM 16C              PRINCIPALACCOUNTANT FEES AND SERVICES**
|            | ** **                                                                                                                                                              | ** **                                                                                                                      | ** ** | **Year Ended   June 30, 2006** | ** ** | ** ** | **Year Ended   June 30, 2005** | ** ** |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------|------------|------------|--------------------------------|------------|
| ** ** | **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................................................................................................ |                                                                                                                            | 1,884      |                           |       | 1,765      |                           |
|       | -          controlled  entities  .......................................................................................   |                                                                                                                            | 6,387      |                           |       | 7,386      |                           |
|       |                                                                                                                                                                    |                                                                                                                            | 8,271      |                           |       | 9,151      |                           |
| ** ** | ** **                                                                                                                                                              | ** **                                                                                                                      | ** ** | ** **                     | ** ** | ** ** | ** **                     |
| **(b)**    | ** **                                                                                                                                                              | **Remuneration for  audit-related services**                                                                                    | ** ** | ** **                     | ** ** | ** ** | ** **                     | ** ** |
| ** ** | ** **                                                                                                                                                              | ** **                                                                                                                      | ** ** | ** **                     | ** ** | ** ** | ** **                     |
|       | Other assurance services (1).........................................................................................................                                   |                                                                                                                            | 3,216      |                           |       | 2,805      |                           |
| ** ** | ** **                                                                                                                                                              | ** **                                                                                                                      | ** ** | ** **                     | ** ** | ** ** | ** **                     |
| **(c)**    | ** **                                                                                                                                                              | **Remuneration for tax  services**                                                                                              | ** ** | ** **                     | ** ** | ** ** | ** **                     | ** ** |
|       | Tax compliance and advisory services....................................................................                                                                |                                                                                                                            | 1,128      |                           |       | 785        |                           |
| ** ** | ** **                                                                                                                                                              | ** **                                                                                                                      | ** ** | ** **                     | ** ** | ** ** | ** **                     |
| **(d)**    | ** **                                                                                                                                                              | **Remuneration for other services.........................................................................**                    |       | -                              |       |       | -                              |       |

 

(1)Includes audit of local statutory financialstatements.

***Pre-Approval Policy***

Thefollowing non-audit services pre-approval policy has been adopted by Amcor.

Toachieve the appropriate balance, there are two broad principles which Amcorwill adhere to:

·                  The external auditors should not provide serviceswhich are fundamentally in conflict with their role as independent statutoryauditors. In broad terms, this means that they should not be in a positionwhere they are seen to:

·                  Assume the role of or as employees of Amcor;

·                  Perform work which they will subsequently berequired to audit;

·                  Become an advocate for Amcor; or

·                  Have a mutual or conflicting interest with Amcor.

·                  For services that do not come into thesecategories, it is in the best interests of Amcor that the Company is able toselect the best service provider for particular services, provided that thereis appropriate transparency and proper approval processes are in place.

Non-Audit - The external auditors shall not provide services to Amcorwhich are services considered to be in conflict with the guiding principles setout by current and prospective Australian and international legislativerequirements, including the Sarbanes-Oxley Act. In particular, the externalauditors may not provide the following non-audit services:

·                  Bookkeeping or other services related to theaccounting records or financial statements of Amcor.;

·                  Financial information systems design andimplementation;

·                  Appraisal or valuation services, where theseresult in figures which are included in the company’s 

accounts;

·                  Fairness opinions;

·                  Actuarial services;

·                  Internal audit outsourcing services;

·                  Secondments to Amcor or other engagementsinvolving management or human resources; 

functions.

·                  Broker or dealer, investment adviser or investmentbanking services; and

·                  Legal services or expert witness servicesunrelated to the audit;

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

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

----

- 96 -

·                                          All PNASEs must be notified, with reasonablespecificity to the Chairman of the Audit and Compliance Committee;

·                                          The notification must specify the services to beprovided, specify the period during which the services will be performed andspecify the maximum total fees to be paid, before the engagement is commenced;

·                                          Any one member of the Audit and ComplianceCommittee is delegated to pre-approve individual PNASEs up to a financial limitof A$500,000;

·                                          The Secretary of the Audit and ComplianceCommittee shall keep a financial year running list of approved PNASEs andsubmit the cumulative list, together with a reasonably specific description ofservices provided to each meeting of the Audit and Compliance Committee fornoting; and

·                                          The Audit and Compliance Committee mustspecifically preapprove all proposed PNASEs. Where pre-approval is to be soughtfor the external auditors to perform non-audit services, this should in thefirst instance be referred to the Executive General Manager Finance who willseek the appropriate Audit and Compliance Committee pre-approval prior tocommencement 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 theexternal auditor under applicable law in Australia or the United States. Theexternal auditor will provide the Audit and Compliance Committee with an annualcertification of their continued independence, under applicable law andprofessional standards both in Australia and in the United States and, inparticular, confirm that they have not carried out any engagements during theyear which would impair their professional independence.

OurAudit and Compliance Committee has not approved any services described incategories (b) through (d) in the table above pursuant to paragraph(c)(7)(i)(C) of Regulation S-X Rule 2-01.

**ITEM 16D****                                          EXEMPTION FROM LISTING STANDARDS FOR AUDITCOMMITTEES**

Not Applicable.

----

- 97 -

**ITEM 16E****                                       PURCHASE OF EQUITY SECURITIES BY THE ISSUER ANDAFFILIATED PURCHASERS**

On May 25, 2006 the Companycompleted the on market buy-back of 8,187,171 fully paid ordinary shares,representing 0.93% of ordinary shares on issue on that date.  The program was announced on January 25, 2006with up to $421 million of shares approved for buy back depending on the numberof conversions to equity of PACRS1 convertible notes.  The total consideration of shares bought backon market was $57,836,513 being an average, including incidental costs, of$7.06 per share.
| **Period**            | ** ** | **Total   Number of   Shares (or   Units)   Purchased** | ** ** | **Average    Price Paid   per Share   (or Units)** | ** ** | **Total  Number of Shares   (or Units) Purchased as   Part of Publicly   Announced Plans or   Programs** | ** ** | **Maximum  Number (or   Approximate Dollar   Value) of Shares (or   Units) that May Yet Be   Purchased Under the   Plans or Programs** | ** ** |
|-----------------------|------------|---------------------------------------------------------|------------|----------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------|------------|
| February 28, 2006     |       | 194,800                                                 |       | $7.34                                              |       | 194,800                                                                                                  |       | $419 million                                                                                                                           |       |
| March 1 - 28, 2006    |       | 2,930,010                                               |       | $7.41                                              |       | 2,930,010                                                                                                |       | $416 million                                                                                                                           |       |
| April 2006            |       | -                                                       |       | -                                                  |       | -                                                                                                        |       | $35 million                                                                                                                            |       |
| May 2 – 25, 2006 |       | 5,062,361                                               |       | $6.90                                              |       | 5,062,361                                                                                                |       | Nil                                                                                                                                    |       |
| **Total**             | ** ** | **8,187,171**                                           | ** ** | **$7.06**                                          | ** ** | **8,187,171**                                                                                            | ** ** | **Nil**                                                                                                                                | ** ** |

 

 

**ITEM 17****                                                   FINANCIAL STATEMENTS**

Not applicable, as we comply with Item 18.

**ITEM 18**                                                   **FINANCIAL STATEMENTS**

Consolidated Financial Statements - see pagesF1 to F159.

**ITEM 19**                                                   **EXHIBITS**

1.             There have been no changes to the constitution ofAmcor Limited since November 2004.  Afull copy of Amcor’s constitution, as amended in 2004, is filed with the SEC asExhibit 1 to 20-F filed December 23, 2004.

2.             Certain instruments defining the rights of holdersof other long-term debt of the Company and its subsidiaries have been omittedpursuant to instruction 2(b)(i) of Item 19 of Form 20-F. The registrant herebyundertakes to furnish to the SEC, upon request, copies of such instruments.

7.               Calculation of Basic and Diluted Earnings perShare

8.               List of Subsidiaries of Amcor

12            302 Certifications

(a)         Certification of theCompany’s Chief Executive Officer and Managing Director

(b)         Certification of theCompany’s Chief Financial Officer

13            906 Certifications

(a)         Certification of theCompany’s Chief Executive Officer and Managing Director

(b)         Certification of theCompany’s Chief Financial Officer

----

- 98 -

 
|        | Index to  Consolidated Financial Statements of Amcor Limited |   |   |
|--------|--------------------------------------------------------------|--------|--------|
|   |                                                         |   |   |
|   | Audited  Financial statements                                |   |   |
|   |                                                         |   |   |
|   | Report of Independent Registered Public Accounting  Firm     |   | F - 1  |
|   |                                                         |   |   |
|   | Consolidated Income  Statements                              |   |   |
|   | for the years ended June 30,  2006 and                       |   |   |
|   | 2005                                                         |   | F - 2  |
|   |                                                         |   |   |
|   | Consolidated Balance Sheets                                  |   |   |
|   | at June 30, 2006, and 2005                                   |   | F - 3  |
|   |                                                         |   |   |
|   | Consolidated  Statements of recognised Income and Expense    |   |   |
|   | for the  years ended June 30, 2006 and                       |   |   |
|   | 2005                                                         |   | F - 4  |
|   |                                                         |   |   |
|   | Consolidated Cash Flow  Statements                           |   |   |
|   | for the years ended June  30,                                |   |   |
|   | 2006 and 2005                                                |   | F - 5  |
|   |                                                         |   |   |
|   | Notes to the  Consolidated Financial Statements 2005-2006    |   | F - 7  |

 

----

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Amcor Limited Boardof Directors and Shareholders

We have audited theaccompanying consolidated balance sheets of Amcor Limited and its subsidiaries(the Consolidated Entity) as of June 30, 2006 and 2005, and the relatedconsolidated income statements, consolidated statements of recognised incomeand expense and consolidated cash flow statements for the years ended June 30,2006 and 2005, all expressed in Australian dollars.  These consolidated financial statements arethe responsibility of the Consolidated Entity’s management.  Our responsibility is to express an opinionon these consolidated financial statements based on our audits.

We conducted our audits inaccordance with the standards of the Public Company Accounting Oversight Board(United States).  Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement.  An audit includes examining, on a test 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 statementpresentation.  We believe that our auditsprovide a reasonable basis for our opinion.

In our opinion, theconsolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of the Consolidated Entity at June30, 2006 and 2005, and the results of its operations and its cash flows for theyears ended June 30, 2006 and 2005, in conformity with the Australianequivalents to International Financial Reporting Standards (“AIFRS”) andInternational Financial Reporting Standards (“IFRS”).

As further described in Note1 to the consolidated financial statements, as a result of adopting AASB 132 “FinancialInstruments: Disclosure and Presentation” and AASB 139 “Financial Instruments:Recognition and Measurement” on July 1, 2005, the Consolidated Entity changedits method of accounting for financial instruments.  In accordance with an election taken underthe relevant transitional provisions, the prior period comparatives have notbeen re-stated and the accounting for such financial instruments for the yearended June 30, 2005 continues to be in accordance with former AustralianGenerally Accepted Accounting Principles (“AGAAP”).

AIFRS vary in certainsignificant respects from accounting principles generally accepted in theUnited States of America.  Informationrelating to the nature and effect of such differences is presented in Note 51to the consolidated financial statements.

KPMG

Melbourne,Australia

August 23, 2006, except as to note 49(4) which is as of January 15,2007

F-1

----

**Amcor Limited Consolidated**

**Income Statements**

**For the financial years ended 30 June 2006 and2005**

 
|                                                                                                                          | ** ** | **Note**   | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|--------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
|                                                                                                                     | ** ** | ** ** | ** ** | ** ** | ** ** | **(1**     | **)**      |
|                                                                                                                     | ** ** | ** ** | ** ** | **$m**     | ** ** | **$m**     | ** ** |
|                                                                                                                     |       |       |       |       |       |       |       |
| **Sales revenue from continuing operations**                                                                             |       | 5          |       | 11,041.9   |       | 10,646.1   |       |
| Cost of sales                                                                                                            |       |       |       | (9,329.9   | )          | (8,853.3   | )          |
|                                                                                                                     |       |       |       |       |       |       |       |
| **Gross profit**                                                                                                         |       |       |       | 1,712.0    |       | 1,792.8    |       |
|                                                                                                                     |       |       |       |       |       |       |       |
| Other income                                                                                                             |       | 5          |       | 176.2      |       | 70.2       |       |
| Sales and marketing expenses                                                                                             |       |       |       | (319.3     | )          | (301.2     | )          |
| General and administration expenses                                                                                      |       |       |       | (790.6     | )          | (1,013.2   | )          |
| Research costs                                                                                                           |       | 6          |       | (37.0      | )          | (39.7      | )          |
| Share of net profit of associates                                                                                        |       | 45         |       | 9.8        |       | 1.8        |       |
| **Profit from continuing operations before  financial income and expenses**                                              |       |       |       | 751.1      |       | 510.7      |       |
|                                                                                                                     |       |       |       |       |       |       |       |
| Financial income                                                                                                         |       | 5          |       | 21.7       |       | 20.4       |       |
| Financial expenses                                                                                                       |       | 6          |       | (263.9     | )          | (181.1     | )          |
|                                                                                                                     |       |       |       |       |       |       |       |
| **Net finance costs**                                                                                                    |       |       |       | (242.2     | )          | (160.7     | )          |
|                                                                                                                     |       |       |       |       |       |       |       |
| **Profit before related income tax expense**                                                                             |       |       |       | 508.9      |       | 350.0      |       |
|                                                                                                                     |       |       |       |       |       |       |       |
| Income tax expense                                                                                                       |       | 9          |       | (92.3      | )          | (72.4      | )          |
| ** **                                                                                                               |       |       |       |       |       |       |       |
| **Profit from continuing operations**                                                                                    |       |       |       | 416.6      |       | 277.6      |       |
|                                                                                                                     |       |       |       |       |       |       |       |
| Loss from discontinued operations                                                                                        |       | 12         |       | (37.4      | )          | (19.2      | )          |
| ** **                                                                                                               |       |       |       |       |       |       |       |
| **Profit for the financial year**                                                                                        |       |       |       | 379.2      |       | 258.4      |       |
|                                                                                                                     |       |       |       |       |       |       |       |
| Profit attributable to:                                                                                                  |       |       |       |       |       |       |       |
| Members of Amcor Limited                                                                                                 |       |       |       | 351.3      |       | 245.3      |       |
| Minority Interest                                                                                                        |       |       |       | 27.9       |       | 13.1       |       |
|                                                                                                                     |       |       |       |       |       |       |       |
|                                                                                                                     |       |       |       | 379.2      |       | 258.4      |       |
|                                                                                                                     |       |       |       |       |       |       |       |
| **Earnings per share for profit from continuing  operations attributable to the ordinary equity holders of the company** | ** ** | ** ** | ** ** | **Cents**  | ** ** | **Cents**  | ** ** |
| ** **                                                                                                               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Basic earnings per share                                                                                                 |       | 11         |       | 44.4       |       | 24.2       |       |
| Diluted earnings per share                                                                                               |       | 11         |       | 43.2       |       | 24.1       |       |
|                                                                                                                     |       |       |       |       |       |       |       |
| **Earnings per share for profit attributable to  the ordinary equity holders of the company**                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                                               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Basic earnings per share                                                                                                 |       | 11         |       | 39.9       |       | 22.0       |       |
| Diluted earnings per share                                                                                               |       | 11         |       | 39.4       |       | 21.9       |       |

 

(1)          The Income Statement for the year ended 30June 2005 has not been restated to comply with *AASB 132Financial Instruments: Disclosure and Presentation and AASB 139 FinancialInstruments: Recognition and Measurement* which has been adopted from1 July 2005.  Refer Note 1(a).

# The above consolidated income statements should be read in conjunctionwith the accompanying notes.

F-2

----

**Amcor Limited Consolidated**

**Balance Sheets**

**As at 30 June 2006 and 2005**

 
|                                                            | ** ** | ** ** | ** ** | **2006**            | ** ** | **2005**            | ** ** |
|------------------------------------------------------------|------------|------------|------------|---------------------|------------|---------------------|------------|
|                                                       | ** ** | ** ** | ** ** | ** **          | ** ** | **(1**              | **)**      |
|                                                       | ** ** | **Note**   | ** ** | **$m**              | ** ** | **$m**              | ** ** |
| **Current assets**                                         | ** ** | ** ** | ** ** | ** **          | ** ** | ** **          | ** ** |
| Cash and cash equivalents                                  |       | 13         |       | 113.9               |       | 229.8               |       |
| Trade and other receivables                                |       | 14         |       | 1,691.9             |       | 1,824.7             |       |
| Inventories                                                |       | 15         |       | 1,380.3             |       | 1,440.1             |       |
| Other financial assets                                     |       | 16         |       | 10.8                |       | -    |       |
| **Total current assets**                                   |       |       |       | 3,196.9             |       | 3,494.6             |       |
| **Non-current assets**                                     | ** ** | ** ** | ** ** | ** **          | ** ** | ** **          | ** ** |
| Investments accounted for using the equity method          |       | 17         |       | 283.1               |       | 40.7                |       |
| Other financial assets                                     |       | 18         |       | 19.1                |       | 52.8                |       |
| Property, plant and equipment                              |       | 19         |       | 4,296.8             |       | 4,426.8             |       |
| Deferred income tax assets                                 |       | 20         |       | 390.7               |       | 349.9               |       |
| Intangible assets                                          |       | 21         |       | 1,888.4             |       | 1,998.0             |       |
| Other non-current assets                                   |       | 22         |       | 80.5                |       | 96.3                |       |
| **Total non-current assets**                               |       |       |       | 6,958.6             |       | 6,964.5             |       |
|                                                       |       |       |       |                |       |                |       |
| **Total assets**                                           |       |       |       | 10,155.5            |       | 10,459.1            |       |
|                                                       |       |       |       |                |       |                |       |
| **Current liabilities**                                    | ** ** | ** ** | ** ** | ** **          | ** ** | ** **          | ** ** |
| Trade and other payables                                   |       | 23         |       | 2,076.6             |       | 1,996.0             |       |
| Interest bearing liabilities                               |       | 24         |       | 690.4               |       | 887.2               |       |
| Subordinated convertible securities                        |       | 25         |       | 464.2               |       | -    |       |
| Other financial liabilities                                |       | 26         |       | 3.2                 |       | -    |       |
| Current income tax liabilities                             |       |       |       | 54.7                |       | 82.5                |       |
| Provisions                                                 |       | 27         |       | 290.0               |       | 289.3               |       |
| **Total current liabilities**                              |       |       |       | 3,579.1             |       | 3,255.0             |       |
|                                                       |       |       |       |                |       |                |       |
| **Non-current liabilities**                                | ** ** | ** ** | ** ** | ** **          | ** ** | ** **          | ** ** |
| Trade and other payables                                   |       | 28         |       | 31.1                |       | 31.6                |       |
| Interest bearing liabilities                               |       | 29         |       | 2,084.9             |       | 1,917.3             |       |
| Subordinated convertible securities                        |       | 30         |       | -    |       | 301.1               |       |
| Deferred income tax liabilities                            |       | 31         |       | 541.2               |       | 517.3               |       |
| Provisions                                                 |       | 27         |       | 100.6               |       | 99.9                |       |
| Retirement benefit obligations                             |       | 32         |       | 246.6               |       | 358.9               |       |
| **Total non-current liabilities**                          |       |       |       | 3,004.4             |       | 3,226.1             |       |
|                                                       |       |       |       |                |       |                |       |
| **Total liabilities**                                      |       |       |       | 6,583.5             |       | 6,481.1             |       |
|                                                       |       |       |       |                |       |                |       |
| **Net assets**                                             |       |       |       | 3,572.0             |       | 3,978.0             |       |
|                                                       |       |       |       |                |       |                |       |
| **Equity**                                                 | ** ** | ** ** | ** ** | ** **          | ** ** | ** **          | ** ** |
| Contributed equity                                         |       | 33         |       | 2,810.3             |       | 3,322.1             |       |
| Reserves                                                   |       | 34         |       | (84.5)              |       | (148.2)             |       |
| Retained profits                                           |       | 34         |       | 794.6               |       | 726.1               |       |
| Total equity attributable to equity holders of the  parent |       |       |       | 3,520.4             |       | 3,900.0             |       |
| Minority interest                                          |       | 35         |       | 51.6                |       | 78.0                |       |
|                                                       |       |       |       |                |       |                |       |
| **Total  equity**                                          |       | 36         |       | 3,572.0             |       | 3,978.0             |       |

 

(1)          The Balance Sheet as at 30 June 2005 has not been restated to complywith *AASB 132 Financial Instruments: Disclosure andPresentation and AASB 139 Financial Instruments: Recognition and Measurement*which has been adopted from 1 July 2005. Refer Note 1(a).

The above consolidated balance sheets should be read inconjunction with the accompanying notes.

F-3

----

**Amcor Limited Consolidated**

**Statements of Recognised Incomeand Expense**

**For the financial years ended 30 June 2006 and2005**

 
|                                                                                  | ** ** | ** ** | ** ** | **2006**   | ** ** | **2005**            | ** ** |
|----------------------------------------------------------------------------------|------------|------------|------------|------------|------------|---------------------|------------|
| ** **                                                                       | ** ** | ** ** | ** ** | ** ** | ** ** | **(1**              | **)**      |
|                                                                             | ** ** | **Note**   | ** ** | **$m**     | ** ** | **$m**              | ** ** |
| ** **                                                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** **          | ** ** |
| Available for sale financial assets, net of tax                                  |       |       |       | (0.1       | )          | -    |       |
| Cash flow hedges, net of tax                                                     |       |       |       | 9.0        |       | -    |       |
| Exchange differences on translation of foreign  operations                       |       |       |       | 85.6       |       | (168.4              | )          |
| Actuarial gains & losses on defined benefit  plans, net of tax               |       |       |       | 12.8       |       | (34.4               | )          |
| **Net income recognised directly in equity**                                     |       |       |       | 107.3      |       | (202.8              | )          |
| Profit for the financial year                                                    |       |       |       | 379.2      |       | 258.4               |       |
| **Total recognised income and expense for the  financial year**                  |       | 36         |       | 486.5      |       | 55.6                |       |
|                                                                             |       |       |       |       |       |                |       |
| Total recognised income and expense for the  financial year is attributable to:  |       |       |       |       |       |                |       |
| Members of Amcor Limited                                                         |       |       |       | 452.4      |       | 58.3                |       |
| Minority Interest                                                                |       |       |       | 34.1       |       | (2.7                | )          |
|                                                                             |       | 36         |       | 486.5      |       | 55.6                |       |
|                                                                             |       |       |       |       |       |                |       |
| **Effects of change in accounting policy -  financial instruments:**             | ** ** | ** ** | ** ** | ** ** | ** ** | ** **          | ** ** |
| Adjustment on adoption of AASB 132 and AASB 139, net  of tax:                    |       |       |       |       |       |                |       |
| Contributed Equity                                                               |       |       |       | (596.6     | )          | -    |       |
| Retained profits                                                                 |       |       |       | 3.2        |       | -    |       |
| Reserves                                                                         |       |       |       | (28.1      | )          | -    |       |
|                                                                             |       | 36         |       | (621.5     | )          | -    |       |
|                                                                             |       |       |       |       |       |                |       |
| Adjustment on adoption of AASB 132 and AASB 139, net  of tax is attributable to: |       |       |       |       |       |                |       |
| Members of Amcor Limited                                                         |       |       |       | (621.5     | )          | -    |       |
| Minority Interest                                                                |       |       |       | -     |       | -    |       |
|                                                                             |       | 36         |       | (621.5     | )          | -    |       |

 

(1)          The statement of recognised income and expense as at 30 June 2005 hasnot been restated to comply with *AASB 132 FinancialInstruments: Disclosure and Presentation and AASB 139 Financial Instruments:Recognition and Measurement* which has been adopted from 1 July2005.  Refer Note 1(a).

Other movements in equity arising from transactionswith owners are set out in Note 36.

The amounts recognised directly in equity aredisclosed net of tax, refer to Note 20 and 31 for the tax effect.

The above consolidated statements of recognised incomeand expense should be read in conjunction with the accompanying notes.

F-4

----

**Amcor Limited Consolidated**

**Cash Flow Statements**

**For the financial years ended 30 June 2006 and2005**

 
|                                                                                              | ** ** | ** ** | ** ** | **2006**   | ** ** | **2005**            | ** ** |
|----------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|---------------------|------------|
| ** **                                                                                   | ** ** | ** ** | ** ** | ** ** | ** ** | **(1**              | **)**      |
|                                                                                         | ** ** | **Note**   | ** ** | **$m**     | ** ** | **$m**              | ** ** |
| **Cash flows from operating activities**                                                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** **          | ** ** |
| Receipts from customers (inclusive of goods and  services and sales tax)                     |       |       |       | 11,457.2   |       | 10,978.7            |       |
| Payments to suppliers and employees (inclusive of  goods and services and sales tax)         |       |       |       | (10,231.3  | )          | (9,878.3            | )          |
| Dividends received                                                                           |       |       |       | 0.4        |       | 0.6                 |       |
| Other income received                                                                        |       |       |       | 56.5       |       | 71.3                |       |
| Finance income received                                                                      |       |       |       | 22.0       |       | 20.6                |       |
| Finance expenses paid                                                                        |       |       |       | (261.6     | )          | (175.6              | )          |
| Income taxes paid                                                                            |       |       |       | (79.1      | )          | (115.5              | )          |
|                                                                                         |       |       |       |       |       |                |       |
| **Net cash from operating activities**                                                       |       | 46         |       | 964.1      |       | 901.8               |       |
| **Cash flows from investing activities**                                                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** **          | ** ** |
| Repayment of loans by associated companies and other  persons                                |       |       |       | 0.1        |       | 4.8                 |       |
| Payments for controlled entities, businesses and  associates, net of cash                    |       | 42,  45    |       | (66.8      | )          | (45.5               | )          |
| Payments for property, plant and equipment                                                   |       |       |       | (486.4     | )          | (647.4              | )          |
| Proceeds on disposal of controlled entities and  businesses (2)                              |       |       |       | (24.8      | )          | 10.8                |       |
| Proceeds on disposal of controlled entities and  business treated as discontinued operations |       | 12         |       | 297.5      |       | -    |       |
| Proceeds on disposal of property, plant and  equipment                                       |       |       |       | 33.4       |       | 77.4                |       |
| ** **                                                                                   |       |       |       |       |       |                |       |
| **Net cash from investing activities**                                                       |       |       |       | (247.0     | )          | (599.9              | )          |
|                                                                                         |       |       |       |       |       |                |       |
| **Cash flows from financing activities**                                                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** **          | ** ** |
| Proceeds from share issues, convertible securities  and calls on partly-paid shares          |       |       |       | 143.5      |       | 12.9                |       |
| Payments for shares bought back                                                              |       | 33         |       | (57.8      | )          | (15.4               | )          |
| Share issue and buy-back transaction costs                                                   |       |       |       | (0.9       | )          | -    |       |
| Proceeds from borrowings                                                                     |       |       |       | 6,206.0    |       | 3,876.0             |       |
| Repayment of borrowings                                                                      |       |       |       | (6,833.3   | )          | (3,706.4            | )          |
| Principal lease repayments                                                                   |       |       |       | (19.4      | )          | (18.1               | )          |
| Dividends and other equity distributions paid                                                |       |       |       | (308.8     | )          | (346.6              | )          |
|                                                                                         |       |       |       |       |       |                |       |
| **Net cash from financing activities**                                                       |       |       |       | (870.7     | )          | (197.6              | )          |
| **Net (decrease)/increase in cash held**                                                     |       |       |       | (153.6     | )          | 104.3               |       |
| Cash and cash equivalents at the beginning of the  financial year                            |       |       |       | 213.8      |       | 121.1               |       |
| Effects of exchange rate changes on cash and cash  equivalents                               |       |       |       | 4.8        |       | (11.6               | )          |
|                                                                                         |       |       |       |       |       |                |       |
| ** **

**Cash and cash equivalents at the end of the  financial year**

** **      |       |       |       | 65.0       |       | 213.8               |       |
| ** **                                                                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** **          | ** ** |
| Financing arrangements                                                                       |       | 29         |       |       |       |                |       |
| Non-cash investing and financing activites                                                   |       | 47         |       |       |       |                |       |
|                                                                                         |       |       |       |       |       |                |       |

**RECONCILIATIONOF CASH AND CASH EQUIVALENTS**

 

For purposes ofthe Cash Flow Statement, cash and cash equivalents includes cash on hand and atbank and short-term money market investments, net of outstanding bankoverdrafts. Cash and cash equivalents as at the end of the financial year asshown in the Cash Flow Statement is reconciled to the related items in theBalance sheet as follows:

 
| Cash assets and cash  equivalents |   | 13     |   | 113.9 |   | 229.8 |   |
|-----------------------------------|--------|--------|--------|-------|--------|-------|--------|
| Bank overdrafts                   |   | 24     |   | (48.9 | )      | (16.0 | )      |
|                              |   |   |   | 65.0  |   | 213.8 |   |

 

(1)          The Cash Flow Statement for the year ended 30 June 2005 has not beenrestated to comply with *AASB 132 FinancialInstruments: Disclosure and Presentation and AASB 139 Financial Instruments:Recognition and Measurement* which has been adopted from 1 July2005.  Refer Note 1(a).

(2)          Proceeds on disposal of controlled entities and businesses is net of$39.6 million cash transferred in respect of the Asian tobacco packagingbusiness.

The above consolidated cash flow statements should beread in conjunction with the accompanying notes.

F-5

----

**Amcor Limited Consolidated**

**Contents of notes to the consolidated financialstatements**

 
| **Note** | ** ** | **Description**                                                                                 |
|----------|------------|-------------------------------------------------------------------------------------------------|
| 1   |       | Summary of significant accounting policies                                                      |
| 2   |       | Financial risk management                                                                       |
| 3   |       | Critical accounting estimates and judgements                                                    |
| 4   |       | Segment information                                                                             |
| 5   |       | Revenue, other income and financial income                                                      |
| 6   |       | Expenses                                                                                        |
| 7   |       | Significant items - income / (expense)                                                          |
| 8   |       | Revision of estimates                                                                           |
| 9   |       | Income tax expense                                                                              |
| 10       |       | Auditors’ remuneration                                                                     |
| 11       |       | Earnings per share                                                                              |
| 12       |       | Discontinued operations                                                                         |
| 13       |       | Current assets - Cash and cash equivalents                                                      |
| 14       |       | Current assets - Trade and other receivables                                                    |
| 15       |       | Current assets - Inventories                                                                    |
| 16       |       | Current assets - Other financial assets                                                         |
| 17       |       | Non-current assets - Investments accounted for using  the equity method                         |
| 18       |       | Non-current assets - Other financial assets                                                     |
| 19       |       | Non-current assets - Property, plant and equipment                                              |
| 20       |       | Non-current assets - Deferred tax assets                                                        |
| 21       |       | Non-current assets - Intangible assets                                                          |
| 22       |       | Non-current assets - Other                                                                      |
| 23       |       | Current liabilities - Trade and other payables                                                  |
| 24       |       | Current liabilities - Interest bearing liabilities                                              |
| 25       |       | Current liabilities - Subordinated convertible  securities                                      |
| 26       |       | Current liabilities - Other financial liabilities                                               |
| 27       |       | Current and non-current liabilities - Provisions                                                |
| 28       |       | Non-current liabilities - Trade and other payables                                              |
| 29       |       | Non-current liabilities - Interest bearing  liabilities                                         |
| 30       |       | Non-current liabilities - Subordinated convertible  securities                                  |
| 31       |       | Non-current liabilities - Deferred tax liabilities                                              |
| 32       |       | Non-current liabilities - Retirement benefit  obligations                                       |
| 33       |       | Contributed equity                                                                              |
| 34       |       | Reserves and retained profits                                                                   |
| 35       |       | Minority interest                                                                               |
| 36       |       | Total equity reconciliation                                                                     |
| 37       |       | Dividends                                                                                       |
| 38       |       | Other financial instrument information                                                          |
| 39       |       | Key management personnel and their related parties  disclosures                                 |
| 40       |       | Contingencies                                                                                   |
| 41       |       | Commitments                                                                                     |
| 42       |       | Business combinations                                                                           |
| 43       |       | Subsidiaries                                                                                    |
| 44       |       | Deed of cross guarantee                                                                         |
| 45       |       | Investments in associates                                                                       |
| 46       |       | Reconciliation of profit after related income tax to  net cash provided by operating activities |
| 47       |       | Non-cash investing and financing activities                                                     |
| 48       |       | Share based payments                                                                            |
| 49       |       | Events subsequent to the end of the financial year                                              |
| 50       |       | Impact of adopting Australian equivalents to  International Financial Reporting Standards       |
| 51       |       | Reconciliation of Accounts to US GAAP                                                           |

 

F-6

----

**Amcor Limited Consolidated**

**Notes to the consolidatedfinancial statements**

**30 June 2006**

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

The principal accounting policies adopted in thepreparation of the consolidated financial statements are set out below.  These policies have been consistently appliedto all the periods presented, unless otherwise stated.  The financial statements includes theconsolidated entity consisting of Amcor Limited and its subsidiaries.

**(a) Basis of preparationof the annual financial report**

This general purpose financial report for the yearended 30 June 2006 has been prepared in accordance with Australian AccountingStandards (‘AASBs’) adopted by the Australian Accounting Standards Board (‘AASB’)and the Corporations Act 2001.

International Financial Reporting Standards (‘IFRS’)form the basis of AASBs adopted by the AASB, and for the purpose of this reportare called Australian Equivalents to IFRS (‘AIFRS’) to distinguish them fromthe previous Australian Generally Accepted Accounting Principles (AGAAP).

*Application of AASB 1 First-time Adoption ofAustralian Equivalents to International Financial Reporting Standards*

These financial statements are the first Amcor Limitedannual financial statements to be prepared in accordance with AIFRS.  AASB 1 *First-time Adoption ofAustralian Equivalents to International Financial Reporting Standards*hasbeen applied in preparing these financial statements.

Financial statements of Amcor Limited have beenprepared in accordance with previous AGAAP until 30 June 2005.  AGAAP differs in certain respects fromAIFRS.  When preparing the financialreport for the year ended 30 June 2006, management adopted certain changes tothe accounting, valuation and consolidation methods applied in the previous AGAAPfinancial statements to comply with AIFRS. With the exception of financial instruments, the comparative figureshave been restated to reflect these adjustments.  The consolidated entity has taken theexemption available under AASB 1 to apply AASB 132 *FinancialInstruments: Disclosure and Presentation* and AASB 139 *Financial Instruments: Recognition and Measurement* only from1 July 2005.  Refer Note 1(z).

Compliance with AIFRS ensures that the financialreports of the consolidated entity also comply with IFRS, except that anelection has been made to apply the relief provided to parent entities inrespect of certain disclosure requirements contained in AASB 132 *Financial Instruments:**Presentation andDisclosure.*

*Early adoption of standard*

The consolidated entity has elected to apply AASB 119 *Employee benefits* (issued in December 2004) and AASB 2004-3 *Amendments to Australian Accounting standards*to thereporting periods beginning 1 July 2005. This includes applying AASB 119 to the comparatives in accordance withAASB 108 *Accounting Policies, Changes in AccountingEstimates and Errors.*

*Historical cost convention*

These financial statements have been prepared underthe historical cost convention, as modified by the revaluation ofavailable-for-sale financial assets, derivative financial instruments, andfinancial assets and liabilities measured at fair value.

*Critical accounting estimates*

The preparation of financial statements in conformitywith AIFRS requires the use of certain critical accounting estimates.  It also requires management to exercise itsjudgement in the process of applying the consolidated entity’s accountingpolicies.  The areas involving a higherdegree of judgement or complexity, or areas where assumptions and estimates aresignificant to the financial statements, are disclosed in Note 3.

F-7

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 1. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES continued**

# **(b)****         ****Principles of consolidation**

*(i) Subsidiaries*

Thesefinancial statementsincorporate the assets and liabilities of all subsidiaries of Amcor Limited (“parententity”) as at 30 June 2006 and the results of all subsidiaries for the yearthen ended.  Amcor Limited and itssubsidiaries together are referred to as the Group or consolidated entity.

Subsidiariesare all those entities (including special purpose entities) over which theconsolidated entity has the power to govern the financial and operatingpolicies, generally accompanying a shareholding of more than 50% of the votingrights.

Subsidiariesare fully consolidated from the date control commences until the date controlceases.

Thepurchase method of accounting is used to account for the acquisition ofsubsidiaries by the consolidated entity. Refer Note 1(h).

Allbalances and transactions between entities included in the consolidated entityhave been eliminated.

Minorityinterests in the results and equity of subsidiaries are shown separately in theconsolidated income statement and balance sheet respectively.

*(ii) Associates*

Associatesare all entities over which the consolidated entity has significant influencebut not control.   Investments inassociates are accounted for in the consolidated financial statements using theequity method, after initially being recognised at cost.  The consolidated entity’s investment inassociates includes goodwill (net of any accumulated impairment loss)identified on acquisition.

Theconsolidated entity recognises its share of its associates’ post-acquisitionprofits or losses in the income statement, and its share of post-acquisitionmovements in reserves is recognised in reserves.   The cumulative post-acquisition movementsare adjusted against the carrying amount of the investment.   Dividends receivable from associates arerecognised as a reduction in the consolidated entity’s carrying amount of theinvestment.

Changesin the consolidated entity’s share of net worth of associates caused by anissue of equity by the associate are recognised in the income statement as gainsor losses.

Unrealisedgains on transactions between the consolidated entity and its associates areeliminated to the extent of the consolidated entity’s interest in theassociates.  Unrealised losses are alsoeliminated unless the transaction provides evidence of an impairment of theasset transferred.

# **(c)****         ****Foreign currency translation**

# *(i)Functional and presentation currency*

Itemsincluded in the financialstatements of each of the consolidated entity’s entities are measured using thecurrency of the economic environment in which the entity primarily generatesand expends cash (‘the functional currency’). The consolidated financial statements are presented in Australiandollars, which is Amcor Limited’s functional currency.

# *(ii)Transactions and balances*

Foreigncurrency transactions are translated into the functional currency using theexchange rates prevailing at the dates of the transactions.   Foreign exchange gains and losses arisingfrom the settlement of such transactions and from the translation at period-endexchange rates of monetary assets and liabilities denominated in foreigncurrencies are recognised in the income statement, except when deferred inequity as qualifying cash flow hedges and qualifying net investmenthedges.  Refer Note 1(o)(ii) and1(o)(iii).

F-8

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**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 1. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES continued**

Translationof differences on non-monetary items, such as equities held at fair valuethrough profit or loss are reported as part of the fair value gain orloss.  Translation differences onnon-monetary items, such as equities classified as available for sale financialassets, are included in the available for sale investments revaluation reservein equity.

*(iii)Group companies*

The results and financialposition of all the Group entities, excluding those in a hyperinflationaryeconomy, that have a functional currency different from the presentationcurrency are translated into the presentation currency as follows:

·                  assets and liabilities for each balancesheet presented are translated at the closing exchange rate at the date of thatbalance sheet;

·                  income and expenses for each incomestatement are translated at average exchange rates, which approximate theexchange rates at the dates of the transactions; and

·                  all resulting exchange differences arerecognised in the exchange fluctuation reserve.

Onconsolidation, exchange differences arising from the translation of any netinvestment in foreign entities and of borrowings and other currency instrumentsdesignated as hedges of such investments, are taken to the exchange fluctuationreserve.   When a foreign operation issold, the cumulative exchange differences from 1 July 2004 are recognised inthe income statement as part of the gain or loss on sale.

Goodwilland fair value adjustments arising on the acquisition of a foreign entity aretreated as assets and liabilities of the foreign entity and translated at theclosing rate.

# **(d)****         ****Revenue recognition**

Revenueis measured at the fair value of the consideration received or receivable.  Amounts disclosed as revenue are net ofreturns, allowances and discounts. Revenue is recognised as follows:

*(i) Sale of Goods*

Salesrevenue comprises revenue earned (net of returns, discounts and allowances) fromthe provision of products to entities outside the consolidated entity.  Sales revenue is recognised when the risksand rewards of ownership have transferred to the customer.  No revenue is recognised if there aresignificant uncertainties regarding recovery of the consideration due, thecosts incurred or to be incurred cannot be measured reliably, there is risk ofreturn of goods or there is continuing management involvement with the goods.

*(ii) Interest Income*

Interestincome is recognised as it accrues, taking into account the effective yield onthe financial asset.  Interest income isincluded as financial income in the income statement.

# **(e)****         ****Government grants**

Grantsfrom governments are recognised at their fair value where there is a reasonableassurance that the grant will be received and the consolidated entity willcomply with all attached conditions.

Grantsrelating to the purchase of property, plant and equipment are included innon-current liabilities as deferred income and are credited to the incomestatement on a straight line basis over the expected lives of the relatedassets.

# **(f)****           ****Income tax**

*(i)General*

Incometax expense is the expected tax payable on the taxable income for the period,using tax rates enacted or substantively enacted at the reporting date,adjusted by changes in deferred tax assets and liabilities attributable totemporary differences between the tax bases of assets and liabilities and theircarrying amounts in the financial statements, and by the availability of unusedtax losses.  Current and deferred taxesattributable to amounts recognised directly in equity are also recogniseddirectly in equity.

F-9

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**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 1. SUMMARY OF SIGNIFICANTACCOUNTING POLICIES continued**

Deferredtax balances are determined using the balance sheet liability method whichcalculates temporary differences based on the carrying amounts of an entity’sassets and liabilities in the balance sheet and their associated taxbases.  The amount of deferred taxprovided will be based on the expected manner of realisation of the asset orsettlement of the liability, using tax rates enacted or substantively enactedat reporting date.

Deferredtax assets will be recognised only to the extent that it is probable thatfuture taxable profits will be available against which the assets can beutilised.

Theparent entity is the head entity in the tax-consolidated group comprising allthe Australian wholly-owned subsidiaries. The head entity recognises all of the current tax liabilities of thetax-consolidated group (after elimination of intra-group transactions).  The tax-consolidated group has entered into atax sharing agreement that requires wholly-owned subsidiaries to makecontributions to the head entity for tax liabilities arising from externaltransactions during the year.  Thecontributions are calculated as if each subsidiary continued to be a standalone taxpayer in its own right.  Thecontributions are payable annually.

*(ii)Capital Gains Tax*

Capitalgains tax, expected to be paid, is provided in the period in which an asset issold.

*(iii)Goods and Services Tax / Value Added Tax*

Revenues,expenses and assets are recognised net of the amount of goods and services taxand valued added tax (‘GST/VAT’) and other sales related taxes, except wherethe amount of GST/VAT incurred is not recoverable from the relevant taxationauthority.  In these circumstances theGST/VAT is recognised as part of the cost of acquisition of the asset or aspart of the expense.

Receivablesand payables are stated with the amount of GST/VAT included.

Thenet amount of GST/VAT recoverable from, or payable to, taxing authorities isincluded as a current asset or liability in the balance sheet.

Cashflows are included in the cash flow statements on a gross basis.  The GST/VAT component of cash flows arisingfrom investing and financing activities which are recoverable from, or payableto, taxing authorities are classified as operating cash flows.

# **(g)****        ****Leases**

Leasesunder which the consolidated entity assumes substantially all the risks andbenefits of ownership are classified as finance leases. Other leases areclassified as operating leases.

Financeleases are capitalised at the lower of the fair value of the leased propertyand the present value of the minimum lease payments.  The corresponding rental obligations, net offinance charges, are included in current and non-current interest bearingliabilities.  Each lease payment is allocatedbetween the liability and the finance charges. The interest element of the finance cost is charged to the incomestatement over the lease period so as to produce a constant periodic rate ofinterest on the remaining balance of the liability for each period.  The property, plant and equipment acquiredunder finance leases is depreciated over the shorter of the asset’s useful lifeand the lease term, unless it is reasonably certain that ownership will beobtained by the end of the lease term where it is depreciated over the periodof the expected use which is the useful life of the asset.

Paymentsmade under operating leases are expensed on a straight-line basis over the termof the lease.

# **(h)****        ****Acquisition of assets**

The purchase method of accounting is used toaccount for all acquisitions of assets (including business combinations)regardless of whether equity instruments or other assets are acquired.  Cost is measured as the fair value of theassets given, shares issued or liabilities incurred or assumed at the date ofexchange plus costs directly attributable to the acquisition.   Where equity instruments are issued in anacquisition, the value of the instruments is their published price at the dateof exchange unless it can be demonstrated that the published price at the dateof exchange is an unreliable indicator of fair value and that other evidenceand valuation methods provide a more reliable measure of fair value.

F-10

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**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 1. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES continued**

Identifiableassets acquired and liabilities and contingent liabilities assumed in abusiness combination are measured at fair values at the acquisition date.   The excess of the cost of acquisition overthe fair value of the consolidated entity’s share of the identifiable netassets acquired is recorded as goodwill (refer Note 1 (s)).  If the cost of acquisition is less than thefair value of the net assets of the subsidiary acquired, the difference isrecognised directly in the income statement.

# **(i)****           ****Impairment of assets**

Therecoverable amount of the consolidated entity’s assets, excluding deferred taxassets, defined benefit assets, and goodwill are reviewed at each reportingdate to determine whether there is any indication of impairment.  If any such indication exists, the asset istested for impairment by comparing its recoverable amount to its carryingamount.

Goodwill and intangibleassets that have an indefinite useful life and intangible assets not ready foruse are tested for impairment at least annually.

Therecoverable amount is estimated for the individual asset or, if it is notpossible to estimate the recoverable amount for the individual asset, therecoverable amount of the cash generating unit (CGU) to which the asset belongsis determined. CGUs have been determined as the smallest identifiable group ofassets that generate cash inflows largely independent of the cash inflows ofother assets or group of assets.  EachCGU is no larger than a segment.

Animpairment loss is recognised as an expense when the carrying amount of anasset or its CGU exceeds its recoverable amount.  Recoverable amount is determined as thehigher of fair value less costs to sell and value in use. * *Impairment losses recognised inrespect of CGUs are allocated first to reduce the carrying amount of anygoodwill allocated to the CGU (group of CGUs) and then, to reduce the carryingamount of the other assets in the unit (group of units) on a pro rata basis.

Animpairment loss recognised in prior periods for an asset (other than goodwill)is reversed if, and only where there is an indicator that the impairment lossmay no longer exist, and if there has been a change in the estimates used todetermine the asset’s recoverable amount since the last impairment loss wasrecognised.  The increased carryingamount of an asset due to a reversal of an impairment loss does not exceed thecarrying amount that would have been determined (net of amortisation ordepreciation) had no impairment loss been recognised for the asset in prioryears.

Incalculating value in use, the cash flows include projections of cash inflowsand outflows from continuing use of the asset and cash flows associated withdisposal of the asset.  The cash flowsare estimated for the asset in its current condition and therefore do notinclude cash inflows and outflows expected to arise from future restructuringswhich are not yet committed, or from improving or enhancing the asset’sperformance.  In assessing value in use,the estimated cash flows are discounted to their present value effectivelyusing a pre-tax discount rate that reflects the current market assessments ofthe risks specific to the asset or CGU.

# **(j)****           ****Cash and cash equivalents**

Cashand cash equivalents include cash on hand and at bank, short term deposits andshort-term money market investments.  Bank overdrafts are shown within interest bearing liabilities in currentliabilities on the balance sheet.

# **(k)****       ****Trade and other receivables**

Tradeand other receivables are recognised at their cost, less any impairment lossesand are non interest bearing.

F-11

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**AmcorLimited Consolidated**

**Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 1. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES continued**

Collectibilityof trade and other receivables is reviewed on an ongoing basis.  Debts which are known to be uncollectible arewritten off.  An impairment loss isrecognised when there is objective evidence that the consolidated entity willnot be able to collect amounts due according to the original terms of thereceivables.

# **(l)****           ****Inventories**

Inventoriesare valued at the lower of cost (including an appropriate proportion of fixedand variable overheads) and net realisable value in the normal course ofbusiness.

After initial measurementof the cost of finished goods inventories, cost is determined using the mostappropriate of either first-in, first-out (FIFO) or weighted average costformula and includes the appropriate share of fixed and variable overheads.

# **(m)****     ****Non-current assets (or disposal groups) held for sale**

Non-current assets (or disposal groups) classifiedas held for sale are stated at the lower of their carrying amount and fairvalue less costs to sell, if their carrying amount will be recoveredprincipally through a sale transaction rather than through continuing use.

An impairment loss is recognised for any initial orsubsequent write down of the asset (or disposal group) to fair value less coststo sell. A gain is recognised for any subsequent increases in fair value lesscosts to sell of an asset (or disposal group), but not in excess of anycumulative impairment loss previously recognised. A gain or loss not previouslyrecognised by the date of the sale of the non-current asset (or disposal group)is recognised at the date of derecognition.

Non-current assets (including those that are partof a disposal group) are not depreciated or amortised while they are classifiedas held for sale. Interest and other expenses attributable to the liabilitiesof a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale andthe assets of a disposal group classified as held for sale are presentedseparately from the other assets in the balance sheet. The liabilities of adisposal group classified as held for sale are presented separately from otherliabilities in the balance sheet.

# **(n)****        ****Investments and other financial assets**

# **From 1 July 2004 to 30 June 2005**

Theconsolidated entity has taken the exemption available under AASB 1 to applyAASB 132 and AASB 139 only from 1 July 2005. The consolidated entity has applied previous AGAAP to the comparativeinformation on the financial instruments within the scope of AASB 132 and AASB139.  For further information on previousAGAAP, refer to the annual report for the year ended 30 June 2005.

**From 1July 2005**

Theconsolidated entity classifies its investments and other financial assets intothe following categories: financial assets at fair value through the incomestatement, loans and receivables, held-to-maturity investments, andavailable-for-sale financial assets.  Theclassification depends on the purpose for which the investments and otherfinancial assets were acquired. Management determines the classification of held-to-maturity assets atinitial recognition and re-evaluates this designation at each reporting date.

Available-for-salefinancial assets and financial assets at fair value through the incomestatement are initially and subsequently carried at fair value. Loans andreceivables and held-to-maturity investments are carried at amortised costusing the effective interest method. Realised and unrealised gains and lossesarising from changes in the fair value of the ‘financial assets at fair valuethrough profit or loss’ category are included in the income statement in theperiod in which they arise. Unrealised gains and losses arising from changes inthe fair value of non-monetary securities classified as available-for-sale arerecognised in equity in the available-for-sale fair value reserve. Whensecurities classified as available-for-sale are sold or impaired, theaccumulated fair value adjustments are included in the income statement asgains and losses from investment securities.

F-12

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**AmcorLimited Consolidated**

**Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 1. SUMMARY OF SIGNIFICANTACCOUNTING POLICIES continued**

The fair values of quotedinvestments are based on current bid prices.

Theconsolidated entity makes an assessment as to the impairment of any financialasset or group of financial assets at each reporting date.  Thisassessment is carried out, based on the existence of objective evidence ofimpairment.  The amount of any impairment is calculated as the differencebetween the carrying amount of the asset, or group of assets and the presentvalue of the estimated future cash flows. For financial assets carried at cost or amortised cost, the amount ofany loss will be recognised in the income statement.  For available-for-sale financial assets, thecumulative loss directly recognised in equity will be removed and recognised inthe income statement when the financial asset is sold.

*(i)Financial assets at fair value through the income statement*

This category has twosub-categories: financial assets held for trading, and those designated at fairvalue through the income statement on initial recognition. A financial asset isclassified in this category if acquired principally for the purpose of sellingin the short term, or to generate short term profits, or if so designated bymanagement.  Assets in this category are classifiedas current assets if they are either held for trading or are expected to berealised within 12 months of the balance sheet date.

*(ii) Loans and receivables*

Loans and receivables arenon-derivative financial assets with fixed or determinable payments that arenot quoted in an active market. They arise when the consolidated entityprovides money, goods or services directly to a debtor with no intention ofselling the receivable. They are included in current assets, except for thosewith maturities greater than 12 months after the balance sheet date which areclassified as non-current assets.

Loans and otherreceivables excluding those held as available-for-sale are recognised at theiramortised cost using the effective interest rate method.

*(iii) Held-to-maturity investments*

Held-to-maturityinvestments are non-derivative financial assets with fixed or determinablepayments and fixed maturities that the consolidated entity’s management has thepositive intention and ability to hold to maturity.

*(iv) Available-for-sale financial assets*

Available-for-salefinancial assets, comprising principally marketable equity securities, arenon-derivatives that are either designated in this category or not classifiedin any of the other categories. They are included in non-current assets unlessmanagement intends to dispose of the investment within 12 months of the balancesheet date.

Purchases and sales ofinvestments and other financial assets are recognised on trade-date, the dateon which the consolidated entity commits to purchase or sell the asset.  Investments are initially recognised at fairvalue plus transaction costs for all financial assets not carried at fair valuethrough profit or loss.  Financial assetsare derecognised when the rights to receive cash flows from the financialassets have expired or have been transferred and the consolidated entity hastransferred substantially all the risks and rewards of ownership.

# **(o)****         ****Derivatives**

**From 1July 2004 to 30 June 2005**

The consolidated entityhas taken the exemption available under AASB 1 to apply AASB 132 and AASB 139from 1 July 2005. The consolidated entity has applied previous AGAAP to thecomparative information on financial instruments within the scope of AASB 132and AASB 139. For further information on previous AGAAP, refer to the annualreport for the year ended 30 June 2005.

F-13

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**AmcorLimited Consolidated**

**Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 1. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES continued**

**From 1July 2005**

Derivatives are initiallyrecognised at fair value on the date a derivative contract is entered into andare subsequently remeasured to their fair value. The method of recognising theresulting gain or loss depends on whether the derivative is designated as ahedging instrument, and if so, the nature of the item being hedged. Theconsolidated entity designates certain derivatives as either: (1) hedges of thefair value of recognised assets or liabilities or a firm commitment (fair valuehedge); or (2) hedges of highly probable forecast transactions (cash flowhedges); or (3) hedges of a net investment in a foreign operation.

The consolidated entitydocuments at the inception of the transaction the relationship between hedginginstruments and hedged items, as well as its risk management objective andstrategy for undertaking various hedge transactions. The consolidated entityalso documents its assessment, both at hedge inception and on an ongoing basis,as to whether the derivatives that are used in hedging transactions have beenand will continue to be highly effective in offsetting changes in fair valuesor cash flows of hedged items.

*(i) Fair value hedge*

Changes in the fair valueof derivatives that are designated and qualify as fair value hedges arerecorded in the income statement, together with any changes in the fair valueof the hedged asset or liability that are attributable to the hedged risk.

*(ii) Cash flow hedge*

The effective portion ofchanges in the fair value of derivatives that are designated and qualify ascash flow hedges is recognised in equity in the hedging reserve. The gain orloss relating to the ineffective portion is recognised immediately in theincome statement.

Amounts accumulated inequity are recycled in the income statement in the periods when the hedged itemwill affect profit or loss (for instance when the forecast sale that is hedgedtakes place). However, when the forecast transaction that is hedged results inthe recognition of a non-financial asset (for example, inventory) or a non-financialliability, the gains and losses previously deferred in equity are transferredfrom equity and included in the measurement of the initial cost or carryingamount of the asset or liability.

When a hedging instrumentexpires or is sold or terminated, or when a hedge no longer meets the criteriafor hedge accounting, any cumulative gain or loss existing in equity at thattime remains in equity and is recognised when the forecast transaction isultimately recognised in the income statement. When a forecast transaction isno longer expected to occur, the cumulative gain or loss that was reported inequity is immediately transferred to the income statement.

*(iii) Net investment in a foreignoperation*

Whereeffective, foreign exchange differences relating to foreign currencytransactions hedging a net investment in a foreign operation, together with anyrelated income tax, are transferred to the exchange fluctuations reserve onconsolidation.  The ineffective portionis recognised in the income statement.

*(iv) Derivatives that do not qualify for hedgeaccounting*

Certain derivativeinstruments do not qualify for hedge accounting. Changes in the fair value ofany derivative instrument that does not qualify for hedge accounting arerecognised immediately in the income statement.

# **(p)****         ****Financial instruments included in liabilities and equity**

**From 1July 2005**

Bankoverdrafts, bank loans, commercial paper, mortgage loans and other loans areinitially recognised at their fair value, net of transaction costsincurred.  Subsequent measurement is atamortised cost with any difference between the net proceeds and the maturityamount recognised in the income statement over the period of the borrowingsusing the effective interest rate method.

F-14

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**Amcor Limited Consolidated**

**Notes to the consolidatedfinancial statements**

**30June 2006**

**NOTE 1. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES continued**

Eurobondnotes and US$ notes are carried at amortised cost, translated at exchange ratesruling at reporting date.  Any differencebetween amortised cost and their amount at maturity is recognised in the incomestatement over the period of the borrowing using the effective interest method.

Undatedsubordinated convertible securities are carried at amortised cost. Thesesecurities have been translated at the exchange rate ruling at reportingdate.  Any difference between amortisedcost and their amount at maturity is recognised in the income statement overthe period of the borrowing using the effective interest method.  The terms and conditions of undatedsubordinated convertible securities outstanding is set out in Note 25.

From 1 July 2005, theconsolidated entity reclassified the issue of $400 million of Perpetual AmcorConvertible Reset Securities (‘PACRS1’) and $210 million of 2002 Perpetual AmcorConvertible Reset Securities (‘PACRS2’) from equity to liabilities.  The conversion discount and transaction costsare set off against the carrying value of the PACRS1 and PACRS2 at amortisedcost.  Over the life of the PACRS1 andPACRS2, these amounts are reflected in the income statement as financing costsusing the effective interest method.  Thecoupons on the PACRS1 and PACRS2 are recorded as a finance cost in the incomestatement.

**Prior to 1 July 2005**

*(i)Financial Instruments included in equity*

The issue of $400 millionof Perpetual Amcor Convertible Reset Securities (‘PACRS1’) and $210 million of2002 Perpetual Amcor Convertible Reset Securities (‘PACRS2’) was classified asequity and the coupon interest payable on the PACRS1 and PACRS2 was treated asa distribution of shareholders’ equity. The consolidated income statement did not include the coupon interest onthe PACRS1 or PACRS2.

PACRS were recorded atthe amount of consideration received less transaction costs.

*(ii)Financial Instruments included in liabilities*

Liabilitieswere recognised 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 were carried at theirprincipal amounts.  Interest was chargedas an expense as it accrued other than for amounts capitalised.

Commercialpaper was carried at face value.  Thediscount interest was carried as a deferred expense and brought to account onan accruals basis.

US$notes were carried at face value and translated at the exchange rates ruling atreporting date. Interest was charged as an expense as it accrued.

Eurobondnotes were carried at face value. The discount on issue was carried as adeferred expense and amortised over the period to maturity. Interest wascharged as an expense as it accrued.

Undatedsubordinated convertible securities were initially recorded at the amount ofconsideration received. These securities were translated at the rate ofexchange ruling at reporting date. Interest payable on these securities wasrecognised when entitlements accrued and was calculated in accordance with theterms of each issue.

# **(q)****         ****Fair value estimation**

The fair value offinancial assets and financial liabilities must be estimated for recognition,measurement and disclosure purposes.

The fair value offinancial instruments traded in active markets (such as publicly tradedderivatives, and trading and available-for-sale securities) is based on quotedmarket prices at the balance sheet date. The quoted market price used forfinancial assets held by the consolidated entity is the current bid price; thequoted market price used for financial liabilities is the current ask price.

F-15

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**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 1. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES continued**

The fair value offinancial instruments that are not traded in an active market (for example,over-the-counter derivatives) is determined using valuation techniques. Theconsolidated entity uses a variety of methods, including discounted cash flowsto calculate the fair value of financial instruments.  These calculations are performed usingcurrent market inputs which may include the use of interest and forward exchangerates ruling at balance date.  Theconsolidated entity makes assumptions concerning these valuations that arebased on market conditions existing at each balance date. Quoted market pricesor dealer quotes for similar instruments are used for long-term debtinstruments held.

The nominal value oftrade receivables and payables are assumed to approximate their fair values.The fair value of financial liabilities for disclosure purposes is estimated bydiscounting the future contractual cash flows at the current market interestrate that is available to the consolidated entity for similar financialinstruments.

# **(r)****         ****Property, plant and equipment**

Property,plant and equipment is stated at cost less accumulated depreciation andimpairment.  Cost includes expenditurethat is directly attributable to the acquisition of the item.

Subsequentcosts are included in the asset’s carrying amount or recognised as a separateasset, as appropriate, only when it is probable that future economic benefitsassociated with the item will flow to the consolidated entity and the cost ofthe item can be measured reliably.  Allother repairs and maintenance are charged to the income statement during thefinancial period in which they are incurred.

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:
| -      | Leasehold land between 1%  - 3% (2005 1% - 3%)          |
|--------|---------------------------------------------------------|
|   |                                                    |
| -      | Land improvements between  1% - 3% (2005 1% - 3%)       |
|   |                                                    |
| -      | Buildings between 1% - 5%  (2005 1% - 5%)               |
|   |                                                    |
| -      | Plant and equipment  between 3% - 25% (2005 3% - 25%)   |
|   |                                                    |
| -      | Finance leased assets  between 4% - 20% (2005 4% - 20%) |

 

Theassets’ residual values and useful lives are reviewed, and adjusted ifappropriate, at each balance sheet date.

Gainsand losses on disposals are determined by comparing the proceeds of eachdisposed asset with its carrying amount, and are included in the incomestatement as other income.

# **(s)****         ****Intangible assets**

*(i)**          Goodwill*

Goodwillrepresents the difference between the cost of a business combination over thenet fair value of the identifiable assets, liabilities and contingentliabilities acquired.  Goodwill iscarried at cost less any accumulated impairment losses.  Goodwill is allocated to CGUs and testedannually for impairment, or more frequently if events or changes incircumstances indicate that it might be impaired.

*(ii)Other intangible assets*

Otherintangible assets acquired are carried at cost less accumulated amortisationand impairment losses.

Expenditureon research associated with product research is charged against net income inthe year in which the expenditure is incurred.

Expenditureon development activities associated with product development innovation iscapitalised if the product is technically and commercially feasible andadequate resources are available to complete development.  Capitalised development expenditure isamortised over the period of time during which the benefits are expected toarise, typically not exceeding ten years.

F-16

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**Amcor Limited Consolidated**

**Notes to the consolidatedfinancial statements**

**30June 2006**

**NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued**

Expenditureon significant commercial development, including major software applicationsand associated systems, is capitalised and amortised over the period of timeduring which the benefits are expected to arise, typically between 3 to 8years.

Softwarecosts are capitalised as intangible assets if they are separable orarise from contractual or other legal rights and it is probable that theexpected future economic benefits attributable to the asset will flow to theconsolidated entity, and the cost of the asset can be measured reliably. Wheresoftware is internally generated, only the costs incurred in the development phaseare capitalised and amortised over the period of time during which the benefitsare expected to arise, typically not exceeding ten years.  Software costs which are incurred in theresearch phase are expensed.

Expenditureon other internally generated intangibles is charged against net income in theyear in which the expenditure is incurred.

# **(t)****           ****Trade and other payables**

Theseamounts represent liabilities for goods and services provided to theconsolidated entity prior to the end of the financial year which were unpaid atthe end of the financial year.  Theseamounts are unsecured.

Tradeand other payables are stated at their amortised cost and are non interestbearing.

# **(u)****        ****Financing costs**

Financingcosts include interest income and expense, amortisation of discounts orpremiums relating to borrowings, amortisation of ancillary costs incurred inconnection with the arrangement of borrowings, lease finance charges and theunwinding discount on provision balances.

Financingcosts are brought to account in determining profit for the year, except to theextent the financing costs are directly attributable to the acquisition,construction or production of a qualifying asset.  Such financing costs are capitalised as partof the cost of the asset up to the time it is ready for its intended use andare then amortised over the expected useful economic life.

# **(v)****          ****Provisions**

Aprovision is recognised when there is a legal 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, and the amount can bereliably estimated.  Provisions are notrecognised for future operating losses.

Whensome or all of the economic benefits required to settle a provision areexpected to be recovered from a third party, the recovery receivable isrecognised as an asset when it is virtually certain that the recovery will bereceived.

Inthe income statement, the expense recognised in respect of a provision ispresented net of the recovery.

*(i)Restructuring*

A provision for restructuring is recognised when:

a)         there is a detailed formal plan for therestructuring at the commitment date, identifying at least: the business orpart of a business concerned; the principal locations affected; the location,function and approximate number of employees who will be compensated forterminating their services (for involuntarily terminated employees, the planmust also specifically identify the benefit formula to be used for determiningindividual employee involuntary termination payments, job classification andfunctions); when the plan will be implemented; and the expenditures that willbe made; and

b)        the entity has announced the main featuresof the plan or started to implement the plan so as to raise a valid expectationin those affected that the entity will carry out the restructuring.

F-17

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued**

*(ii)Dividends*

Aprovision for dividends payable is recognised in the reporting period in whichthe dividends are declared on or before the end of the financial period but notdistributed at balance date.

*(iii)Decommissioning*

Thepresent value of the estimated costs of dismantling and removing an asset andrestoring the site on which it is located are recognised as an asset withinproperty, plant and equipment and as a provision, where a legal or constructiveobligation exists.  At each reportingdate, the liability is remeasured in line with changes in discount rates, timingand estimated cash flows.  Any changes inthe liability are added or deducted from the related asset, other than theunwinding of the discount, which is recognised as a financing cost in theincome statement.

*(iv)Onerous Contracts*

A provision for onerous contracts is recognisedwhen unavoidable costs under a contract, calculated as the lower of the cost offulfilling the contract and any compensation or penalties arising from thefailure to fulfil it, is loss-making, rather than simply unfavourable dueto current prices.  A provision is recognisedonly in respect of the onerous element of the contract.  The provision is discounted to its presentvalue, where the effect of discounting is material.

*(v)Insurance and Other Claims*

Provisionsfor workers’ 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.

Estimatednet future cash flows are based on the assumption that all claims will besettled and the weighted average cost of historical claims adjusted forinflation will continue to approximate future costs.

# **(w)****  ****Employee benefits**

*(i)Wages, Salaries, Annual Leave and Sick Leave*

Liabilitiesfor employee benefits such as wages, salaries, annual leave, sick leave andother current employee entitlements represent present obligations resultingfrom employees’ services provided to reporting date, and are measured at theamounts expected to be paid when the liabilities are settled.

*(ii)Long Service Leave*

Liabilitiesrelating to long service leave are measured as the present value of estimatedfuture cash outflows to be made in respect of services provided by employees upto the reporting date.  Consideration isgiven to expected future wage and salary levels, experience of employeedepartures and periods of service.

Liabilities which are not expected to be settledwithin twelve months are discounted using market yields at the reporting dateof high quality corporate bonds.  Incountries where there is no deep market for corporate bonds (such asAustralia), the market yield on government bonds at the reporting date isused.   The rates used reflect the termsto maturity and currency that match, as closely as possible, the estimatedfuture cash outflows.

*(iii) Retirement Benefit Obligations*

*(a)Defined Benefit Plans*

Theconsolidated entity’sliability or asset in respect of defined benefit pension plans is recognised inthe balance sheet, and is measured as the present value of the defined benefitobligation at the reporting date plus unrecognised actuarial gains (lessunrecognised actuarial losses), less the fair value of the pension plan’sassets at that date and any unrecognised past service cost. The present valueof the defined benefit obligation is based on expected future payments whicharise from membership of the fund to the 

F-18

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued**

reporting date, calculated annually by independentactuaries. Consideration is given to expected future wage and salary levels,experience of employee departures and periods of service.

Expectedfuture payments are discounted using market yields at the reporting date onnational government bonds with terms to maturity and currency that match, asclosely as possible, the estimated future cash outflows.

Actuarialgains and losses arising from experience adjustments and changes in actuarialassumptions are charged or credited to equity.

Pastservice costs are recognised immediately in income, unless the changes to thepension plan are conditional on the employees remaining in service for aspecified period of time (the vesting period). In this case, the past service costs are amortised on a straight-linebasis over the vesting period.

Futuretaxes that are funded by the entity and are part of the provision of theexisting benefit obligation (eg taxes on investment income and employercontributions) are taken into account in measuring the net liability or asset.

*(b) Defined Contribution Plans*

Contributionsby the consolidated entity to the defined contribution fund are recognised asan expense as they become payable. Prepaid contributions are recognised as anasset to the extent that a cash refund or a reduction in the future payments isavailable.

*(iv) Share-based Payments*

Thecompany maintains two Employee Share Schemes: the Employee Share Purchase 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.

Anumber of sub-plans exist under the ESPP, including the Employee IncentiveShare Plan (“EISP”), the Senior Executive Retention Share Plan (“SERSP”) andthe Senior Executive Retention Payment Plan (“SERPP”).

Whereloans are made to assist in the purchase of shares under a sub-plan, they aretreated as a reduction in equity and not recognised as a receivable.  Repayments are recorded as contributions toshare capital.  Shares are held in trustuntil the loan is settled.

*Share options granted before 7November 2002 which have vested before 1 January 2005*

No expense is recognisedin respect of these options.  The sharesare recognised when the options are exercised and the proceeds receivedallocated to share capital.

*Share options granted after 7November 2002 which have vested after 1 January 2005*

The fair value of optionsgranted is recognised as an employee benefit expense with a correspondingincrease in the share-based payments reserve in equity. The fair value ismeasured at grant date taking into account market performance conditions only,and spread over the vesting period during which the employees becomeunconditionally entitled to the options. The fair value of options granted ismeasured using the Black Scholes model. The amount recognised as an expense isadjusted to reflect the actual number of options that vest, except whereforfeiture is due to market related conditions.

Upon exercise of theoptions, the balance of the share-based payments reserve relating to thoseoptions is transferred to share capital.

*(v)Profit Sharing and Bonus Plans*

Aliability and an expense is recognised for profit sharing and bonus plans,including benefits based on the future value of equity instruments and benefitsunder plans allowing the consolidated entity to settle in either cash orshares.

F-19

----

**Amcor Limited Consolidated**

**Notes to the consolidatedfinancial statements**

**30June 2006**

**NOTE1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued**

Entitlementsunder the Employee Bonus Payment Plan (‘EBPP’) are estimated and accrued at theend of the financial reporting period.

# **(x)****  ****Contributed equity**

Ordinary shares are classified as equity.  Incremental costs directly attributable tothe issue of new shares or the exercise of options are shown in equity as adeduction, net of tax, from the proceeds.

# **(y)****  ****Earnings per Share (EPS)**

*(i) Basic Earnings per Share*

Basicearnings per share is calculated by dividing the net profit attributable tomembers of the company for the reporting period, by the weighted average numberof ordinary shares of the company for the reporting period, adjusted for anybonus issue.

*(ii) Diluted Earnings per Share*

DilutedEPS is calculated by adjusting the basic EPS for the after tax effect offinancing costs and the effect of conversion to ordinary shares associated withdilutive potential ordinary shares.

Thediluted EPS weighted average number of shares includes the number of ordinaryshares assumed to be issued for no consideration in relation to dilutivepotential ordinary shares.  The number ofordinary shares assumed to be issued for no consideration represents thedifference between the number that would have been issued at the exercise priceand the number that 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-20

----

**Amcor Limited Consolidated**

**Notes to the consolidatedfinancial statements**

**30June 2006**

**NOTE1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued**

# **(z)****  ****Change in accounting policies – financial instruments**

Theconsolidated entity has elected not to restate comparative information forfinancial instruments within the scope of Accounting Standards *AASB 132 Financial Instruments: Disclosure and Presentation*and *AASB 139 Financial Instruments: Recognition andMeasurement*, as permitted on the first-time adoption of AIFRS.  The effect of changes in the accountingpolicies for financial instruments on the balance sheet as at 1 July 2005 isshown below: 
|                                                            | ** ** | ** **                 | ** ** | **30 June**         | ** ** | **Effect of**       | ** ** | **1 July** | ** ** |
|------------------------------------------------------------|------------|----------------------------|------------|---------------------|------------|---------------------|------------|------------|------------|
| ** **                                                 | ** ** | ** **                 | ** ** | **2005**            | ** ** | **adoption**        | ** ** | **2005**   | ** ** |
| ** **                                                 | ** ** | **Footnote**               | ** ** | **$m**              | ** ** | **$m**              | ** ** | **$m**     | ** ** |
| **Current assets**                                         | ** ** | ** **                 | ** ** | ** **          | ** ** | ** **          | ** ** | ** ** | ** ** |
| Cash and cash equivalents                                  |       |                       |       | 229.8               |       | -    |       | 229.8      |       |
| Trade and other receivables                                |       | (iii),  (iv), (vii), (ix)  |       | 1,824.7             |       | (120.8              | )          | 1,703.9    |       |
| Inventories                                                |       |                       |       | 1,440.1             |       | -    |       | 1,440.1    |       |
| Other financial assets                                     |       | (iv),  (vi), (vii), (viii) |       | -    |       | 109.6               |       | 109.6      |       |
| **Total current assets**                                   |       |                       |       | 3,494.6             |       | (11.2               | )          | 3,483.4    |       |
|                                                       |       |                       |       |                |       |                |       |       |       |
| **Non-current assets**                                     | ** ** | ** **                 | ** ** | ** **          | ** ** | ** **          | ** ** | ** ** | ** ** |
| Investments accounted for using the equity method          |       | (vi)                       |       | 40.7                |       | 6.6                 |       | 47.3       |       |
| Other financial assets                                     |       | (iv)                       |       | 52.8                |       | 4.0                 |       | 56.8       |       |
| Property, plant and equipment                              |       |                       |       | 4,426.8             |       | -    |       | 4,426.8    |       |
| Deferred tax assets                                        |       | (xi)                       |       | 349.9               |       | 22.0                |       | 371.9      |       |
| Intangible assets                                          |       |                       |       | 1,998.0             |       | -    |       | 1,998.0    |       |
| Other non-current assets                                   |       | (i),  (iii)                |       | 96.3                |       | (12.0               | )          | 84.3       |       |
| **Total non-current assets**                               |       |                       |       | 6,964.5             |       | 20.6                |       | 6,985.1    |       |
|                                                       |       |                       |       |                |       |                |       |       |       |
| **Total assets**                                           |       |                       |       | 10,459.1            |       | 9.4                 |       | 10,468.5   |       |
|                                                       |       |                       |       |                |       |                |       |       |       |
| **Current liabilities**                                    | ** ** | ** **                 | ** ** | ** **          | ** ** | ** **          | ** ** | ** ** | ** ** |
| Trade and other payables                                   |       | (ii),  (ix)                |       | 1,996.0             |       | 9.2                 |       | 2,005.2    |       |
| Interest bearing liabilities                               |       | (iii)                      |       | 887.2               |       | (1.3                | )          | 885.9      |       |
| Subordinated convertible securities                        |       | (i)                        |       | -    |       | 414.6               |       | 414.6      |       |
| Other financial liabilities                                |       | (vii),  (viii)             |       | -    |       | 7.5                 |       | 7.5        |       |
| Current tax liabilities                                    |       |                       |       | 82.5                |       | -    |       | 82.5       |       |
| Provisions                                                 |       | (ii)                       |       | 289.3               |       | (8.7                | )          | 280.6      |       |
| **Total current liabilities**                              |       |                       |       | 3,255.0             |       | 421.3               |       | 3,676.3    |       |
|                                                       |       |                       |       |                |       |                |       |       |       |
| **Non-current liabilities**                                | ** ** | ** **                 | ** ** | ** **          | ** ** | ** **          | ** ** | ** ** | ** ** |
| Trade and other payables                                   |       |                       |       | 31.6                |       | 5.6                 |       | 37.2       |       |
| Interest bearing liabilities                               |       |                       |       | 1,917.3             |       | (10.2               | )          | 1,907.1    |       |
| Subordinated convertible securities                        |       |                       |       | 301.1               |       | 215.2               |       | 516.3      |       |
| Deferred tax liabilities                                   |       |                       |       | 517.3               |       | (1.0                | )          | 516.3      |       |
| Provisions                                                 |       |                       |       | 99.9                |       | -    |       | 99.9       |       |
| Retirement benefit obligations                             |       |                       |       | 358.9               |       | -    |       | 358.9      |       |
| **Total non-current liabilities**                          |       |                       |       | 3,226.1             |       | 209.6               |       | 3,435.7    |       |
|                                                       |       |                       |       |                |       |                |       |       |       |
| **Total liabilities**                                      |       |                       |       | 6,481.1             |       | 630.9               |       | 7,112.0    |       |
|                                                       |       |                       |       |                |       |                |       |       |       |
| **Net assets**                                             |       |                       |       | 3,978.0             |       | (621.5              | )          | 3,356.5    |       |
|                                                       |       |                       |       |                |       |                |       |       |       |
| **Equity**                                                 | ** ** | ** **                 | ** ** | ** **          | ** ** | ** **          | ** ** | ** ** | ** ** |
| Contributed equity                                         |       | (i)                        |       | 3,322.1             |       | (596.6              | )          | 2,725.5    |       |
| Reserves                                                   |       | (ix),  (x), (xi)           |       | (148.2              | )          | (28.1               | )          | (176.3)    |       |
| Retained profits                                           |       | (i),  (iii), (v), (vi)     |       | 726.1               |       | 3.2                 |       | 729.3      |       |
| Total equity attributable to equity holders of the  parent |       |                       |       | 3,900.0             |       | (621.5              | )          | 3,278.5    |       |
| Minority interest                                          |       |                       |       | 78.0                |       | -    |       | 78.0       |       |
|                                                       |       |                       |       |                |       |                |       |       |       |
| **Total equity**                                           |       |                       |       | 3,978.0             |       | (621.5              | )          | 3,356.5    |       |

 

F-21

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued**

The following financialassets and financial liabilities were designated at fair value through profitor loss from 1 July 2005.  Thesefinancial assets and financial liabilities were previously measured at cost:
|                                          | ** ** | **Fair value at 1  July 2005** | ** ** | **Carrying  amount at 30  June 2005** | ** ** |
|------------------------------------------|------------|--------------------------------|------------|---------------------------------------|------------|
| ** **                               | ** ** | **$m**                         | ** ** | **$m**                                | ** ** |
| ** **                               | ** ** | ** **                     | ** ** | ** **                            | ** ** |
| **Financial  assets:**                   | ** ** | ** **                     | ** ** | ** **                            | ** ** |
| Current                                  |       |                           |       |                                  |       |
| Derivatives  hedging employee share plan |       |                           |       |                                  |       |
| - Equity share  options                  |       | 1.5                            |       | 2.9                                   |       |
| - Equity share  swaps                    |       | 3.8                            |       | 4.1                                   |       |
|                                     |       | 5.3                            |       | 7.0                                   |       |
|                                     |       |                           |       |                                  |       |
| Non-current                              |       |                           |       |                                  |       |
| Share  investments                       |       | 7.7                            |       | 7.7                                   |       |
|                                     |       | 7.7                            |       | 7.7                                   |       |
|                                     |       |                           |       |                                  |       |
| **Financial  liabilities:**              | ** ** | ** **                     | ** ** | ** **                            | ** ** |
| Interest free loan                       |       | -               |       | 2.3                                   |       |

 

The followingtransitional provisions have an effect on future periods:

·      On initial recognition,certain financial assets and liabilities were measured at fair value throughthe income statement.

·      Theeffectiveness of hedging relationships was assessed at 1 July 2005 and anyineffectiveness has been recognised in retained earnings.  As provided under AASB 1, assessment ofeffectiveness at hedge inception has not been undertaken where the hedge wasentered into before 1 July 2005.

The adjustments made at 1 July 2005 to restate theopening balance sheet to comply with AASB 132 and 139 include the following:

(i)            ThePerpetual Amcor Convertible Reset Securities (PACRS) have been reclassifiedfrom issued capital of $596.6 million to current and non-current subordinatedconvertible securities of $414.6 million and $215.2 million respectively.  The conversion discount of $32.1 million andother non-current asset transaction issue costs of $13.3 million have been setoff against the carrying value of the PACRS at amortised cost.  Over the life of the PACRS, these amountswill be reflected in the income statement using the effective interest method.

(ii)           Thecoupons on the PACRS from 1 July 2005 are recorded as a finance cost, ratherthan a distribution from retained earnings. Therefore, the accrual of the coupons results in an increase to currentpayables of $8.7 million and was offset by a decrease in current provisions of$8.7 million.  The increase to financecosts for the 12 months to 30 June 2006 is $57.8 million.

(iii)          For Amcor Limited, interest bearingliabilities have been measured at amortised cost which includes the netting ofdeferred finance costs previously recognised in assets.  The following adjustments were made:

·      current receivablesdecreased by $1.2 million;

·      non-current other assets decreasedby $8.4 million;

·      current interest bearingliabilities decreased by $1.3 million;

·      non-current interest bearingliabilities decreased by $7.9 million; and

·      a decrease of $0.4 millionto retained profits.

(iv)          For Amcor Limited,financial instruments in relation to various employee equity share and optionplans have been measured at fair value and have resulted in a decrease of $7.0million in current receivables and an increase of $1.3 million and $4.0 millionin other current and non-current financial assets.

F-22

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued**

(v)           Themeasurement of interest bearing liabilities at fair value resulted in adecrease in non-current interest bearing liabilities of $2.3 million and anincrease in retained profits of $2.3 million.

(vi)          Theequity method investment in Vision Grande was remeasured to reflect theconsideration for the option to purchase shares.  In addition, the 96 million options toacquire shares in Vision Grande, held at 1 July 2005 were recorded at theirfair value.  This resulted in an increasein the equity method investment of $6.6 million and an increase in other currentfinancial assets of $29 million.

(vii)         Based on the maturity date of the instruments,certain financial instrument derivative amounts previously recognised incurrent receivables and current payables have been reclassified to increaseother current financial assets by $78.2 million and increase other currentfinancial liabilities by $5.0 million respectively.

(viii)        The recognition and measurement of allderivatives at fair value, resulting in:

·      other current financialassets and liabilities of $1.1 million and $12.5 million, and

·      non-current trade and otherpayables of $0.6 million.

(ix)           Thetransfer of deferred hedging gains and losses relating to interest rate risk onvarious interest bearing liabilities. These amounts were designated and accounted for as cash flow hedges. Theeffect of this adjustment is to:

·      decrease current assetreceivables by $35.5 million

·      decrease current liabilitypayables by $1.5 million, with

·      the net decrease of $34.0million recognised in reserves.

(x)            Thedeferral in equity of the effective portion of the fair value of derivativesdesignated and accounted for as a cash flow hedge of underlying forecastforeign exchange and commodity exposures. This resulted in a decrease of $4.4 million in reserves.

(xi)           The recognition ofdeferred tax assets of $22 million, a reduction in deferred tax liabilities of$1 million and an increase of $10.2 million in reserves in relation to theadjustments described above.

# **(aa) Rounding of amounts**

Thecompany is of the kind referred to in the Australian Securities and InvestmentsCommission Class order 98/0100 dated 10 July 1998.  In accordance with that Class Order, amountsin the financial statements have been rounded nearest $100,000 or, where theamount is $50,000 or less, zero, unless specifically stated otherwise.

# **(ab)****  ****New accounting standards and UIGInterpretations**

Certainnew accounting standards and Urgent Issues Group (UIG) interpretations havebeen published that are not mandatory for 30 June 2006 reporting periods.  The consolidated entity’s assessment of thesenew standards and interpretations is set out below:

*(i)**          *UIG 4*Determining Whether an Arrangement Contains a Lease*

UIG 4 is applicable to annualperiods beginning on or after 1 January 2006. The consolidated entity has not elected to adopt UIG 4 early.  It will apply UIG 4 and the UIG 4 transitionprovisions in its 2007 financial statements. The consolidated entity will therefore apply UIG 4 on the basis of factsand circumstances that existed as of 1 July 2006.  An assessment of the impact of UIG 4 is currentlybeing performed, and as yet it is not possible to make a reliable measurementof the financial impact.

*(ii)**         *AASB2005-5 *Amendments to Australian Accounting Standards [AASB1, AASB 139]*

AASB2005-5 is applicable to annual periods beginning on or after 1 January2006.  The consolidated entity has notelected to adopt AASB 2005-5 early.  Theamendments provide transitional relief if UIG 4 and UIG 5 were early adoptedand also provides for amendments to AASB 139 Financial Instruments: Recognitionand Measurement as a consequence of UIG 4 and UIG 5.

*(iii)**        *UIG 5 *Rights to Interests Arising from Decommissioning, Restoration andEnvironmental Rehabilitation Funds*

Theconsolidated entity does not have any material interests in decommissioning,restoration and environmental rehabilitation funds.  This interpretation is not expected to affectthe consolidated entity’s financial statements.

F-23

----

**Amcor Limited Consolidated**

**Notes to the consolidatedfinancial statements**

**30 June 2006**

**NOTE1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued**

*(iv)**        *AASB 2005-9 *Amendments to AustralianAccounting Standards* [*AASB 4, AASB 1023, AASB139 and AASB 132*]

AASB2005-9 is applicable to annual reporting periods beginning on or after 1January 2006.  The amendments relate tothe accounting for financial guarantee contracts.  The consolidated entity has not elected toadopt the amendments early. It will apply the revised standards in its 30 June2007 financial statements. The consolidated entity may have to recognise aliability in relation to a guarantee given by a subsidiary in respect of alease by a former subsidiary (refer Note 40). An assessment of the fair value of these guarantees is currently beingperformed, and as yet it is not possible to make a reliable measurement of thefinancial impact.  The new rules will beimplemented retrospectively with a restatement of comparatives as required byAASB 108 *Accounting Policies, Changes in AccountingEstimates and Errors.*

*(v)**          *AASB 7 *Financial Instruments:Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards*[*AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1,AASB 4, AASB 1023 and AASB 1038*]

AASB7 and AASB 2005-10 are applicable to annual reporting periods beginning on orafter 1 January 2007.  The consolidatedentity has not adopted the standards early. Application of the standards will not affect any of the amountsrecognised in the financial statements, but will impact the type of informationdisclosed in relation to the consolidated entity’s financial statements.

*(vi)**        *UIG 6 *Liabilities arising fromParticipating in a Specific Market – Waste Electrical and Electronic Equipment*

UIG6 is applicable to annual reporting periods beginning on or after 1 December2006.  The consolidated entity has notsold any electronic or electrical equipment on the European market and has notincurred any associated liabilities. This interpretation will not affect the consolidated entity’s financialstatements.

*(vii)**       *UIG 7 *Applying the RestatementApproach under AASB 129 Financial Reporting in Hyperinflationary Economies*

UIG7 is applicable to annual reporting periods beginning on or after 1 March2006.  The interpretation addresses therequirement in AASB 129 for financial statement to be stated in terms of themeasuring unit current at the reporting date when they are reported in thecurrency of a hyperinflationary economy. This interpretation is not expected to affect the consolidated entity’sfinancial statements.

*(viii)**      *UIG 9 *Reassessment of embeddedderivatives*

UIG9 is applicable to annual reporting periods beginning on or after 1 June2006.  The interpretation clarifies thatan entity is required to reassess whether an embedded derivative should beaccounted for separately from the host contract only when there is a change inthe terms of the contract that significantly modifies the cash flows otherwiserequired.  The interpretation is notexpected to have a material affect on the consolidated entity’s financialstatements.

F-24

----

**Amcor Limited Consolidated**

**Notes to the consolidatedfinancial statements**

**30 June 2006**

**NOTE 2. FINANCIAL RISK MANAGEMENT**

Theconsolidated entity’s activities expose it to a variety of financial risks;market risk (including currency risk, equity securities price risk, commodityprice risk, interest rate risk, employee share plan risk); credit risk andliquidity risk.

Theconsolidated entity’s overall risk management program seeks to minimisepotential adverse effects on the financial performance of the consolidatedentity.  The consolidated entitynegotiates appropriate commercial terms or uses derivative financialinstruments such as foreign exchange contracts and interest rate swaps to hedgecertain risk exposures.

Riskmanagement is carried out by Amcor Treasury under policies approved by theBoard of Directors.  Amcor Treasuryidentifies, evaluates and hedges financial risks in close co-operation with theconsolidated entity’s business groups. The Board provides written principles for overall risk management, aswell as written policies covering specific areas, such as mitigating foreignexchange, interest rate and credit risks, use of derivative financialinstruments and investing excess liquidity.

**(a)****   Market risk**

*(i)**           Currency risk*

Foreignexchange risk arises when future commercial transactions and recognised assetsand liabilities are denominated in a currency that is not the functionalcurrency of the entity within the consolidated entity.  The consolidated entity operatesinternationally and is exposed to foreign exchange risk arising from currencyexposures mainly to the US dollar and Euro.

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, where exposures are measured as forecast or actualtransactional cash flows in currencies other than the functional currency ofthe business.

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 matching representing a natural hedge.  Cross currency interest rate swaps allow theconsolidated entity to swap long term Australian denominated borrowings intoforeign currencies to hedge the investment in entities with functionalcurrencies which are not the reporting currency of the consolidated entity.

*(ii)**          Equity securities price risk*

The consolidatedentity is exposed to equity securities price risk.  This arises from investments held by theconsolidated entity and classified on the balance sheet either asavailable-for-sale or at fair value through the income statement.

*(iii)**         Commodityprice risk*

The consolidated entity is exposed to commodity pricerisk, particularly for resin, and manages this by passing the riskcontractually to customers to the maximum extent possible.  In the case of aluminium, some hedging isundertaken based on customer instructions, and all related risks, benefits andcosts are passed onto the customer.

*(iv)**         Interestrate risk*

The consolidatedentity is exposed to movements in interest rates under various debtfacilities.  By monitoring globalinterest rates and, where appropriate, hedging interest rate exposures or borrowingat fixed interest rates, the company is able to manage the consolidated entity’sinterest rate risk.

TheGroup also manages its interest-rate risk by using floating-for-fixed interestrate swaps.  Interest rate swaps andforward rate agreements allow the consolidated entity to swap floating rateborrowings into fixed rates and vice-versa.

Eachcontract involves quarterly or semi-annual payment or receipt of the net amountof interest.  Floating rates are based oninterest rate settings in the currencies concerned plus the consolidated entity’scredit margin.

F-25

----

**AmcorLimited Consolidated**

**Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 2.FINANCIAL RISK MANAGEMENT continued**

Theconsolidated entity may also enter into interest rate options to reduce theimpact of changes in interest rates on floating rate long-term debt.  There were no interest rate optionsoutstanding at year end (2005: Nil).

*(v)**           Employeeshare plan risk*

Inrelation to the cash settled variants of the Employee Options and EmployeeBonus Payment Plan (‘EBPP’) schemes, the consolidated entity is exposed tomovements in the value of the underlying ordinary shares of Amcor Limited.  For all such entitlements offered, theconsolidated entity has hedged its exposure by entering into cash settledequity share option or equity share swap contracts that offset the fluctuationsin value of the employee benefit.

**(b)****   Credit risk**

The consolidated entity has no significant concentrationsof credit risk.  In order tocontrol any exposure which may result from non-performance by counterparties,financial assets, other than trade receivables, and hedging contracts are onlyentered into with a range of major banks with a minimum long term credit ratingof A- by Standard & Poor’s.  In addition,the Amcor Limited Board must approve these banks for use, and specific internalguidelines have been established with regard to limits, dealing and settlementprocedures.

*FinancialInstruments*

Themaximum credit risk on financial assets of the consolidated entity, other thaninvestments in shares, is generally the carrying amount of receivables, net ofimpairment losses.

The consolidated entityminimises its concentrations of credit risk by undertaking transactions with alarge number of customers and counterparties in various countries.  Theconsolidated entity has policies in place to ensure that sales of products andservices are made to customers with an appropriate credit history.   There is no material exposure to anyindividual customer.

*DerivativeFinancial Instruments*

Thecredit risk exposure arising from derivative financial instruments is the sumof all contracts with a positive replacement cost.  For derivative financial instruments, themaximum credit exposure is the amount contracted to be received by theconsolidated entity when settlement occurs.

**(c)****   Liquidity risk**

Prudentliquidity risk management implies maintaining sufficient cash and marketablesecurities, the availability of funding through an adequate amount of committedcredit facilities and the ability to close-out market positions.  Due to the dynamic nature of the underlyingbusinesses, Amcor Treasury aims at maintaining flexibility in funding bykeeping committed credit lines available whilst maintaining minimum cashbalances.

F-26

----

**Amcor Limited Consolidated**

**Notes to the consolidatedfinancial statements**

**30 June 2006**

**NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS**

Estimatesand judgements are continually evaluated and are based on historical experienceand other factors, including expectations of future events that are believed tobe reasonable under the circumstances.

(a)           **Critical accountingestimates and assumptions**

Theconsolidated entity makes estimates and assumptions concerning the future. Theresulting accounting estimates will, by definition, seldom equal the relatedactual results. The estimates and assumptions that have a significant risk ofcausing a material adjustment to the carrying amounts of assets and liabilitieswithin the next financial year are discussed below.

Management believes thefollowing are the critical accounting policies and estimates used in thepreparation of the AIFRS financial statements:

·      The testing for impairmentof assets;

·      The testing for impairmentof goodwill;

·      Income tax related assumptionsand estimates; and

·      Thecalculation of annual pension costs and related assets and liabilities.

*Impairmentof assets*

Thedetermination of impairment for property, plant and equipment, goodwill andother intangible assets involves the use of estimates that include, but is notlimited to, the cause, timing and amount of the impairment.  Impairment is based on a large number offactors, such as changes in competitive positions, expectations of growth,increased cost of capital, current replacement costs, increases in cost ofinputs, and other factors which may indicate impairment.  An asset is considered impaired when therecoverable amount is less than the carrying value.  Recoverable amount is determined as thehigher of fair value less costs to sell and value-in-use.  In calculating value-in-use, the cash flowsinclude projections of cash inflows and outflows from continuing use of theasset and cash flows associated with disposal of the asset.  The cash flows are estimated for the asset inits current condition.  In assessingvalue-in-use, the estimated cash flows are discounted to their present valueusing a pre-tax discount rate that reflects the current market assessments ofthe risks specific to the asset or CGU. The identification of impairment indicators, the estimation of futurecash flows and the determination of fair values of assets (or groups of assets)requires management to make significant estimates and judgements concerning theidentification of impairment indicators, earnings before interest and tax,growth rates, applicable discount rates, useful lives and residual values.

ReferNote 1(i) for further details regarding the accounting policy regarding ‘Impairmentof assets’.

Managementbelieves that this policy is critical to the financial statements, particularlywhen evaluating the consolidated entity’s assets for impairment.  Varying results from this impairment analysisare possible due to the significant estimates and judgements involved.

*Impairment of Goodwill*

The consolidated entitytests, at least annually, whether goodwill has suffered any impairment, inaccordance with the accounting policy stated in Note 1(i) and (s) of theFinancial Statements.  The recoverableamounts of CGUs have been determined based on the higher of net selling priceor value-in-use calculations. These calculations require the use ofassumptions, including forecast earnings before interest and tax, growth ratesand discount rates. Refer to Note 21 of the Financial Statements for details ofthese assumptions and the potential impact of changes to these assumptions.

The assumptions aremanagement’s best estimates based on current and forecast marketconditions.  Changes in economic andoperating conditions impacting these assumptions could result in additionalimpairment charges in future periods.

Managementbelieves that this policy is critical to the financial statements, particularlywhen evaluating the consolidated entity’s goodwill for impairment.  Varying results from this analysis arepossible due to the significant estimates and judgements involved in theCompany’s evaluations.

F-27

----

**AmcorLimited Consolidated**

**Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS continued**

*Income Taxes*

Theconsolidated entity is subject to income taxes in Australia and foreignjurisdictions.  Significant judgement isrequired in determining the world-wide provision for income taxes.  There are many transactions and calculationsrelating to the ordinary course of business for which the ultimate taxdetermination is uncertain.  Theconsolidated entity recognises liabilities for anticipated tax audit issuesbased on estimates of whether additional taxes will be due.  Where the final tax outcome of these mattersis different from the amounts that were initially recorded, such differenceswill impact the current and deferred tax provisions in the period in which suchdetermination is made.

Inaddition, deferred tax assets are recognised only to the extent it is probablethat future taxable profits will be available against which the assets can beutilised.  The consolidated entity’sassumptions regarding future realization may change due to future operatingperformance and other factors.

*Retirement benefit obligations*

A liability or asset inrespect of defined benefit superannuation plans is recognised in the balancesheet, and is measured as the present value of the defined benefit obligationat the reporting date plus unrecognised actuarial gains (less unrecognisedactuarial losses) less the fair value of the superannuation fund’s assets atthat date and any unrecognised past service cost. The present value of thedefined benefit obligation is based on expected future payments which arisefrom membership of the fund to the reporting date, calculated annually byindependent actuaries. Consideration is given to expected future wage andsalary levels, experience of employee departures and periods of service.

Expected future paymentsare discounted using market yields at the reporting date on either nationalgovernment bonds or corporate bonds (in countries where there is a deep marketin high quality corporate bonds) with terms to maturity and currency thatmatch, as closely as possible, the estimated future cash outflows.

Actuarial gains andlosses arising from experience adjustments and changes in actuarial assumptionsare charged or credited to equity.

Refer Note 1(w) to the financial statements for furtherdetails of the accounting policy relating to retirement benefitobligations.  Refer Note 32 of thefinancial statements for details of the key assumptions used in determining theaccounting for these plans.  Thefollowing are the main categories of assumptions used:

·      Discount rate;

·      Rate of inflation;

·      Expected return on plan assets;

·      Future salary increases; and

·      Medical cost trend rates (in the case of non-pension health plans).

The assumptions made have a significant impact on thecalculations and any adjustments arising therefrom.

If the discount rate were to differ by 10% frommanagement’s estimates, the carrying amount of pension obligations would be anestimated $68.8 million lower or $80.0 million higher.  In addition, a one-half percentage pointchange in the actuarial assumption regarding the expected return on plan assetswould result in a change of approximately $3.3 million in pre-tax pensionexpense for the year ended 30 June 2006. In addition, changes in external factors, including fair values of planassets could result in possible future changes to the amount of the pensionobligations recognised in the balance sheet.

F-28

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE4. SEGMENT INFORMATION**

Business segments are the primary reportingsegments, as these reflect the consolidated entity’s management reportingsystem.  The secondary reporting segmentshave been classified based on the geographical location of the consolidatedentity’s business segments.

**(a)****      ****Description of segments**

**Business segments**

The consolidated entityis organised on a global basis into the following business segments by producttype:

Amcor PET

Polyethylene Triphthalate (PET) packaging for abroad range of predominantly beverage & food products, including carbonatedsoft drinks, water, juices, sports drinks, milk-based beverages, spirits andbeer, sauces, dressings, spreads and personal care items and plastic caps for awide variety of applications.

Amcor Australasia

Corrugated boxes, cartons, folding cartons; steeland aluminium cans for foods, beverages and household products; flexiblepackaging; PET plastic jars and bottles; plastic and metal closures; glass winebottles; multiwall sacks; cartonboard; paper and paper recycling.

Amcor Flexibles

Flexible and film packaging in the food andbeverage and pharmaceutical sectors, including confectionery, coffee, freshfood and dairy, as well as high value-added medical applications.  Specialty folding cartons for tobacco,confectionery and cosmetics.

Amcor Sunclipse

The distribution unit purchases, warehouses, sellsand delivers a wide variety of products. The business also manufacturescorrugated and other mostly fibre based specialty product packaging including ‘pointof sale’ displays.

Amcor Asia

Tobacco carton packaging; flexible plasticpackaging for the food and industrial markets.

**Geographic segments**

Although the consolidated entity’s operations aremanaged on a global basis, they operate in five main geographical areas:

Australia and New Zealand

Comprises operations carried on in Australia and NewZealand which are largely managed together. The areas of operations are principally corrugated boxes, cartons, folding cartons;steel and aluminium cans for foods, beverages and household products; flexiblepackaging; PET plastic jars and bottles; plastic and metal closures; glass winebottles; multiwall sacks; cartonboard; paper and paper recycling.

Europe

Comprises operations carried on in the UnitedKingdom, Germany, France, Spain, Netherlands, Belgium, Italy, Sweden, Norway,Finland, Ireland, Russia, Poland, Hungary, Czech Republic, Denmark, Ukraine,Switzerland, Portugal and Morocco.  TheFlexibles and PET businesses operate manufacturing facilities in thesecountries.

North America

Comprises operations carried on in the UnitedStates of America and Canada.  The PET,Sunclipse and Flexibles businesses operate manufacturing or distributionfacilities in these countries.

Latin America

Comprises operations carried on in Brazil,Argentina, Venezuela, Colombia, Peru, Ecuador, Mexico, Honduras, El Salvadorand Puerto Rico.  The PET and Flexiblesbusinesses operate manufacturing facilities in these countries. Sunclipsedistributes products in Mexico.

Asia

Comprises operations carried out in Malaysia,China, Indonesia, India, Singapore and Philippines.  The PET and Asian business operatemanufacturing facilities in these countries.

F-29

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**Note4. SEGMENT INFORMATION continued**

**(b)****       Notes to and forming partof the segment information**

*(i)**       Accounting Policies*

Segment information is prepared in conformity withthe accounting policies of the consolidated entity as disclosed in Note 1 andaccounting standard AASB 114 *Segment Reporting*.

The primary reporting segments have been classifiedbased on the consolidated entity’s businesses. The secondary segments have been classified based on the geographicallocation of the consolidated entity’s business segments.

Segment results, assets and liabilities includeitems directly attributable to a segment as well as those that can be allocatedon a reasonable basis.  Segment assetsand liabilities do not include income taxes.

Segment result is profit before unallocated finance costs and income tax.

Net finance costs include financial income of $22.4million (2005: $20.9 million).

Unallocated items mainly comprise interest-bearingloans and borrowings.

*(ii) Changes in Segment Accounting Policy*

During the year ended 30 June 2006, a detailed review of the corporatecosts of the consolidated entity was undertaken, and it was identified that$33.4 million (2005 restated: $33.1 million) of the total $76.0 million (2005:$85.4 million) are directly attributable to the results of the operatingsegments and, as such, have been allocated based on relevant cost and service drivers.

*(iii) Changes in Reported Segments*

On 1 July 2005, the consolidated entity changed theidentification of its segments to combine the previously reported ‘Rentsch andClosures’ segment with Amcor Flexibles. This change in segments was as a result of changes in the managementstructure and reporting to the CEO, increasingly common infrastructure sharedby the business, including co-location, resourcing and similartechnologies.  On 1 June 2006, theconsolidated entity disposed of the White Cap Metal Closures business for $333million.  This disposal has been treatedas a discontinued operation and as such the Flexibles segment for 30 June 2006reporting purposes only includes the previously reported Flexibles and Rentschbusiness segments.  Prior periods havebeen restated to reflect these changes.

On 28 February 2006, the consolidated entitydisposed of the Asian Corrugated, Closures and Sacks businesses for $12.9million.  This disposal has been treatedas a discontinued operation and as such has been excluded from the Asianbusiness segment for 30 June 2006 reporting purposes.  Prior periods have been restated to reflectthis change.

*(iv) Inter-segment transfers*

Segment revenues, expenses and results includetransfers between segments.  Suchtransfers are generally priced on an “arm’s length” basis and eliminated onconsolidation.

*(v) External revenue by product*

The following table provides a split of externalrevenue by significant product type:
|             | ** ** | **PET  Packaging** | ** ** | **Flexible  and Film  Packaging** | ** ** | **Fibre/Paper  Based  Packaging** | ** ** | **Metal  Packaging** | ** ** | **Tobacco  Cartons** | ** ** | **Glass** | ** ** | **Discontinued  Operations** | ** ** | **Other** | ** ** | **Consolidated** | ** ** |
|-------------|------------|--------------------|------------|-----------------------------------|------------|-----------------------------------|------------|----------------------|------------|----------------------|------------|-----------|------------|------------------------------|------------|-----------|------------|------------------|------------|
| ** **  | ** ** | **$m**             | ** ** | **$m**                            | ** ** | **$m**                            | ** ** | **$m**               | ** ** | **$m**               | ** ** | **$m**    | ** ** | **$m**                       | ** ** | **$m**    | ** ** | **$m**           | ** ** |
| **2005/06** |       | 4,048.9            |       | 2,390.2                           |       | 1,707.6                           |       | 620.5                |       | 566.8                |       | 111.8     |       | 397.4                        |       | 1,596.1   |       | 11,439.3         |       |
| **2004/05** |       | 3,696.4            |       | 2,409.3                           |       | 1,710.2                           |       | 582.0                |       | 516.1                |       | 97.4      |       | 453.5                        |       | 1,634.7   |       | 11,099.6         |       |

 

F-30

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE4.  SEGMENT INFORMATION continued**

 
| (c) Business segments                                                                        | ** ** | ** **  | ** ** | ** **      | ** ** | ** **    | ** ** | ** **    | ** ** | ** **  | ** ** | ** **  | ** ** | ** **     | ** ** | ** **     | ** ** | ** **       | ** ** | ** **             | ** ** | ** ** | ** ** | ** ** | ** ** | **Total**    | ** ** | ** **   | ** ** | ** ** | ** ** | **Unallocated /** | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|-------------|------------|-----------------|------------|---------------|------------|---------------|------------|-------------|------------|-------------|------------|----------------|------------|----------------|------------|------------------|------------|------------------------|------------|------------|------------|------------|------------|--------------|------------|--------------|------------|------------|------------|------------------------|------------|------------|------------|------------|------------|
| ** **                                                                                             | ** ** | **Amcor**   | ** ** | **Amcor**       | ** ** | **Amcor**     | ** ** | **Amcor**     | ** ** | **Amcor**   | ** ** | ** **  | ** ** | ** **     | ** ** | **continuing** | ** ** | **Discontinued** | ** ** | **Inter segment** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                             | ** ** | **PET**     | ** ** | **Australasia** | ** ** | **Flexibles** | ** ** | **Sunclipse** | ** ** | **Asia**    | ** ** | **Other**   | ** ** | **operations** | ** ** | **operations** | ** ** | **eliminations** | ** ** | **Consolidated**       | ** ** |
| **For the year ended 30 June**                                                | ** ** | **2006**    | ** ** | **2005**        | ** ** | **2006**      | ** ** | **2005**      | ** ** | **2006**    | ** ** | **2005**    | ** ** | **2006**       | ** ** | **2005**       | ** ** | **2006**         | ** ** | **2005**               | ** ** | **2006**   | ** ** | **2005**   | ** ** | **2006**     | ** ** | **2005**     | ** ** | **2006**   | ** ** | **2005**               | ** ** | **2006**   | ** ** | **2005**   | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                                                                             | ** ** | **$m**      | ** ** | **$m**          | ** ** | **$m**        | ** ** | **$m**        | ** ** | **$m**      | ** ** | **$m**      | ** ** | **$m**         | ** ** | **$m**         | ** ** | **$m**           | ** ** | **$m**                 | ** ** | **$m**     | ** ** | **$m**     | ** ** | **$m**       | ** ** | **$m**       | ** ** | **$m**     | ** ** | **$m**                 | ** ** | **$m**     | ** ** | **$m**     | ** ** | **$m** | ** ** | **$m** | ** ** |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Segment  revenue                                                                                       |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Revenue  from external customers                                                                       |       | 4,048.9     |       | 3,696.4         |       | 2,557.7       |       | 2,566.3       |       | 2,965.6     |       | 2,960.5     |       | 1,287.7        |       | 1,214.7        |       | 173.4            |       | 182.8                  |       | 8.6        |       | 25.4       |       | 11,041.9     |       | 10,646.1     |       | 397.4      |       | 453.5                  |       | -          |       | -          |       | 11,439.3 |   | 11,099.6 |   |
| Inter—segment  revenue                                                                            |       | -           |       | -               |       | 3.2           |       | 5.4           |       | 13.0        |       | 10.7        |       | 4.4            |       | 4.0            |       | 1.1              |       | (0.6                   | )          | -          |       | -          |       | 21.7         |       | 19.5         |       | 3.9        |       | 8.1                    |       | (25.6      | )          | (27.6      | )          | - |   | - |   |
| Total  sales revenue                                                                                   |       | 4,048.9     |       | 3,696.4         |       | 2,560.9       |       | 2,571.7       |       | 2,978.6     |       | 2,971.2     |       | 1,292.1        |       | 1,218.7        |       | 174.5            |       | 182.2                  |       | 8.6        |       | 25.4       |       | 11,063.6     |       | 10,665.6     |       | 401.3      |       | 461.6                  |       | (25.6      | )          | (27.6      | )          | 11,439.3 |   | 11,099.6 |   |
| Share  of net profits of associates                                                                    |       | -           |       | -               |       | -             |       | -             |       | -           |       | -           |       | -              |       | -              |       | 9.8              |       | 1.8                    |       | -          |       | -          |       | 9.8          |       | 1.8          |       | -          |       | -                      |       | -          |       | -          |       | 9.8 |   | 1.8 |   |
| Other  revenue                                                                                         |       | 29.9        |       | 29.8            |       | 12.7          |       | 14.5          |       | 20.1        |       | 18.5        |       | 0.6            |       | 7.0            |       | 99.4             |       | 1.1                    |       | 13.5       |       | (0.7       | )          | 176.2        |       | 70.2         |       | 7.5        |       | 13.0                   |       | -          |       | -          |       | 183.7 |   | 83.2 |   |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| **Total Segment Revenue**                                                                              | ** ** | **4,078.8** | ** ** | **3,726.2**     | ** ** | **2,573.6**   | ** ** | **2,586.2**   | ** ** | **2,998.7** | ** ** | **2,989.7** | ** ** | **1,292.7**    | ** ** | **1,225.7**    | ** ** | **283.7**        | ** ** | **185.1**              | ** ** | **22.1**   | ** ** | **24.7**   | ** ** | **11,249.6** | ** ** | **10,737.6** | ** ** | **408.8**  | ** ** | **474.6**              | ** ** | **(25.6**  | **)**      | **(27.6**  | **)**      | **11,632.8** | ** ** | **11,184.6** | ** ** |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Segment result                                                                                         |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Profit  before depreciation, amortisation, interest, related income tax expense and  significant items |       | 451.6       |       | 457.3           |       | 384.2         |       | 431.1         |       | 289.6       |       | 291.4       |       | 78.4           |       | 67.3           |       | 36.7             |       | 31.7                   |       | (40.6      | )          | (48.0      | )          | 1,199.9      |       | 1,230.8      |       | 49.2       |       | 52.8                   |       | -          |       | -          |       | 1,249.1 |   | 1,283.6 |   |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Depreciation  & amortisation                                                                       |       | 206.6       |       | 197.5           |       | 121.8         |       | 115.3         |       | 101.2       |       | 101.0       |       | 13.3           |       | 12.6           |       | 6.9              |       | 8.6                    |       | 2.0        |       | 4.3        |       | 451.8        |       | 439.3        |       | 21.6       |       | 22.5                   |       | -          |       | -          |       | 473.4 |   | 461.8 |   |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Profit  before interest, related income tax expense and significant items                              |       | 245.0       |       | 259.8           |       | 262.4         |       | 315.8         |       | 188.4       |       | 190.4       |       | 65.1           |       | 54.7           |       | 29.8             |       | 23.1                   |       | (42.6      | )          | (52.3      | )          | 748.1        |       | 791.5        |       | 27.6       |       | 30.3                   |       | -          |       | -          |       | 775.7 |   | 821.8 |   |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Net finance costs                                                                                      |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       | (242.2       | )          | (160.7       | )          | (4.4       | )          | (5.7                   | )          |       |       |       |       | (246.6 | ) | (166.4 | ) |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Profit  from ordinary activities before related income tax and significant items                       |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       | 529.1 |   | 655.4 |   |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Significant  items before related income tax expense                                                   |       | (22.5       | )          | (107.3          | )          | -             |       | (108.7        | )          | (71.9       | )          | (57.4       | )          | -              |       | -              |       | 93.8             |       | (9.6                   | )          | (0.4       | )          | (6.1       | )          | (1.0         | )          | (289.1       | )          | (63.1      | )          | (35.3                  | )          | -          |       | -          |       | (64.1 | ) | (324.4 | ) |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Profit  before related income tax expense                                                              |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       | 465.0 |   | 331.0 |   |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Income  tax expense                                                                                    |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       | (92.3        | )          | (72.4        | )          | 6.5        |       | (0.2                   | )          |       |       |       |       | (85.8 | ) | (72.6 | ) |
|                                                                                                   |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       |   |   |   |   |
| Profit for the financial  year                                                                         |       |        |       |            |       |          |       |          |       |        |       |        |       |           |       |           |       |             |       |                   |       |       |       |       |       |         |       |         |       |       |       |                   |       |       |       |       |       | 379.2 |   | 258.4 |   |

F-31

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE4.  SEGMENT INFORMATION continued**

**(c) Business segments (continued)**
|            | ** ** | **Amcor** | ** ** | **Amcor**       | ** ** | **Amcor**     | ** ** | **Amcor**     | ** ** | **Amcor** | ** ** | ** ** | ** ** | ** **     | ** ** | **Total  continuing** | ** ** | **Discontinued** | ** ** | **Unallocated/  Inter segment** | ** ** | ** ** | ** ** | ** ** | ** ** |
|------------|------------|-----------|------------|-----------------|------------|---------------|------------|---------------|------------|-----------|------------|------------|------------|----------------|------------|-----------------------|------------|------------------|------------|--------------------------------------|------------|------------|------------|------------|------------|
| ** ** | ** ** | **PET**   | ** ** | **Australasia** | ** ** | **Flexibles** | ** ** | **Sunclipse** | ** ** | **Asia**  | ** ** | **Other**  | ** ** | **operations** | ** ** | **operations**        | ** ** | **eliminations** | ** ** | **Consolidated**                     | ** ** |
| **For the year ended 30 June**                                            |  | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------------------------------------------------------------|--|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| ** **                                                                                         |  | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                                                                                               |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |
| Segment  assets                                                                                    |  | 3,853.4  |       | 3,786.0  |       | 2,552.4  |       | 2,556.2  |       | 2,312.3  |       | 2,412.0  |       | 548.5    |       | 517.7    |       | 409.8    |       | 285.8    |       | 98.1     |       | 5.8      |       | 9,774.5  |       | 9,563.5  |       | -        |       | 582.1    |       | (9.6     | )          | (36.3    | )          | 9,764.9  |       | 10,109.3 |       |
|                                                                                               |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |
| Segment liabilities                                                                                |  | (974.2   | )          | (955.4   | )          | (536.2   | )          | (520.3   | )          | (889.6   | )          | (793.2   | )          | (144.8   | )          | (133.2   | )          | (33.3    | )          | (44.1    | )          | (179.7   | )          | (222.1   | )          | (2,757.8 | )          | (2,668.3 | )          | -        |       | (143.7   | )          | 9.6      |       | 36.3     |       | (2,748.2 | )          | (2,775.7 | )          |
| Unallocated  corporate borrowings                                                                  |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       | (3,239.6 | )          | (3,105.7 | )          |
|                                                                                               |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |
| Total  liabilities                                                                                 |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       | (5,987.8 | )          | (5,881.4 | )          |
|                                                                                               |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |
| Investments  in associates accounted  for using the equity method                                  |  | -        |       | -        |       | -        |       | -        |       | -        |       | -        |       | -        |       | -        |       | 283.1    |       | 40.7     |       | -        |       | -        |       | 283.1    |       | 40.7     |       | -        |       | -        |       | -        |       | -        |       | 283.1    |       | 40.7     |       |
|                                                                                               |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |
| Acquisition  of property, plant and  equipment, intangibles and other non-  current segment assets |  | 231.5    |       | 225.3    |       | 123.2    |       | 189.4    |       | 107.4    |       | 205.9    |       | 15.2     |       | 23.2     |       | 64.1     |       | 42.8     |       | 1.8      |       | 0.2      |       | 543.2    |       | 686.8    |       | 10.0     |       | 6.1      |       | -        |       | -        |       | 553.2    |       | 692.9    |       |
|                                                                                               |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |
| Impairment  losses - inventories  (Note 6)                                                         |  | 0.8      |       | 2.9      |       | 8.4      |       | 7.8      |       | 3.1      |       | 12.2     |       | -        |       | 0.5      |       | 1.8      |       | 1.0      |       | -        |       | -        |       | 14.1     |       | 24.4     |       | 3.7      |       | 2.4      |       | -        |       | -        |       | 17.8     |       | 26.8     |       |
|                                                                                               |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |
| Impairment  losses - trade receivables  (Note 6)                                                   |  | 2.9      |       | 5.9      |       | (1.9     | )          | 3.1      |       | (6.1     | )          | 3.2      |       | 3.4      |       | 3.6      |       | 1.0      |       | 0.3      |       | 4.7      |       | (1.9     | )          | 4.0      |       | 14.2     |       | -        |       | -        |       | -        |       | -        |       | 4.0      |       | 14.2     |       |
|                                                                                               |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |
| Reversal  of previous impairment  losses (Note 6)                                                  |  | -        |       | (2.7     | )          | (7.1     | )          | -        |       | -        |       | -        |       | -        |       | -        |       | -        |       | -        |       | -        |       | -        |       | (7.1     | )          | (2.7     | )          | -        |       | -        |       | -        |       | -        |       | (7.1     | )          | (2.7     | )          |
|                                                                                               |  |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |     |       |
| Other  non-cash expenses                                                                           |  | 76.4     |       | 30.4     |       | 55.6     |       | 52.6     |       | 60.1     |       | 33.5     |       | (0.4     | )          | (1.7     | )          | 1.4      |       | 1.0      |       | (35.3    | )          | 76.6     |       | 157.8    |       | 192.4    |       | 10.3     |       | 7.3      |       | -        |       | -        |       | 168.1    |       | 199.7    |       |

 

F-32

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 4.  SEGMENTINFORMATION continued**

 

**(d) Geographic segments**

 
|                                                                                          | ** ** | **Australia and  New Zealand** | ** ** | **Europe** | ** ** | **North America** | ** ** | **Latin America** | ** ** | **Asia**   | ** ** | **Consolidated** | ** ** |
|------------------------------------------------------------------------------------------|------------|------------------------------------------|------------|------------|------------|------------------------|------------|------------------------|------------|------------|------------|------------------|------------|
| **For the year ended 30 June**                                  | ** ** | **2006**                                 | ** ** | **2005**   | ** ** | **2006**               | ** ** | **2005**               | ** ** | **2006**   | ** ** | **2005**         | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                                                               | ** ** | **$m**                                   | ** ** | **$m**     | ** ** | **$m**                 | ** ** | **$m**                 | ** ** | **$m**     | ** ** | **$m**           | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** |
|                                                                                     |       |                                     |       |       |       |                   |       |                   |       |       |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total external segment  revenue                                                          |       | 2,557.7                                  |       | 2,566.3    |       | 3,448.3                |       | 3,547.5                |       | 3,806.4    |       | 3,425.9          |       | 1,024.5 |   | 895.7 |   | 205.0 |   | 210.7 |   | 11,041.9 |   | 10,646.1 |   |
|                                                                                     |       |                                     |       |       |       |                   |       |                   |       |       |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Long lived assets (1)                                                                    |       | 1,586.2                                  |       | 1,494.3    |       | 1,265.2                |       | 1,396.4                |       | 1,017.4    |       | 1,023.8          |       | 375.9 |   | 361.5 |   | 52.1 |   | 150.8 |   | 4,296.8 |   | 4,426.8 |   |
|                                                                                     |       |                                     |       |       |       |                   |       |                   |       |       |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Segment assets                                                                           |       | 2,178.4                                  |       | 2,518.0    |       | 3,344.7                |       | 2,562.0                |       | 2,781.3    |       | 3,104.7          |       | 1,011.2 |   | 1,004.5 |   | 449.3 |   | 338.0 |   | 9,764.9 |   | 9,527.2 |   |
|                                                                                     |       |                                     |       |       |       |                   |       |                   |       |       |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Unallocated  assets                                                                      |       |                                     |       |       |       |                   |       |                   |       |       |       |             |       |   |   |   |   |   |   |   |   | 390.6 |   | 349.8 |   |
| **Total  assets**                                                                        | ** ** | ** **                               | ** ** | ** ** | ** ** | ** **             | ** ** | ** **             | ** ** | ** ** | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **10,155.5** | ** ** | **9,877.0** | ** ** |
|                                                                                     |       |                                     |       |       |       |                   |       |                   |       |       |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Acquisition of property,  plant and equipment, intangibles and investments in associates |       | 125.0                                    |       | 189.6      |       | 140.0                  |       | 225.0                  |       | 133.3      |       | 180.1            |       | 80.8 |   | 49.3 |   | 64.1 |   | 42.8 |   | 543.2 |   | 686.8 |   |

 
|                                                         | ** ** | **Australia** | ** ** | **USA**    | ** ** | **UK**     | ** ** | **OTHER FOREIGN** | ** ** | **UNALLOCATED** | ** ** | **Consolidated** | ** ** |
|---------------------------------------------------------|------------|---------------|------------|------------|------------|------------|------------|------------------------|------------|-----------------|------------|------------------|------------|
| **For the year ended 30 June** | ** ** | **2006**      | ** ** | **2005**   | ** ** | **2006**   | ** ** | **2005**               | ** ** | **2006**        | ** ** | **2005**         | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                              | ** ** | **$m**        | ** ** | **$m**     | ** ** | **$m**     | ** ** | **$m**                 | ** ** | **$m**          | ** ** | **$m**           | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** | **$m** | ** ** |
|                                                    |       |          |       |       |       |       |       |                   |       |            |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total  external segment revenue                         |       | 2,119.5       |       | 2,118.1    |       | 3,552.1    |       | 3,081.6                |       | 1,203.9         |       | 1,206.4          |       | 4,166.4 |   | 4,240.0 |   | - |   | - |   | 11,041.9 |   | 10,646.1 |   |
|                                                    |       |          |       |       |       |       |       |                   |       |            |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Long lived assets (1)                                   |       | 1,444.8       |       | 1,347.7    |       | 825.6      |       | 753.2                  |       | 298.0           |       | 321.0            |       | 1,728.3 |   | 2,011.0 |   | - |   | - |   | 4,296.8 |   | 4,426.8 |   |
|                                                    |       |          |       |       |       |       |       |                   |       |            |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Segment assets                                          |       | 1,896.8       |       | 2,215.8    |       | 2,475.8    |       | 2,603.7                |       | 881.6           |       | 900.2            |       | 4,510.7 |   | 3,807.6 |   | - |   | - |   | 9,764.9 |   | 9,527.2 |   |
|                                                    |       |          |       |       |       |       |       |                   |       |            |       |             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Unallocated  assets                                     |       | -             |       | -          |       | -          |       | -                      |       | -               |       | -                |       | - |   | - |   | 390.6 |   | 347.8 |   | 390.6 |   | 349.8 |   |
| **Total assets**                                        | ** ** | ** **    | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** | ** **      | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **10,155.5** | ** ** | **9,877.0** | ** ** |

 

The above table represents net sales, long lived assetsand segment assets for each material country for the year ended June 30, 2006and June 30, 2005.

 

Thegeographic segments have been prepared for continuing operations only.

F-33

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June2006**

 
| NOTE 5. REVENUE, OTHER INCOME AND FINANCIAL INCOME          | ** **   | **2006**     | ** **   | **2005**            | ** **   |
|------------------------------------------------------------------------------------------------|--------------|--------------|--------------|---------------------|--------------|
| ** **                                                                                     | ** **   | **$m**       | ** **   | **$m**              | ** **   |
| ** **                                                                                     | ** **   | ** **   | ** **   | ** **          | ** **   |
| **Revenue from continuing  operations**                                                        | ** **   | ** **   | ** **   | ** **          | ** **   |
|                                                                                           |         |         |         |                |         |
| ***Sales  Revenue***                                                                           | *** *** | *** *** | *** *** | *** ***        | *** *** |
| Revenue from sale of  goods                                                                    |         | 11,041.9     |         | 10,646.1            |         |
| ** **                                                                                     | ** **   | ** **   | ** **   | ** **          | ** **   |
| ***Other  income***                                                                            | *** *** | *** *** | *** *** | *** ***        | *** *** |
|                                                                                           |         |         |         |                |         |
| Dividend  received/receivable                                                                  |         | 0.4          |         | 0.6                 |         |
|                                                                                           |         |         |         |                |         |
| Sub-lease rentals                                                                              |         | 4.8          |         | 3.8                 |         |
| Net profit on disposal  of property, plant and equipment                                       |         | 4.0          |         | 8.4                 |         |
| Net profit on disposal  of businesses                                                          |         | 0.4          |         | 3.8                 |         |
| Net foreign exchange  gains                                                                    |         | 4.1          |         | 4.5                 |         |
| Fair  value gains on other financial assets designated at fair value through income  statement |         | 11.4         |         | -         |         |
| Government grants                                                                              |         | 1.9          |         | 1.7                 |         |
| Other                                                                                          |         | 52.4         |         | 47.4                |         |
|                                                                                           |         |         |         |                |         |
| Significant Items                                                                              |         |         |         |                |         |
| Fair value gains  on derivatives related to Vision Grande acquisition                          |         | 32.0         |         | -    |         |
| Gain arising  from associate’s equity issue - Vision Grande                               |         | 12.5         |         | -    |         |
| Net profit on  disposal of controlled entities to Vision Grande                                |         | 52.3         |         | -    |         |
|                                                                                           |         |         |         |                |         |
| **Total other income**                                                                         |         | 176.2        |         | 70.2                |         |
|                                                                                           |         |         |         |                |         |
| **Financial income**                                                                           | ** **   | ** **   | ** **   | ** **          | ** **   |
|                                                                                           |         |         |         |                |         |
| Interest received/receivable                                                                   |         | 21.7         |         | 20.4                |         |

 

**(a)****                                  Discontinuedoperations**

Fordetails of revenue and other income related to discontinued operations duringthe year ended 30 June 2006, refer Note 12.

F-34

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June 2006**
| **NOTE 6. EXPENSES**                                                        | ** ** | ** **    | ** ** | ** **          | ** ** |
|-----------------------------------------------------------------------------|------------|---------------|------------|---------------------|------------|
|                                                                        | ** ** | **2006**      | ** ** | **2005**            | ** ** |
| ** **                                                                  | ** ** | **$m**        | ** ** | **$m**              | ** ** |
| **Profit before related income  tax includes the**                          | ** ** | ** **    | ** ** | ** **          | ** ** |
| **following specific expenses:**                                            | ** ** | ** **    | ** ** | ** **          | ** ** |
| ** **                                                                  | ** ** | ** **    | ** ** | ** **          | ** ** |
| Depreciation                                                                |       |          |       |                |       |
|  • of property, plant and equipment - refer  Note 1(r)            |       | 422.4         |       | 416.7               |       |
| Amortisation:                                                               |       |          |       |                |       |
|  • of leased assets- refer Note 1(r)                              |       | 9.4           |       | 7.7                 |       |
|  • of other intangibles                                           |       | 20.0          |       | 14.9                |       |
|                                                                        |       | 451.8         |       | 439.3               |       |
|                                                                        |       |          |       |                |       |
| Financial expenses                                                          |       |          |       |                |       |
| Interest paid/payable:                                                      |       |          |       |                |       |
|  • Finance charges on leased assets                               |       | 3.3           |       | 4.0                 |       |
|  • Other                                                          |       | 254.9         |       | 172.9               |       |
| Amount capitalised -  refer Note 1(u)                                       |       | (2.1          | )          | (3.7                | )          |
|                                                                        |       | 256.1         |       | 173.2               |       |
| Borrowing costs                                                             |       | 7.8           |       | 7.9                 |       |
|                                                                        |       |          |       |                |       |
| Total financial  expenses                                                   |       | 263.9         |       | 181.1               |       |
|                                                                        |       |          |       |                |       |
| Impairment of trade  receivables                                            |       | 4.0           |       | 14.2                |       |
|                                                                        |       |          |       |                |       |
| Provisions:                                                                 |       |          |       |                |       |
|  • Employee entitlements and directors’  retiring allowances |       | 65.8          |       | 69.7                |       |
|  • Write-downs of inventories                                     |       | 14.1          |       | 24.4                |       |
|  • Insurance/workers’ compensation and other  claims         |       | 34.8          |       | 43.1                |       |
|  • Onerous contracts                                              |       | 27.2          |       | 12.8                |       |
|  • Decommissioning Expenses                                       |       | 5.6           |       | 2.1                 |       |
|  • Restructuring                                                  |       | 82.3          |       | 70.0                |       |
| Employee benefits  expense:                                                 |       |          |       |                |       |
|  • Wages and salaries                                             |       | 1,813.1       |       | 1,643.4             |       |
|  • Workers’ compensation and other oncosts                   |       | 162.9         |       | 91.6                |       |
|  • Superannuation costs - defined benefit  plans                  |       | 41.8          |       | 46.8                |       |
|  • Superannuation costs - accumulation funds                      |       | 45.6          |       | 54.5                |       |
|  • Other employment benefits expense                              |       | 15.2          |       | 3.2                 |       |
|  • Share based payments expense                                   |       | 2.8           |       | 4.4                 |       |
| Total employee benefits  expense                                            |       | 2,081.4       |       | 1,843.9             |       |
| Rental expense relating  to operating leases                                |       |          |       |                |       |
|  • Minimum lease payments                                         |       | 100.6         |       | 124.7               |       |
|  • Contingent rentals                                             |       | 8.6           |       | -    |       |
| Total rental expense  relating to operating leases                          |       | 109.2         |       | 124.7               |       |
|                                                                        |       |          |       |                |       |
| Asset impairment  reversal - refer Note 1(r)                                |       | (7.1          | )          | (2.7                | )          |
| Asset Impairments                                                           |       | 66.8          |       | 227.0               |       |
| Goodwill impairment                                                         |       | -   |       | 6.3                 |       |
| Net loss on sale of  receivables                                            |       | 4.3           |       | 3.0                 |       |
| Research                                                                    |       | 37.0          |       | 39.7                |       |

 

F-35

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June 2006**
| **NOTE 7. SIGNIFICANT ITEMS - INCOME / (EXPENSE)**                                 | ** **   | **2006**     | ** **   | **2005**            | ** **   |
|------------------------------------------------------------------------------------|--------------|--------------|--------------|---------------------|--------------|
|                                                                               | ** **   | **$m**       | ** **   | **$m**              | ** **   |
| **Significant items before  related income tax expense**                           | ** **   | ** **   | ** **   | ** **          | ** **   |
|                                                                               |         |         |         |                |         |
| ***Income***                                                                       | *** *** | *** *** | *** *** | *** ***        | *** *** |
|                                                                               |         |         |         |                |         |
| Fair value gains on  derivatives related to Vision Grande acquisition              |         | 32.0         |         | -         |         |
| Gain arising from  associate’s equity issue - Vision Grande (1)               |         | 12.5         |         | -         |         |
| Net profit on disposal  of controlled entities to Vision Grande (2)                |         | 52.3         |         | -         |         |
|                                                                               |         |         |         |                |         |
|                                                                               |         | 96.8         |         | -         |         |
| ***Expense***                                                                      | *** *** | *** *** | *** *** | *** ***        | *** *** |
|                                                                               |         |         |         |                |         |
| PET business  integration and restructure                                          |         | (10.1        | )            | (51.8               | )            |
|                                                                               |         |         |         |                |         |
| Flexibles market sector  rationalisation                                           |         | (53.7        | )            | (34.2               | )            |
|                                                                               |         |         |         |                |         |
| Disposal of Asian  corrugated, sacks and closures businesses                       |         | (7.2         | )            | -         |         |
|                                                                               |         |         |         |                |         |
| Closures business  restructure and loss on disposal                                |         | (18.6        | )            | -         |         |
|                                                                               |         |         |         |                |         |
| Asset impairments                                                                  |         | (66.8        | )            | (238.4              | )            |
|                                                                               |         |         |         |                |         |
| Onerous leases and  curtailment of pension funds                                   |         | (4.5         | )            | -         |         |
|                                                                               |         |         |         |                |         |
|                                                                               |         | (160.9       | )            | (324.4              | )            |
|                                                                               |         |         |         |                |         |
| **Significant items before  related income tax expense**                           |         | (64.1        | )            | (324.4              | )            |
|                                                                               |         |         |         |                |         |
| **Related income tax (expense)/benefit on  significant  items (where applicable)** | ** **   | ** **   | ** **   | ** **          | ** **   |
|                                                                               |         |         |         |                |         |
| Income tax benefit on  PET business integration and restructure                    |         | 1.5          |         | 14.8                |         |
|                                                                               |         |         |         |                |         |
| Income tax benefit on  Flexibles market sector rationalisation                     |         | 14.8         |         | 9.5                 |         |
|                                                                               |         |         |         |                |         |
| Closures business  restructure and loss on disposal                                |         | 3.6          |         | -         |         |
|                                                                               |         |         |         |                |         |
| Income tax benefit on  asset impairments                                           |         | 3.4          |         | 34.3                |         |
|                                                                               |         |         |         |                |         |
| Income  tax benefit on onerous leases and curtailment of pension funds             |         | 2.0          |         | -         |         |
| **Income tax benefit on  significant items**                                       |         | 25.3         |         | 58.6                |         |
|                                                                               |         |         |         |                |         |
| **SIGNIFICANT ITEMS AFTER RELATED  INCOME TAX EXPENSE**                            |         | (38.8        | )            | (265.8              | )            |
|                                                                               |         |         |         |                |         |
| Significant Items  attributable to:                                                |         |         |         |                |         |
| Members of Amcor  Limited                                                          |         | (54.6        | )            | (265.8              | )            |
| Minority  Interest                                                                 |         | 15.8         |         | -    |         |
|                                                                               |         |         |         |                |         |
|                                                                               |         | (38.8        | )            | (265.8              | )            |
|                                                                               |         |         |         |                |         |
| **Significant items before  related income tax expense:**                          | ** **   | ** **   | ** **   | ** **          | ** **   |
| Continuing  Operations                                                             |         | (1.0         | )            | (289.1              | )            |
| Discontinued Operations                                                            |         | (63.1        | )            | (35.3               | )            |
|                                                                               |         | (64.1        | )            | (324.4              | )            |
| **Related income tax (expense)/benefit on  significant  items:**                   | ** **   | ** **   | ** **   | ** **          | ** **   |
| Continuing  Operations                                                             |         | 16.0         |         | 54.1                |         |
| Discontinued  Operations                                                           |         | 9.3          |         | 4.5                 |         |
|                                                                               |         | 25.3         |         | 58.6                |         |
|                                                                               |         |         |         |                |         |
| **SIGNIFICANT  ITEMS AFTER RELATED INCOME TAX EXPENSE**                            | ** **   | ** **   | ** **   | ** **          | ** **   |
| Continuing  Operations                                                             |         | 15.0         |         | (235.0              | )            |
| Discontinued  Operations                                                           |         | (53.8        | )            | (30.8               | )            |
|                                                                               |         | (38.8        | )            | (265.8              | )            |

\

(1) The amount represents the increase in Amcor’sshare of the associate’s net worth, as a result of an equity issue by theassociate.

(2) During the year, the Group’s China based tobaccopackaging plants were sold to an associate – Vision Grande

F-36

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June 2006**

** **

**NOTE 7. SIGNIFICANT ITEMS - INCOME / (EXPENSE)**

 

**DETAILS OF CONSOLIDATEDSIGNIFICANT ITEMS BEFORE INCOME TAX**

 
| **2006**  | ** ** | **Restructuring** | ** ** | ** **         | ** ** | ** **         | ** ** | ** **               | ** ** | ** **                | ** ** | ** **                             | ** ** | ** **    | ** ** | ** ** |
|-----------|------------|-------------------|------------|--------------------|------------|--------------------|------------|--------------------------|------------|---------------------------|------------|----------------------------------------|------------|---------------|------------|------------|
|      | ** ** | **Redundancy**    | ** ** | **Plant  Closure** | ** ** | **Onerous  Lease** | ** ** | **Pension  Curtailment** | ** ** | **Impairment  of Assets** | ** ** | **Disposal  of  controlled  entities** | ** ** | **Other (1)** | ** ** | **Total**  | ** ** | ** ** |
|      | ** ** | **$m**            | ** ** | **$m**             | ** ** | **$m**             | ** ** | **$m**                   | ** ** | **$m**                    | ** ** | **$m**                                 | ** ** | **$m**        | ** ** | **$m**     | ** ** | ** ** |
|      |       |              |       |               |       |               |       |                     |       |                      |       |                                   |       |          |       |       |   |   |
| PET       |       | (4.0              | )          | (6.1               | )          | (6.0               | )          | 1.9                      |       | (8.3                      | )          | -                            |       | -   |       | (22.5      | ) |   |
| Flexibles |       | (3.0              | )          | (47.9              | )          | -        |       | -              |       | (18.2                     | )          | -                            |       | (2.8          | )          | (71.9      | ) |   |
| Closures  |       | (5.4              | )          | -        |       | -        |       | -              |       | (15.5                     | )          | (13.1                                  | )          |          |       | (34.0      | ) |   |
| Asia      |       | (0.5              | )          | -        |       | -        |       | -              |       | (24.8                     | )          | 45.5                                   |       | 44.5          |       | 64.7       |   |   |
| Corporate |       | -       |       | -        |       | (1.8               | )          | 1.4                      |       | -               |       | -                            |       | -   |       | (0.4       | ) |   |
|      |       |              |       |               |       |               |       |                     |       |                      |       |                                   |       |          |       |       |   |   |
| **Total** | ** ** | **(12.9**         | **)**      | **(54.0**          | **)**      | **(7.8**           | **)**      | **3.3**                  | ** ** | **(66.8**                 | **)**      | **32.4**                               | ** ** | **41.7**      | ** ** | **(64.1**  | **)** | ** ** |

 

(1)  Comprises fair value gains on derivativesrelated to the Vision Grande acquisition ($32 million) and gains arising fromVision Grande’s equity issue ($12.5 million)

 
| **2005**    | ** ** | **Restructuring** | ** ** | ** **         | ** ** | ** **         | ** ** | ** **                | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-------------|------------|-------------------|------------|--------------------|------------|--------------------|------------|---------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|
|        | ** ** | **Redundancy**    | ** ** | **Plant  Closure** | ** ** | **Onerous  Lease** | ** ** | **Goodwill   Impairment** | ** ** | **(1)   Impairment   of Assets** | ** ** | **Total**  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|        | ** ** | **$m**            | ** ** | **$m**             | ** ** | **$m**             | ** ** | **$m**                    | ** ** | **$m**                           | ** ** | **$m**     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| PET         |       | (20.7             | )          | (19.1              | )          | (12.0              | )          | (5.6                      | )          | (49.9                            | )          | (107.3     | )          |       |       |       |   |   |
| Australasia |       | -       |       | -        |       | -        |       | -               |       | (108.7                           | )          | (108.7     | )          |       |       |       |   |   |
| Flexibles   |       | (27.7             | )          | (6.5               | )          | -        |       | -               |       | (23.2                            | )          | (57.4      | )          |       |       |       |   |   |
| Asia        |       | -       |       | -        |       | -        |       | (0.7                      | )          | (44.2                            | )          | (44.9      | )          |       |       |       |   |   |
| Corporate   |       | -       |       | -        |       | -        |       | -               |       | (6.1                             | )          | (6.1       | )          |       |       |       |   |   |
|        |       |              |       |               |       |               |       |                      |       |                             |       |       |       |       |       |       |   |   |
| **Total**   | ** ** | **(48.4**         | **)**      | **(25.6**          | **)**      | **(12.0**          | **)**      | **(6.3**                  | **)**      | **(232.1**                       | **)**      | **(324.4** | **)**      |       |       |       |   |   |

 

(1)  Comprises $7.3m related to inventory, $1.1mrelated to other intangibles, $0.4 related to other non current assets and thebalance relates to property plant & equipment reflecting the reassessmentof carrying values in a number of operating units.

 

**NOTE8. REVISION OF ESTIMATES**

**Revision of Useful Lives ofProperty, Plant and Equipment**

During the year ended 30June 2006, the useful lives of certain items of plant and equipment were re-assessed.The financial effect of this re-assessment, assuming the assets are held untilthe end of their estimated useful lives, is to decrease consolidateddepreciation expense in the current year and for the next four years, by thefollowing amounts:
|        | **$m** |   |
|--------|--------|--------|
|   |   |   |
| 2006   | 10.8   |   |
| 2007   | 10.8   |   |
| 2008   | 10.8   |   |
| 2009   | 10.8   |   |
| 2010   | 10.8   |   |

 

F-37

----

**AmcorLimited Consolidated**

**Notes tothe consolidated financial statements**

**30 June 2006**
|                                                                                  | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| **NOTE 9. INCOME TAX EXPENSE**                                                   | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                                                                             |       |     |       |     |       |
|                                                                             |       |     |       |     |       |
| **(a) Income tax expense**                                                       |       |     |       |     |       |
|                                                                             |       |     |       |     |       |
| Current tax  expense                                                             |       | (92.6)   |       | (91.4)   |       |
|                                                                             |       |     |       |     |       |
| Adjustments  relating to current tax expense of prior periods                    |       | 0.3      |       | 8.6      |       |
|                                                                             |       |     |       |     |       |
| Benefit arising  from a previously unrecognised tax loss, tax                    |       |     |       |     |       |
| credit or  temporary difference of a prior period used to reduce                 |       |     |       |     |       |
| current tax  expense                                                             |       | 12.3     |       | 11.1     |       |
|                                                                             |       |     |       |     |       |
|                                                                             |       |     |       |     |       |
| Total current tax expense                                                        |       | (80.0)   |       | (71.7)   |       |
|                                                                             |       |     |       |     |       |
|  Deferred tax expense relating to the  origination and reversal             |       |     |       |     |       |
|  of temporary differences                                                   |       | (5.8)    |       | (0.9)    |       |
|                                                                             |       |     |       |     |       |
| Total deferred tax expense                                                       |       | (5.8)    |       | (0.9)    |       |
|                                                                             |       |     |       |     |       |
| **TOTAL INCOME TAX (EXPENSE) / BENEFIT**                                         |       | (85.8)   |       | (72.6)   |       |
|                                                                             |       |     |       |     |       |
| Income tax expense is attributable to:                                           |       |     |       |     |       |
|                                                                             |       |     |       |     |       |
|  Profit from continuing operations                                          |       | (92.3)   |       | (72.4)   |       |
|                                                                             |       |     |       |     |       |
|  Profit from discontinued operations                                        |       | 6.5      |       | (0.2)    |       |
|                                                                             |       |     |       |     |       |
|                                                                             |       |     |       |     |       |
| **TOTAL INCOME TAX (EXPENSE) / BENEFIT**                                         |       | (85.8)   |       | (72.6)   |       |
|                                                                             |       |     |       |     |       |
| Deferred income tax revenue (expense) included in  income tax expense comprises: |       |     |       |     |       |
|                                                                             |       |     |       |     |       |
| (Decrease)  increase in deferred tax assets (Note 20)                            |       | 48.6     |       | (33.0)   |       |
|                                                                             |       |     |       |     |       |
| Decrease  (increase) in deferred tax liabilities (Note 31)                       |       | (54.4)   |       | 32.1     |       |
|                                                                             |       |     |       |     |       |
|                                                                             |       | (5.8)    |       | (0.9)    |       |

 

F-38

----

**AmcorLimited Consolidated**

**Notes tothe consolidated financial statements**

**30 June 2006**

 
|                                                                                                                                                               | ** ** | **2006** | ** ** | **2005** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| **NOTE 9. INCOME TAX EXPENSE continued**                                                                                                                      | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                                                                                                                                                          |       |     |       |     |       |
| **(b)  Numerical reconciliation of income tax expense to prima facie tax payable**                                                                            |       |     |       |     |       |
| ** **                                                                                                                                                    |       |     |       |     |       |
| Profit from  continuing operations                                                                                                                            |       | 508.9    |       | 350.0    |       |
|                                                                                                                                                          |       |     |       |     |       |
| Loss from  discontinued operations                                                                                                                            |       | (43.9)   |       | (19.0)   |       |
| **Profit  before related income tax expense**                                                                                                                 |       | 465.0    |       | 331.0    |       |
| ** **                                                                                                                                                    |       |     |       |     |       |
| Tax at the  Australian tax rate of 30% (2005 - 30%)                                                                                                           |       | (139.5)  |       | (99.3)   |       |
| ** **                                                                                                                                                    |       |     |       |     |       |
| Tax effect of  amounts which are not deductible (taxable) in calculating taxable income:                                                                      |       |     |       |     |       |
| Net operating items non-deductible/non-assessable  for tax                                                                                                    |       | (10.3)   |       | (21.2)   |       |
| Goodwill tax adjustments                                                                                                                                      |       | 1.7      |       | (2.1)    |       |
| Net significant items non-deductible/non-assessable  for tax                                                                                                  |       | (10.4)   |       | (30.6)   |       |
|                                                                                                                                                          |       |     |       |     |       |
| Capital structures                                                                                                                                            |       | 60.3     |       | 57.3     |       |
| Tax losses, tax credits and temporary differences  not  recognised for book in prior years  now recouped                                                 |       | 12.3     |       | 11.1     |       |
|                                                                                                                                                          |       |     |       |     |       |
|                                                                                                                                                          |       | (85.9)   |       | (84.8)   |       |
|                                                                                                                                                          |       |     |       |     |       |
| (Under)/over provision in prior year                                                                                                                          |       | 11.9     |       | 8.6      |       |
|                                                                                                                                                          |       |     |       |     |       |
| Foreign tax rate differential                                                                                                                                 |       | (11.8)   |       | 3.6      |       |
|                                                                                                                                                          |       |     |       |     |       |
| **TOTAL  INCOME TAX (EXPENSE) / BENEFIT**                                                                                                                     |       | (85.8)   |       | (72.6)   |       |
|                                                                                                                                                          |       |     |       |     |       |
| **(c)  Amounts recognised directly in equity**                                                                                                                |       |     |       |     |       |
|                                                                                                                                                          |       |     |       |     |       |
| Aggregate  current and deferred tax arising in the reporting period 

and not  recognised in net profit or loss but directly debited or 

credited to  equity |       |     |       |     |       |
|                                                                                                                                                          |       |     |       |     |       |
| Net deferred tax - debited/(credited) directly to  equity                                                                                                     |       |     |       |     |       |
| (Note 20 and 31)                                                                                                                                              |       | (12.2)   |       | (11.0)   |       |
|                                                                                                                                                          |       |     |       |     |       |
|                                                                                                                                                          |       | (12.2)   |       | (11.0)   |       |

 

F-39

----

**Amcor Limited Consolidated**

**Notes tothe consolidated financial statements**

**30 June 2006**

 

 
|                                                                            | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| **NOTE 9. INCOME TAX EXPENSE continued**                                   | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                                                                       |       |     |       |     |       |
| **(d) Tax  losses**                                                        |       |     |       |     |       |
|                                                                       |       |     |       |     |       |
| Unused tax  losses for which no deferred tax asset has been recognised     |       | 635.2    |       | 658.2    |       |
|                                                                       |       |     |       |     |       |
| Potential tax  benefit at applicable tax rates                             |       | 211.3    |       | 220.0    |       |
|                                                                       |       |     |       |     |       |
| Unused tax  losses have been incurred by entities in foreign jurisdictions |       |     |       |     |       |

 
|                                                                                       |       |       |       |       |
|---------------------------------------------------------------------------------------|------------|------------|------------|------------|
|                                                                                  |       |       |       |       |
| The amount and  expiration dates for unbooked tax losses and temporary differences at |       |       |       |       |
| 30 June 2006 are  as follows:                                                         |       |       |       |       |
| ** **                                                                            | ** ** | **Gross**  | ** ** | **Net**    | ** ** |
| ** **                                                                            | ** ** | **Amount** | ** ** | **Amount** | ** ** |
| **Expiration Date**                                                                   | ** ** | **$m**     | ** ** | **$m**     | ** ** |
| ** **                                                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
|  30 June 2007                                                                    |       | 30.6       |       | 10.4       |   |
|  30 June 2008                                                                    |       | 25.4       |       | 8.8        |   |
|  30 June 2009                                                                    |       | 31.9       |       | 10.1       |   |
|  30 June 2010                                                                    |       | 30.5       |       | 9.7        |   |
|  30 June 2011                                                                    |       | 29.2       |       | 10.2       |   |
|  30 June 2012                                                                    |       | 25.4       |       | 8.7        |   |
|  30 June 2013                                                                    |       | 30.8       |       | 10.4       |   |
|  30 June 2014                                                                    |       | 35.2       |       | 11.4       |   |
|  30 June 2015                                                                    |       | 15.9       |       | 5.6        |   |
|  30 June 2016                                                                    |       | 17.8       |       | 6.2        |   |
|  30 June 2017                                                                    |       | 15.5       |       | 5.4        |   |
|  30 June 2018                                                                    |       | 15.5       |       | 5.4        |   |
|  30 June 2019                                                                    |       | 15.5       |       | 5.4        |   |
|  30 June 2020                                                                    |       | 15.5       |       | 5.4        |   |
|  30 June 2021                                                                    |       | 3.5        |       | 1.2        |   |
| Indefinite life                                                                       |       | 297.0      |       | 97.0       |   |
|                                                                                  |       |       |       |       |   |
|                                                                                  |       |       |       |       |   |
| Total                                                                                 |       | 635.2      |       | 211.3      |   |

 

**(e)Unrecognised temporary differences**

A deferred tax liability has not been recognised in respect of temporarydifferences arising as a result of the translation of the financial statementsof the consolidated entity’s investments in subsidiaries and associates. Thedeferred tax liability will only arise in the event of disposal of the subsidiaryor associate, and no such disposal is expected in the foreseeable future.

Unremitted earnings ofAmcor’s international operations are considered to be re-invested indefinitelyand relate to the ongoing operations. Upon distribution of any earnings in theform of dividends or otherwise Amcor may be subject to withholding taxespayable to various foreign countries; however such amounts are not consideredto be significant. As Amcor controls when the deferred tax liability will beincurred and is satisfied that it will not be incurred in the foreseeablefuture, the deferred tax liability has not been recognised.

F-40

----

**Amcor Limited Consolidated**

**Notes tothe consolidated financial statements**

**30 June 2006**

 
|                                               | ** ** | **2006**        | ** ** | **2005**        | ** ** |
|-----------------------------------------------|------------|-----------------|------------|-----------------|------------|
| ** **                                    | ** ** | **$000’s** | ** ** | **$000’s** | ** ** |
| **NOTE  10. AUDITORS’ REMUNERATION**     |       |            |       |            |       |
| ** **                                    |       |            |       |            |       |
| **Audit  services:**                          |       |            |       |            |       |
| KPMG Australian  firm:                        |       |            |       |            |       |
| Audit and review of financial reports         |       | 3,062           |       | 2,883           |       |
| Overseas KPMG  firms:                         |       |            |       |            |       |
| Audit and review of financial reports         |       | 5,209           |       | 6,268           |       |
| Other regulatory audit services               |       | 2,655           |       | 2,290           |       |
| **Total  remuneration for audit services**    |       | 10,926          |       | 11,441          |       |
|                                          |       |            |       |            |       |
| **Other  services:**                          |       |            |       |            |       |
| KPMG Australian  firm:                        |       |            |       |            |       |
| Taxation services                             |       | 400             |       | 299             |       |
| Other assurance services                      |       | 515             |       | 380             |       |
| Overseas KPMG  firms:                         |       |            |       |            |       |
| Taxation services                             |       | 728             |       | 486             |       |
| Other assurance services                      |       | 46              |       | 135             |       |
| **Total  remuneration for other services**    |       | 1,689           |       | 1,300           |       |
|                                          |       |            |       |            |       |
| **TOTAL  AUDITORS’ REMUNERATION****(1)** |       | 12,615          |       | 12,741          |       |

 

(1) Audit fees for the consolidated entity for 2006 include amountsassociated with the audit of transition to AIFRS of $285,000 (2005: $1,560,000).

F-41

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 11.  EARNINGS PERSHARE**
|                                                                                                                                                     | ** ** | **2006**            | ** ** | **2005**                    |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|------------|-----------------------------|------------|
| **Basic earnings per share**                                                                                                                        | ** ** | **cents**           | ** ** | **cents**                   | ** ** |
|                                                                                                                                                |       |                |       |                        |       |
| From  continuing operations attributable to the ordinary equity holders of the  company                                                             |       | 44.4           |       | 24.2                   |       |
| From  discontinued operations                                                                                                                       |       | (4.5)               |       | (2.2)                       |       |
| Attributable  to the ordinary equity holders of the company                                                                                         |       | 39.9           |       | 22.0                   |       |
|                                                                                                                                                |       |                |       |                        |       |
| **Diluted earnings per share**                                                                                                                      |       |                |       |                        |       |
|                                                                                                                                                |       |                |       |                        |       |
| From  continuing operations attributable to the ordinary equity holders of the  company                                                             |       | 43.2           |       | 24.1                   |       |
| From  discontinued operations                                                                                                                       |       | (3.8)               |       | (2.2)                       |       |
| Attributable  to the ordinary equity holders of the company                                                                                         |       | 39.4           |       | 21.9                   |       |
|                                                                                                                                                |       |                |       |                        |       |
| **(a) Reconciliation of earnings used in calculating  earnings per share**                                                                          | ** ** | **$m**              | ** ** | **$m**                      | ** ** |
|                                                                                                                                                |       |                |       |                        |       |
| ***Basic earnings per share***                                                                                                                      |       |                |       |                        |       |
| Profit  from continuing operations                                                                                                                  |       | 416.6          |       | 277.6                  |       |
| Profit  from continuing operations attributable to minority interests                                                                               |       | (26.2)              |       | (13.1)                      |       |
| After  tax effect of interest on convertible securities                                                                                             |       | -    |       | (52.3)                      |       |
|  

Profit  from continuing operations attributable to the ordinary equity holders of the  company used in calculating basic earnings per share |       | 390.4          |       | 212.2                  |       |
|                                                                                                                                                |       |                |       |                        |       |
| Loss  from discontinued operations

                                                                                                           |       | (39.1)              |       | (19.5)                      |       |
|  

Profit  attributable to the ordinary equity holders of the company used in  calculating basic earnings per share                            |       | 351.3          |       | 192.7                  |       |
|                                                                                                                                                |       |                |       |                        |       |
| ***Diluted earnings per share***                                                                                                                    |       |                |       |                        |       |
| Profit  from continuing operations attributable to the ordinary equity holders of the  company used in calculating basic earnings per share         |       | 390.4          |       | 212.2                  |       |
|  

Interest  savings on convertible securities

                                                                                          |       |  

48.1   |       |  

-    |       |
|                                                                                                                                                |       |                |       |                        |       |
| Profit  from continuing operations attributable to the ordinary equity holders of the  company used in calculating diluted earnings per share       |       | 438.5          |       | 212.2                  |       |
|                                                                                                                                                |       |                |       |                        |       |
| Loss  from discontinued operations

                                                                                                           |       | (39.1)              |       | (19.5)                      |       |
| Profit  attributable to the ordinary equity holders of the company used in  calculating diluted earnings per share                                  |       | 399.4          |       | 192.7                  |       |
|                                                                                                                                                |       |                |       |                        |       |
| **(b) Weighted average number of shares used as  denominator**                                                                                      | ** ** | **millions**        | ** ** | **millions**                | ** ** |
|                                                                                                                                                |       |                |       |                        |       |
| Weighted  average number of ordinary shares for basic EPS                                                                                           |       | 879.7          |       | 879.0                  |       |
| Effect  of employee options                                                                                                                         |       | 0.1            |       | 0.1                    |       |
| Effect  of partly paid shares                                                                                                                       |       | 0.3            |       | 1.1                    |       |
| Effect  of convertible securities                                                                                                                   |       | 134.0          |       | -            |       |
|  

Weighted  average number of ordinary shares and potential ordinary shares for diluted  EPS

                                           |       | 1,014.1             |       | 880.2                       |       |

 

F-42

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 11.  EARNINGS PER SHARE continued**

**(c)Information concerning classification of securities**

The following securities have been classifiedas ordinary shares and included in the calculation of basic earnings per share:

·                  ordinary shares.

Thefollowing securities have been classified as potential ordinary shares andincluded in diluted earnings per share as at 30 June 2006:

·                  ordinary shares

·                  partly paid shares

·                  employee options

·                  convertible securities

**(d)Details of securities**

(i)*Partly paid ordinary shares*

Partly paid ordinary shares do not carry the right to participate individends in proportion to the amount paid relative to the total issue priceand have not been recognised in ordinary share equivalents in the determinationof basic earnings per share.  Amountsuncalled on partly paid shares and calls in arrears are treated as theequivalent of options to acquire ordinary shares and are included as potentialordinary shares in the determination of diluted earnings per share.

*(ii)Options*

Options granted to employees under the Amcor Limited employeeshare/option plans are considered to be potential ordinary shares and have beenincluded in the determination of diluted earnings per share to the extent towhich they are dilutive.  The optionshave not been included in the determination of basic earnings per share.  Details relating to the options are set outin Note 48.

*(iii)Convertible notes*

Convertible notes issued are considered to be potential ordinary sharesand have been included in the determination of diluted earnings per share.  Details relating to the convertible notes areset out in Notes 25 and 30.

**NOTE 12.  DISCONTINUED OPERATIONS**

**(a)****          Description of events**

On 23 February 2006, a controlled entity announced the disposal of itsWhite Cap Metal Closures business for $333 million with effect from 1 June2006.

On 23 February 2006, a controlled entity announced the disposal of theAsian Corrugated business for $12.9 million with effect from 28 February 2006.

Financialinformation related to these discontinued operations for the period to the dateof disposal is set out below.  Furtherinformation is also provided in Note 4 – segment information.

F-43

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE12.  DISCONTINUED OPERATIONS continued**

 
|                                                                                                                                         | ** ** | **TOTAL  DISCONTINUED  OPERATIONS** | ** ** | **TOTAL  DISCONTINUED  OPERATIONS** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|-------------------------------------|------------|
|                                                                                                                                    | ** ** | **2006**                            | ** ** | **2005**                            | ** ** |
| **(b) Financial performance and cash flow  information**                                                                                |       | $m                                  |       | $m                                  |       |
|                                                                                                                                    |       |                                |       |                                |       |
|                                                                                                                                    |       |                                |       |                                |       |
| The  financial performance and cash flow information for the period until disposal  and the year ended 30 June 2005 is presented below: |       |                                |       |                                |       |
|                                                                                                                                    |       |                                |       |                                |       |
| Revenue  (refer Note 4) (1)                                                                                                             |       | 404.9                          |       | 466.5                          |       |
| Expenses

                                                                                                                         |       | (429.4)                             |       | (485.5)                             |       |
| Loss  before related income tax (expense)/benefit                                                                                       |       | (24.5)                              |       | (19.0)                              |       |
| Income  tax (expense)/benefit                                                                                                           |       | 5.1                            |       | (0.2)                               |       |
|                                                                                                                                    |       |                                |       |                                |       |
| **Loss after related income tax (expense)/benefit  of discontinued operations**                                                         |       | (19.4)                              |       | (19.2)                              |       |
|                                                                                                                                    |       |                                |       |                                |       |
| **Loss on sale before related income tax benefit**                                                                                      |       | (19.4)                              |       | -                    |       |
| Income  tax benefit

                                                                                                              |       | 1.4                            |       | -                    |       |
| ** **

**Loss on sale after related income tax benefit**                                                                           |       | (18.0)                              |       | -                    |       |
|                                                                                                                                    |       |                                |       |                                |       |
| **LOSS FROM DISCONTINUED OPERATIONS**                                                                                                   |       | (37.4)                              |       | (19.2)                              |       |
|                                                                                                                                    |       |                                |       |                                |       |
| Net  cash from operating activities                                                                                                     |       | 18.1                           |       | 14.8                           |       |
| Net  cash from investing activities (2006 includes an inflow of $297.5 from the  sale of discontinued operations)                       |       | 289.7                          |       | (21.0)                              |       |
| Net  cash from financing activities

                                                                                              |       | (34.2)                              |       | 13.9                           |       |
| ** **

**NET INCREASE IN CASH GENERATED**                                                                                          |       | 273.6                          |       | 7.7                            |       |
|                                                                                                                                    |       |                                |       |                                |       |
| **(c) Carrying amounts of assets and liabilites**                                                                                       | ** ** | ** **                          | ** ** | ** **                          | ** ** |
|                                                                                                                                    |       |                                |       |                                |       |
| The  carrying amounts of assets and liabilities as at the date of disposal and as  at 30 June 2005 were:                                |       |                                |       |                                |       |
|                                                                                                                                    |       |                                |       |                                |       |
| Intangible  assets                                                                                                                      |       | 189.4                          |       | 172.3                          |       |
| Deferred  tax assets                                                                                                                    |       | 16.4                           |       | 5.9                            |       |
| Property,  plant and equipment                                                                                                          |       | 141.3                          |       | 180.5                          |       |
| Trade  and other receivables                                                                                                            |       | 152.3                          |       | 144.5                          |       |
| Inventories                                                                                                                             |       | 98.4                           |       | 87.7                           |       |
| Cash  and cash equivalents                                                                                                              |       | 11.1                           |       | 20.5                           |       |
| Other

                                                                                                                            |       | 4.5                            |       | 89.5                           |       |
| ** **

**Total assets**                                                                                                            |       | 613.4                          |       | 700.9                          |       |
|                                                                                                                                    |       |                                |       |                                |       |
| Retirement  benefit obligations                                                                                                         |       | 45.4                           |       | 33.4                           |       |
| Provisions                                                                                                                              |       | 27.8                           |       | 19.4                           |       |
| Deferred  tax liabilities                                                                                                               |       | 10.0                           |       | 9.7                            |       |
| Interest  bearing liabilities                                                                                                           |       | 49.8                           |       | 151.0                          |       |
| Trade  and other payables                                                                                                               |       | 110.6                          |       | 87.2                           |       |
| Current  tax liabilities                                                                                                                |       | -                    |       | 3.6                                 |       |
| Other

                                                                                                                            |       | 2.0                            |       | 4.1                            |       |
| ** **

**Total liabilities**                                                                                                       |       | 245.6                          |       | 308.4                          |       |
| ** **

**Net assets**                                                                                                              |       | 367.8                          |       | 392.5                          |       |

 

(1)As inter-segment revenue is eliminated for the consolidated results, revenuefrom discontinued operations shown above is inclusive of revenue from externalcustomers and other revenue only.

F-44

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 12. DISCONTINUED OPERATIONScontinued**
|                                                                 | ** ** | **TOTAL  DISCONTINUED  OPERATIONS** | ** ** | **TOTAL  DISCONTINUED  OPERATIONS** | ** ** |
|-----------------------------------------------------------------|------------|-------------------------------------|------------|-------------------------------------|------------|
| ** **                                                      | ** ** | **2006**                            | ** ** | **2005**                            | ** ** |
|                                                            |       | $m                                  |       | $m                                  |       |
|                                                            |       |                                |       |                                |       |
| **(d) Details of the sale of  operations**                      | ** ** | ** **                          | ** ** | ** **                          | ** ** |
|                                                            |       |                                |       |                                |       |
| Consideration received  or receivable:                          |       |                                |       |                                |       |
| Cash and  short-term deposits                                   |       | 308.6                               |       | -                         |       |
| Present value of  deferred sales proceeds

                |       | 37.3                                |       | -                         |       |
| ** **

**Total disposal consideration**                    |       | 345.9                               |       | -                         |       |
| less carrying amounts  of net assets disposed of                |       | (367.8                              | )          | -                         |       |
| less share of exchange  fluctuation reserve

              |       | 2.5                                 |       | -                         |       |
| ** **

**Loss on sale before related  income tax benefit** |       | (19.4                               | )          | -                         |       |
| Income tax benefit

                                       |       | 1.4                                 |       | -                         |       |
| ** **

**Loss on sale after related  income tax benefit**  |       | (18.0                               | )          | -                         |       |
|                                                            |       |                                |       |                                |       |
| Net cash inflow on  disposal                                    |       |                                |       |                                |       |
| Cash and cash  equivalents consideration                        |       | 308.6                               |       | -                         |       |
| less cash and  cash equivalents balance disposed of

      |       | (11.1                               | )          | -                         |       |
|  

Reported in the cash flow statement                     |       | 297.5                               |       | -                         |       |

 

F-45

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
|                                                           | ** ** | **2006 **          | ** ** | **2005 **          | ** ** |
|-----------------------------------------------------------|------------|-------------------------|------------|-------------------------|------------|
| **NOTE 13. CURRENT ASSETS - CASH AND CASH   EQUIVALENTS** | ** ** | **$m **            | ** ** | **$m **            | ** ** |
|                                                      |       |                    |       | ** **              |       |
| Cash on hand and  at bank                                 |       | 81.2** **          |       | 198.8** **         |       |
| Short-term  deposits                                      |       | 17.3** **          |       | 19.0** **          |       |
| Deposits at call

                                   |       | 15.4** **          |       | 12.0** **          |       |
|  

**TOTAL CASH AND CASH EQUIVALENTS**

        |       | 113.9** **

  |       | 229.8** **

  |       |

 

The carrying amount of cash and cash equivalentsrepresents their fair value.  Theweighted average interest rate for cash assets is 2.3% (2005: 1.54%).

 

 

**NOTE14.  CURRENT ASSETS - TRADE AND OTHERRECEIVABLES**

 
| Trade receivables (i)

                                            |   | 1,411.5               |   | 1,519.4                |       |
|-------------------------------------------------------------------------|--------|----------------------------|--------|-----------------------------|------------|
| Less impairment  losses

                                          |   | (45.3)                     |   | (49.7)                      |       |
|  

                                                           |   | 1,366.2               |   | 1,469.7                | ** ** |
|  

Amounts owing by  controlled entities                           |   | -           |   | -            |       |
|  

Other  receivables (ii)                                         |   | 239.1                 |   | 137.7                  |       |
|  

Other loans                                                     |   | 22.4                  |   | 100.4                  |       |
|  

Prepayments

                                              |   |  

64.2 

  |   |  

116.9 

  |       |
|  

**TOTAL CURRENT TRADE AND OTHER  RECEIVABLES****(iii)**

  |   | 1,691.9 

       |   | 1,824.7 

        |       |

 

**(i)****            Impaired tradereceivables**

The consolidated entityhas recognised a loss of $4.0 million (2005: $14.2 million) in respect ofimpaired trade receivables during the financial year ended 30 June 2006.  The loss has been included in ‘general andadministration’ expenses in the income statement.

**(ii)****        Other receivables**

These amounts generallyarise from transactions outside the usual operating activities of theconsolidated entity.  Interest may becharged at commercial rates where the terms of repayment exceed sixmonths.  Collateral is not normallyobtained.

**(iii)****    Credit risk**

Information concerningcredit risk of both current and non-current receivables is set out in Note 2.

F-46

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
| **NOTE 15. CURRENT ASSETS - INVENTORIES**       | ** ** | **2006** | ** ** | **2005** | ** ** |
|-------------------------------------------------|------------|----------|------------|----------|------------|
| ** **                                      | ** ** | **$m**   | ** ** | **$m**   |       |
| Raw materials  and stores at cost               |       | 449.6    |       | 455.3    |       |
| Raw materials at  net realisable value          |       | 46.7     |       | 118.9    |       |
| Work in progress  at cost                       |       | 133.6    |       | 86.1     |       |
| Work in progress  at net realisable value       |       | 4.9      |       | 49.4     |       |
| Finished goods  at cost                         |       | 650.4    |       | 543.5    |       |
| Finished goods  at net realisable value

  |       | 95.1     |       | 186.9    |       |
| ** **

**TOTAL  INVENTORIES**

** **  |       | 1,380.3  |       | 1,440.1  |       |

 

Write-downs ofinventories to net realisable value recognised as an expense during thefinancial year ended 30 June 2006 amounted to $14.1 million (2005: $24.4million).  The expense has been includedin ‘cost of sales’ expenses in the income statement.  One of the entities of the group has pledgedinventory to the value of $1.8 million (2005 $2.6 million) for a workingcapital loan from a local bank.
| **NOTE 16. CURRENT ASSETS - OTHER FINANCIAL   ASSETS**                                                               | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| ** **                                                                                                           | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                                                                                                                 |       |     |       |     |       |
| Derivative financial instruments - held for trading                                                                  |       |     |       |     |       |
| Forward exchange contracts                                                                                           |       | 2.5      |       | -   |       |
| Commodity contracts                                                                                                  |       | 0.1      |       | -   |       |
| Contracts for cash settled employee share plan  options (“American” contracts) (Note 18(1); Note 48(c)(v)) |       | 2.6      |       | -   |       |
|                                                                                                                 |       | 5.2      |       | -   |       |
| Derivative financial instruments - cash flow hedges                                                                  |       |     |       |     |       |
| Forward exchange contracts (Note 38(c))                                                                              |       | 5.2      |       | -   |       |
| Commodity contracts (Note 38(d))                                                                                     |       | 0.4      |       | -   |       |
|                                                                                                                 |       | 5.6      |       | -   |       |
|  

                                                                                                        |       |     |       |     |       |
| **TOTAL CURRENT OTHER FINANCIAL ASSETS**                                                                             |       | 10.8     |       | -   |       |

 
| **NOTE 17. NON-CURRENT ASSETS - INVESTMENTS  ACCOUNTED FOR USING THE EQUITY METHOD** | ** ** | **2006**      | ** ** | **2005**     | ** ** |
|--------------------------------------------------------------------------------------|------------|---------------|------------|--------------|------------|
| ** **                                                                           | ** ** | **$m**        | ** ** | **$m**       | ** ** |
| ** **                                                                           | ** ** | ** **    | ** ** | ** **   | ** ** |
| Share of associates (refer Note 45)

                                           |       | 283.1         |       | 40.7         |       |
|                                                                                 |       |          |       |         |       |
| **TOTAL INVESTMENTS ACCOUNTED FOR USING THE EQUITY  METHOD**

                  |       | 283.1

  |       | 40.7

  |       |

 

Investments in associates are accounted for in the consolidatedfinancial statements using the equity method of accounting.

F-47

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
|                                                                                                                                       | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| **NOTE 18. NON-CURRENT ASSETS -  OTHER FINANCIAL ASSETS**                                                                             | ** ** | **$m**     | ** ** | **$m**     | ** ** |
| ** **                                                                                                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| Investments  in companies listed on stock exchanges - available for sale                                                              |       | 4.0        |       | 5.7        |       |
|  

Investments  in companies not listed on stock exchanges - held for trading                                                    |       | 0.3        |       | 2.0        |       |
|                                                                                                                                  |       | 4.3        |       | 7.7        |       |
|                                                                                                                                  |       |       |       |       |       |
| Derivative  financial instruments - held for trading                                                                                  |       |       |       |       |       |
| Contracts for cash  settled employee share plan options (“American contracts”) (Note 48(c)(v))                              |       | 0.5        |       | -     |       |
|                                                                                                                                  |       |       |       |       |       |
| Contracts for cash  settled bonus and retention payment plans (“Equity Share Swap contracts”)  (Note 48(c)(i) and (ii)) (1) |       | 0.8        |       | -     |       |
|                                                                                                                                  |       | 1.3        |       | -     |       |
| Derivative  financial instruments - cash flow hedges                                                                                  |       |       |       |       |       |
| Forward exchange  contracts (Note 38 (c)) (1)                                                                                         |       | 0.8        |       | -     |       |
|                                                                                                                                  |       | 2.1        |       | -     |       |
|                                                                                                                                  |       |       |       |       |       |
| Other  receivables  (2)                                                                                                               |       | 12.7       |       | 45.1       |       |
|                                                                                                                                  |       |       |       |       |       |
|                                                                                                                                  |       | 12.7       |       | 45.1       |       |
|                                                                                                                                  |       |       |       |       |       |
| **TOTAL NON-CURRENT OTHER FINANCIAL ASSETS**                                                                                          |       | 19.1       |       | 52.8       |       |

 

(1)Employee share plan risk management

In relation to the cash settled Employee Share Plan Options, theEmployee Bonus Payment Plan and the Senior Executive Retention Payment Plan,the consolidated entity is exposed to movements in the value of the underlyingordinary shares of Amcor Limited.  Forall such entitlements offered, the consolidated entity has hedged its exposureby entering into cash settled equity share option or equity share swapcontracts that mirror the terms and conditions of the employee benefit.

The following table sets out the expiry or vesting date (if applicable),the outstanding option/share hedged contract positions and the hedged price ofthe contracts as at 30 June 2006:

F-48

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 18.  NON-CURRENT ASSETS – OTHER FINANCIAL ASSETScontinued**
| **2006 Equity share option**                     | ** ** | ** **        | ** ** | ** **            | ** ** | ** **                   | ** ** |
|--------------------------------------------------|------------|-------------------|------------|-----------------------|------------|------------------------------|------------|
| **“American”  contracts**              | ** ** | **Expiry  date**  | ** ** | **Contract  amounts** | ** ** | **Average  hedged  price $** | ** ** |
|                                             |       |              |       |                  |       |                         |       |
| One year or less                                 |       | 11-Sep-06         |       | 50,000                |       | 8.28                         |       |
|                                             |       | 24-Mar-07         |       | 17,800                |       | 7.87                         |       |
| More than one  year but not more than five years |       | 01-Jul-07         |       | 160,000               |       | 7.40                         |       |
|                                             |       | 02-Aug-07         |       | 21,500                |       | 6.84                         |       |
|                                             |       | 11-Sep-07         |       | 50,000                |       | 8.28                         |       |
|                                             |       | 12-Sep-07         |       | 100,000               |       | 7.20                         |       |
|                                             |       | 11-Sep-08         |       | 50,000                |       | 8.28                         |       |
|                                             |       | 24-Mar-10         |       | 289,250               |       | 7.87                         |       |
|                                             |       | 02-Aug-10         |       | 348,300               |       | 6.84                         |       |
| More than five  years                            |       | 01-Nov-12         |       | 457,600               |       | 8.20                         |       |
|                                             |       |              |       |                  |       |                         |       |
| **Equity  share swap contracts**                 | ** ** | **Vesting  date** | ** ** | **Contract  amounts** | ** ** | **Average  hedged  price $** | ** ** |
|                                             |       |              |       |                  |       |                         |       |
| Vested                                           |       | Dec-03            |       | 5,000                 |       | 7.11                         |       |
|                                             |       | Dec-04            |       | 16,800                |       | 7.11                         |       |
|                                             |       | Dec-05            |       | 105,800               |       | 7.11                         |       |
| One year or less                                 |       | Jul-06            |       | 50,000                |       | 7.11                         |       |
|                                             |       | Oct-06            |       | 8,000                 |       | 7.11                         |       |
|                                             |       | Feb-07            |       | 198,400               |       | 7.11                         |       |
| More than one  year but not more than five years |       | Jul-07            |       | 20,000                |       | 7.11                         |       |
| More than five  years                            |       | Sep-11            |       | 8,410                 |       | 7.11                         |       |
|                                             |       | Sep-12            |       | 28,315                |       | 7.11                         |       |
|                                             |       | Sep-13            |       | 17,425                |       | 7.11                         |       |
|                                             |       |              |       |                  |       |                         |       |
| **2005  Equity share option**                    | ** ** | ** **        | ** ** | ** **            | ** ** | ** **                   | ** ** |
| **“American”  contracts**              | ** ** | **Expiry  date**  | ** ** | **Contract  amounts** | ** ** | **Average  hedged  price $** | ** ** |
|                                             |       |              |       |                  |       |                         |       |
| One year or less                                 |       | 12-Sep-05         |       | 100,000               |       | 7.20                         |       |
|                                             |       | 29-Jun-06         |       | 55,132                |       | 6.06                         |       |
| Over one to five  years                          |       | 11-Sep-06         |       | 50,000                |       | 8.28                         |       |
|                                             |       | 12-Sep-06         |       | 200,000               |       | 6.47                         |       |
|                                             |       | 23-Mar-07         |       | 17,800                |       | 7.87                         |       |
|                                             |       | 01-Jul-07         |       | 280,000               |       | 7.40                         |       |
|                                             |       | 02-Aug-07         |       | 25,000                |       | 6.84                         |       |
|                                             |       | 11-Sep-07         |       | 50,000                |       | 8.28                         |       |
|                                             |       | 12-Sep-07         |       | 100,000               |       | 7.20                         |       |
|                                             |       | 11-Sep-08         |       | 50,000                |       | 8.28                         |       |
|                                             |       | 24-Mar-10         |       | 351,550               |       | 7.87                         |       |
| More than five  years                            |       | 02-Aug-10         |       | 420,000               |       | 6.84                         |       |
|                                             |       | 01-Nov-12         |       | 517,000               |       | 8.20                         |       |
|                                             |       |              |       |                  |       |                         |       |
| **Equity  share swap contracts**                 | ** ** | **Vesting  date** | ** ** | **Contract  amounts** | ** ** | **Average  hedged  price $** | ** ** |
|                                             |       |              |       |                  |       |                         |       |
| Vested                                           |       | Dec-03            |       | 5,000                 |       | 7.11                         |       |
|                                             |       | Dec-04            |       | 16,800                |       | 7.11                         |       |
| One year or less                                 |       | Dec-05            |       | 171,000               |       | 7.11                         |       |
| Over one to five  years                          |       | Jul-06            |       | 50,000                |       | 7.11                         |       |
|                                             |       | Oct-06            |       | 8,000                 |       | 7.11                         |       |
|                                             |       | Feb-07            |       | 210,100               |       | 7.11                         |       |
|                                             |       | Jul-07            |       | 50,000                |       | 7.11                         |       |
|                                             |       | Sep-11            |       | 8,410                 |       | 7.11                         |       |
|                                             |       | Sep-12            |       | 28,315                |       | 7.11                         |       |
|                                             |       | Sep-13            |       | 17,425                |       | 7.11                         |       |

 

F-49

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 18. NON-CURRENT ASSETS – OTHER FINANCIAL ASSETS continued**

 

The net fair value of derivative financial instrumentsheld as at reporting date are:

 
|                                | ** ** | **2006** | ** ** | **2005** | ** ** |
|--------------------------------|------------|----------|------------|----------|------------|
| ** **                     | ** ** | **$m**   | ** ** | **$m**   | ** ** |
| Equity share  option contracts |       | 0.8      |       | 1.5      |       |
| Equity share  swap contracts   |       | 3.1      |       | (0.2     | )          |
|                           |       |     |       |     |       |
|                           |       |     |       |     |       |
|                           |       | 3.9      |       | 1.3      |       |

 

During the year,there was a loss recorded in the income statement of $1.4 million to record thedecrease in the fair value of equity share option and swap contracts.

(2)The fair value of non-current loans and other receivables at 30 June 2006 areas follows:
|                   | ** ** | **2006**              | ** ** | **2005**        | ** ** |
|-------------------|------------|-----------------------|------------|-----------------|------------|
| ** **        | ** ** | ** **            | ** ** | ** **      | ** ** |
| ** **        | ** ** | **Carrying   amount** | ** ** | **Fair  value** | ** ** | **Carrying   amount** | ** ** | **Fair  value** | ** ** |
| ** **        | ** ** | **$m **          | ** ** | **$m **    | ** ** | **$m ** | ** ** | **$m ** | ** ** |
| Other receivables |       | 12.7             |       | 12.7       |       | 45.1  |   | 45.1  |   |
|              |       |                  |       |            |       |   |   |   |   |
|              |       |                  |       |            |       |   |   |   |   |
|              |       | 12.7             |       | 12.7       |       | 45.1  |   | 45.1  |   |

 

F-50

----

 

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

** **

**NOTE19.  NON-CURRENT ASSETS - PROPERTY, PLANTAND EQUIPMENT**

 

Reconciliations of the carrying amounts for each classof property, plant and equipment

 
|                                                                               | ** ** | ** **    | ** ** | **Land**         | ** ** | ** **    | ** ** | **Plant &** | ** ** | **Assets under** | ** ** | **Finance**   | ** ** | ** **    | ** ** |
|-------------------------------------------------------------------------------|------------|---------------|------------|------------------|------------|---------------|------------|----------------------|------------|-----------------------|------------|---------------|------------|---------------|------------|
| ** **                                                                    | ** ** | **Land**      | ** ** | **improvements** | ** ** | **Buildings** | ** ** | **equipment**        | ** ** | **construction**      | ** ** | **leases**    | ** ** | **TOTAL**     | ** ** |
| ** **                                                                    | ** ** | **$m**        | ** ** | **$m**           | ** ** | **$m**        | ** ** | **$m**               | ** ** | **$m**                | ** ** | **$m**        | ** ** | **$m**        | ** ** |
| **At 1 July 2004**                                                            | ** ** | ** **    | ** ** | ** **       | ** ** | ** **    | ** ** | ** **           | ** ** | ** **            | ** ** | ** **    | ** ** | ** **    | ** ** |
| Cost                                                                          |       | 293.4         |       | 31.4             |       | 893.6         |       | 7,131.6              |       | 76.7                  |       | 150.4         |       | 8,577.1       |       |
| Accumulated  depreciation                                                     |       | (0.4          | )          | (4.0             | )          | (137.2        | )          | (3,591.7             | )          | -           |       | (36.2         | )          | (3,769.5      | )          |
| Net  book amount                                                              |       | 293.0         |       | 27.4             |       | 756.4         |       | 3,539.9              |       | 76.7                  |       | 114.2         |       | 4,807.6       |       |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| **Financial year ended 30 June 2005**                                         | ** ** | ** **    | ** ** | ** **       | ** ** | ** **    | ** ** | ** **           | ** ** | ** **            | ** ** | ** **    | ** ** | ** **    | ** ** |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| Opening  net book amount                                                      |       | 293.0         |       | 27.4             |       | 756.4         |       | 3,539.9              |       | 76.7                  |       | 114.2         |       | 4,807.6       |       |
| Additions                                                                     |       | 1.6           |       | 0.8              |       | 55.4          |       | 520.1                |       | -           |       | -   |       | 577.9         |       |
| Disposals                                                                     |       | (11.5         | )          | (0.4             | )          | (19.5         | )          | (36.5                | )          | -           |       | (1.3          | )          | (69.2         | )          |
| Depreciation/amortisation                                                     |       | (0.2          | )          | (1.8             | )          | (30.5         | )          | (400.0               | )          | -           |       | (7.7          | )          | (440.2        | )          |
| Acquisitions  of businesses and controlled entities                           |       | -   |       | -      |       | -   |       | 0.1                  |       | -           |       | -   |       | 0.1           |       |
| Disposal  of businesses and                                                   |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| controlled  entities                                                          |       | -   |       | -      |       | -   |       | (7.0                 | )          | -           |       | (4.2          | )          | (11.2         | )          |
| Impairment  loss recognised                                                   |       | (1.2          | )          | -      |       | (11.6         | )          | (214.2               | )          | -           |       | -   |       | (227.0        | )          |
| Impairment  losses reversed                                                   |       | -   |       | -      |       | -   |       | 2.7                  |       | -           |       | -   |       | 2.7           |       |
| Foreign  exchange fluctuations on translation of overseas controlled entities |       | (12.9         | )          | (0.3             | )          | (40.0         | )          | (148.1               | )          | (1.6                  | )          | (11.0         | )          | (213.9        | )          |
| Other  transfers                                                              |       | -   |       | -      |       | -   |       | 44.3                 |       | (41.6                 | )          | (2.7          | )          | -   |       |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| Closing  net book amount                                                      |       | 268.8         |       | 25.7             |       | 710.2         |       | 3,301.3              |       | 33.5                  |       | 87.3          |       | 4,426.8       |       |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| **At 30 June 2005**                                                           | ** ** | ** **    | ** ** | ** **       | ** ** | ** **    | ** ** | ** **           | ** ** | ** **            | ** ** | ** **    | ** ** | ** **    | ** ** |
| Cost                                                                          |       | 270.6         |       | 30.6             |       | 882.4         |       | 7,092.7              |       | 33.5                  |       | 126.6         |       | 8,436.3       |       |
| Accumulated  depreciation                                                     |       | (1.8          | )          | (4.9             | )          | (172.2        | )          | (3,791.4             | )          | -           |       | (39.3         | )          | (4,009.5      | )          |
| Net  book amount                                                              |       | 268.8         |       | 25.7             |       | 710.2         |       | 3,301.3              |       | 33.5                  |       | 87.3          |       | 4,426.8       |       |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| **Financial year ended 30 June 2006**                                         | ** ** | ** **    | ** ** | ** **       | ** ** | ** **    | ** ** | ** **           | ** ** | ** **            | ** ** | ** **    | ** ** | ** **    | ** ** |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| Opening  net book amount                                                      |       | 268.8         |       | 25.7             |       | 710.2         |       | 3,301.3              |       | 33.5                  |       | 87.3          |       | 4,426.8       |       |
| Additions                                                                     |       | 0.9           |       | 1.6              |       | 40.6          |       | 409.5                |       | 9.3                   |       | 0.6           |       | 462.5         |       |
| Disposals                                                                     |       | (5.7          | )          | (0.6             | )          | (17.2         | )          | (5.1                 | )          | -           |       | (0.7          | )          | (29.3         | )          |
| Depreciation/amortisation                                                     |       | -   |       | (0.9             | )          | (40.2         | )          | (401.5               | )          | -           |       | (9.5          | )          | (452.1        | )          |
| Acquisitions  of businesses and                                               |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| controlled  entities                                                          |       | -   |       | -      |       | -   |       | 0.6                  |       | -           |       | -   |       | 0.6           |       |
| Disposal  of businesses and                                                   |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| controlled  entities                                                          |       | (4.4          | )          | (0.1             | )          | (33.4         | )          | (149.6               | )          | -           |       | -   |       | (187.5        | )          |
| Impairment  loss recognised                                                   |       | -   |       | -      |       | -   |       | (66.8                | )          | -           |       | -   |       | (66.8         | )          |
| Impairment  losses reversed                                                   |       | -   |       | -      |       | -   |       | 7.1                  |       | -           |       | -   |       | 7.1           |       |
| Foreign  exchange fluctuations on translation of overseas controlled entities |       | 6.8           |       | 0.5              |       | 24.9          |       | 98.3                 |       | 1.3                   |       | 3.7           |       | 135.5         |       |
| Transfers  to assets held for sale                                            |       | -   |       | -      |       | -   |       | -          |       | -           |       | -   |       | -   |       |
| Transfers  from assets held for sale                                          |       | -   |       | -      |       | -   |       | -          |       | -           |       | -   |       | -   |       |
| Other  transfers                                                              |       | (6.1          | )          | -      |       | 15.4          |       | 23.4                 |       | (31.1                 | )          | (1.6          | )          | -   |       |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| Closing  net book amount                                                      |       | 260.3         |       | 26.2             |       | 700.3         |       | 3,217.2              |       | 13.0                  |       | 79.8          |       | 4,296.8       |       |
|                                                                          |       |          |       |             |       |          |       |                 |       |                  |       |          |       |          |       |
| **At 30 June 2006**                                                           | ** ** | ** **    | ** ** | ** **       | ** ** | ** **    | ** ** | ** **           | ** ** | ** **            | ** ** | ** **    | ** ** | ** **    | ** ** |
| Cost                                                                          |       | 260.4         |       | 32.7             |       | 882.6         |       | 7,177.8              |       | 13.0                  |       | 130.6         |       | 8,497.1       |       |
| Accumulated  depreciation                                                     |       | (0.1          | )          | (6.5             | )          | (182.3        | )          | (3,960.6             | )          | -           |       | (50.8         | )          | (4,200.3      | )          |
| Net  book amount                                                              |       | 260.3         |       | 26.2             |       | 700.3         |       | 3,217.2              |       | 13.0                  |       | 79.8          |       | 4,296.8       |       |

 

F-51

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 19.  NON-CURRENT ASSETS — PROPERTY, PLANT ANDEQUIPMENTcontinued**

**(a) Non-current assets pledged assecurity**

Refer to Notes 24and 29 for information on non-current assets pledged as security by theconsolidated entity.

**(b) Non-current asset impairments**

During the yearended 30 June 2006, the consolidated entity recorded impairments of property,plant and equipment totalling $66.8 million in the following segments:

·      Amcor Flexibles recorded theimpairment of the White Cap Metal Closures business of $15.5 million.  The recoverable amount of these plants wasdetermined using the fair value less costs to sell method which was based on aProfit before interest, tax, depreciation and amortisation (PBITDA) multiple ofsix times.  White Cap Metal Closuresbusiness was disposed of in the current year. Refer Note 12.

·      Amcor Flexibles alsorecorded an impairment of a UK based plant in the Processed Foods CGU of $16.4million due to poor performance.  Therecoverable amount of this CGU was determined using value in use calculationswhich used a post tax discount rate of 5.58% and tax effected the sum of theresulting discounted cash flows.

·      Amcor Asia recorded afurther $22.6 million impairment of the corrugated business due to continuedpoor performance.  The recoverable amountof these plants was determined using value in use calculations which used adiscount rate of 8.9%.  The Asiancorrugated business was disposed of in the current year.  Refer Note 12.

·      Amcor PET recorded animpairment of $8.3 million relating to the closure of plants in PET Mexico andPoland.  The recoverable amount of theseplants was determined using fair value less costs to sell of the particularassets available for sale.

·      Other asset impairments of$4 million were also recorded in the current year.

During the yearended 30 June 2005, the consolidated entity recorded impairments of property,plant and equipment totalling $232.1 million in the following segments:

1.               AmcorPET recorded an impairment of $49.9 million of plant and equipment relating tothe decision to close three small Canadian plants, in Vancouver, Calgary andMontreal.  The recoverable amount ofthese plants was determined using value in use calculations which used adiscount rate of 9%.

2.               AmcorAustralasia recorded an impairment of $108.7 million which included the plantand equipment relating to the reduction in the expected useful lives of theBotany and Fairfield paper mills.     Therecoverable amount of this CGU was determined using value in use calculationswhich used a discount rate of 15%.

3.               AmcorFlexibles recorded an impairment of $23.2 million of plant and equipmentrelating to three plants in the Processed Foods CGU.  The impairment was a result of ongoingdifficult operating conditions in some market segments and geographicregions.  The recoverable amount of thisCGU was determined using value in use calculations which used a discount rateof 8.5%.

4.               AmcorAsia recorded an impairment of $44.2 million of plant and equipment relating tothe corrugated assets.  The impairmentwas the result of excess capacity and the inability to pass on linerboard rawmaterial cost increases.  The recoverableamount of this CGU was determined using value in use calculations which used adiscount rate of 8.9%.

5.               AmcorCorporate recorded an impairment of $6.1 million of plant and equipmentrelating to its US tube plant.  Therecoverable amount of these assets was determined using fair value less coststo sell.

**(c) Non-current asset impairmentreversals**

During the year ended 30June 2006, the consolidated entity recorded impairment reversals of $7.1million relating to the plant and equipment at the Botany paper mill due to are-assessment of estimates used in the value in use calculation.  The discount rate of 15% used in 2005 was notchanged.  The impairment reversal isshown in the general and administration expenses in the income statement.

F-52

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 20.  NON-CURRENT ASSETS - DEFERRED TAXASSETS**
|                                                                                                     | ** ** | **2006** | ** ** | **2005** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| ** **                                                                                          | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                                                                                                |       |     |       |     |       |
| **The  balance comprises temporary differences attributable to:**                                   |       |     |       |     |       |
|                                                                                                |       |     |       |     |       |
| *Amounts  recognised in income statement*                                                           |       |     |       |     |       |
| Impairment of trade receivables                                                                     |       | 7.9      |       | 5.9      |       |
| Employee benefits                                                                                   |       | 40.2     |       | 44.5     |       |
| Valuation of inventories                                                                            |       | 17.8     |       | 12.2     |       |
| Other provisions                                                                                    |       | 46.2     |       | 35.9     |       |
| Financial instruments at fair value                                                                 |       | (4.3     | )          | -   |       |
| Tax losses                                                                                          |       | 78.6     |       | 52.9     |       |
| Accruals / other                                                                                    |       | 146.6    |       | 138.8    |       |
|                                                                                                |       | 333.0    |       | 290.2    |       |
| *Amounts  recognised directly in equity*                                                            |       |     |       |     |       |
| Cash flow hedges                                                                                    |       | 20.4     |       | -   |       |
| Employee benefits                                                                                   |       | 59.5     |       | 74.9     |       |
| Exchange fluctuation reserve                                                                        |       | 19.6     |       | (6.4     | )          |
| Other                                                                                               |       | (2.0     | )          | -   |       |
|                                                                                                |       | 97.5     |       | 68.5     |       |
|                                                                                                |       |     |       |     |       |
| Set-off of deferred tax liabilities throughout the  group pursuant to  set-off provisions (Note 31) |       | (39.8    | )          | (8.8     | )          |
| Net deferred tax  assets                                                                            |       | 390.7    |       | 349.9    |       |
|                                                                                                |       |     |       |     |       |
| **Movements:**                                                                                      |       |     |       |     |       |
|                                                                                                |       |     |       |     |       |
| Balance at  beginning of financial year                                                             |       | 349.9    |       | 401.3    |       |
| Change on  adoption of AASB 132 and AASB 139 (Note 1(z))                                            |       | 22.0     |       | -   |       |
| Credited/(charged)  to the income statement (Note 9)                                                |       | 48.6     |       | (33.0    | )          |
| Credited/(charged)  to equity                                                                       |       | 8.8      |       | 11.0     |       |
| Disposal of  businesses and controlled entities (Note 12)                                           |       | (16.4    | )          | -   |       |
| Foreign exchange fluctuations on translation of  overseas  controlled entities                      |       | 14.1     |       | (20.6    | )          |
| Other movements                                                                                     |       | (36.3    | )          | (8.8     | )          |
| Balance at end  of financial year                                                                   |       | 390.7    |       | 349.9    |       |
|                                                                                                |       |     |       |     |       |
| Deferred tax  assets to be recovered after more than 12 months                                      |       | 390.7    |       | 349.9    |       |
|                                                                                                |       | 390.7    |       | 349.9    |       |

 

The deferred taxasset attributable to tax losses does not exceed taxable amounts arising fromthe reversal of existing assessable temporary differences.

F-53

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**

**NOTE 21.  NON-CURRENT ASSETS — INTANGIBLE ASSETS**
|                                                             | ** ** | **Internal  development  costs** | ** ** | **Internally  developed  software  costs** | ** ** | **External  software  costs** | ** ** | **Goodwill** | ** ** | **Other   External** | ** ** | **Total**  | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------------------|------------|-------------------------------|------------|--------------|------------|---------------------------|------------|------------|------------|
| ** **                                                  | ** ** | **$m**                           | ** ** | **$m**                                     | ** ** | **$m**                        | ** ** | **$m**       | ** ** | **$m**                    | ** ** | **$m**     | ** ** |
| **As at 1  July 2004**                                      | ** ** | ** **                       | ** ** | ** **                                 | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **                | ** ** | ** ** | ** ** |
| Cost                                                        |       | -                           |       | 31.5                                       |       | 67.5                          |       | 2,038.4      |       | 79.7                      |       | 2,217.1    |       |
| Accumulated  amortisation and impairment                    |       | -                           |       | (6.2                                       | )          | (27.7                         | )          | (1.0         | )          | (35.6                     | )          | (70.5      | )          |
|                                                        |       |                             |       |                                       |       |                          |       |         |       |                      |       |       |       |
| **Net book  amount**                                        |       | -                           |       | 25.3                                       |       | 39.8                          |       | 2,037.4      |       | 44.1                      |       | 2,146.6    |       |
|                                                        |       |                             |       |                                       |       |                          |       |         |       |                      |       |       |       |
| **Financial  year ended 30 June 2005**                      | ** ** | ** **                       | ** ** | ** **                                 | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **                | ** ** | ** ** | ** ** |
| ** **                                                  | ** ** | ** **                       | ** ** | ** **                                 | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **                | ** ** | ** ** | ** ** |
| Opening net book  amount                                    |       | -                           |       | 25.3                                       |       | 39.8                          |       | 2,037.4      |       | 44.1                      |       | 2,146.6    |       |
| Additions                                                   |       | 10.5                             |       | 18.2                                       |       | 26.4                          |       | 9.1          |       | 0.5                       |       | 64.7       |       |
| Disposals                                                   |       | -                           |       | -                                     |       | -                        |       | -       |       | (3.0                      | )          | (3.0       | )          |
| Acquisition of  businesses and controlled entities          |       | -                           |       | -                                     |       | -                        |       | 5.0          |       | -                    |       | 5.0        |       |
| Subsequent  recognition of acquired tax losses              |       | -                           |       | -                                     |       | -                        |       | (10.5        | )          | 0.1                       |       | (10.4      | )          |
| Fluctuations on  translation of foreign controlled entities |       | (0.5                             | )          | (0.3                                       | )          | (1.6                          | )          | (175.5       | )          | (1.4                      | )          | (179.3     | )          |
| Impairment losses  recognised                               |       | -                           |       | -                                     |       | -                        |       | (6.3         | )          | (1.7                      | )          | (8.0       | )          |
| Amortisation  charge                                        |       | (2.2                             | )          | (0.3                                       | )          | (15.0                         | )          | -       |       | (0.1                      | )          | (17.6      | )          |
| Other transfers                                             |       | -                           |       | -                                     |       | 6.8                           |       | -       |       | (6.8                      | )          | -     |       |
| ** **                                                  |       |                             |       |                                       |       |                          |       |         |       |                      |       |       |       |
| **Closing net book amount**                                 |       | 7.8                              |       | 42.9                                       |       | 56.4                          |       | 1,859.2      |       | 31.7                      |       | 1,998.0    |       |
| **As at 30  June 2005**                                     | ** ** | ** **                       | ** ** | ** **                                 | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **                | ** ** | ** ** | ** ** |
| Cost                                                        |       | 9.9                              |       | 49.4                                       |       | 107.8                         |       | 1,877.0      |       | 57.4                      |       | 2,101.5    |       |
| Accumulated amortisation  and impairment                    |       | (2.1                             | )          | (6.5                                       | )          | (51.4                         | )          | (17.8        | )          | (25.7                     | )          | (103.5     | )          |
|                                                        |       |                             |       |                                       |       |                          |       |         |       |                      |       |       |       |
| **Net book  amount**                                        |       | 7.8                              |       | 42.9                                       |       | 56.4                          |       | 1,859.2      |       | 31.7                      |       | 1,998.0    |       |
|                                                        |       |                             |       |                                       |       |                          |       |         |       |                      |       |       |       |
| **Financial  year ended 30 June 2006**                      | ** ** | ** **                       | ** ** | ** **                                 | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **                | ** ** | ** ** | ** ** |
| ** **                                                  | ** ** | ** **                       | ** ** | ** **                                 | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **                | ** ** | ** ** | ** ** |
| Opening net book  amount                                    |       | 7.8                              |       | 42.9                                       |       | 56.4                          |       | 1,859.2      |       | 31.7                      |       | 1,998.0    |       |
| Additions                                                   |       | 0.5                              |       | 16.2                                       |       | 9.4                           |       | 6.1          |       | -                    |       | 32.2       |       |
| Disposals                                                   |       | -                           |       | -                                     |       | (1.2                          | )          | -       |       | 0.2                       |       | (1.0       | )          |
| Disposal of  businesses and controlled entities             |       | -                           |       | -                                     |       | (2.5                          | )          | (190.0       | )          | -                    |       | (192.5     | )          |
| Subsequent  recognition of acquired tax losses              |       | -                           |       | -                                     |       | -                        |       | (10.1        | )          | -                    |       | (10.1      | )          |
| Fluctuations on  translation of foreign controlled entities |       | 0.6                              |       | 0.5                                        |       | 1.9                           |       | 78.4         |       | 0.7                       |       | 82.1       |       |
| Impairment losses  recognised                               |       | -                           |       | -                                     |       | -                        |       | -       |       | 1.1                       |       | 1.1        |       |
| Amortisation  charge                                        |       | (1.4                             | )          | (3.8                                       | )          | (16.3                         | )          | -       |       | 0.1                       |       | (21.4      | )          |
| Other transfers                                             |       | -                           |       | -                                     |       | 22.5                          |       | -       |       | (22.5                     | )          | -     |       |
|                                                        |       |                             |       |                                       |       |                          |       |         |       |                      |       |       |       |
| **Closing  net book amount**                                |       | 7.5                              |       | 55.8                                       |       | 70.2                          |       | 1,743.6      |       | 11.3                      |       | 1,888.4    |       |
|                                                        |       |                             |       |                                       |       |                          |       |         |       |                      |       |       |       |
| **As at 30  June 2006**                                     | ** ** | ** **                       | ** ** | ** **                                 | ** ** | ** **                    | ** ** | ** **   | ** ** | ** **                | ** ** | ** ** | ** ** |
| Cost                                                        |       | 11.3                             |       | 69.9                                       |       | 139.9                         |       | 1,769.9      |       | 25.2                      |       | 2,016.2    |       |
| Accumulated  amortisation and impairment                    |       | (3.8                             | )          | (14.1                                      | )          | (69.7                         | )          | (26.3        | )          | (13.9                     | )          | (127.8     | )          |
|                                                        |       |                             |       |                                       |       |                          |       |         |       |                      |       |       |       |
| **Net book amount**                                         |       | 7.5                              |       | 55.8                                       |       | 70.2                          |       | 1,743.6      |       | 11.3                      |       | 1,888.4    |       |

 

Changes in the carryingamount of Goodwill for the year ended June 30, 2006 are as follows:
|                                                             |   | Amcor  PET |   | Amcor  Australasia |   | Amcor Flexibles |   | Amcor  Sunclipse |   | Amcor Asia |   | Other  |   | Discontinued  Operations |   | TOTAL   |   |
|-------------------------------------------------------------|--------|------------|--------|--------------------|--------|----------------------|--------|------------------|--------|-----------------|--------|--------|--------|--------------------------|--------|---------|--------|
|                                                        |   |       |   |               |   |                 |   |             |   |            |   |   |   |                     |   |    |   |
| **Balance  as of 30 June 2004**                             |   | 1,206.2    |   | 114.1              |   | 393.2                |   | 131.6            |   | 13.4            |   | (7.9   | )      | 185.8                    |   | 2,037.4 |   |
| ** **                                                  |   |       |   |               |   |                 |   |             |   |            |   |   |   |                     |   |    |   |
| Goodwill acquired                                           |   | 9.0        |   | 0.2                |   | -                    |   | 4.9              |   | -               |   | -      |   | -                        |   | 14.1    |   |
| Disposal of  businesses and controlled entities             |   | -          |   | -                  |   | -                    |   | -                |   | -               |   | -      |   | -                        |   | -       |   |
| Goodwill  impairment                                        |   | (5.6       | )      | -                  |   | -                    |   | -                |   | -               |   | -      |   | (0.7                     | )      | (6.3    | )      |
| Subsequent  recognition of acquired tax losses              |   | -          |   | -                  |   | -                    |   | -                |   | -               |   | (10.5  | )      | -                        |   | (10.5   | )      |
| Fluctuations on  translation of foreign controlled entities |   | (108.1     | )      | 0.2                |   | (37.0                | )      | (12.6            | )      | (0.5            | )      | -      |   | (17.5                    | )      | (176.5  | )      |
|                                                        |   |       |   |               |   |                 |   |             |   |            |   |   |   |                     |   |    |   |
| **Balance  as of 30 June 2005**                             |   | 1,103.4    |   | 114.5              |   | 354.0                |   | 122.6            |   | 10.5            |   | (15.1  | )      | 169.2                    |   | 1,869.2 |   |
| ** **                                                  |   |       |   |               |   |                 |   |             |   |            |   |   |   |                     |   |    |   |
| Goodwill acquired                                           |   | (3.0       | )      | -                  |   | (1.1                 | )      | -                |   | (0.7            | )      | 7.6    |   | 3.5                      |   | 6.1     |   |
| Disposal of  businesses and controlled entities             |   | -          |   | -                  |   | -                    |   | -                |   | (8.1            | )      | -      |   | (183.9                   | )      | (190.0  | )      |
| Subsequent recognition  of acquired tax losses              |   | 0.1        |   | -                  |   | -                    |   | -                |   | -               |   | (10.2  | )      | -                        |   | (10.1   | )      |
| Fluctuations on translation of foreign controlled  entities |   | 38.0       |   | (3.3               | )      | 29.0                 |   | 4.0              |   | 0.1             |   | (0.4   | )      | 11.2                     |   | 78.4    |   |
|                                                        |   |       |   |               |   |                 |   |             |   |            |   |   |   |                     |   |    |   |
| **Balance as of 30 June 2006**                              |   | 1,136.5    |   | 111.0              |   | 381.9                |   | 126.6            |   | 3.8             |   | (18.2  | )      | -                        |   | 1,743.6 |   |

 

The consolidated entityexternal software costs includes $7.1 million (2005: $4.8 million) for SAPlicences.  These are perpetual licencescurrently held as indefinite life intangible assets on behalf of theconsolidated group.  Within the next twoyears, as SAP software is progressively implemented across the Business Groups,these licences will be transferred to entities within the consolidated groupand at that time they will be in use and amortised according to GroupAccounting Policy refer Note 1 (s) (ii).

There are no otherindefinite life intangible assets for the consolidated group.

F-54

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 21.  NON-CURRENT ASSETS — INTANGIBLE ASSETScontinued**

**(a) Impairment tests for goodwill**

Goodwill acquired in abusiness combination is allocated to groups of cash-generating units (CGUs)according to the level at which management monitors goodwill.
| **A CGU summary of the goodwill allocation is  presented below:** | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                        | ** ** | **$m**     | ** ** | **$m**     | ** ** |
| ** **                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| PET                                                               |       |       |       |       |       |
| North America                                                     |       | 663.6      |       | 646.6      |       |
| Europe/Asia                                                       |       | 248.1      |       | 240.2      |       |
| Latin America                                                     |       | 226.8      |       | 216.6      |       |
| Australasia                                                       |       |       |       |       |       |
| Flexibles packaging division                                      |       | 42.2       |       | 43.0       |       |
| Fibre packaging division                                          |       | 51.7       |       | 52.2       |       |
| Beverage can group                                                |       | 15.0       |       | 16.8       |       |
| Other                                                             |       | 2.1        |       | 2.5        |       |
| Flexibles                                                         |       |       |       |       |       |
| Healthcare                                                        |       | 192.2      |       | 191.7      |       |
| Food                                                              |       | 175.1      |       | 148.7      |       |
| Rentsch                                                           |       | 14.6       |       | 13.6       |       |
| Closures                                                          |       | -     |       | 169.2      |       |
| Sunclipse                                                         |       |       |       |       |       |
| North America Distribution                                        |       | 89.3       |       | 87.8       |       |
| North America Corrugator                                          |       | 10.8       |       | 9.4        |       |
| North America Multi Purpose Packaging                             |       | 26.4       |       | 25.4       |       |
| Other (including  utilisation of acquired tax losses)             |       | (14.3      | )          | (4.5       | )          |
|                                                              |       | 1,743.6    |       | 1,859.2    |       |

 

The goodwillamounts allocated above are tested annually or semi-annually if there areindicators of impairment, by comparison with the recoverable amount of each CGU’sassets.  Recoverable amounts for CGUs arebased on value in use, which is calculated from cash flow projections for tenyears using data from the Group’s latest internal forecasts.  The key assumptions for the value in usecalculations are those regarding discount rates, growth rates and expectedchanges in margins.  Management estimatesdiscount rates for each CGU using pre-tax rates that reflect the current marketassessment of the time value of money and the risks specific to the countriesin which the CGUs operate for which the future cash flow estimates have notbeen adjusted.  Changes in selling pricesand direct costs are based on past experience and management’s expectation offuture changes in the markets in which the consolidated entity operates.

The forecasts areextrapolated beyond four years based on growth rates representing a maximum of7% in specific high growth sectors to negative 24% in particular low growthsectors.  Generally the average growthrates applied were conservative at between 2% positive and 2% negative.

The pre-taxdiscount rates used to calculate value in use range from 7% to 16%.  These discount rates are derived from theGroup’s post-tax weighted average cost of capital, as adjusted for the specificrisks relating to each geographical region.

In June 2006,impairment reviews were performed by comparing the carrying value of assets andgoodwill with the recoverable amount of the CGUs to which goodwill has beenallocated.  Management determined thatthere has been no impairment.

**(b)Impairment charge and reversals**

Prior to the halfyear ended 31 December 2005, indicators of impairment were identified in theWhite Cap Metal Closures business in Europe and Asia and the Corrugatedbusiness in Asia.  An assessment was carriedout on each business using the value in use methodology and the carryingamounts of the businesses were reduced to their recoverable amounts throughrecognition of impairment losses against goodwill of $15.5 million and $22.6million respectively. These impairments have been disclosed as part of the lossfrom discontinued operations in the income statement.  On 1 June 2006, the White Cap Closuresbusiness was sold and, on 28 February, the Asia Corrugated business was sold(refer to Note 12 for more details).

F-55

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 21.  NON-CURRENT ASSETS — INTANGIBLE ASSETScontinued**

**(c) Estimated future amortisationcharge on other intangibles**
| Financial year ending: | ** ** | **$m** | ** ** |
|----------------------------------|------------|--------|------------|
| 30 June 2007                     |       | 22.7   |       |
| 30 June 2008                     |       | 21.4   |       |
| 30 June 2009                     |       | 13.9   |       |
| 30 June 2010                     |       | 10.7   |       |
| 30 June 2011                     |       | 8.5    |       |

 
| **NOTE 22. NON-CURRENT ASSETS - OTHER** | ** ** | **2006** |   | **2005** |   |
|------------------------------------------------------------------|------------|----------|--------|----------|--------|
|                                                             |       | **$m**   |   | **$m**   |   |
|                                                             |       |     |   |     |   |
| Supply contract  deposits                                        |       | 36.2     |   | 34.1     |   |
| Other  non-current financial assets (1)                          |       | -   |   | 10.4     |   |
| Other  non-current assets                                        |       | 44.3     |   | 51.8     |   |
|                                                             |       |     |   |     |   |
| **TOTAL  OTHER NON-CURRENT ASSETS**                              |       | 80.5     |   | 96.3     |   |

 

(1)          The statements of recognisedincome and expense as at 30 June 2005 have not been restated to comply with *AASB 132 Financial Instruments: Disclosure and Presentation and AASB139 Financial Instruments: Recognition and Measurement* which hasbeen adopted from 1 July 2005.  ReferNote 1(a).
|                                                              |       | **2006**   |       | **2005**   |       |
|--------------------------------------------------------------|------------|------------|------------|------------|------------|
|                                                         |       | **$m**     |       | **$m**     |       |
| ** **                                                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| **NOTE 23. CURRENT LIABILITIES - TRADE AND  OTHER PAYABLES** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Trade creditors                                              |       | 1,544.0    |       | 1,493.6    |       |
| Deferred grant  income                                       |       | 1.8        |       | 1.0        |       |
| Other creditors  and accruals                                |       | 530.8      |       | 501.4      |       |
|                                                         |       |       |       |       |       |
| **TOTAL  TRADE AND OTHER PAYABLES**                          |       | 2,076.6    |       | 1,996.0    |       |

 

F-56

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
|                                                                   |       | **Footnote** |       | **2006**   |       | **2005**   |       |
|-------------------------------------------------------------------|------------|--------------|------------|------------|------------|------------|------------|
|                                                              |       |         |       | **$m**     |       | **$m**     |       |
|                                                              |       |         |       |       |       |       |       |
| **NOTE 24. CURRENT LIABILITIES - INTEREST   BEARING LIABILITIES** | ** ** | ** **   | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                              |       |         |       |       |       |       |       |
| Secured  borrowings:                                              |       |         |       |       |       |       |       |
| Bank overdrafts                                                   |       | (1),  (2)    |       | -     |       | 0.4        |       |
| Bank loans                                                        |       | (3)          |       | 5.9        |       | 3.1        |       |
| Other loans                                                       |       | (2)          |       | -     |       | 157.8      |       |
| Lease liabilities (refer Note 41)                                 |       | (7)          |       | 6.9        |       | 2.2        |       |
| Total secured current interest bearing liabilities                |       |         |       | 12.8       |       | 163.5      |       |
| Unsecured  borrowings:                                            |       |         |       |       |       |       |       |
| Bank overdrafts                                                   |       | (1)          |       | 48.9       |       | 15.6       |       |
| Commercial paper                                                  |       | (4)          |       | 211.0      |       | 307.7      |       |
| Bank loans                                                        |       | (5),  (6)    |       | 405.5      |       | 389.3      |       |
| Other loans                                                       |       | (6)          |       | 12.2       |       | 11.1       |       |
| Amounts owing to controlled entities                              |       |         |       | -     |       | -     |       |
|                                                              |       |         |       |       |       |       |       |
| Total unsecured  current interest bearing liabilities             |       |         |       |       |       |       |       |
|                                                              |       |         |       | 677.6      |       | 723.7      |       |
| **TOTAL CURRENT INTEREST  BEARING LIABILITIES**                   | ** ** | ** **   | ** ** | 690.4      | ** ** | 887.2      | ** ** |

 

Details of the interestrate risk and fair value of interest bearing liabilities for the consolidatedentity are set out in Note 38(b) and 38(e) and details of non-current interestbearing liabilities are set out in Note 29.

(1)                      Theconsolidated entity has committed bank overdraft facilities (both secured andunsecured) to a maximum of $109.8 million (2005: $92.8 million).  As at 30 June 2006, the unused portions ofthe facilities were $60.9 million (2005: $76.8 million). The bank overdraftsare payable on demand and are subject to annual review.

(2)       Thesebank overdrafts and other loans are secured by a charge over assets of certaincontrolled entities.

(3)                      Comprisesloans secured over property, plant and equipment in overseas controlledentities to the extent of $6.6 million (2005: $11.2 million).  The carrying value of the pledged property is$19.8 million (2005: $11.2 million).

(4)                      Borrowingsin commercial paper markets include:

**PromissoryNote Facility**

This is an uncommittedpromissory note facility of $600 million. This facility continues indefinitely until terminated by giving writtennotice to the dealer panel.

As at 30 June 2006, therewere $89.7 million in promissory notes outstanding with an average maturity of32 days (2005: $149 million).

**Euro-CommercialPaper Program**

A US$200 millionnon-underwritten facility under which commercial paper can be issued into theAsian and European capital markets.  Asat 30 June 2006, there were nil Euro notes outstanding (2005: nil).

**USCommercial Paper Program**

This is an uncommitted commercial paper program ofUS$400 million (2005: US$200 million). As at 30 June 2006, A$121.3 million ofcommercial paper was outstanding with an average maturity of 39 days (2005:A$158.7 million).

F-57

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 24.  CURRENT LIABILITIES — INTEREST BEARINGLIABILITIES continued**

(5)       Various bankborrowings including:

Amcor Limited - $300 million multi-currency facilitymaturing in December 2006.  $300 million(2005: $ Nil) drawn under this facility bears interest at BBSY or LIBOR plus anapplicable credit margin. Amcor Limited - $25.0 million (2005: $45.5 million)drawn under uncommitted at call facilities. Amounts borrowed under thesefacilities bear interest at the overnight cash rate plus an applicable margin.

(6)                      Comprisesvarious funding facilities made available to subsidiary companies predominantlyin Europe and North America.

(7)       Leaseliabilities (other than liabilities recognised in relation to surplus spaceunder non-cancellable operating leases) are effectively secured as the rightsto the leased assets recognised in the financial statement revert to the lessorin the event of default.
| **NOTE 25. CURRENT LIABILITIES - SUBORDINATED  CONVERTIBLE SECURITIES** | ** ** | **Footnote** |       | **2006**   |       | **2005**   |       |
|-------------------------------------------------------------------------------------------------------|------------|--------------|------------|------------|------------|------------|------------|
| ** **                                                                                            | ** ** |         |       | **$m**     |       | **$m**     |       |
|                                                                                                  |       |         |       |       |       |       |       |
| 1996 issue of 7.25% Undated Subordinated Convertible    Unsecured Notes - refer Note 1(p)             |       | (1)          |       | 246.0      |       | -     |       |
| PACRS2 - refer  Note 1(p)                                                                             |       | (2)          |       | 218.2      |       | -     |       |
|                                                                                                  |       |         |       |       |       |       |       |
| **TOTAL  SUBORDINATED**                                                                               | ** ** | ** **   | ** ** | ** ** | ** ** | ** ** | ** ** |
| **CONVERTIBLE  SECURITIES**                                                                           |       | (3)          |       | 464.2      |       | -     |       |

 

(1)   Originalissue of US$230 million 7.25% undated subordinated convertible notesconvertible into American Depository Receipts, representing four ordinaryshares of the company, at a rate in the range of 2.347 to 2.664 for each US$50principal amount of notes converted. The actual conversion rate will depend onthe average closing sales price for the American Depository shares on NASDAQfor the five trading days prior to the conversion date.  The notes were convertible from 19 November1996 and may be converted prior to 18 November 2006.

These notes have no maturity dates, are onlyredeemable after 18 November 2006, and then only at Amcor Limited’s option, andare subordinated to all other creditors of the company other than subordinatedcreditors. Amcor has announced its intention to redeem.

Interest on these notes is payable semi-annually.

During the year ended 30 June 2006, 959,699 notes wereconverted to 10,016,192 ordinary shares (2005: 1,000)

As at 30 June 2006, 3,631,543 notes remain outstanding(2005: 4,591,242).

F-58

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**

**NOTE 25. CURRENT LIABILITIES - SUBORDINATED CONVERTIBLE SECURITIES continued**

(2)          PACRS are PerpetualAmcor Convertible Reset Securities of which there were two tranches as follows:
|                                                                                       |       | **2006**   |       | **2005**   |       |
|---------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
|                                                                                  |       | **No,**    |       |       |       | **No,** |   |   |   |
|                                                                                  |       | **'000**   |       | **$m**     |       | **'000** |   | **$m** |   |
| ** **                                                                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Current and non-current - Perpetual Amcor  Convertible Reset   Securities (PACRS)** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| PACRS1                                                                                |       | -     |       | -     |       | 4,000.0 |   | 389.2 |   |
|                                                                                  |       |       |       |       |       |   |   |   |   |
| PACRS2                                                                                |       | 2,099.0    |       | 218.2      |       | 2,099.0 |   | 207.4 |   |
|                                                                                  |       |       |       |       |       |   |   |   |   |
| Balance at end  of financial year                                                     |       | 2,099.0    |       | 218.2      |       | 6,099.0 |   | 596.6 |   |

 

PACRS1 were fully paidperpetual, non-cumulative, subordinated, convertible, reset, unsecurednotes.  Non-cumulative interest was paidsemi-annually on PACRS1 at a coupon rate of 8.5733% per annum, fixed until thefirst reset date on 30 April 2006.

On 25 January 2006, Amcorannounced that PACRS1 would be converted to equity on 30 April 2006.  Prior to the conversion, Amcor offered torepurchase the PACRS1 notes off-market to provide holders with a cashalternative to receiving ordinary shares.

The offer price for therepurchase of PACRS1 notes was $105.2632 per note with settlement of therepurchase occurring on 28 April 2006.  Holders accepting the repurchase offerreceived the full amount of interest for the final interest period up to theconversion date of 30 April 2006.  Theoffer price, together with the final interest payment of $4.2514 per note,reflected the full value of the conversion terms.

Acceptances were receivedin relation to 3,434,736 PACRS1 notes. The remaining 565,264 PACRS1 notes wereconverted into 8,187,171 ordinary shares in Amcor Limited.

Also on 25 January 2006,Amcor announced its intention to commence an on-market share buy back programto acquire shares equivalent to the number arising on conversion of the PACRS1remaining after the repurchase program. Refer Note 33(a) for details of the share buy back.

PACRS2 are fully paidperpetual, non-cumulative, subordinated, convertible, reset, unsecurednotes.  Non-cumulative interest is paidsemi-annually on PACRS2 at a coupon rate of 8.57% per annum fixed until thefirst reset date on 30 April 2007.

On reset dates, holdersof PACRS2 may convert some or all outstanding PACRS2 into ordinary sharescalculated with reference to the conversion discount.  The issuer may convert some or all of theoutstanding PACRS2 on or before a reset date by giving at least 30 ASX businessdays notice at any time in the six months before reset date.  Coupon rates, conversion terms and theconversion discount are able to be reset by the issuer on the reset date.

(3) Adequate committedfacilities exist to refinance the PRIDES and PACRS 2, if required (refer Note29).
| **NOTE 26. CURRENT LIABILITIES - OTHER FINANCIAL  LIABILITIES** |   | **2006** |   | **2005** |   |
|-----------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|
|                                                                                          |   | **$m**   |   | **$m**   |   |
| Derivative  financial instruments - held for trading                                          |   |     |   |     |   |
| Forward exchange contracts (Note 38(c))                                                       |   | 0.3      |   | -   |   |
|                                                                                          |   | 0.3      |   | -   |   |
|                                                                                          |   |     |   |     |   |
| Derivative financial  instruments - cash flow hedges                                          |   |     |   |     |   |
| Forward exchange contracts (Note 38(c))                                                       |   | 1.2      |   | -   |   |
| Commodity contracts (Note 38(d))                                                              |   | 1.7      |   | -   |   |
|                                                                                          |   | 2.9      |   | -   |   |
|                                                                                          |   | 3.2      |   | -   |   |

 

F-59

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 27. CURRENT AND NON-CURRENTLIABILITIES -PROVISIONS**
|                                                                                                                           | ** ** | **Note**   |       | **2006**   |       | **2005**   |       |
|---------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                                                                                                                | ** ** |       |       | **$m**     |       | **$m**     |       |
| ** **                                                                                                                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Current**                                                                                                               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Dividends/distributions                                                                                                   |       | (i)        |       | -          |       | 8.7        |       |
| Employee  entitlements & directors' retirement allowances                                                             |       |       |       | 135.5      |       | 137.8      |       |
| Insurance and  other claims                                                                                               |       | (ii)       |       | 58.0       |       | 53.3       |       |
| Onerous  contracts                                                                                                        |       | (iii)      |       | 23.2       |       | 17.4       |       |
| Decommissioning  costs                                                                                                    |       | (iv)       |       | 0.4        |       | 1.4        |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| Amcor Flexibles  restructuring                                                                                            |       | (v)        |       | 45.5       |       | 19.4       |       |
| Amcor PET/Amcor  Closures restructuring                                                                                   |       | (vi)       |       | 8.7        |       | 11.0       |       |
| Other business  groups restructuring                                                                                      |       | (vii)      |       | 18.7       |       | 40.0       |       |
| Total  restructuring provisions                                                                                           |       |       |       | 72.9       |       | 70.4       |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| Other current  provisions                                                                                                 |       |       |       | -          |       | 0.3        |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| **Total  Current Provisions**                                                                                             |       |       |       | 290.0      |       | 289.3      |       |
|                                                                                                                      |       |       |       |       |       |       |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| **Non-current**                                                                                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Employee  entitlements & directors' retirement allowances                                                             |       |       |       | 21.5       |       | 27.1       |       |
| Insurance and  other claims                                                                                               |       | (ii)       |       | 21.5       |       | 13.7       |       |
| Onerous  contracts                                                                                                        |       | (iii)      |       | 4.5        |       | 5.0        |       |
| Decommissioning  costs                                                                                                    |       | (iv)       |       | 51.7       |       | 50.9       |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| Amcor Flexibles  restructuring                                                                                            |       | (v)        |       | 0.9        |       | 0.2        |       |
| Amcor PET/Amcor  Closures restructuring                                                                                   |       | (vi)       |       | 0.2        |       | 1.6        |       |
| Other business  groups restructuring                                                                                      |       | (vii)      |       | -          |       | 1.4        |       |
| Total  restructuring provisions                                                                                           |       |       |       | 1.1        |       | 3.2        |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| Other  Non-Current Provisions                                                                                             |       |       |       | 0.3        |       | -          |       |
|                                                                                                                      |       |       |       |       |       |       |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| **Total  Non-Current Provisions**                                                                                         |       |       |       | 100.6      |       | 99.9       |       |
|                                                                                                                      |       |       |       |       |       |       |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| **TOTAL  PROVISIONS**                                                                                                     |       |       |       | 390.6      |       | 389.2      |       |
|                                                                                                                      |       |       |       |       |       |       |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| **Reconciliations**                                                                                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                                                                                      |       |       |       |       |       |       |       |
| Reconciliations of the carrying amounts of each  class of provision, except for employee entitlements, are set out below: |       |       |       |       |       |       |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| **(i)  Dividends/distributions**                                                                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                                                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                                                                           |       |       |       | 8.7        |       | 8.8        |       |
| Provisions made  during the year:                                                                                         |       |       |       |       |       |       |       |
| Final dividend 2005                                                                                                       |       |       |       | 149.3      |       | 140.6      |       |
| Interim dividend 2006                                                                                                     |       |       |       | 149.5      |       | 149.6      |       |
| PACRS distribution                                                                                                        |       |       |       | -          |       | 23.6       |       |
| Payments made during the year                                                                                             |       |       |       | (298.8     | )          | (313.9     | )          |
| Reclassification of PACRS to interest bearing  liabilities                                                                |       |       |       | (8.7       | )          | -          |       |
|                                                                                                                      |       |       |       |       |       |       |       |
| Carrying amount  at end of financial year                                                                                 |       |       |       | -          |       | 8.7        |       |
|                                                                                                                      |       |       |       |       |       |       |       |

 

F-60

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 27. CURRENT AND NON-CURRENTLIABILITIES -PROVISIONS continued**
|                                                                               | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                    | ** ** | **$m**     | ** ** | **$m**     | ** ** |
| **(ii)  Insurance and other claims**                                          | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Current**                                                                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                               |       | 53.3       |       | 67.7       |       |
| Provisions made  during the year                                              |       | 11.1       |       | 32.1       |       |
| Payments made  during the year                                                |       | (5.8       | )          | (41.5      | )          |
| Disposal of  businesses and controlled entities                               |       | (0.2       | )          | -     |       |
| Provisions  released during the year                                          |       | (1.3       | )          | (2.9       | )          |
| Foreign exchange  fluctuations on translation of overseas controlled entities |       | 0.9        |       | (2.1       | )          |
|                                                                          |       |       |       |       |       |
| Carrying amount  at end of financial year                                     |       | 58.0       |       | 53.3       |       |
|                                                                          |       |       |       |       |       |
|                                                                          |       |       |       |       |       |
| **Non-current**                                                               | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of year                                         |       | 13.7       |       | 3.2        |       |
| Provisions made  during the year                                              |       | 23.7       |       | 11.0       |       |
| Payments made  during the year                                                |       | (14.0      | )          | -     |       |
| Disposal of  businesses and controlled entities                               |       | (3.7       | )          | -     |       |
| Unwinding of  discount                                                        |       | 0.7        |       | -     |       |
| Provisions  released during the year                                          |       | -     |       | (0.2       | )          |
| Foreign exchange  fluctuations on translation of overseas controlled entities |       | 1.1        |       | (0.3       | )          |
|                                                                          |       |       |       |       |       |
| Carrying amount  at end of financial year                                     |       | 21.5       |       | 13.7       |       |
|                                                                          |       |       |       |       |       |

 

Insurance and other claimsprovisions include provisions for workers’ compensation, insurance and otherclaims and are made for claims received and claims expected to be received inrelation to incidents occurring prior to 30 June 2006, based on historicalclaim rates.

Estimated net future cashflows are based on the assumption that all claims will be settled and theweighted average cost of historical claims adjusted for inflation will continueto approximate future costs.
|                                                                               | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                    | ** ** | **$m**     | ** ** | **$m**     | ** ** |
| **(iii)  Onerous Contracts**                                                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Current**                                                                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                               |       | 17.4       |       | 9.5        |       |
| Provisions made  during the year                                              |       | 25.7       |       | 12.8       |       |
| Payments made  during the year                                                |       | (22.6      | )          | (4.1       | )          |
| Net transfers in                                                              |       | 0.8        |       | 2.8        |       |
| Disposal of  businesses and controlled entities                               |       | -     |       | (3.0       | )          |
| Provisions  released during the year                                          |       | (0.1       | )          | (0.1       | )          |
| Foreign exchange  fluctuations on translation of overseas controlled entities |       | 2.0        |       | (0.5       | )          |
|                                                                          |       |       |       |       |       |
| Carrying amount  at end of financial year                                     |       | 23.2       |       | 17.4       |       |
|                                                                          |       |       |       |       |       |
|                                                                          |       |       |       |       |       |
| **Non-current**                                                               | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                               |       | 5.0        |       | 7.8        |       |
| Provisions made  during the year                                              |       | 1.5        |       | -     |       |
| Payments made  during the year                                                |       | (1.3       | )          | -     |       |
| Net transfers  out                                                            |       | (0.8       | )          | (2.8       | )          |
| Foreign exchange  fluctuations on translation of overseas controlled entities |       | 0.1        |       | -     |       |
|                                                                          |       |       |       |       |       |
| Carrying amount  at end of financial year                                     |       | 4.5        |       | 5.0        |       |
|                                                                          |       |       |       |       |       |

 

Onerous contract provisions relate to rental of land and buildings byAmcor Flexibles and PET business groups which are not able to be fully used orsublet by Amcor.  The provision reflectsonly the onerous element of these commitments.

F-61

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 27. CURRENT AND NON-CURRENTLIABILITIES -PROVISIONS continued**
|                                                                               | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                    | ** ** | **$m**     | ** ** | **$m**     | ** ** |
|                                                                          |       |       |       |       |       |
| **(iv)  Decommissioning Costs**                                               | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Current**                                                                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                               |       | 1.4        |       | 1.4        |       |
| Provisions  released during the year                                          |       | (1.0       | )          | -     |       |
|                                                                          |       |       |       |       |       |
| Carrying amount  at end of financial year                                     |       | 0.4        |       | 1.4        |       |
|                                                                          |       |       |       |       |       |
| **Non-Current**                                                               | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                               |       | 50.9       |       | 51.1       |       |
| Provisions made  during the year                                              |       | 5.6        |       | 2.1        |       |
| Payments made  during the year                                                |       | (0.3       | )          | (0.2       | )          |
| Disposal of  businesses and controlled entities                               |       | (5.3       | )          | -     |       |
| Unwinding of  discount                                                        |       | 1.4        |       | 0.9        |       |
| Provisions  released during the year                                          |       | (2.4       | )          | -     |       |
| Foreign exchange  fluctuations on translation of overseas controlled entities |       | 1.8        |       | (3.0       | )          |
|                                                                          |       |       |       |       |       |
| Carrying amount at end  of financial year                                     |       | 51.7       |       | 50.9       |       |

 

Provisions fordecommissioning relate to either make-good provisions included in leaseagreements or decommissioning costs associated with environmental risks forwhich the consolidated entity has a legal or constructive obligation.

Where lease agreementsinclude requirements to return the property to its original condition theconsolidated entity has made a provision based on an estimate of these costs.

Ona number of sites, there are areas of contamination caused by past practice,many of which relate to operations prior to Amcor’s ownership.  The provision includes costsassociated with the clean-up ofsites it owns, or contamination that it caused, to enable on-going use of theland as an industrial property.

Inaddition, the consolidated entity recognises the environmental risks associatedwith underground storage tanks.  Theprovision includes costs associated with the decommissioning, removal or repairof any tanks which may failintegrity tests.

F-62

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
| **NOTE 27. CURRENT AND NON-CURRENT LIABILITIES -  PROVISIONS continued** |       | **2006**   |       | **2005**   |       |
|-------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
|                                                                                                        |       | **$m**     |       | **$m**     |       |
| **(v)  Amcor Flexibles Restructuring**                                                                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Current**                                                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                                                             |       | 19.4       |       | 54.5       |       |
| Provisions made  during the year                                                                            |       | 37.3       |       | 6.5        |       |
| Payments made  during the year                                                                              |       | (13.7      | )          | (39.0      | )          |
| Net transfers in                                                                                            |       | -     |       | 0.6        |       |
|                                                                                                        |       |       |       |       |       |
| Foreign exchange  fluctuations on translation of overseas controlled entities                               |       | 2.5        |       | (3.2       | )          |
|                                                                                                        |       |       |       |       |       |
| Carrying amount  at end of financial year                                                                   |       | 45.5       |       | 19.4       |       |
|                                                                                                        |       |       |       |       |       |
| **Non-Current**                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                                                             |       | 0.2        |       | 0.5        |       |
| Provisions made  during the year                                                                            |       | 0.8        |       | 1.5        |       |
| Payments made  during the year                                                                              |       | (0.1       | )          | (1.2       | )          |
| Net transfers  out                                                                                          |       | -     |       | (0.6       | )          |
|                                                                                                        |       |       |       |       |       |
| Carrying amount  at end of financial year                                                                   |       | 0.9        |       | 0.2        |       |
|                                                                                                        |       |       |       |       |       |
| **(vi)  Amcor PET/Amcor Closures Restructuring**                                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Current**                                                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                                                             |       | 11.0       |       | 8.8        |       |
| Provisions made  during the year                                                                            |       | 34.2       |       | 24.5       |       |
| Payments made  during the year                                                                              |       | (31.9      | )          | (21.5      | )          |
| Net transfers in                                                                                            |       | -     |       | 0.2        |       |
| Disposal of  businesses and controlled entities                                                             |       | (5.3       | )          | -     |       |
| Foreign exchange  fluctuations on translation of overseas controlled entities                               |       | 0.7        |       | (1.0       | )          |
|                                                                                                        |       |       |       |       |       |
| Carrying amount  at end of financial year                                                                   |       | 8.7        |       | 11.0       |       |
|                                                                                                        |       |       |       |       |       |
| **Non-Current**                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                                                             |       | 1.6        |       | 0.3        |       |
| Provisions made  during the year                                                                            |       | -     |       | 1.5        |       |
| Payments made  during the year                                                                              |       | (1.5       | )          | (0.2       | )          |
| Net transfers  out                                                                                          |       | -     |       | (0.2       | )          |
| Foreign exchange  fluctuations on translation of overseas controlled entities                               |       | 0.1        |       | 0.2        |       |
|                                                                                                        |       |       |       |       |       |
| Carrying amount  at end of financial year                                                                   |       | 0.2        |       | 1.6        |       |

 

The Amcor Flexibles restructuring provisions include the costs relatingto the closure of Hochheim, Colodense and Envi plants.   The Amcor PET/Amcor Closure restructuringprovisions include the costs of closing the Vancouver, Calgary and Dorvalfacilities. The consolidated entity has provided for redundancies, otheremployee costs and site clearance costs.

F-63

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
| **NOTE 27. CURRENT AND NON-CURRENT LIABILITIES -  PROVISIONS continued** |       | **2006**   |       | **2005**   |       |
|-------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
|                                                                                                        |       | **$m**     |       | **$m**     |       |
| **(vii)  Other Business Groups Restructuring**                                                              | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Current**                                                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                                                             |       | 40.0       |       | 25.5       |       |
| Provisions made  during the year                                                                            |       | 9.9        |       | 35.8       |       |
| Payments made  during the year                                                                              |       | (32.5      | )          | (18.7      | )          |
| Net transfers  out                                                                                          |       | -     |       | (1.4       | )          |
| Provisions  released during the year                                                                        |       | (0.3       | )          | (0.8       | )          |
| Foreign exchange  fluctuations on translation of overseas controlled entities                               |       | 1.6        |       | (0.4       | )          |
|                                                                                                        |       |       |       |       |       |
| Carrying amount  at end of financial year                                                                   |       | 18.7       |       | 40.0       |       |
|                                                                                                        |       |       |       |       |       |
| **Non-Current**                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Carrying amount  at beginning of financial year                                                             |       | 1.4        |       | -     |       |
| Provisions made  during the year                                                                            |       | 0.1        |       | 0.1        |       |
| Payments made  during the year                                                                              |       | (1.6       | )          | -     |       |
| Net transfers in                                                                                            |       | -     |       | 1.4        |       |
| Foreign exchange  fluctuations on translation of overseas controlled entities                               |       | 0.1        |       | (0.1       | )          |
|                                                                                                        |       |       |       |       |       |
| Carrying amount  at end of financial year                                                                   |       | -     |       | 1.4        |       |

 
| **NOTE 28. NON-CURRENT LIABILITIES - TRADE AND   OTHER PAYABLES** |   | **2006** |   | **2005** |   |
|-----------------------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|
|                                                                                                      |   | **$m**   |   | **$m**   |   |
|                                                                                                      |   |     |   |     |   |
| Deferred Grant Income                                                                                     |   | 26.5     |   | 26.8     |   |
| Other unsecured creditors                                                                                 |   | 4.6      |   | 4.8      |   |
|                                                                                                      |   |     |   |     |   |
| **TOTAL  NON-CURRENT TRADE AND OTHER PAYABLES**                                                           |   | 31.1     |   | 31.6     |   |

 

F-64

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
| **NOTE 29. NON-CURRENT LIABILITIES - INTEREST  BEARING LIABILITIES** | ** ** | ** ** | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|----------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                                                                                         | ** ** | Footnote   | ** ** | **$m**     | ** ** | **$m**     | ** ** |
| ** **                                                                                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Secured  borrowings:                                                                               |       |       |       |       |       |       |       |
| Other loans                                                                                        |       | (1)        |       | 165.2      |       | 177.5      |       |
| Lease liabilities (refer Note 41)                                                                  |       | (6)        |       | 57.8       |       | 76.2       |       |
|                                                                                               |       |       |       |       |       |       |       |
| Total secured  non-current interest bearing liabilities                                            |       |       |       | 223.0      |       | 253.7      |       |
|                                                                                               |       |       |       |       |       |       |       |
| Unsecured  borrowings:                                                                             |       |       |       |       |       |       |       |
| Bank loans                                                                                         |       | (2)        |       | 586.7      |       | 445.7      |       |
| US$Notes                                                                                           |       | (3)        |       | 675.1      |       | 655.8      |       |
| Eurobond                                                                                           |       | (4)        |       | 595.5      |       | 554.5      |       |
| Other loans                                                                                        |       | (5)        |       | 4.6        |       | 7.6        |       |
|                                                                                               |       |       |       |       |       |       |       |
| Total unsecured  non-current interest bearing liabilities                                          |       |       |       | 1,861.9    |       | 1,663.6    |       |
|                                                                                               |       |       |       |       |       |       |       |
| **TOTAL  NON-CURRENT**                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **INTEREST-BEARING  LIABILITIES**                                                                  |       |       |       | 2,084.9    |       | 1,917.3    |       |

 
| **Reconciliation of consolidated net debt**                                             | ** ** | ** ** | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-----------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                                                                              | ** ** | ** ** | ** ** | **$m**     | ** ** | **$m**     | ** ** |
| ·   Current  - refer Note 24                                        |       |       |       | 690.4      |       | 887.2      |       |
| ·   Current  subordinated convertible securities- refer Note 25     |       |       |       | 464.2      |       | -     |       |
| ·   Non-current  - refer above                                      |       |       |       | 2,084.9    |       | 1,917.3    |       |
| ·   Non-current  subordinated convertible securities- refer Note 30 |       |       |       | -     |       | 301.1      |       |
|                                                                                    |       |       |       |       |       |       |       |
| Total interest  bearing liabilities                                                     |       |       |       | 3,239.5    |       | 3,105.6    |       |
| ·   Cash  and cash equivalents - refer Note 13                      |       |       |       | (113.9     | )          | (229.8     | )          |
| ** **                                                                              | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net debt                                                                                |       |       |       | 3,125.6    |       | 2,875.8    |       |

 

Details of the interestrate risk and fair value of interest bearing liabilities for the consolidatedentity are set out in Note 38(b) and 38(e).

(1)                                  Comprisesloans secured over property, plant and equipment in Australian and overseascontrolled entities to the extent of $177.4 million (2005: $182.2million).  The carrying value of thepledged property is $180.1 million (2005: $190.1 million).

(2)                                  Principallyrelates to bank borrowings in:

·      AmcorFinance (New Zealand) Limited – A$47.0 million (2005: A$63.4 million) drawnunder NZ$100 million revolving cash advance facility maturing in April2008.  This facility bears interest atthe bank bill rate plus an applicable credit margin.

·      AmcorLimited/Amcor UK Finance Limited/Amcor Finance (USA) Inc. - A$534.2 million(2005: A$315.5 million) drawn under a US$1,250 million (2005: US$1,000 million)global syndicated multi-currency facility term-tranche of US$750 million (2005:US$650 million) maturing June 2011. Drawings are in various currencies and bear interest at the applicableBBSY or LIBOR rate plus a credit margin.

(3)                                  RepresentsUS$500 million Amcor Limited senior unsecured guaranteed notes issued in theUnited States Private Placement market. The notes have final bullet maturities between 2009 and 2017. Intereston these notes is payable semi-annually.

(4)           RepresentsEUR350 million Amcor Limited unsecured notes issued in the Eurobond market.  The notes mature in March 2011 and pay anannual coupon of 4.25%.

(5)           Comprisesvarious funding facilities made available to subsidiary companies predominantlyin Europe and North America.

(6)           Leaseliabilities (other than liabilities recognised in relation to surplus spaceunder non-cancellable operating leases) are effectively secured, as the rightsto the leased assets recognised in the financial statement revert to the lessorin the event of default.

F-65

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**
| **NOTE 29. NON-CURRENT LIABILITIES - INTEREST  BEARING LIABILITIES continued** |       | **2006**   |       | **2005**   |       |
|--------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
|                                                                           |       | **$m**     |       | **$m**     |       |
| ** **                                                                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Financing arrangements**                                                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| Unrestricted access was  available at balance date to the following credit:    |       |       |       |       |       |
| ** **                                                                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Credit standby arrangements**                                                | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| Total facilities                                                               |       |       |       |       |       |
| Bank overdrafts                                                                |       | 109.8      |       | 92.8       |       |
| Unsecured bill  acceptance facility                                            |       | 677.4      |       | 459.1      |       |
| ** **                                                                     |       | 787.2      |       | 551.9      |       |
| Used at balance date                                                           |       |       |       |       |       |
| Bank overdrafts                                                                |       | 48.9       |       | 16.0       |       |
| Unsecured bill  acceptance facility                                            |       | 211.0      |       | 307.7      |       |
| ** **                                                                     |       | 259.9      |       | 323.7      |       |
| Unused at balance date                                                         |       |       |       |       |       |
| Bank overdrafts                                                                |       | 60.9       |       | 76.8       |       |
| Unsecured bill  acceptance facility                                            |       | 466.4      |       | 151.4      |       |
| ** **                                                                     |       | 527.3      |       | 228.2      |       |
| ** **                                                                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Loan facilities**                                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| Total facilities                                                               |       | 3,354.6    |       | 2,899.3    |       |
| Used at balance  date                                                          |       | 2,515.4    |       | 2,480.8    |       |
| Unused at  balance date                                                        |       | 839.2      |       | 418.5      |       |

 

Amounts drawn under themajor committed facilities incur a margin over the applicable LIBOR or bankbill rate, based on the Amcor Limited credit rating which at June 30, 2006 wasBBB. Commitment fees are charged on either the full or undrawn portion of eachfacility. The uncommitted facilities incur a margin of between three to fifteenbasis points over the applicable LIBOR or bank bill rate, depending on size,tenor and demand. Members of each dealer panel are paid an incentive and payingagent fee on each settled promissory or commercial paper issue. Bank facilitiescontain standard events of default, representations and warranties and other undertakingsincluding negative pledge conditions.

F-66

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
| **NOTE 30. NON-CURRENT LIABILITIES -  SUBORDINATED CONVERTIBLE SECURITIES** |       | **2006**   |       | **2005**   |       |
|-----------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                                                |       |       |       |       |       |
|                                                                                                      |       | **$m**     |       | **$m**     |       |
| ** **                                                                                                | ** ** | ** ** | ** ** | ** ** | ** ** |
| 1996 issue of 7.25% Undated Subordinated Convertible  Unsecured Notes - refer Note 25(1)                  |       | -     |       | 301.1      |       |
|                                                                                                      |       |       |       |       |       |
|                                                                                                      |       | -     |       | 301.1      |       |

 
| **NOTE 31. NON-CURRENT LIABILITIES - DEFERRED TAX  LIABILITIES** |       | **2006**   |       | **2005**   |       |
|------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
|                                                                                           |       |       |       |       |       |
|                                                                                           |       | **$m**     |       | **$m**     |       |
| ** **                                                                                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| **The  balance comprises temporary differences attributable to:**                              | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                                                           |       |       |       |       |       |
| *Amounts  recognised in income statement*                                                      | * *   | * *   | * *   | * *   | * *   |
| Valuation of inventories                                                                       |       | 0.6        |       | -     |       |
| Financial instruments at fair value                                                            |       | 1.6        |       | -     |       |
| Depreciation                                                                                   |       | 470.8      |       | 403.4      |       |
| Other                                                                                          |       | 105.0      |       | 116.3      |       |
|                                                                                           |       | 578.0      |       | 519.7      |       |
|                                                                                           |       |       |       |       |       |
| *Amounts  recognised directly in equity*                                                       | * *   | * *   | * *   | * *   | * *   |
| Cash flow hedges                                                                               |       | (0.4       | )          | -     |       |
| Employee benefits                                                                              |       | 0.1        |       | -     |       |
| Exchange fluctuation reserve                                                                   |       | 3.3        |       | 6.4        |       |
|                                                                                           |       | 3.0        |       | 6.4        |       |
|                                                                                           |       |       |       |       |       |
| Set-off of deferred tax liabilities pursuant to set-off provisions (Note 20)              |       | (39.8      | )          | (8.8       | )          |
|                                                                                           |       |       |       |       |       |
| Net deferred tax  liabilities                                                                  |       | 541.2      |       | 517.3      |       |
|                                                                                           |       |       |       |       |       |
| **Movements**                                                                                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| Balance at  beginning of financial year                                                        |       | 517.3      |       | 585.2      |       |
| Change on adoption of AASB 132 and AASB 139 (Note  1(z))                                       |       | (1.0       | )          | -     |       |
| Charged/(credited) to the income statement (Note 9)                                            |       | 54.4       |       | (32.1      | )          |
| Charged/(credited) directly to equity                                                          |       | (3.4       | )          | -     |       |
| Disposal of businesses and controlled entities (Note  12)                                      |       | (10.0      | )          | -     |       |
| Foreign exchange fluctuations on translation of  overseas controlled entities                  |       | 15.0       |       | (27.0      | )          |
| Other movements                                                                                |       | (31.1      | )          | (8.8       | )          |
| Balance at end  of financial year                                                              |       | 541.2      |       | 517.3      |       |
|                                                                                           |       |       |       |       |       |
| Deferred tax  liabilities to be settled after more than 12 months                              |       | 541.2      |       | 517.3      |       |
| Deferred tax  liabilities to be settled within 12 months                                       |       | -     |       | -     |       |
|                                                                                           |       | 541.2      |       | 517.3      |       |

 

F-67

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE32.  NON-CURRENT LIABILITIES – RETIREMENTBENEFIT OBLIGATIONS**

**(a)****Description of plans**

The consolidatedentity participates in a number of pension plans which were established toprovide benefits for employees and their dependants.  The funds cover company sponsored plans,industry/union plans, and government plans.

*CompanySponsored Plans*

The principalbenefits are pensions or lump sums for members on resignation, retirement,death or total permanent disablement. These benefits are determined on either a defined benefit oraccumulation 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 defined contributionfunds, the amounts set out in the appropriate fund rules.

*Industry/UnionPlans*

Employer companiesparticipate in industry and union plans on behalf of certain employees.

These plansoperate on an accumulation basis and provide lump sum benefits for members onresignation, retirement or death.

The employercompany has a legally enforceable obligation to contribute at varying rates tothese plans.

*GovernmentPlans*

Employer companiesparticipate in government plans, on behalf of certain employees, which providepension benefits.

There exists alegally enforceable obligation on employer companies to contribute as requiredby legislation.

*DefinedBenefit Plans*

The consolidatedentity maintains several defined benefit superannuation arrangementsinternationally.  On a vested benefitbasis, some arrangements are in actuarial surplus, others are in a position ofactuarial 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 funding policy in relation to its defined benefit arrangements.

The consolidated entityhas no legal obligation to settle unfunded defined benefit obligation with animmediate contribution or additional one-off contributions. The objective offunding is to ensure that the benefit entitlements of members and otherbeneficiaries are fully funded by the time they become payable.  The consolidated entity’s current intentionis to make annual contributions to defined benefit funds at a rate determinedfrom time to time, following discussions with the funds’ actuaries or othercompetent authorities and advisors.  Theconsolidated entity expects that the contribution rates will be determinedafter taking into account sound actuarial principles and would be designed toenable all consolidated entity defined benefit funds to meet retirementexpectations and relevant regulatory requirements. The consolidated entity’scurrent intention is based on these assumptions.  The consolidated entity reserves the right toincrease reduce or suspend its contributions to the funds as it sees fit.

F-68

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
| **NOTE 32. NON-CURRENT LIABILITIES - RETIREMENT  BENEFIT OBLIGATIONS continued** |       | **2006**     |       | **2005**    |       |
|----------------------------------------------------------------------------------------------------------------|------------|--------------|------------|-------------|------------|
|                                                                                                           |       | **$m**       |       | **$m**      |       |
|                                                                                                           |       |         |       |        |       |
| **(b)  Defined benefit pension plans**                                                                         | ** ** | ** **   | ** ** | ** **  | ** ** |
|                                                                                                           |       |         |       |        |       |
| **(i)  Balance sheet amounts**                                                                                 | ** ** | ** **   | ** ** | ** **  | ** ** |
|                                                                                                           |       |         |       |        |       |
| The amounts  recognised in the balance sheet are determined as follows:                                        |       |         |       |        |       |
|                                                                                                           |       |         |       |        |       |
| Present value of  the funded defined benefit obligation                                                        |       | 1,034.6      |       | 885.4       |       |
| Fair value of  defined benefit plan assets                                                                     |       | (848.8       | )          | (624.9      | )          |
|                                                                                                           |       | 185.8        |       | 260.5       |       |
| Present value of  the unfunded defined benefit obligation                                                      |       | 27.3         |       | 67.2        |       |
|                                                                                                           |       |         |       |        |       |
| Net liability  before adjustment for contributions tax                                                         |       | 213.1        |       | 327.7       |       |
| Amounts not  recognised as an asset                                                                            |       | 0.7          |       | -      |       |
| **Net  liability in the balance sheet**                                                                        |       | 213.8        |       | 327.7       |       |
| ** **                                                                                                     | ** ** | ** **   | ** ** | ** **  | ** ** |
| **Net  liability in the balance sheet comprises:**                                                             | ** ** | ** **   | ** ** | ** **  | ** ** |
| Retirement benefit asset                                                                                       |       | (2.9         | )          | (0.6        | )          |
| Retirement benefit obligation                                                                                  |       | 216.7        |       | 328.3       |       |
| Total net  liability - Defined benefit pension plans                                                           |       | 213.8        |       | 327.7       |       |
|                                                                                                           |       |         |       |        |       |
| Total liability  - Defined benefit pension plans                                                               |       | 216.7        |       | 328.3       |       |
|                                                                                                           |       |         |       |        |       |
| Total liability  - Defined benefit non- pension plans - refer Note 32 (c) (i)                                  |       | 29.9         |       | 30.6        |       |
|                                                                                                           |       |         |       |        |       |
| **Total  Retirement benefit obligations in the balance sheet**                                                 |       | 246.6        |       | 358.9       |       |
|                                                                                                           |       |         |       |        |       |
| **(ii)  Allocation of plan assets**                                                                            | ** ** | ** **   | ** ** | ** **  | ** ** |
|                                                                                                           |       |         |       |        |       |
| Proportion of  the fair value of total plan assets:                                                            |       | %            | ** ** | %           | ** ** |
|                                                                                                           |       |         |       |        |       |
| Equity  securities                                                                                             |       | 54.0         |       | 56.0        |       |
| Debt securities                                                                                                |       | 34.0         |       | 35.0        |       |
| Real estate                                                                                                    |       | 4.0          |       | 2.0         |       |
| Other assets                                                                                                   |       | 8.0          |       | 7.0         |       |
|                                                                                                           |       |         |       |        |       |
| Total                                                                                                          |       | 100.0        |       | 100.0       |       |
|                                                                                                           |       |         |       |        |       |
|                                                                                                           | ** ** | **Domestic** | ** ** | **Foreign** | ** ** |
| Weighted average  of fair value of assets by class:                                                            |       | %            | ** ** | %           | ** ** |
|                                                                                                           |       |         |       |        |       |
| Equity  securities                                                                                             |       | 69.0         |       | 47.0        |       |
| Debt securities                                                                                                |       | 21.0         |       | 40.0        |       |
| Real estate                                                                                                    |       | -       |       | 6.0         |       |
| Other assets                                                                                                   |       | 10.0         |       | 7.0         |       |
|                                                                                                           |       |         |       |        |       |
| Total                                                                                                          |       | 100.0        |       | 100.0       |       |

 

The defined benefit planassets of the parent entity may include Amcor securitites at various timesthroughout the year. At 30 June 2006, the plan did not hold any Amcorsecurities (2005 : Nil).

F-69

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**
| **NOTE 32. NON-CURRENT LIABILITIES -  RETIREMENT BENEFIT OBLIGATIONS continued** |       | **2006**   |       | **2005**   |       |
|---------------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
|                                                                                                                |       | **$m**     |       | **$m**     |       |
| ** **                                                                                                          | ** ** | ** ** | ** ** | ** ** | ** ** |
| **(iii)  Reconciliations**                                                                                          | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                                                                                |       |       |       |       |       |
| *Reconciliation  of the present value of the defined benefit obligation:*                                           | * *   | * *   | * *   | * *   | * *   |
| Balance at  beginning of financial year                                                                             |       | 952.6      |       | 898.0      |       |
| Current service  cost                                                                                               |       | 49.1       |       | 46.7       |       |
| Interest cost                                                                                                       |       | 43.8       |       | 43.6       |       |
| Actuarial gains  and losses                                                                                         |       | 17.0       |       | 80.8       |       |
| Employee  contributions                                                                                             |       | 13.2       |       | 12.8       |       |
| Benefits paid                                                                                                       |       | (54.4      | )          | (26.5      | )          |
| Past service  cost                                                                                                  |       | 1.0        |       | 0.3        |       |
| Disposal of  businesses and controlled entities                                                                     |       | (44.9      | )          | -     |       |
| Curtailments                                                                                                        |       | (1.4       | )          | (0.3       | )          |
| Settlement                                                                                                          |       | (0.1       | )          | (39.6      | )          |
| Expenses, taxes,  premiums paid                                                                                     |       | (10.0      | )          | (5.6       | )          |
| Plan converted  from defined contribution to defined benefit                                                        |       | 57.5       |       | -     |       |
| Foreign exchange  fluctuations on translation of overseas controlled entities                                       |       | 38.5       |       | (57.6      | )          |
| **Balance  at end of financial year**                                                                               |       | 1,061.9    |       | 952.6      |       |
| ** **                                                                                                          | ** ** | ** ** | ** ** | ** ** | ** ** |
| Funded defined  benefit obligation                                                                                  |       | 1,034.6    |       | 885.4      |       |
| Unfunded defined  benefit obligation                                                                                |       | 27.3       |       | 67.2       |       |
| **Balance  at end of financial year**                                                                               |       | 1,061.9    |       | 952.6      |       |
|                                                                                                                |       |       |       |       |       |
| *Reconciliation  of the fair value of defined benefit plan assets:*                                                 | * *   | * *   | * *   | * *   | * *   |
| Balance at  beginning of financial year                                                                             |       | 624.9      |       | 600.2      |       |
| Expected return  on plan assets                                                                                     |       | 42.7       |       | 36.7       |       |
| Actuarial gains  and losses                                                                                         |       | 36.9       |       | 38.4       |       |
| Contributions by  Group companies                                                                                   |       | 104.2      |       | 42.3       |       |
| Contributions by  plan participants                                                                                 |       | 13.2       |       | 12.9       |       |
| Benefits paid                                                                                                       |       | (50.9      | )          | (25.3      | )          |
| Curtailments                                                                                                        |       | (0.2       | )          | -     |       |
| Settlement                                                                                                          |       | (0.1       | )          | (39.6      | )          |
| Expenses, taxes,  premiums paid                                                                                     |       | (10.0      | )          | (5.6       | )          |
| Plan converted  from defined contribution to defined benefit                                                        |       | 64.2       |       | -     |       |
| Foreign exchange  fluctuations on translation of overseas controlled entities                                       |       | 23.9       |       | (35.1      | )          |
| **Balance  at end of financial year**                                                                               |       | 848.8      |       | 624.9      |       |
|                                                                                                                |       |       |       |       |       |
| **(iv)  Amounts recognised in income statement**                                                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                                                                                |       |       |       |       |       |
| The amounts  recognised in the income statement are as follows:                                                     |       |       |       |       |       |
|                                                                                                                |       |       |       |       |       |
| Current service  cost                                                                                               |       | 49.1       |       | 46.7       |       |
| Interest cost                                                                                                       |       | 43.8       |       | 43.6       |       |
| Expected return  on plan assets                                                                                     |       | (42.7      | )          | (36.7      | )          |
| Past service  cost                                                                                                  |       | 1.0        |       | 0.3        |       |
| Losses (gains)  on curtailments and benefits paid                                                                   |       | (7.4       | )          | (3.1       | )          |
| **Total  included in employee benefits expense**                                                                    |       | 43.8       |       | 50.8       |       |
|                                                                                                                |       |       |       |       |       |
| Actual return on  plan assets                                                                                       |       | 79.6       |       | 75.1       |       |
|                                                                                                                |       |       |       |       |       |
| **(v)  Amounts recognised in the statement of recognised income and expense**                                       | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                                                                                |       |       |       |       |       |
| Net actuarial gains  (losses) recognised in the financial year                                                      |       | 19.9       |       | (42.4      | )          |

 

The cumulative amount of actuarial gains/(losses) recognised throughthe statement of recognised income and expense as at 30 June 2006 is ($22.5)million (2005: ($42.4) million).

F-70

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 32.  NON-CURRENT LIABILITIES – RETIREMENT BENEFITOBLIGATIONS continued**

**(vi) Expected return on assets assumption**

The expected rate ofreturn on assets assumption is determined by weighing the expected long-termreturn for each asset class by the benchmark allocation of assets to eachclass. The returns used for each class are net of tax and investment fees.

**(vii) Estimated future benefitpayments**
|                                        |       | **Domestic** |       | **Foreign** |       |
|----------------------------------------|------------|--------------|------------|-------------|------------|
|                                   |       | **$m**       |       | **$m**      |       |
| **Estimated  future benefit payments** | ** ** | ** **   | ** ** | ** **  | ** ** |
| Financial year  ending:                |       |         |       |        |       |
| 30 June 2007                           |       | 25.8         |       | 21.5        |       |
| 30 June 2008                           |       | 22.4         |       | 21.1        |       |
| 30 June 2009                           |       | 25.0         |       | 23.1        |       |
| 30 June 2010                           |       | 25.1         |       | 24.5        |       |
| 30 June 2011                           |       | 23.6         |       | 25.8        |       |
| Next 5 years                           |       | 134.3        |       | 165.7       |       |
| Total                                  |       | 256.2        |       | 281.7       |       |

 

**viii) Investment strategy**

The investment strategiesfor the consolidated entity’s defined benefit plans are varied, with the plansseeking to achieve moderate to high returns within a given risk profile.  Investment target strategies for the materialdefined benefit plans include:

·                  High returns inthe long term, while tolerating a reasonably high degree of volatility ofreturns over the short period.

·                  A balance ofequity, debt securities and fixed income securities, which would be expected toproduce a moderately high return over the long-term, with only a moderatedegree of variability of returns over short periods.

·                  Whereinvestments are made in equity securities, ensuring there is an appropriate mixof domestic and international securities.

·                  To achievereturns greater than a pre-determined percentage above the prevailing inflationrate.

·                  To ensure alllegal obligations are met.

**(ix) Estimated futurecontributions**

Employer contributions tothe defined benefit pension plans are based on recommendations by the plans’actuaries.  Actuarial assessments aremade periodically.

Employer contributions todefined benefit funds for the consolidated entity during the financial yearending 30 June 2007 are expected to total $16.4 million for domestic plans and$20.7 million for foreign plans. Employer contributions to defined benefit funds for the parent entityduring the financial year ending 30 June 2007 are expected to total $16.4million.

The consolidated entityand the company have used the AASB1 First-Time Adoption of Australian Equivalentsto International Financial Reporting Standards paragraph 20A exemption anddisclosed amounts under AASB 1 paragraph 20A(p) above for each annual reportingperiod prospectively from transaction date.

F-71

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 32.  NON-CURRENT LIABILITIES - RETIREMENT BENEFITOBLIGATIONS continued**

**(x) Principal actuarialassumptions**

The principal actuarialassumptions used for the purposes of reporting under AASB 119 Employee Benefitsare as follows:

 
|                                                                  |       | **Economic  assumptions used in  making funding recommendations** |
|------------------------------------------------------------------|------------|-------------------------------------------------------------------|
| ** **                                                       | ** ** | ** **                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                       | ** ** | **Discount  rate  %**                                             | ** ** | **Expected  return on  plan assets  %** | ** ** | **Future  salary  increases  %** | ** ** |
| **30 June  2006**                                                | ** ** | ** **                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Amcor  Limited**                                               | ** ** | ** **                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Amcor  Superannuation Fund                                       |       | 5.0                                                               |   | 8.0 |   | 4.5 |   |
|                                                             |       |                                                              |   |   |   |   |   |
| **Controlled  Entities**                                         | ** ** | ** **                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Amcor Flexibles  (UK) Pension Plan                               |       | 5.2                                                               |   | 6.4 |   | 4.4 |   |
| Amcor New  Zealand Super Fund                                    |       | 4.0                                                               |   | 5.5 |   | 3.8 |   |
| Amcor PET  Packaging UK Limited Pension Plan                     |       | 5.3                                                               |   | 7.5 |   | 3.7 |   |
| Amcor PET Packaging  Pension Plan USA                            |       | 6.3                                                               |   | 8.0 |   | 4.5 |   |
| Amcor  Rentsch/Poly Laupen                                       |       | 3.3                                                               |   | 3.5 |   | 2.0 |   |
| Amcor Twinpack  Americas Inc Pension Plan for salaried employees |       | 4.5                                                               |   | 6.5 |   | 4.1 |   |
|                                                             |       |                                                              |   |   |   |   |   |
| Other funds (3)                                                  |       | 3.9                                                               |   | 4.8 |   | 2.0 |   |
|                                                             |       |                                                              |   |   |   |   |   |
| **30 June  2005**                                                | ** ** | ** **                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Amcor  Limited**                                               | ** ** | ** **                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Amcor  Superannuation Fund                                       |       | 4.5                                                               |   | 7.0 |   | 4.5 |   |
|                                                             |       |                                                              |   |   |   |   |   |
| **Controlled  Entities**                                         | ** ** | ** **                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Amcor Flexibles  (UK) Pension Plan                               |       | 5.0                                                               |   | 6.1 |   | 4.1 |   |
| Amcor New  Zealand Super Fund                                    |       | 3.9                                                               |   | 5.5 |   | 3.8 |   |
| Amcor PET  Packaging UK Limited Pension Plan                     |       | 5.0                                                               |   | 7.1 |   | 3.3 |   |
| Amcor PET Packaging  Pension Plan USA                            |       | 5.3                                                               |   | 8.0 |   | 4.5 |   |
| Amcor  Rentsch/Poly Laupen                                       |       | 3.0                                                               |   | 3.5 |   | 1.0 |   |
| Amcor Twinpack  Americas Inc Pension Plan for salaried employees |       | 4.5                                                               |   | 7.0 |   | 3.0 |   |
|                                                             |       |                                                              |   |   |   |   |   |
| Other funds (3)                                                  |       | 4.2                                                               |   | 4.1 |   | 2.3 |   |

 

F-72

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 32. NON-CURRENT LIABILITIES –RETIREMENT BENEFIT OBLIGATIONS continued**

(xi)All plans are listed below showing the details of the net financial positionand arrangements for employer contributions for funding for each definedbenefit plan based on the requirements of AAS 25 *FinancialReporting by Superannuation Plans.*
| **Defined benefit funds as at June 2006** |   | ** ** | **Economic  assumptions used in  making funding recommendations** |
|-------------------------------------------|--------|------------|-------------------------------------------------------------------|

 
|                                                                  | ** ** | **Reporting  date** | ** ** | **Fund assets  at net  market  value** | ** ** | **Accrued  benefits** | ** ** | **Accrued  surplus/  (deficit)**(1) | ** ** | **Current contribution  recommendations**                                                                                  | ** ** | **Funding method**                         | ** ** | **Discount  rate** | ** ** | **Expected  return on  plan assets** | ** ** | **Future  salary   increases** | ** ** |
|------------------------------------------------------------------|------------|---------------------|------------|----------------------------------------|------------|-----------------------|------------|-------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|--------------------|------------|--------------------------------------|------------|--------------------------------|------------|
| **Amcor Limited**                                                | ** ** | ** **          |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
| Amcor Superannuation Fund (2)                                    |       | 30/06/2006          |       | 254.6                                  |       | 265.1                 |       | (10.5                               | )          |  11% of salary plus deemed and salary sacrifice  contributions                                                        |       | Target coverage of vested benefits         |       | 7.0                |       | 8.0                                  |       | 5.0                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
| **Controlled Entities**                                          | ** ** | ** **          |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
| Amcor Flexibles (UK) Pension Plan                                |       | 30/06/2006          |       | 188.5                                  |       | 222.4                 |       | (33.9                               | )          |  11.9% of pensionable salary for one category of  members (Level B) and 18.9% of pensionable salary for other members |       | Projected Unit Method                      |       | 6.3                |       | 6.4                                  |       | 4.0                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
| Amcor New Zealand Super Fund (2)                                 |       | 30/06/2006          |       | 22.4                                   |       | 23.5                  |       | (1.1                                | )          |  11% of members salaries, including withholding  tax                                                                  |       | Projected Unit Credit Method               |       | 5.5                |       | 5.5                                  |       | 4.0                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
| Amcor PET Packaging UK Limited Pension Plan                      |       | 30/06/2006          |       | 19.5                                   |       | 29.1                  |       | (9.6                                | )          |  12.6% of pensionable earnings                                                                                        |       | Projected Unit Method                      |       | 7.9                |       | 7.5                                  |       | 3.5                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
| Amcor PET Packaging Pension Plan USA                             |       | 30/06/2006          |       | 29.0                                   |       | 30.0                  |       | (1.0                                | )          |  Contributions prescribed by Trust Deed rules                                                                         |       | Projected Unit Credit Method               |       | 8.0                |       | 8.0                                  |       | 4.5                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
| Amcor Rentsch/Poly Laupen                                        |       | 30/06/2006          |       | 89.7                                   |       | 71.8                  |       | 17.9                                |       |  Contributions prescribed by Trust Deed rules                                                                         |       | Method prescribed by statutory legislation |       | 3.5                |       | 3.5                                  |       | -                              |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
| Amcor Twinpack Americas Inc Pension Plan for salaried  employees |       | 30/06/2006          |       | 29.5                                   |       | 55.4                  |       | (25.9                               | )          |  Estimated minimum annual employer contribution  of CAD 1.24m for salaried employees                                  |       | Projected Unit Credit Method               |       | 4.3                |       | 6.5                                  |       | 2.5                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                       |       |                                       |       |               |       |                                 |       |                           |       |
| Other funds (3)                                                  |       | Various             |       | 94.4                                   |       | 134.4                 |       | (40.0                               | )          | Various                                                                                                                    |       | Various                                    |       | 4.7                |       | 4.8                                  |       | 2.0                            |       |

 

F-73

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 32. NON-CURRENT LIABILITIES –RETIREMENT BENEFIT OBLIGATIONS continued**

(xi)All plans are listed below showing the details of the net financial positionand arrangements for employer contributions for funding for each definedbenefit plan based on the requirements of AAS 25 *FinancialReporting by Superannuation Plans (continued)*
| **Defined  benefit funds as at 30 June 2005** |   | ** ** | **Economic  assumptions used in  making funding recommendations** |
|-----------------------------------------------|--------|------------|-------------------------------------------------------------------|

 
|                                                                  | ** ** | **Reporting  date** | ** ** | **Fund assets  at net  market  value** | ** ** | **Accrued  benefits** | ** ** | **Accrued  surplus/  (deficit)**(1) | ** ** | **Current contribution  recommendations**                                                                                   | ** ** | **Funding method**                          | ** ** | **Discount  rate** | ** ** | **Expected  return on  plan assets** | ** ** | **Future  salary   increases** | ** ** |
|------------------------------------------------------------------|------------|---------------------|------------|----------------------------------------|------------|-----------------------|------------|-------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|--------------------|------------|--------------------------------------|------------|--------------------------------|------------|
| **Amcor  Limited**                                               | ** ** | ** **          |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
| Amcor  Superannuation Fund (2)                                   |       | 30/06/2004          |       | 206.8                                  |       | 250.2                 |       | (43.4                               | )          |  11% of  salary plus deemed and salary sacrifice contributions                                                         |       |  Target  coverage of vested benefits   |       | 7.0                |       | 7.0                                  |       | 5.0                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
| **Controlled  Entities**                                         |       | ** **          |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
| Amcor Flexibles  (UK) Pension Plan                               |       | 30/06/2005          |       | 180.5                                  |       | 212.9                 |       | (32.4                               | )          |  11.9% of  pensionable salary for one category of members (Level B) and 18.9% of  pensionable salary for other members |       |  Projected  Unit Method                |       | 6.3                |       | 6.1                                  |       | 4.0                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
| Amcor New Zealand  Super Fund (2)                                |       | 30/06/2005          |       | 28.1                                   |       | 24.3                  |       | 3.8                                 |       |  11% of  members salaries, including withholding tax                                                                   |       | Projected Unit  Credit Method               |       | 6.0                |       | 5.5                                  |       | 5.0                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
| Amcor PET  Packaging UK Limited Pension Plan                     |       | 30/06/2005          |       | 18.7                                   |       | 27.9                  |       | (9.2                                | )          |  12.6% of  pensionable earnings                                                                                        |       | Projected Unit  Method                      |       | 7.9                |       | 7.1                                  |       | 3.5                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
| Amcor PET  Packaging Pension Plan USA                            |       | 30/06/2005          |       | 20.2                                   |       | 23.1                  |       | (2.9                                | )          |  Contributions  prescribed by Trust Deed rules                                                                         |       | Projected Unit  Credit Method               |       | 8.0                |       | 8.0                                  |       | 4.5                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
| Amcor  Rentsch/Poly Laupen                                       |       | 30/06/2005          |       | 66.6                                   |       | 61.7                  |       | 4.9                                 |       |  Contributions  prescribed by Trust Deed rules                                                                         |       | Method prescribed  by statutory legislation |       | 4.0                |       | 3.5                                  |       | -                              |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
| Amcor Twinpack  Americas Inc Pension Plan for salaried employees |       | 30/06/2005          |       | 25.8                                   |       | 48.6                  |       | (22.8                               | )          |  Estimated  minimum annual employer contribution of CAD 1.24m for salaried employees                                   |       | Projected Unit  Credit Method               |       | 4.3                |       | 7.0                                  |       | 2.5                            |       |
|                                                             |       |                |       |                                   |       |                  |       |                                |       |                                                                                                                        |       |                                        |       |               |       |                                 |       |                           |       |
| Other funds (3)                                                  |       | Various             |       | 84.0                                   |       | 127.3                 |       | (43.3                               | )          | Various                                                                                                                     |       | Various                                     |       | 4.3                |       | 4.6                                  |       | 2.0                            |       |

 

F-74

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 32. NON-CURRENT LIABILITIES –RETIREMENT BENEFIT OBLIGATIONScontinued**

(1)  Netfinancial position of plan

The aggregatedeficit of fund assets over accrued benefits calculated as the differencebetween fund assets at net market value as at the last reporting date of eachfund and the accrued benefits as at the last actuarial date of each fund is$104.1 million (2005: $145.2 million). This amount does not represent the actual shortfall of fund assets overaccrued benefits that existed at 30 June 2006, but does represent the most upto date information which it has been possible to obtain.

(2)  Netfinancial position of plan

Relates only to thedefined benefit section of the respective funds

(3)  Otherfunds comprise the following:

AmcorPET Packaging Canada Inc Plan for hourly paid employees

AmcorPET Packaging Canada Inc Pension Plan and supplemental plan for executiveemployees

AmcorGent Plan Belgium

AmcorHalen Plan Belgium

AmcorFlexibles Envi Netherlands

AmcorFlexibles Haarlem Netherlands

AmcorFlexibles Drammen Norway

AmcorFlexibles Schroeder & Wagner

AmcorFlexibles Helio –Folien

AmcorFlexibles Tobepal

AmcorFlexibles Tobefil

AmcorFlexibles France

AmcorFlexibles SPS

AmcorFlexibles Albertazzi

AmcorFlexibles Pension Innerfor Skatteregiene

AmcorFlexibles Avtalesfestet Fortids Pension

AmcorFlexibles Retirement Plan Schupbach AG und Ivers Lee AG

AmcorFlexibles Lund

AmcorPET Packaging Belgium

AmcorPET Packaging Iberia SA

AmcorPET Packaging Germany

WhiteCap Belguim (2005 Only)

WhiteCap Germany (2005 Only)

White Cap France (2005 Only)
|                                                     | ** ** | **2006**   | ** ** | **2005**   | ** ** | ** ** |
|-----------------------------------------------------|------------|------------|------------|------------|------------|------------|
|                                                | ** ** | **$m**     | ** ** | **$m**     | ** ** | ** ** |
|                                                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **(xii)  Historic summary**                         |       |       |       |       |       |       |
|                                                |       |       |       |       |       |       |
| Defined benefit  plan obligation                    |       | 1,062.6    |       | 952.6      |       |       |
| Plan assets                                         |       | 848.8      |       | 624.9      |       |       |
| Surplus/(deficit)                                   |       | (213.8     | )          | (327.7     | )          |       |
|                                                |       |       |       |       |       |       |
| Experience  adjustments arising on plan liabilities |       | (42.0      | )          | (27.1      | )          |       |
| Experience  adjustments arising on plan assets      |       | 37.9       |       | 38.6       |       |       |

 

F-75

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 32.  NON-CURRENT LIABILITIES – RETIREMENT BENEFITOBLIGATIONS continued**

**(xiii) Classification of defined benefit relatedcharges in the income statements**

The followingtable sets out the classification of defined benefit related expenses includedin the income statement for both pension and non pension defined benefit plans.
|                                      | ** ** | **2006**   | ** ** | **2005**   | ** ** | ** ** |
|--------------------------------------|------------|------------|------------|------------|------------|------------|
|                                 | ** ** | **$m**     | ** ** | **$m**     | ** ** | ** ** |
|                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cost of sales                        |       | 11.3       |       | 5.4        |       |       |
| Sales and  marketing expenses        |       | 0.5        |       | 0.8        |       |       |
| General and  administration expenses |       | 29.7       |       | 32.3       |       |       |
| Research and  development costs      |       | 0.3        |       | 8.3        |       |       |
| Net financing  costs                 |       | 2.0        |       | 8.5        |       |       |
|                                 |       |       |       |       |       |       |
| Total                                |       | 43.8       |       | 55.3       |       |       |

 

**(c) Defined benefit non-pension plans**

 
|                                                                         | ** ** | **2006**      | ** ** | **2005**      | ** ** | ** ** |
|-------------------------------------------------------------------------|------------|---------------|------------|---------------|------------|------------|
|                                                                    | ** ** | **$m**        | ** ** | **$m**        | ** ** | ** ** |
|                                                                    | ** ** | ** **    | ** ** | ** **    | ** ** | ** ** |
| **(i)  Balance sheet amounts**                                          |       |          |       |          |       |       |
|                                                                    |       |          |       |          |       |       |
| The amounts  recognised in the balance sheet are determined as follows: |       |          |       |          |       |       |
|                                                                    |       |          |       |          |       |       |
| Present value of  the funded defined benefit obligation                 |       | -   |       | -   |       |       |
| Fair value of  plan assets                                              |       | -   |       | -   |       |       |
|                                                                    |       | -   |       | -   |       |       |
| Present value of  the unfunded defined benefit obligation               |       | 29.9          |       | 30.6          |       |       |
|                                                                    |       |          |       |          |       |       |
| **Net  liability in the balance sheet**                                 |       | 29.9          |       | 30.6          |       |       |
|                                                                    |       |          |       |          |       |       |
| **(ii)  Allocation of plan assets**                                     |       |          |       |          |       |       |
|                                                                    |       |          |       |          |       |       |
| Plan assets  represent $nil at 30 June 2006 (2005: $nil)                |       |          |       |          |       |       |

 

F-76

----

 

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 
|                                                                                         | ** ** | **CONSOLIDATED** | ** ** | ** **    |
|-----------------------------------------------------------------------------------------|------------|------------------|------------|---------------|
| **NOTE  32.  NON-CURRENT LIABILITIES -  RETIREMENT BENEFIT OBLIGATIONS continued** | ** ** | **2006**         | ** ** | **2005**      | ** ** | ** ** |
| ** **                                                                              | ** ** | **$m**           | ** ** | **$m**        | ** ** | ** ** |
| ** **                                                                              |       |             |       |          |   |   |
| **(iii)  Reconciliations**                                                              |       |             |       |          |   |   |
|                                                                                    |       |             |       |          |   |   |
| *Reconciliation  of the present value of the defined benefit obligation:*               |       |             |       |          |   |   |
| Balance at  beginning of financial year                                                 |       | 30.6             |       | 25.0          |   |   |
| Current service  cost                                                                   |       | 1.4              |       | 2.9           |   |   |
| Interest cost                                                                           |       | 1.0              |       | 1.6           |   |   |
| Actuarial  (gains) and losses                                                           |       | (2.4             | )          | 4.0           |   |   |
| Benefits paid                                                                           |       | (1.2             | )          | (1.5          | ) |   |
| Curtailments                                                                            |       | (2.4             | )          | -             |   |   |
| Foreign exchange  fluctuations on translation of overseas controlled entities           |       | 2.9              |       | (1.4          | ) |   |
| **Balance  at end of financial year**                                                   |       | 29.9             |       | 30.6          |   |   |
|                                                                                    |       |             |       |          |   |   |
| *Reconciliation  of the fair value of defined benefit plan assets:*                     |       |             |       |          |   |   |
| Balance at  beginning of financial year                                                 |       | -      |       | -   |   |   |
| Contributions by  Group companies                                                       |       | -      |       | 0.3           |   |   |
| Benefits paid                                                                           |       | -      |       | (0.3          | ) |   |
| Curtailments                                                                            |       | -      |       | -   |   |   |
| **Balance  at end of financial year**                                                   |       | -      |       | -   |   |   |
|                                                                                    |       |             |       |          |   |   |
| **(iv)  Amounts recognised in income statement**                                        |       |             |       |          |   |   |
|                                                                                    |       |             |       |          |   |   |
| The amounts  recognised in the income statement are as follows:                         |       |             |       |          |   |   |
|                                                                                    |       |             |       |          |   |   |
| Current service  cost                                                                   |       | 1.4              |       | 2.9           |   |   |
| Interest cost                                                                           |       | 1.0              |       | 1.6           |   |   |
| Losses (gains)  on curtailments and benefits paid                                       |       | (2.4             | )          | -   |   |   |
| **Total  included in employee benefits expense**                                        |       | -      |       | 4.5           |   |   |
|                                                                                    |       |             |       |          |   |   |
| Actual return on  plan assets                                                           |       | -      |       | -   |   |   |
|                                                                                    |       |             |       |          |   |   |
| **(v)  Amounts recognised in the statement of recognised income and expense**           | ** ** | ** **       | ** ** | ** **    | ** ** | ** ** |
|                                                                                    |       |             |       |          |   |   |
| Net actuarial  gains (losses) recognised in the financial year                          |       | 2.4              |       | (4.0          | ) |   |

 

F-77

----

 

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 32.  NON-CURRENT LIABILITIES – RETIREMENT BENEFITOBLIGATIONS continued**
|                                             |                               |        |             |       |
|---------------------------------------------|------------------------------------|-------------|------------------|------------|
| ** **                                  | ** **                         | ** **  | **CONSOLIDATED** | ** ** |
| **(vi)  Estimated future benefit payments** | ** **                         | **Foreign** | ** **       |
|                                        |                               | ** **  | ** **       | **$m**     | ** ** |
|                                        | Estimated future  benefit payments |        |             |       |
|                                        |                               |        |             |       |
|                                        | Financial year  ending:            |        |             |       |
|                                        | 30 June 2007                       |        | 2.4              |       |
|                                        | 30 June 2008                       |        | 1.5              |       |
|                                        | 30 June 2009                       |        | 1.7              |       |
|                                        | 30 June 2010                       |        | 1.9              |       |
|                                        | 30 June 2011                       |        | 1.7              |       |
|                                        | Next 5 years                       |        | 8.9              |       |
|                                        | Total                              |        | 18.1             |       |
|                                             |                                    |             |                  |            |  |

 

**(vii) Estimated futurecontributions**

Employercontributions to the defined benefit non-pension plans are based onrecommendations by the plans’ actuaries. Actuarial assessments are made periodically.

Employercontributions to defined benefit non-pension funds for the consolidated entityduring the financial year ending 30 June 2007 are expected to total $0.5million for foreign plans.  

**(viii)Principal actuarial assumptions**

Theprincipal actuarial assumptions used for the purposes of reporting under AASB119 *Employee Benefits*are as follows:
|                                                                            |   | **Economic  assumptions used in making  funding recommendations** |
|----------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                       |   | **Discount  rate**                                                | ** ** | **Future  salary  increases** | ** ** | **Medical  cost  trend rates** |
|                                                                       |   | **%**                                                             |   | **%** | ** ** | **%** |
| **30 June  2006  (1)**                                                |   |                                                              |   |   |   |   |
| **Controlled  Entities**                                                   |   |                                                              |   |   |   |   |
| Amcor Flexibles  Transpac SA                                               |   | 3.8                                                               |   | -   |   | -   |
| Amcor Flexibles  Transpac SA - (Jubilee)                                   |   | 4.7                                                               |   | 3.8 |   | -   |
| Amcor Flexibles  Schroeder & Wagner GmbH                               |   | 4.7                                                               |   | -   |   | -   |
| Amcor Flexibles  Helio Folien GmbH                                         |   | 3.8                                                               |   | -   |   | -   |
| Amcor Flexibles  Helio Folien GmbH - (Jubilee)                             |   | 4.7                                                               |   | -   |   | -   |
| Amcor Flexible  France SA                                                  |   | 4.2                                                               |   | 2.3 |   | -   |
| Amcor PET  Packaging USA Inc. consolidated retiree welfare benefit program |   | 6.3                                                               |   | -   |   | 12.0 |
| Amcor PET  Packaging Canada Inc. Group Insurance Plans                     |   | 4.5                                                               |   | -   |   | 5.0 |
|                                                                       |   |                                                              |   |   |   |   |
| **30 June  2005  (1)**                                                |   |                                                              |   |   |   |   |
| **Controlled  Entities**                                                   |   |                                                              |   |   |   |   |
| Amcor Flexibles  Transpac SA                                               |   | 2.5                                                               |   | -   |   | -   |
| Amcor Flexibles  Transpac SA - (Jubilee)                                   |   | 4.0                                                               |   | 3.8 |   | -   |
| Amcor Flexibles  Schroeder & Wagner GmbH                               |   | 4.0                                                               |   | -   |   | -   |
| Amcor Flexibles  Helio Folien GmbH                                         |   | 2.5                                                               |   | -   |   | -   |
| Amcor Flexibles  Helio Folien GmbH - (Jubilee)                             |   | 4.0                                                               |   | -   |   | -   |
| Amcor Flexible  France SA                                                  |   | 4.0                                                               |   | 2.3 |   | -   |
| Amcor PET  Packaging USA Inc. consolidated retiree welfare benefit program |   | 5.3                                                               |   | -   |   | 12.0 |
| Amcor PET  Packaging Canada Inc. Group Insurance Plans                     |   | 4.5                                                               |   | -   |   | 5.0 |

 

(1) As these non-pension plans do not hold any assetsthe expected return on plan assets is nil.

F-78

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 32.  NON-CURRENT LIABILITIES– RETIREMENT BENEFIT OBLIGATIONS continued**
|                                                    | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------------|------------|----------|------------|----------|------------|
| ** **                                         | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                                               |       |     |       |     |       |
| **(ix) Historic summary**                          |       |     |       |     |       |
|                                               |       |     |       |     |       |
| Defined benefit plan obligation                    |       | 29.9     |       | 30.6     |       |
| Plan assets                                        |       | -        |       | -        |       |
| Deficit                                            |       | 29.9     |       | 30.6     |       |
|                                               |       |     |       |     |       |
| Experience adjustments arising on plan liabilities |       | (0.1)    |       | (2.4)    |       |

 

**(x) Effects of changes inassumed medical cost trend rates**

A1% decrease in medical cost trend rates would be expected to reduce service andinterest cost components and the value of the defined benefit obligation by$0.2 million and $2.1 million respectively. A 1% increase in medical cost trend rates would be expected to increaseservice and interest cost components and the value of the defined benefitobligation by $0.2 million and $2.6 million respectively.

**(xi) Classification of defined benefit relatedcharges in the income statements**

Seenote 32(b)(xiii) for defined benefit pension plans.

Theconsolidated entity and the company have used the AASB1 *First-TimeAdoption of Australian Equivalents to International Financial ReportingStandards* paragraph 20A exemption and disclosed amounts under AASB 1paragraph 20A(p) above for each annual reporting period prospectively fromtransaction date.

F-79

----

 

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 
| **NOTE 33.   CONTRIBUTED EQUITY**                   | ** ** | **2006**      | ** ** | **2005** | ** ** | ** ** | ** ** |
|----------------------------------------------------------|------------|---------------|------------|----------|------------|------------|------------|
|                                                     | ** ** | **$m**        | ** ** | **$m**   | ** ** | ** ** | ** ** |
| ** **                                               |       |          |       |     |       |       |       |
| Issued and  paid-up:                                     |       |          |       |     |       |       |       |
| 890,252,026  ordinary shares with no par value           |       |          |       |     |       |       |       |
| (2005:  878,182,834) (1)                                 |       | 2,810.2       |       | 2,725.4  |       |       |       |
|                                                     |       |          |       |     |       |       |       |
| 1,317,000 partly  paid ordinary shares with no par value |       |          |       |     |       |       |       |
| (2005: 1,467,000) (2)                                    |       | 0.1           |       | 0.1      |       |       |       |
|                                                     |       |          |       |     |       |       |       |
| Perpetual Amcor  Convertible Reset Securities            |       |          |       |     |       |       |       |
| (2005:  6,099,087) (3)                                   |       | -   |       | 596.6    |       |       |       |
|                                                     |       |          |       |     |       |       |       |
| **TOTAL  CONTRIBUTED EQUITY**                            |       | 2,810.3       |       | 3,322.1  |       |       |       |

 

(1)   Fully paid ordinary shares carry one vote pershare and carry the right to dividends.

(2)          The partly paid ordinaryshares comprise 915,000 (2005: 1,035,000) shares paid to five cents and 402,000(2005: 432,000) shares paid to one cent under Employee Share / OptionPlans.  The aggregate uncalled capital of$8.9 million (2005: $10.0 million) will be brought to account when these sharesare fully paid.

(3)          PACRS are now reportedas debt (Refer Note 25).  Refer Note 1(z)for details on the impact of transition to AASB 132 and AASB 139.
|                                                                      | ** ** | **2006**      | ** ** | ** **    | **2005**   | ** ** | ** **    |
|----------------------------------------------------------------------|------------|---------------|------------|---------------|------------|------------|---------------|
|                                                                 | ** ** | **No.**       | ** ** | ** **    | ** ** | ** ** | **No.**       | ** ** | ** ** | ** ** | ** ** |
|                                                                 | ** ** | **‘000** | ** ** | **$m**        | ** ** | ** ** | **‘000** | ** ** | **$m** | ** ** | ** ** |
|                                                                 | ** ** | ** **    | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** ** | ** ** |
| **(a) Reconciliation of fully paid ordinary shares**                 |       |          |       |          |       |       |          |   |   |   |   |
|                                                                 |       |          |       |          |       |       |          |   |   |   |   |
| Balance at beginning of year                                         |       | 878,183       |       | 2,725.5       |       |       | 877,950       |   | 2,721.4 |   |   |
| Calls on partly  paid shares                                         |       | 150           |       | 1.1           |       |       | 325           |   | 2.1 |   |   |
| Issue of shares  to employees in lieu of bonus payments (Note 48(a)) |       | -   |       | -   |       |       | 34            |   | -   |   |   |
| Exercise of  options and loan repayments under the                   |       |          |       |          |       |       |          |   |   |   |   |
| Employee Share  /Option plan (Note  48(d))                           |       | 1,903         |       | 20.9          |       |       | 2,069         |   | 17.3 |   |   |
| Conversion of  convertible securities (Notes  25 and 30)             |       | 18,203        |       | 121.5         |       |       | 10            |   | 0.1 |   |   |
| Share buy-back (1)                                                   |       | (8,187        | )          | (57.8         | )          |       | (2,205        | ) | (15.4 | ) |   |
| Transaction  costs associated with the issue of capital              |       | -   |       | (0.9          | )          |       | -   |   | -   |   |   |
|                                                                 |       |          |       |          |       |       |          |   |   |   |   |
| **Balance at end of year**                                           |       | 890,252       |       | 2,810.3       |       |       | 878,183       |   | 2,725.5 |   |   |

 

(1)   On 25 May 2006 (2005: 19 April 2005), theCompany completed the on market buy-back of 8,187,171 (2005: 2,205,000) fullypaid ordinary shares, representing 0.93% (2005: 0.25%) of ordinary shares onthat date.  The total consideration ofshares bought back on market was $57,836,513 (2005: $15,442,612) being anaverage, including incidental costs, of $7.06 (2005: $7.00) per share.  

 
|                                                        | ** ** | **2006**          | ** ** | **2006**      | ** ** | ** ** | **2005**          | ** ** | **2005**      | ** ** | ** ** |
|--------------------------------------------------------|------------|-------------------|------------|---------------|------------|------------|-------------------|------------|---------------|------------|------------|
|                                                   | ** ** | **No. ‘000** | ** ** | **$m**        | ** ** | ** ** | **No. ‘000** | ** ** | **$m**        | ** ** | ** ** |
| **(b)  Reconciliation of partly paid ordinary shares** | ** ** | ** **        | ** ** | ** **    | ** ** | ** ** | ** **        | ** ** | ** **    | ** ** | ** ** |
|                                                   |       |              |       |          |       |       |              |       |          |       |       |
| Balance at  beginning of year                          |       | 1,467             |       | 0.1           |       |       | 1,792             |       | 0.1           |       |       |
| Converted to  fully paid ordinary shares               |       | (150              | )          | -   |       |       | (325              | )          | -   |       |       |
|                                                   |       |              |       |          |       |       |              |       |          |       |       |
| **Balance  at end of year**                            |       | 1,317             |       | 0.1           |       |       | 1,467             |       | 0.1           |       |       |

 

F-80

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 33.  CONTRIBUTEDEQUITY continued**

**(c) Other equity securities**

Refer Note 48 for details of performance rights issues, CEO options andCEO performance rights.
|                                                                          | ** ** | **2006**      | ** ** | **2005**      | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------|------------|---------------|------------|---------------|------------|------------|------------|
| **NOTE  34.  RESERVES AND RETAINED PROFITS**                        | ** ** | **$m**        | ** ** | **$m**        | ** ** | ** ** | ** ** |
|                                                                     |       |          |       |          |       |       |       |
| **(a)  Reserves**                                                        |       |          |       |          |       |       |       |
|                                                                     |       |          |       |          |       |       |       |
| Available for  sale investments revaluation reserve                      |       | (1.8          | )          | -             |       |       |       |
| Cash flow hedge  reserve                                                 |       | (19.0         | )          | -             |       |       |       |
| Share-based  payments reserve                                            |       | 7.8           |       | 4.4           |       |       |       |
| Exchange  fluctuation reserve                                            |       | (71.5         | )          | (152.6        | )          |       |       |
|                                                                     |       |          |       |          |       |       |       |
| **TOTAL  RESERVES**                                                      |       | (84.5         | )          | (148.2        | )          |       |       |
|                                                                     |       |          |       |          |       |       |       |
| **Reconciliations**                                                      |       |          |       |          |       |       |       |
|                                                                     |       |          |       |          |       |       |       |
| **AVAILABLE  FOR SALE INVESTMENTS REVALUATION RESERVE**                  |       |          |       |          |       |       |       |
| Balance at  beginning of financial year                                  |       | -   |       | -   |       |       |       |
| Adjustment on adoption of AASB 132 and AASB 139, net  of tax (Note 1(z)) |       | (1.7          | )          | -   |       |       |       |
| Revaluation - gross (Note 18)                                            |       | (0.1          | )          | -   |       |       |       |
|                                                                     |       |          |       |          |       |       |       |
| Balance at end  of financial year                                        |       | (1.8          | )          | -   |       |       |       |
|                                                                     |       |          |       |          |       |       |       |
| **CASH  FLOW HEDGE RESERVE**                                             |       |          |       |          |       |       |       |
| Balance at  beginning of financial year                                  |       | -             |       | -   |       |       |       |
| Adjustment on adoption of AASB 132 and AASB 139, net  of tax (Note 1(z)) |       | (28.0         | )          | -   |       |       |       |
| Revaluation - gross                                                      |       | 3.5           |       | -   |       |       |       |
| Deferred tax                                                             |       | (0.8          | )          | -   |       |       |       |
| Transfer to net profit - gross                                           |       | 7.9           |       | -   |       |       |       |
| Deferred tax                                                             |       | (1.8          | )          | -   |       |       |       |
| Transfer to non-financial assets - gross                                 |       | 0.2           |       | -   |       |       |       |
| Balance at end  of financial year                                        |       | (19.0         | )          | -   |       |       |       |
|                                                                     |       |          |       |          |       |       |       |
| **SHARE-BASED  PAYMENTS RESERVE**                                        |       |          |       |          |       |       |       |
|                                                                     |       |          |       |          |       |       |       |
| Balance at  beginning of financial year                                  |       | 4.4           |       | 0.7           |       |       |       |
| Options expense and other share based payments                           |       | 3.5           |       | 3.7           |       |       |       |
| Transfer to share capital (options exercised)                            |       | (0.1          | )          | -   |       |       |       |
| Balance at end  of financial year                                        |       | 7.8           |       | 4.4           |       |       |       |
|                                                                     |       |          |       |          |       |       |       |
| **EXCHANGE  FLUCTUATION RESERVE**                                        |       |          |       |          |       |       |       |
|                                                                     |       |          |       |          |       |       |       |
| Balance at  beginning of financial year                                  |       | (152.6        | )          | -   |       |       |       |
| Adjustment on adoption of AASB 132 and AASB 139, net  of tax (Note 1(z)) |       | 1.6           |       | -   |       |       |       |
| Currency translation differences arising during  financial year          |       | 63.2          |       | (146.2        | )          |       |       |
| Deferred tax (Note 20)                                                   |       | 16.3          |       | (6.4          | )          |       |       |
|                                                                     |       |          |       |          |       |       |       |
| Balance at end  of financial year                                        |       | (71.5         | )          | (152.6        | )          |       |       |

 

F-81

----

 

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 34. RESERVES AND RETAINED PROFITS continued**

 
|                                                                            | ** ** | **2006**            | ** ** | **2005**      | ** ** | ** ** | ** ** |
|----------------------------------------------------------------------------|------------|---------------------|------------|---------------|------------|------------|------------|
| ** **                                                                 | ** ** | **$m**              | ** ** | **$m**        | ** ** | ** ** | ** ** |
|                                                                       |       |                |       |          |       |       |       |
| **(b)  Retained profits**                                                  |       |                |       |          |       |       |       |
| Balance at  beginning of financial year                                    |       | 726.1               |       | 857.7         |       |       |       |
| Adjustment on  adoption of AASB 132 and AASB 139, net of tax   (Note 1(z)) |       | 3.2                 |       | -   |       |       |       |
| Profit  attributable to members of Amcor Limited                           |       | 351.3               |       | 245.3         |       |       |       |
| Actuarial  gains/losses recognised directly in equity                      |       | 12.8                |       | (34.4         | )          |       |       |
| Dividends paid  (Note 37)                                                  |       | (298.8              | )          | (290.2        | )          |       |       |
| Distribution  paid on PACRS Note 1(z):                                     |       |                |       |          |       |       |       |
| - Coupon rate of 8.5733% on $400 million from                              |       |                |       |          |       |       |       |
| 1 July 2004 to 30 April 2005                                               |       | -    |       | (28.7         | )          |       |       |
| - Coupon rate of 8.5733% on $400 million from                              |       |                |       |          |       |       |       |
| 1 May 2005 to 30 June 2005                                                 |       | -    |       | (5.6          | )          |       |       |
| Distribution  paid on PACRS2:                                              |       |                |       |          |       |       |       |
| - Coupon rate of 8.57% on $210 million from                                |       |                |       |          |       |       |       |
| 1 July 2004 to 30 April 2005                                               |       | -    |       | (15.0         | )          |       |       |
| - Coupon rate of 8.57% on $210 million from                                |       |                |       |          |       |       |       |
| 1 May 2005 to 30 June 2005                                                 |       | -    |       | (3.0          | )          |       |       |
|                                                                       |       |                |       |          |       |       |       |
| Balance at end  of financial year                                          |       | 794.6               |       | 726.1         |       |       |       |

 

**(c**) **Nature and purpose of reserves**

*(i)Available for sale investments revaluation reserve*

Changes in the fair valueand exchange differences arising on translation of investments, such asequities, classified as available-for-sale financial assets, are taken to theavailable-for-sale investments revaluation reserve, as described in Note 1(o).Amounts are recognised in the income statement when the associated assets are soldor impaired.

*(ii)Hedging reserve - cash flow hedges*

The hedging reservecomprises the effective portion of the cumulative net change in the fair valueof cash flow hedging instruments related to hedged transactions that have notyet occurred.

*(iii) Share-basedpayments reserve*

The share-based paymentsreserve is used to recognise the fair value of options recognised as anexpense.

*(iv)Exchange fluctuation reserve*

Exchange differencesarising on translation of foreign controlled operations are taken to theexchange fluctuation reserve, as described in Note 1(o). The reserve isrecognised in the income statement when the net investment is disposed of.

F-82

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 
| ** ** | ** **                            |   | **2006** |   | **2005** |   |   |   |
|------------|---------------------------------------|--------|----------|--------|----------|--------|--------|--------|
| ** ** | **NOTE 35.   MINORITY INTEREST** |   | **$m**   |   | **$m**   |   |   |   |
|       |                                  |   |     |   |     |   |   |   |
|       | Share capital                         |   | 36.4     |   | 58.0     |   |   |   |
|       | Reserves                              |   | (5.3     | )      | (14.0    | )      |   |   |
|       | Retained profits                      |   | 20.5     |   | 34.0     |   |   |   |
|       |                                  |   |     |   |     |   |   |   |
| ** ** | **TOTAL  MINORITY INTEREST**          |   | 51.6     |   | 78.0     |   |   |   |
|       |                                  |   |     |   |     |   |   |   |

 

**NOTE 36.  TOTAL EQUITYRECONCILIATION**

 
|                                                            | ** ** | ** ** | ** ** | **Contributed  equity** | ** ** | **Reserves**  | ** ** | **Retained  profits** | ** ** | **Total  Attributable to  Members of  the Parent  Entity** | ** ** | **Minority  interest** | ** ** | **Total  equity** | ** ** | ** ** |
|------------------------------------------------------------|------------|------------|------------|-------------------------|------------|---------------|------------|-----------------------|------------|------------------------------------------------------------|------------|------------------------|------------|-------------------|------------|------------|
|                                                       |       | Note       | ** ** | **$m**                  | ** ** | **$m**        | ** ** | **$m**                | ** ** | **$m**                                                     | ** ** | **$m**                 | ** ** | **$m**            | ** ** | ** ** |
| **Balance  at 1 July 2005**                                |       |       |       | 3,322.1                 |       | (148.2        | )          | 726.1                 |       | 3,900.0                                                    |       | 78.0                   |       | 3,978.0           |       |       |
| Effect of change in  accounting policy, net of tax         |       | 1(z)       |       | -             |       | (28.1         | )          | 3.2                   |       | (24.9                                                      | )          | -            |       | (24.9             | )          |       |
| Reclassification of  PACRS to interest bearing liabilities |       | 1(z)       |       | (596.6                  | )          | -   |       | -           |       | (596.6                                                     | )          | -            |       | (596.6            | )          |       |
| Balance at 1 July 2005 -  re-stated                        |       |       |       | 2,725.5                 |       | (176.3        | )          | 729.3                 |       | 3,278.5                                                    |       | 78.0                   |       | 3,356.5           |       |       |
| Total recognised income  and expense for the year          |       |       |       | -             |       | 88.4          |       | 364.1                 |       | 452.5                                                      |       | 34.0                   |       | 486.5             |       |       |
| Contributions of equity,  net of transaction costs         |       |       |       | 142.6                   |       | (0.1          | )          | -           |       | 142.5                                                      |       | -            |       | 142.5             |       |       |
| Share-based payments  options expense                      |       |       |       | -             |       | 3.5           |       | -           |       | 3.5                                                        |       | -            |       | 3.5               |       |       |
| Share buy-back                                             |       |       |       | (57.8                   | )          | -   |       | -           |       | (57.8                                                      | )          | -            |       | (57.8             | )          |       |
| Dividends provided or  paid                                |       |       |       | -             |       | -   |       | (298.8                | )          | (298.8                                                     | )          | -            |       | (298.8            | )          |       |
| Minority interest buy  out                                 |       |       |       | -             |       | -   |       | -           |       | -                                                |       | (5.7                   | )          | (5.7              | )          |       |
| Dividends paid to  minority interests in subsidiaries      |       |       |       | -             |       | -   |       | -           |       | -                                                |       | (8.0                   | )          | (8.0              | )          |       |
| Disposals of controlled  entities and businesses           |       |       |       | -             |       | -   |       | -           |       | -                                                |       | (46.7                  | )          | (46.7             | )          |       |
|                                                       |       |       |       |                    |       |          |       |                  |       |                                                       |       |                   |       |              |       |       |
| **Balance  at 30 June 2006**                               |       |       |       | 2,810.3                 |       | (84.5         | )          | 794.6                 |       | 3,520.4                                                    |       | 51.6                   |       | 3,572.0           |       |       |
|                                                       |       |       |       |                    |       |          |       |                  |       |                                                       |       |                   |       |              |       |       |
|                                                       |       |       |       |                    |       |          |       |                  |       |                                                       |       |                   |       |              |       |       |
| ** **                                                 | ** ** | ** ** | ** ** | **Contributed  equity** | ** ** | **Reserves**  | ** ** | **Retained  profits** | ** ** | **Total  Attributable to  Members of  the Parent  Entity** | ** ** | **Minority  interest** | ** ** | **Total  equity** | ** ** | ** ** |
| ** **                                                 | ** ** | ** ** | ** ** | **$m**                  | ** ** | **$m**        | ** ** | **$m**                | ** ** | **$m**                                                     | ** ** | **$m**                 | ** ** | **$m**            | ** ** | ** ** |
| **Balance  at 1 July 2004**                                |       |       |       | 3,318.0                 |       | 0.7           |       | 857.7                 |       | 4,176.4                                                    |       | 90.7                   |       | 4,267.1           |       |       |
| Total recognised income  and expense for the year          |       |       |       | -             |       | (152.6        | )          | 210.9                 |       | 58.3                                                       |       | (2.7                   | )          | 55.6              |       |       |
| Contributions of equity,  net of transaction costs         |       |       |       | 19.5                    |       | -   |       | -           |       | 19.5                                                       |       | -            |       | 19.5              |       |       |
| Share-based payments  options expense                      |       |       |       | -             |       | 3.7           |       | -           |       | 3.7                                                        |       | -            |       | 3.7               |       |       |
| Share buy-back                                             |       |       |       | (15.4                   | )          | -   |       | -           |       | (15.4                                                      | )          | -            |       | (15.4             | )          |       |
| Dividends provided or  paid                                |       |       |       | -             |       | -   |       | (290.2                | )          | (290.2                                                     | )          | -            |       | (290.2            | )          |       |
| Distribution accrued on  PACRS                             |       |       |       | -             |       | -   |       | (52.3                 | )          | (52.3                                                      | )          | -            |       | (52.3             | )          |       |
| Minority interest  buy-out                                 |       |       |       | -             |       | -   |       | -           |       | -                                                |       | (3.1                   | )          | (3.1              | )          |       |
| Dividends paid to  minority interests in subsidiaries      |       |       |       | -             |       | -   |       | -           |       | -                                                |       | (6.9                   | )          | (6.9              | )          |       |
| **Balance  at 30 June 2005**                               |       |       |       | 3,322.1                 |       | (148.2        | )          | 726.1                 |       | 3,900.0                                                    |       | 78.0                   |       | 3,978.0           |       |       |

 

F-83

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June2006**

 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | ** ** | **2006**      | ** ** | **2005**      | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------|------------|---------------|------------|
| **NOTE 37. DIVIDENDS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | ** ** | **$m**        | ** ** | **$m**        | ** ** |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |          |       |          |       |
| **(a) Ordinary shares**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       |          |       |          |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       |          |       |          |       |
| Final dividend for the financial year ended 30 June  2005 of 17 cents (2004: 16 cents) per fully paid share paid on 28 September  2005 (2004: 29 September 2004)                                                                                                                                                                                                                                                                                                                                              |       |          |       |          |       |
| Franked at 22%  based on tax paid at 30%                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |       | 149.3         |       | -   |       |
| Franked at 40%  based on tax paid at 30%                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |       | -   |       | 140.6         |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       |          |       |          |       |
| Interim dividend for the financial year ended 30  June 2006 of 17 cents (2005: 17 cents) per fully paid share paid 31 March  2006 (2005: 23 March 2005)                                                                                                                                                                                                                                                                                                                                                       |       |          |       |          |       |
| Franked at 15%  based on tax paid at 30%                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |       | 149.5         |       | -   |       |
| Franked at 28%  based on tax paid at 30%                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |       | -   |       | 149.6         |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       |          |       |          |       |
| **(b) Dividends not recognised at year end**                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |          |       |          |       |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |          |       |          |       |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |          |       |          |       |
| In addition to the above dividends, since the end of  the financial year, directors have declared a final dividend of 17 cents per  fully paid ordinary share, (2005: 17 cents) 15% franked (2005: 22% franked)  based on tax paid at 30% of which 75% is sourced from the Conduit Foreign  Income Account (2005: Nil) . The aggregate amount of the proposed dividend  expected to be paid on 29 September 2006 out of retained profits at 30 June  2006, but not recognised as a liability at year end, is: |       | 151.5         |       | 149.3         |       |

 

**(c)Franked dividends**

 

The frankedportions of the final dividends recommended after 30 June 2006 will be frankedout of existing franking credits or franking credits arising from the paymentof income tax in the year ending 30 June 2006.

 
|                                                                                                   | ** ** | **2006**      | ** ** | **2005**      |   |   |
|---------------------------------------------------------------------------------------------------|------------|---------------|------------|---------------|--------|--------|
| ** **                                                                                        | ** ** | **$m**        | ** ** | **$m**        |   |   |
|                                                                                              |       |          |       |          |   |   |
| Franking credits available for subsequent financial  years based on a tax rate of 30% (2005: 30%) |       | -   |       | -   |   |   |

 

The above amounts represent the balance of the franking account as atthe end of the financial year, adjusted for:

(a)          franking credits that will arise from thepayment of the amount of the current tax liabilities

(b)         franking debits that will arise from thepayment of dividends recognised as a liability at the reporting date, and

(c)          franking credits that will arise from thereceipt of dividends recognised as receivables at the reporting date.

The impact on the frankingaccount of the dividend recommended by the Directors since year end, but not recognisedas a liability at year end, will be a reduction in the franking account of $9.7million (2005: $14.1 million).

**(d)Conduit Foreign Income Account**

For non-residentshareholders for Australian Tax purposes, future dividends will not be subjectto Australian withholding tax to the extent that they are franked or sourcedfrom the parent entity’s Conduit Foreign Income Account.  For the dividend payable in September 2006,75% of the dividend is sourced from the parent entity’s Conduit Foreign IncomeAccount.  As a result, 90% of thedividend paid to a non-resident will not be subject to Australian withholdingtax.

The balance of the ConduitForeign Income Account as at 30 June 2006 is $788.4 million (2005:Nil). Thiswill reduce to $673.6 million after payment of the September 2006 dividend. 

F-84

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June2006**

 

**NOTE 38.  OTHER FINANCIAL INSTRUMENT INFORMATION**

Included below are details of interest rate swapcontracts, cross currency interest rate swaps, interest rate risk exposures,forward foreign exchange contracts, commodity swap contracts and fair valueassessments.  Equity related derivativeinstruments are included in Note 18.

For all interestrate, foreign exchange and commodity contracts, that are designated as part ofa cash flow hedge, the portion of the gain or loss on the hedging instrumentthat is determined to be an effective hedge is recognised directly inequity.  When the cash flows occur, theamount that has been deferred in equity is released to the balance sheet orincome statement as appropriate.

At balance date,contracts determined to be an effective hedge were assets of $3.5 million.  During the year ended 30 June 2006, $0.2million (2005: nil) was removed from equity and added to the measurement ofnon-financial assets and a $ 7.9 million loss (2005: nil) was transferred tothe income statement.  In the year ended30 June 2006, there was a gain from the increase in fair value ofnon-designated hedging instruments of $2.4 million.

**(a) Interestrate swap contracts and cross currency interest rate swaps**

Interest rateswaps and forward rate agreements have been taken out to swap floating rateborrowings into fixed rates and vice-versa. Cross currency interest rate swaps have been taken out to swap long termAustralian denominated borrowings into foreign currencies to hedge theinvestment in entities with functional currencies which are not the reportingcurrency of the parent entity.  

Each contractinvolves quarterly or semi-annual payment or receipt of the net amount ofinterest.  Floating rates are based oninterest rate settings in the currencies concerned plus the consolidated entity’scredit margin.

There are nointerest rate swap contracts currently in place over the consolidated entity’sborrowings (2005: swap contracts over 17% of borrowings).  The fixed interest rates ranged between 4.81%and 7.65% in 2005 and the variable rates between 2.15% and 5.77% in 2005.

At 30 June 2006,the notional principal amounts and periods of expiry of the interest rate swapsand cross currency interest rate swap contracts are as follows:

F-85

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June2006**

 

**NOTE38.  OTHER FINANCIAL INSTRUMENTINFORMATION**

**Periods of expiry of interest rateand cross currency interest rate swaps**

 
|                    | ** ** | **Interest  rate swap  contracts** | ** ** | **Cross  currency interest rate  swap contracts** | ** ** |
|--------------------|------------|------------------------------------|------------|---------------------------------------------------|------------|
| ** **         | ** ** | **2006**                           | ** ** | **2005**                                          | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **         | ** ** | **$’000**                     | ** ** | **$’000**                                    | ** ** | **$’000** | ** ** | **$’000** | ** ** |
|               |       |                               |       |                                              |       |   |   |   |   |
| 1 year or less     |       |                               |       |                                              |       |   |   |   |   |
| AUD                |       | -              |       | (480.0                                            | )          | -     |   | 607.3 |   |
| EUR                |       | -              |       | 480.0                                             |       | -     |   | (607.3 | ) |
| Over 1 to 2  years |       |                               |       |                                              |       |   |   |   |   |
| AUD                |       | -              |       | -                                       |       | -     |   | 116.0 |   |
| USD                |       | -              |       | 6.1                                               |       | -     |   | -     |   |
| CAD                |       | -              |       | -                                       |       | -     |   | (116.0 | ) |

 

The contractsrequire settlement of net interest receivable or payable each 90 or 180days.  The settlement dates coincide withthe dates on which interest is payable on the underlying debt.  The contracts are settled on a net basis.

The gain or lossfrom re-measuring the hedging instruments at fair value is deferred in equityin the hedging reserve or exchange fluctuation reserve, to the extent that itis an effective cash flow or net investment hedge.  Amounts in the cash flow hedge reserve arere-classified into the income statement when the hedged interest expense isrecognised.  The ineffective portion isrecognised in income immediately.

During the year,all interest rate swaps were settled. There was a gain from a decrease in the fair value of non-designatedinterest rate swaps of $9.2 million to the income statement.

During the year,all cross currency interest rate swaps were settled.  There was a decrease of $31.1 million in thefair value of cross currency interest rate swaps, of which, $0.1 million losswas recognised in the income statement and $31.0 million was recognised inreserves.

The fair value ofinterest rate and cross currency interest rate swaps held as at reporting dateare:

**Fair values interest rate and crosscurrency interest rate swaps at 30 June:**

 
|                                    | ** ** | **2006**       |   | **2005**       | ** ** |
|------------------------------------|------------|----------------|--------|----------------|------------|
|                               | ** ** | **$’000** |   | **$’000** | ** ** |
| Interest rate swaps                |       | -    |   | (9.2           | )          |
| Cross currency interest rate swaps |       | -    |   | 83.1           |       |

 

F-86

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June2006**

 

**NOTE 38.  OTHER FINANCIAL INSTRUMENT INFORMATIONcontinued**

**(b) Interest rate risk exposures**

The followingtable sets out the consolidated entity’s exposure to interest rate risk forfinancial liabilities, including the contractual re-pricing dates and theeffective weighted average interest rate by maturity periods.

For details relating to the financial assets, refer:

·                  Cash – Note 13

·                  Receivables – Notes 14

·                  Otherfinancial assets – Notes 16 and 18.
|                                     |       |       | ** ** | ** **                  | ** ** | **Fixed  interest maturing in:** |       |                     |       |                     |       |                     |       |
|-------------------------------------|------------|------------|------------|-----------------------------|------------|----------------------------------|------------|--------------------------|------------|--------------------------|------------|--------------------------|------------|
| **2006 $m**                         | ** ** | **Note**   | ** ** | **Floating  Interest Rate** | ** ** | **1 year  or less**              | ** ** | **Over 1  to   2 years** | ** ** | **Over 2  to   3 years** | ** ** | **Over 3  to   4 years** | ** ** | **Over 4  to   5 years** | ** ** | **Over 5  years** | ** ** | **Non-interest  Bearing** | ** ** | **Total** | ** ** | **Effective  Weighted Average Interest Rate** | ** ** |
|                                |       |       |       |                        |       |                             |       |                     |       |                     |       |                     |       |   |   |   |   |   |   |   |   |   |   |
|                                |       |       |       |                        |       |                             |       |                     |       |                     |       |                     |       |   |   |   |   |   |   |   |   |   |   |
| Financial Liabilities               |       |       |       |                        |       |                             |       |                     |       |                     |       |                     |       |   |   |   |   |   |   |   |   |   |   |
| Payables                            |       | 23, 28     |       | -                 |       | -                      |       | -              |       | -              |       | -              |       | -   |   | -   |   | 2,107.7 |   | 2,107.7 |   | - |   |
| Bank and other loans                |       | 24, 29     |       | 1,004.5                     |       | 6.1                              |       | 51.6                     |       | -              |       | -              |       | -   |   | 161.7 |   | 5.1 |   | 1,229.0 |   | 4.93 | % |
| Commercial paper                    |       | 24, 29     |       | 211.0                       |       | -                      |       | -              |       | -              |       | -              |       | -   |   | -   |   | -   |   | 211.0 |   | 5.56 | % |
| US$Notes                            |       | 24, 29     |       | -                 |       | -                      |       | -              |       | -              |       | 54.0                     |       | -   |   | 621.1 |   | -   |   | 675.1 |   | 5.58 | % |
| Eurobond                            |       | 24, 29     |       | -                 |       | -                      |       | -              |       | -              |       | -              |       | 595.5 |   | -   |   | -   |   | 595.5 |   | 4.44 | % |
| Lease liabilities                   |       | 24, 29     |       | -                 |       | 8.3                              |       | -              |       | -              |       | 22.3                     |       | 34.1 |   | -   |   | -   |   | 64.7 |   | 6.48 | % |
| Subordinated convertible securities |       | 25,30      |       | -                 |       | 464.2                            |       | -                        |       | -              |       | -              |       | -   |   | -   |   | -   |   | 464.2 |   | 8.41 | % |
|                                |       |       |       | 1,215.5                     |       | 478.6                            |       | 51.6                     |       | -                        |       | 76.3                     |       | 629.6 |   | 782.8 |   | 2,112.8 |   | 5,347.2 |   | 5.54 | % |
|                                |       |       |       |                        |       |                             |       |                     |       |                     |       |                     |       |   |   |   |   |   |   |   |   |   |   |
|                                |       |       |       |                        |       |                             |       |                     |       |                     |       |                     |       |   |   |   |   |   |   |   |   |   |   |
| **2005 $m**                         | ** ** | ** ** | ** ** | ** **                  | ** ** | ** **                       | ** ** | ** **               | ** ** | ** **               | ** ** | ** **               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                |       |       |       |                        |       |                             |       |                     |       |                     |       |                     |       |   |   |   |   |   |   |   |   |   |   |
| Financial Liabilities               |       |       |       |                        |       |                             |       |                     |       |                     |       |                     |       |   |   |   |   |   |   |   |   |   |   |
| Payables                            |       | 23, 28     |       | -                 |       | -                      |       | -              |       | -              |       | -              |       | -   |   | -   |   | 2,027.6 |   | 2,027.6 |   | - |   |
| Bank and other loans                |       | 24, 29     |       | 1,187.1                     |       | 2.0                              |       | 3.7                      |       | 0.9                      |       | 7.7                      |       | -   |   | -   |   | 6.7 |   | 1,208.1 |   | 4.22 | % |
| Commercial paper                    |       | 24, 29     |       | 307.7                       |       | -                      |       | -              |       | -              |       | -              |       | -   |   | -   |   | -   |   | 307.7 |   | 4.64 | % |
| US$Notes                            |       | 24, 29     |       | -                 |       | -                      |       | -              |       | -              |       | -              |       | 52.5 |   | 603.3 |   | -   |   | 655.8 |   | 5.58 | % |
| Eurobond                            |       | 24, 29     |       | -                 |       | -                      |       | -              |       | -              |       | -              |       | - |   | 554.5 |   | -   |   | 554.5 |   | 4.44 | % |
| Lease liabilities                   |       | 24, 29     |       | 0.7                         |       | 2.2                              |       | 3.3                      |       | -              |       | -              |       | 71.7 |   | 0.5 |   | -   |   | 78.4 |   | 6.56 | % |
| Distributions payable               |       | 27         |       | -                 |       | -                      |       | -              |       | -              |       | -              |       | -   |   | -   |   | 8.7 |   | 8.7 |   | - |   |
| Subordinated convertible securities |       | 25,30      |       | -                 |       | -                      |       | 301.1                    |       | -              |       | -              |       | -   |   | -   |   | -   |   | 301.1 |   | 7.25 | % |
|                                |       |       |       | 1,495.5                     |       | 4.2                              |       | 308.1                    |       | 0.9                      |       | 7.7                      |       | 124.2 |   | 1,158.3 |   | 2,043.0 |   | 5,141.9 |   | 4.94 | % |

 

F-87

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June2006**

 

**NOTE 38.  OTHER FINANCIAL INSTRUMENT INFORMATIONcontinued**

**(c) Forward foreign exchangecontracts**

In order to protectagainst exchange rate movements, the consolidated entity has entered intoforward exchange contracts to hedge all net forecast or actual foreign currencyexposures greater than A$100,000.  Thecash flows are expected to occur at various dates up to one year from thebalance date.  

At balance date, thedetails of outstanding contracts were:
|                   |   | **2006**              | ** ** | **2006**              | ** ** | **2005**              | ** ** | **2005**              | ** ** |
|-------------------|--------|-----------------------|------------|-----------------------|------------|-----------------------|------------|-----------------------|------------|
|              |   | **Weighted  Average** | ** ** | **Contract  Amounts** | ** ** | **Weighted  Average** | ** ** | **Contract  Amounts** | ** ** |
|              |   | **Rate**              | ** ** | **$m**                | ** ** | **Rate**              | ** ** | **$m**                | ** ** |
|              |   |                  |       |                  |       |                  |       |                  |       |
| Buy Contracts     |   |                  |       |                  |       |                  |       |                  |       |
| 0-12 months       |   |                  |       |                  |       |                  |       |                  |       |
| CAD               |   | -           |       | -           |       | 0.94                  |       | 1.0                   |       |
| CHF               |   | 0.90                  |       | 0.5                   |       | 0.91                  |       | 1.2                   |       |
| DKK               |   | 4.35                  |       | 9.9                   |       | 4.70                  |       | 14.5                  |       |
| EUR               |   | 0.59                  |       | 76.8                  |       | 0.60                  |       | 50.2                  |       |
| GBP               |   | 0.40                  |       | 15.3                  |       | 0.40                  |       | 8.4                   |       |
| JPY               |   | -           |       | -           |       | 76.54                 |       | 3.4                   |       |
| NZD               |   | -           |       | -           |       | 1.09                  |       | 0.9                   |       |
| PLN               |   | 2.37                  |       | 1.6                   |       | -           |       | -           |       |
| SEK               |   | 5.42                  |       | 13.4                  |       | 5.80                  |       | 13.2                  |       |
| USD               |   | 0.75                  |       | 93.6                  |       | 0.76                  |       | 75.0                  |       |
| Over 1 to 2 years |   |                  |       |                  |       |                  |       |                  |       |
| EUR               |   | 0.59                  |       | 16.1                  |       | 0.61                  |       | 2.5                   |       |
| USD               |   | 0.75                  |       | 1.6                   |       | 0.75                  |       | 4.3                   |       |
|              |   |                  |       |                  |       |                  |       |                  |       |
| Sell Contracts    |   |                  |       |                  |       |                  |       |                  |       |
| 0-12 months       |   |                  |       |                  |       |                  |       |                  |       |
| CAD               |   | 0.82                  |       | 73.3                  |       | -           |       | -           |       |
| CHF               |   | 0.91                  |       | 0.2                   |       | 0.97                  |       | 5.7                   |       |
| DKK               |   | 4.35                  |       | 5.6                   |       | 4.70                  |       | 5.1                   |       |
| EUR               |   | -           |       | -           |       | 0.61                  |       | 0.7                   |       |
| GBP               |   | 0.40                  |       | 13.2                  |       | 0.41                  |       | 22.1                  |       |
| NOK               |   | 4.58                  |       | 4.9                   |       | 5.12                  |       | 6.0                   |       |
| NZD               |   | 1.15                  |       | 70.7                  |       | 1.08                  |       | 29.5                  |       |
| SEK               |   | 5.41                  |       | 2.3                   |       | 5.78                  |       | 2.8                   |       |
| USD               |   | 0.73                  |       | 74.4                  |       | 0.76                  |       | 28.7                  |       |

 

The fair value of forward foreign exchange contractsheld as at the reporting date are:

 
|                                |   |   |   |   |   | **2006**   |   | **2005**   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|------------|--------|------------|--------|--------|
|                                |   |   |   |   |   | **$m**     |   | **$m**     |   |   |
|                                |   |   |   |   |   | ** ** |   | ** ** |   |   |
| Forward foreign  exchange contracts |   |   |   |   |   | 7.1        |   | (4.1)      |   |   |

 

F-88

----

# **Amcor Limited Consolidated**

# **Notes to the consolidated financial statements**

**30 June2006**

 

**NOTE 38.  OTHER FINANCIAL INSTRUMENT INFORMATIONcontinued**

**(d) Commodity swap contracts**

The consolidated entityenters into various fixed price commodity swap contracts on behalf of certaincustomers.  Hedging undertaken is basedon customer instructions and all related costs are passed to the customer.  The following table sets out the gross valueto be received under commodity swap contracts, the weighted average contractedLondon Metals Exchange rates and the settlement periods of contractsoutstanding as at 30 June:
|                                |       | **2006**                 | ** ** | **2005**                 | ** ** | **2006**              | ** ** | **2005**              | ** ** |
|--------------------------------|------------|--------------------------|------------|--------------------------|------------|-----------------------|------------|-----------------------|------------|
| **USD denominated  contracts** | ** ** | **Average  Fixed Price** | ** ** | **Average  Fixed Price** | ** ** | **Contract  Amounts** | ** ** | **Contract  Amounts** | ** ** |
|                           |       | **per  tonne**           | ** ** | **per  tonne**           | ** ** | **A$m**               | ** ** | **A$m**               | ** ** |
| **Buy Contracts**              |       |                     |       |                     |       |                  |       |                  |       |
| 0-12 months                    |       |                     |       |                     |       |                  |       |                  |       |
| Aluminium                      |       | 2,599.6                  |       | 1,828.3                  |       | 13.8                  |       | 29.4                  |       |
| Over 1 to 2 years              |       |                     |       |                     |       |                  |       |                  |       |
| Aluminium                      |       | 2,785.0                  |       | -              |       | 1.0                   |       | -           |       |
|                           |       |                     |       |                     |       |                  |       |                  |       |
|                           |       | **2006**                 | ** ** | **2005**                 | ** ** | **2006**              | ** ** | **2005**              | ** ** |
| **AUD denominated  contracts** | ** ** | **Average  Fixed Price** | ** ** | **Average  Fixed Price** | ** ** | **Contract  Amounts** | ** ** | **Contract  Amounts** | ** ** |
|                           |       | **per  tonne**           | ** ** | **per  tonne**           | ** ** | **A$m**               | ** ** | **A$m**               | ** ** |
| **Buy Contracts**              |       |                     |       |                     |       |                  |       |                  |       |
| 0-12 months                    |       |                     |       |                     |       |                  |       |                  |       |
| Aluminium                      |       | 3,715.0                  |       | -              |       | 24.5                  |       | -           |       |
|                           |       |                     |       |                     |       |                  |       |                  |       |

 

The fair value ofcommodity swap contracts held as at the reporting date are:
|                             |   |   |   |   | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-----------------------------|--------|--------|--------|--------|------------|------------|------------|------------|------------|
|                        |   |   |   |   | ** ** | **$m**     | ** ** | **$m**     | ** ** |
|                        |   |   |   |   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Commodity fixed price swaps |   |   |   |   |       | (1.3       | )          | (1.6       | )          |

 

**(e) Fair values**

The followingtable sets out the carrying amounts and fair values of interest bearingfinancial liabilities at balance date.

For details relating to the financial assets, refer:

·                  Cash – Note 13

·                  Receivables – Notes 14

·                  Otherfinancial assets – Notes 16 and 18.

The fair value of cash,receivables and other financial assets approximates their carrying value.
|                                              |       |       |       | **Carrying  Amount** | ** ** | **Net Fair  Value** | ** ** | **Carrying  Amount** | ** ** | **Net Fair  Value** | ** ** |
|----------------------------------------------|------------|------------|------------|----------------------|------------|---------------------|------------|----------------------|------------|---------------------|------------|
|                                         |       | ** ** | ** ** | **2006**             | ** ** | **2006**            | ** ** | **2005**             | ** ** | **2005**            | ** ** |
|                                         |       | **Note**   | ** ** | **$m**               | ** ** | **$m**              | ** ** | **$m**               | ** ** | **$m**              | ** ** |
| **Financial  Liabilities**                   | ** ** | ** ** | ** ** | ** **           | ** ** | ** **          | ** ** | ** **           | ** ** | ** **          | ** ** |
|                                         |       | ** ** | ** ** | ** **           | ** ** | ** **          | ** ** | ** **           | ** ** | ** **          | ** ** |
| Payables                                     |       | 23, 28     |       | 2,107.7              |       | 2107.7              |       | 2,027.6              |       | 2,027.6             | ** ** |
| Bank and other loans                         |       | 24, 29     |       | 1,229.0              |       | 1229.0              |       | 1,208.1              |       | 1,208.1             | ** ** |
| Commercial paper                             |       | 24, 29     |       | 211.0                |       | 211.0               |       | 307.7                |       | 307.7               | ** ** |
| US$ Notes                               |       | 24, 29     |       | 675.1                |       | 623.4               |       | 655.8                |       | 651.8               | ** ** |
| Eurobond                                     |       | 24, 29     |       | 595.5                |       | 589.3               |       | 554.5                |       | 578.0               | ** ** |
| Lease liabilities                            |       | 24, 29     |       | 64.7                 |       | 64.7                |       | 78.4                 |       | 78.4                | ** ** |
| Distributions  payable                       |       | 27         |       | -          |       | -         |       | 8.7                  |       | 8.7                 | ** ** |
| Undated  subordinated convertible securities |       | 25, 30     |       | 464.2                |       | 464.7               |       | 301.1                |       | 316.2               | ** ** |

 

For details relating to methods and significantassumptions applied in determining fair values of financial liabilities, referto Note 1 (q).

F-89

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 39.  KEY MANAGEMENT PERSONNEL AND THEIR RELATEDPARTIES DISCLOSURES**

**(a) Directors**

The following personswere directors of Amcor Limited during the financial year:
| **Names**                           | ** ** | **Period of Directorship**                         |
|-------------------------------------|------------|----------------------------------------------------|
| ** **                          | ** ** | ** **                                         |
| C I (Chris) Roberts – Chairman |       | Director since 1999 – Appointed Chairman 2000 |
| K N (Ken) MacKenzie - CEO           |       | Director since 2005                                |
| R K (Keith) Barton                  |       | Director since 1999                                |
| G J (John) Pizzey                   |       | Director since 2003                                |
| J G (John) Thorn                    |       | Director since 2004                                |
| G A (Geoff) Tomlinson               |       | Director since 1999                                |
| E J J (Ernest) Pope                 |       | Director since 2005 – Appointed October 2005  |
| D C K (Charles) Allen               |       | Director since 1996 – Retired October 2005    |
| E A (Elizabeth) Alexander           |       | Director since 1994 – Retired October 2005    |
| R H (Russell) Jones                 |       | Director since 1998 – Retired December 2004   |

 

**(b) Other key managementpersonnel (other than directors)**

The following personsalso had authority and responsibility for planning, directing and controllingthe activities of the consolidated entity, directly or indirectly, during thefinancial year:
| **Name**   | ** ** | **Position**                                            | ** ** | **Employer**                      |
|------------|------------|---------------------------------------------------------|------------|-----------------------------------|
| ** ** | ** ** | ** **                                              | ** ** | ** **                        |
| W P Day    |       | Executive General Manager Finance                       |       | Amcor Limited                     |
| I G Wilson |       | Strategic Development Director                          |       | Amcor Limited                     |
| L J Lachal |       | Managing Director, Amcor Australasia                    |       | Amcor Packaging Australia Pty Ltd |
| G S James  |       | Chief Executive Officer, Amcor Flexibles                |       | Amcor Europe Group Management     |
| W J Long   |       | President, Amcor PET Packaging                          |       | Amcor PET Packaging USA Inc       |
| E E Bloom  |       | President and Chief Executive Officer, Amcor  Sunclipse |       | Amcor Packaging (USA) Inc         |
| C K Chan   |       | Managing Director, Amcor Asia                           |       | Leigh-Mardon Singapore Pte Ltd    |

 

**(c) Key management personnelcompensation**
|                                              | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------|------------|----------|------------|----------|------------|
| ** **                                   | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                                         |       |     |       |     |       |
| Short-term  employee benefits                |       | 12.3     |       | 11.6     |       |
| Post-employment  benefits                    |       | 0.8      |       | 0.8      |       |
| Termination  benefits                        |       | 0.9      |       | 1.1      |       |
| Share-based  payments                        |       | 1.3      |       | 1.5      |       |
|                                         |       |     |       |     |       |
| Total key  management personnel compensation |       | 15.3     |       | 15.0     |       |

 

The company hastaken advantage of the relief provided by Corporations Regulations 2001 and hastransferred the detailed remuneration disclosures (including: remunerationpolicies, service contracts and details of remuneration) to the RemunerationReport included within the Directors’ Report.

 F-90

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 39.  KEY MANAGEMENT PERSONNEL AND THEIR RELATEDPARTIES DISCLOSURES continued**

**(d) Equity based compensation tokey management personnel**

**(i)Details of options provided as remuneration and shares issued on exercise ofsuch options**

Options and sharesare issued as part of long term incentive plans.  There are two umbrella plans in place, theEmployee Share/Option Plan (ESOP) and the Employee Share Purchase Plan(ESPP).  The details and conditionspertaining to these plans are outlined within the Remuneration Report and Note48.

The terms andconditions of each grant of options affecting remuneration in this or futurereporting periods are as follows:
| Grant date | ** ** | ** ** | **Expiry date** | ** ** | ** ** | **Fair value per  option  $** | ** ** | ** ** | **Exercise price  $** | ** ** | ** ** | **Price of shares  at grant date  $** | ** ** | ** ** | **Risk free  interest rate  %** | ** ** | ** ** | **Date exercisable** | ** ** |
|-----------------|------------|------------|----------------------|------------|------------|-----------------------------------------|------------|------------|----------------------------|------------|------------|-----------------------------------------------------------|------------|------------|-------------------------------------------|------------|------------|---------------------------|------------|
| ** **      | ** ** | ** ** | ** **           | ** ** | ** ** | ** **                              | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **                                                | ** ** | ** ** | ** **                                | ** ** | ** ** | ** **                | ** ** |
| 11/01/2002      |       |       | 11/01/2012           |       |       | 2.00                                    |       |       | 8.20                       |       |       | 8.17                                                      |       |       | 5.43                                      |       |       | 11/01/2005                |       |
| 10/13/2003      |       |       | 11/01/2012           |       |       | 2.43                                    |       |       | 8.20                       |       |       | 8.96                                                      |       |       | 5.67                                      |       |       | 11/01/2005                |       |
| 03/24/2004      |       |       | 03/24/2010           |       |       | 1.27                                    |       |       | 7.87                       |       |       | 7.87                                                      |       |       | 5.12                                      |       |       | 03/24/2007                |       |
| 08/02/2004      |       |       | 08/02/2010           |       |       | 1.03                                    |       |       | 6.84                       |       |       | 6.84                                                      |       |       | 5.62                                      |       |       | 08/02/2007                |       |
| 10/27/2005      |       |       | 12/31/2010           |       |       | 0.98                                    |       |       | 6.78                       |       |       | 6.69                                                      |       |       | 5.40                                      |       |       | 01/01/2008                |       |
| 10/27/2005      |       |       | 06/30/2011           |       |       | 1.01                                    |       |       | 6.78                       |       |       | 6.69                                                      |       |       | 5.40                                      |       |       | 07/01/2008                |       |
| 10/27/2005      |       |       | 12/31/2011           |       |       | 1.03                                    |       |       | 6.78                       |       |       | 6.69                                                      |       |       | 5.40                                      |       |       | 01/01/2009                |       |
| 10/27/2005      |       |       | 12/31/2010           |       |       | 4.24                                    |       |       | -                          |       |       | 6.69                                                      |       |       | 5.40                                      |       |       | 01/01/2008                |       |
| 10/27/2005      |       |       | 06/30/2011           |       |       | 4.15                                    |       |       | -                          |       |       | 6.69                                                      |       |       | 5.40                                      |       |       | 07/01/2008                |       |
| 10/27/2005      |       |       | 12/31/2011           |       |       | 4.06                                    |       |       | -                          |       |       | 6.69                                                      |       |       | 5.40                                      |       |       | 01/01/2009                |       |

 

*Option Holdings*

The number of optionsover ordinary shares in the company held during the financial year by each ofthe key management personnel of the consolidated entity, including theirpersonally-related entities, is set out below.
| **2006**                                                         | ** ** | ** **          | ** ** | ** ** | **Granted**      | ** ** | ** ** | ** **     | ** ** | ** ** | **Other**      | ** ** | ** ** | ** **        | ** ** | ** ** | **Balance vested** |   |
|------------------------------------------------------------------|------------|---------------------|------------|------------|------------------|------------|------------|----------------|------------|------------|----------------|------------|------------|-------------------|------------|------------|--------------------|--------|
| ** **                                                       | ** ** | **Balance  at the** | ** ** | ** ** | **during the**   | ** ** | ** ** | **Exercised**  | ** ** | ** ** | **changes**    | ** ** | ** ** | **Balance**       | ** ** | ** ** | **and not yet**    |   |
| ** **                                                       | ** ** | **beginning  of**   | ** ** | ** ** | **year as**      | ** ** | ** ** | **during the** | ** ** | ** ** | **during the** | ** ** | ** ** | **at the end of** | ** ** | ** ** | **exercised at**   |   |
| **Name**                                                         | ** ** | **the year**        | ** ** | ** ** | **remuneration** | ** ** | ** ** | **year**       | ** ** | ** ** | **year**       | ** ** | ** ** | **the year**      | ** ** | ** ** | **end of year**    |   |
|                                                             |       |                |       |       |             |       |       |           |       |       |           |       |       |              |       |       |               |   |
| ***Directors  of Amcor Limited***                                |       |                |       |       |             |       |       |           |       |       |           |       |       |              |       |       |               |   |
| C I Roberts                                                      |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| K N MacKenzie                                                    |       | 277,000             |       |       | 750,000          |       |       | -              |       |       | (14,000)       |       |       | 1,013,000         |       |       | 88,000             |   |
| R K Barton                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| G J Pizzey                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| J G Thorn                                                        |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| G A Tomlinson                                                    |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| E J J Pope *(appointed 27 October 2005)*                         |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| E A Alexander *(retired 27 October 2005)*                        |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| D C K Allen *(retired 27 October 2005)*                          |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
|                                                             |       |                |       |       |             |       |       |           |       |       |           |       |       |              |       |       |               |   |
| ***Other  key management personnel of the consolidated entity*** |       |                |       |       |             |       |       |           |       |       |           |       |       |
| W P Day                                                          |       | 472,500             |       |       | -                |       |       | -              |       |       | (35,000)       |       |       | 437,500           |       |       | -                  |   |
| G S James                                                        |       | 347,500             |       |       | -                |       |       | (20,000)       |       |       | (21,000)       |       |       | 306,500           |       |       | 44,000             |   |
| L J Lachal                                                       |       | 352,000             |       |       | -                |       |       | (24,000)       |       |       | (21,000)       |       |       | 307,000           |       |       | -                  |   |
| W J Long                                                         |       | 722,000             |       |       | -                |       |       | -              |       |       | (28,000)       |       |       | 694,000           |       |       | 344,000            |   |
| E E Bloom                                                        |       | 690,500             |       |       | -                |       |       | (145,000)      |       |       | (14,000)       |       |       | 531,500           |       |       | 344,000            |   |
| C K Chan                                                         |       | 385,000             |       |       | -                |       |       | (152,000)      |       |       | (14,000)       |       |       | 219,000           |       |       | 44,000             |   |
| I G Wilson                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |

 

No options are vested and unexercisable at the end of the year.

No options were held bykey management personnel related parties.

 F-91

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 39.  KEY MANAGEMENT PERSONNEL AND THEIR RELATEDPARTIES DISCLOSURES continued**
| **2005**                                                         | ** ** | ** **          | ** ** | ** ** | **Granted**      | ** ** | ** ** | ** **     | ** ** | ** ** | **Other**      | ** ** | ** ** | ** **        | ** ** | ** ** | **Balance vested** |   |
|------------------------------------------------------------------|------------|---------------------|------------|------------|------------------|------------|------------|----------------|------------|------------|----------------|------------|------------|-------------------|------------|------------|--------------------|--------|
| ** **                                                       | ** ** | **Balance  at the** | ** ** | ** ** | **during the**   | ** ** | ** ** | **Exercised**  | ** ** | ** ** | **changes**    | ** ** | ** ** | **Balance**       | ** ** | ** ** | **and not yet**    |   |
| ** **                                                       | ** ** | **beginning  of**   | ** ** | ** ** | **year as**      | ** ** | ** ** | **during the** | ** ** | ** ** | **during the** | ** ** | ** ** | **at the end of** | ** ** | ** ** | **exercised at**   |   |
| **Name**                                                         | ** ** | **the year**        | ** ** | ** ** | **remuneration** | ** ** | ** ** | **year**       | ** ** | ** ** | **year**       | ** ** | ** ** | **the year**      | ** ** | ** ** | **end of year**    |   |
|                                                             |       |                |       |       |             |       |       |           |       |       |           |       |       |              |       |       |               |   |
| ***Directors  of Amcor Limited***                                |       |                |       |       |             |       |       |           |       |       |           |       |       |              |       |       |               |   |
| C I Roberts                                                      |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| K N MacKenzie                                                    |       | 291,000             |       |       | 100,000          |       |       | (103,000)      |       |       | (11,000)       |       |       | 277,000           |       |       | -                  |   |
| R K Barton                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| G J Pizzey                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| J G Thorn                                                        |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| G A Tomlinson                                                    |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| E J J Pope *(appointed 27 October 2005)*                         |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| E A Alexander *(retired 27 October 2005)*                        |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| D C K Allen *(retired 27 October 2005)*                          |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| R H Jones *(retired 7 December 2004)*                            |       | 6,000,000           |       |       | -                |       |       | -              |       |       | (6,000,000)    |       |       | -                 |       |       | -                  |   |
|                                                             |       |                |       |       |             |       |       |           |       |       |           |       |       |              |       |       |               |   |
| ***Other  key management personnel of the consolidated entity*** |       |                |       |       |             |       |       |           |       |       |           |       |       |
| W P Day                                                          |       | 400,000             |       |       | 250,000          |       |       | (150,000)      |       |       | (27,500)       |       |       | 472,500           |       |       | -                  |   |
| G S James                                                        |       | 214,000             |       |       | 150,000          |       |       | -              |       |       | (16,500)       |       |       | 347,500           |       |       | 20,000             |   |
| L J Lachal                                                       |       | 224,000             |       |       | 150,000          |       |       | -              |       |       | (22,000)       |       |       | 352,000           |       |       | 24,000             |   |
| W J Long                                                         |       | 544,000             |       |       | 200,000          |       |       | -              |       |       | (22,000)       |       |       | 722,000           |       |       | 300,000            |   |
| E E Bloom                                                        |       | 626,500             |       |       | 100,000          |       |       | (25,000)       |       |       | (11,000)       |       |       | 690,500           |       |       | 457,500            |   |
| C K Chan                                                         |       | 336,000             |       |       | 100,000          |       |       | (40,000)       |       |       | (11,000)       |       |       | 385,000           |       |       | 152,000            |   |
| I G Wilson                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |

 

No options are vested and unexercisable at the end of the year.

No options were held bykey management personnel related parties.

*Performance Rights*

The number ofrights over ordinary shares in the company held during the financial year byeach of the key management personnel of the consolidated entity, includingtheir personally-related entities, is set out below.
| **2006**                                                         | ** ** | ** **          | ** ** | ** ** | **Granted**      | ** ** | ** ** | ** **     | ** ** | ** ** | **Other**      | ** ** | ** ** | ** **        | ** ** | ** ** | **Balance vested** |   |
|------------------------------------------------------------------|------------|---------------------|------------|------------|------------------|------------|------------|----------------|------------|------------|----------------|------------|------------|-------------------|------------|------------|--------------------|--------|
| ** **                                                       | ** ** | **Balance  at the** | ** ** | ** ** | **during the**   | ** ** | ** ** | **Exercised**  | ** ** | ** ** | **changes**    | ** ** | ** ** | **Balance**       | ** ** | ** ** | **and not yet**    |   |
| ** **                                                       | ** ** | **beginning  of**   | ** ** | ** ** | **year as**      | ** ** | ** ** | **during the** | ** ** | ** ** | **during the** | ** ** | ** ** | **at the end of** | ** ** | ** ** | **exercised at**   |   |
| **Name**                                                         | ** ** | **the year**        | ** ** | ** ** | **remuneration** | ** ** | ** ** | **year**       | ** ** | ** ** | **year**       | ** ** | ** ** | **the year**      | ** ** | ** ** | **end of year**    |   |
|                                                             |       |                |       |       |             |       |       |           |       |       |           |       |       |              |       |       |               |   |
| ***Directors  of Amcor Limited***                                |       |                |       |       |             |       |       |           |       |       |           |       |       |              |       |       |               |   |
| C I Roberts                                                      |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| K N MacKenzie                                                    |       | -                   |       |       | 300,000          |       |       | -              |       |       | -              |       |       | 300,000           |       |       | -                  |   |
| R K Barton                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| G J Pizzey                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| J G Thorn                                                        |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| G A Tomlinson                                                    |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| E J J Pope *(appointed 27 October 2005)*                         |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| E A Alexander *(retired 27 October 2005)*                        |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| D C K Allen *(retired 27 October 2005)*                          |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
|                                                             |       |                |       |       |             |       |       |           |       |       |           |       |       |              |       |       |               |   |
| ***Other  key management personnel of the consolidated entity*** |       |                |       |       |             |       |       |           |       |       |           |       |       |
| W P Day                                                          |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| G S James                                                        |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| L J Lachal                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| W J Long                                                         |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| E E Bloom                                                        |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| C K Chan                                                         |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |
| I G Wilson                                                       |       | -                   |       |       | -                |       |       | -              |       |       | -              |       |       | -                 |       |       | -                  |   |

 

There were no performance rights on issue in 2005.

There were no performancerights held by key management personnel related parties.

 F-92

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**

 

**NOTE 39. KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES DISCLOSURES continued**

 

*Share holdings*

The number ofshares in the company held during the financial year by each of the keymanagement personnel of the consolidated entity, including theirpersonally-related entities, is set out below.
| **2006**                                       | ** ** | ** **                                        | ** ** | ** ** | ** **          | ** ** | ** ** | ** **                                                    | ** ** | ** ** | ** **                                                | ** ** | ** ** | ** **          |   |   |
|------------------------------------------------|------------|---------------------------------------------------|------------|------------|---------------------|------------|------------|---------------------------------------------------------------|------------|------------|-----------------------------------------------------------|------------|------------|---------------------|--------|--------|
| ** **                                     | ** ** | ** **                                        | ** ** | ** ** | **Received**        | ** ** | ** ** | ** **                                                    | ** ** | ** ** | ** **                                                | ** ** | ** ** | ** **          |   |   |
| ** **                                     | ** ** | **Balance  at the**                               | ** ** | ** ** | **during the year** | ** ** | ** ** | ** **                                                    | ** ** | ** ** | ** **                                                | ** ** | ** ** | ** **          |   |   |
| ** **                                     | ** ** | **beginning  of**                                 | ** ** | ** ** | **on the exercise** | ** ** | ** ** | **Purchased**                                                 | ** ** | ** ** | **Sold during the**                                       | ** ** | ** ** | **Balance of the**  |   |   |
| **Name**                                       | ** ** | **the year**                                      | ** ** | ** ** | **of options**      | ** ** | ** ** | **during the year**                                           | ** ** | ** ** | **year**                                                  | ** ** | ** ** | **end of the year** |   |   |
|                                           |       |                                              |       |       |                |       |       |                                                          |       |       |                                                      |       |       |                |   |   |
| ***Directors  of Amcor Limited***              |       |                                              |       |       |                |       |       |                                                          |       |       |                                                      |       |       |                |   |   |
| *** ***                                   |       |                                              |       |       |                |       |       |                                                          |       |       |                                                      |       |       |                |   |   |
| **Ordinary shares**                            |       |                                              |       |       |                |       |       |                                                          |       |       |                                                      |       |       |                |   |   |
| C I Roberts                                    |       | 135,482                                           |       |       | -                   |       |       | 25,192                                                        |       |       | -                                                         |       |       | 160,674             |   |   |
| K N MacKenzie                                  |       | 11,200                                            |       |       | -                   |       |       | 503                                                           |       |       | -                                                         |       |       | 11,703              |   |   |
| R K Barton                                     |       | 29,390                                            |       |       | -                   |       |       | 4,509                                                         |       |       | -                                                         |       |       | 33,899              |   |   |
| G J Pizzey                                     |       | 12,248                                            |       |       | -                   |       |       | 5,933                                                         |       |       | -                                                         |       |       | 18,181              |   |   |
| J G Thorn                                      |       | 3,915                                             |       |       | -                   |       |       | 6,465                                                         |       |       | -                                                         |       |       | 10,380              |   |   |
| G A Tomlinson                                  |       | 44,322                                            |       |       | -                   |       |       | *         11,692 |       |       | *        (12,946) |       |       | 43,068              |   |   |
| E J J Pope *(appointed 27 October 2005)*       |       | **       2,000 |       |       | -                   |       |       | 3,731                                                         |       |       | -                                                         |       |       | 5,731               |   |   |
| E A Alexander ***  *(retired 27 October 2005)* |       | 31,929                                            |       |       | -                   |       |       | 2,629                                                         |       |       | -                                                         |       |       | 34,558              | ****   |   |
| D C K Allen *(retired 27 October 2005)*        |       | 59,715                                            |       |       | -                   |       |       | 1,531                                                         |       |       | -                                                         |       |       | 61,246              | ****   |   |

 

* Includes acquisition and disposal for no monetary consideration

** Shares owned at commencement of directorship on 27 October 2005

*** E A Alexander sold 50,000 partly paid shares, paid to five cents,on her retirement from the Amcor Board.

**** Represent holdings OR retirement on 27 October 2005

 

***Other key management personnel of the consolidated entity***

 

**Ordinary shares**
| W P Dayia   |   | 62,129  |   |   | -       |   |   | 1,948 |   |   | -        |   |   | 64,077  |   |   |
|-------------|--------|---------|--------|--------|---------|--------|--------|-------|--------|--------|----------|--------|--------|---------|--------|--------|
| G S James   |   | 24,500  |   |   | 20,000  |   |   | -     |   |   | (44,200  | )      |   | 300     |   |   |
| L J Lachal* |   | 249,469 |   |   | 24,000  |   |   | -     |   |   | (50,000  | )      |   | 223,469 |   |   |
| W J Long    |   | 100     |   |   | -       |   |   | -     |   |   | -        |   |   | 100     |   |   |
| E E Bloom   |   | 1,000   |   |   | 145,000 |   |   | -     |   |   | (145,000 | )      |   | 1,000   |   |   |
| C K Chan**  |   | 40,000  |   |   | 152,000 |   |   | -     |   |   | (152,000 | )      |   | 40,000  |   |   |
| I G Wilson  |   | 62,085  |   |   | -       |   |   | -     |   |   | -        |   |   | 62,085  |   |   |

** **

* L J Lachal also holds 20,000 partly paidshares paid to one cent

** C K Chan also holds 50,000 partly paidshares paid to five cents

** **

There were no ordinaryshares held by key management personnel related parties.

 F-93

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**

 

**NOTE 39.  KEY MANAGEMENT PERSONNEL AND THEIR RELATEDPARTIES DISCLOSURES continued**
| **2005**                                                                                                                                                                    | ** ** | ** **                                  | ** ** | ** **                                                 | ** ** | ** **                     | ** ** | ** **                 | ** ** | ** **                           |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|------------------------------------------------------------|------------|--------------------------------|------------|----------------------------|------------|--------------------------------------|
| ** **                                                                                                                                                                  | ** ** | ** **                                  | ** ** | ** **                                                 | ** ** | ** **                     | ** ** | ** **                 | ** ** | ** **                           |
| **Name**                                                                                                                                                                    | ** ** | **Balance  at the  beginning of  the year** | ** ** | **Received  during the year  on the exercise  of options** | ** ** | **Purchased  during the year** | ** ** | **Sold  during the  year** | ** ** | **Balance  at the  end of the year** |
|                                                                                                                                                                        |       |                                        |       |                                                       |       |                           |       |                       |       |                                 |
| ***Directors of Amcor Limited***                                                                                                                                            |       |                                        |       |                                                       |       |                           |       |                       |       |                                 |
|                                                                                                                                                                        |       |                                        |       |                                                       |       |                           |       |                       |       |                                 |
| **Ordinary shares**                                                                                                                                                         |       |                                        |       |                                                       |       |                           |       |                       |       |                                 |
| C I Roberts                                                                                                                                                                 |       | 114,421                                     |       | -                                                          |       | 21,061                         |       | -                          |       | 135,482                              |
| K N MacKenzie                                                                                                                                                               |       | 1,200                                       |       | 103,000                                                    |       | -                              |       | (93,000                    | )          | 11,200                               |
| R K Barton                                                                                                                                                                  |       | 25,270                                      |       | -                                                          |       | 4,120                          |       | -                          |       | 29,390                               |
| G J Pizzey                                                                                                                                                                  |       | 6,408                                       |       | -                                                          |       | 5,840                          |       | -                          |       | 12,248                               |
| J G Thorn                                                                                                                                                                   |       | -                                           |       | -                                                          |       | 3,915                          |       | -                          |       | 3,915                                |
| G A Tomlinson                                                                                                                                                               |       | 39,684                                      |       | -                                                          |       | 4,638                          |       | -                          |       | 44,322                               |
| E A Alexander *  *(retired 27 October  2005)*                                                                                                                          |       | 26,258                                      |       | -                                                          |       | 5,671                          |       | -                          |       | 31,929                               |
| D C K Allen *(retired 27 October  2005)*                                                                                                                                    |       | 55,857                                      |       | -                                                          |       | 3,858                          |       | -                          |       | 59,715                               |
|                                                                                                                                                                        |       |                                        |       |                                                       |       |                           |       |                       |       |                                 |
| * E A Alexander also held 50,000 partly paid shares  paid to five cents

R H Jones held 381,764 shares at the start of the  year and retired as director on 7 December 2004 |
|                                                                                                                                                                        |       |                                        |       |                                                       |       |                           |       |                       |       |                                 |
| ***Other key management personnel  of the consolidated entity***                                                                                                            |       |                                        |       |                                                       |       |                           |       |
|                                                                                                                                                                        |       |                                        |       |                                                       |       |                           |       |                       |       |                                 |
| **Ordinary shares**                                                                                                                                                         |       |                                        |       |                                                       |       |                           |       |                       |       |                                 |
| W P Day                                                                                                                                                                     |       | 59,452                                      |       | 150,000                                                    |       | 2,677                          |       | (150,000)                  |       | 62,129                               |
| G S James                                                                                                                                                                   |       | 70,360                                      |       | -                                                          |       | -                              |       | (45,860                    | )          | 24,500                               |
| L J Lachal *                                                                                                                                                                |       | 299,469                                     |       | -                                                          |       | -                              |       | (50,000                    | )          | 249,469                              |
| W J Long                                                                                                                                                                    |       | 100                                         |       | -                                                          |       | -                              |       | -                          |       | 100                                  |
| E Bloom                                                                                                                                                                     |       | 1,000                                       |       | 25,000                                                     |       | -                              |       | (25,000                    | )          | 1,000                                |
| C K Chan **                                                                                                                                                                 |       | -                                           |       | 40,000                                                     |       | -                              |       | -                          |       | 40,000                               |
| I G Wilson                                                                                                                                                                  |       | 62,085                                      |       | -                                                          |       | -                              |       | -                          |       | 62,085                               |

 

* L J Lachal also holds 20,000 partly paidshares paid to one cent

** C K Chan also holds 50,000 partly paidshares paid to five cents

 

There were no ordinaryshares held by key management personnel related parties.

 F-94

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**

 

**NOTE 39.  KEY MANAGEMENT PERSONNEL AND THEIR RELATEDPARTIES DISCLOSURES continued**

**(ii)Loans to key management personnel and their related parties**

Details of loansmade to the key management personnel of the consolidated entity, includingtheir personally-related entities, are set out below.
| **Aggregates for key management  personnel**                         |       |                                         |       |                                          |       |                       |
|----------------------------------------------------------------------|------------|----------------------------------------------|------------|-----------------------------------------------|------------|----------------------------|
| **2006**                                                             | ** ** | **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** |
| **Group**                                                            | ** ** | **$**                                        | ** ** | **$**                                         | ** ** | **$**                      | ** ** | **$** | ** ** | ** ** |
|                                                                 |       |                                         |       |                                          |       |                       |   |   |   |   |
| Directors of Amcor Limited                                           |       | -                                            |       | -                                             |       | -                          |   | -         |   |  - |
| Other key management personnel of the consolidated  entity           |       | 11,318                                       |       | -                                             |       | 688                        |   | 9,173 |   | 1 |
|                                                                 |       |                                         |       |                                          |       |                       |   |   |   |   |
| **2005**                                                             |       |                                         |       |                                          |       |                       |   |   |   |   |
| **Group**                                                            |       |                                         |       |                                          |       |                       |   |   |   |   |
|                                                                 |       |                                         |       |                                          |       |                       |   |   |   |   |
| Directors of Amcor Limited                                           |       | 1,056,180                                    |       | 7,334                                         |       | 41,782                     |   | -         |   |  - |
| Other key management personnel of the consolidated  entity           |       | 13,516                                       |       | -                                             |       | 845                        |   | 11,318 |   | 1 |
|                                                                 |       |                                         |       |                                          |       |                       |   |   |   |   |
| **Individuals with aggregate loans above $100,000  during the year** |       |                                         |       |                                          |       |                       |   |   |   |   |
|                                                                 |       |                                         |       |                                          |       |                       |   |   |   |   |
| **2006**                                                             |       |                                         |       |                                          |       |                       |   |   |   |   |
| **Nil**                                                              |       |                                         |       |                                          |       |                       |   |   |   |   |
|                                                                 |       |                                         |       |                                          |       |                       |   |   |   |   |
| **2005**                                                             |       |                                         |       |                                          |       |                       |   |   |   |   |
| R H Jones (retired 7 December 2004)                                  |       | 1,056,180                                    |       | 7,334                                         |       | 41,782                     |   | -         |   |   |

 

Loans to key managementpersonnel are repayable on cessation of employment, have interest charged atvarying rates and are secured by holding locks on employee entitlements andsecurities.

The amount shownfor interest not charged in the table above represents the difference betweenthe amount paid and payable for the year and the amount of interest that wouldhave been charged on an arm’s-length basis.

No impairmentslosses have been recognised in relation to any loans made to key managementpersonnel.

Loans for the purchase of shares and other loans aremade in accordance with the terms and conditions of the plans referred to inNote 18.

During the year, under the employee share plans, shareloan repayments totalling $2,145 (2005: $2,198) were received from L J Lachal.

No loans were advanced during the year.

Loans to directors of Amcor Limited in Note 18 totalNil (2005: Nil).

**(iii) Other transactions with key management personnel in the normalcourse of business and on an arm’s length basis**

***Directorsof Amcor Limited***

Nil

 F-95

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**

**NOTE 39.  KEY MANAGEMENT PERSONNEL AND THEIR RELATEDPARTIES DISCLOSURES continued**

***Transactionswith other key management personnel and their related parties***

EssentialMarketing Pty Ltd is a company that supplies various marketing services to theconsolidated entity.  The company isowned by the daughter of G S James, a member of the other key managementpersonnel.  Transactions are based onnormal terms and conditions.

Aggregate amountsof the above transactions with other key management personnel of theconsolidated entity are as follows:
|                                                                                                                                                                            |   | **2006**   |   | **2005**   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|------------|
| **Amounts recognised as expenses**                                                                                                                                         |   | **$**      |   | **$**      |
|                                                                                                                                                                       |   |       |   |       |
| Provision of goods supplied at cost and marketing  services                                                                                                                |   | 532,937    |   | 605,671    |
|                                                                                                                                                                       |   |       |   |       |
| Aggregate amounts payable to other key management  personnel of the consolidated entity at balance date relating to the above  types of other transactions are as follows: |
|                                                                                                                                                                       |   | ** ** |   | ** ** |
|                                                                                                                                                                       |   | **2006**   |   | **2005**   |
|                                                                                                                                                                       |   | **$**      |   | **$**      |
|                                                                                                                                                                       |   |       |   |       |
| Current liabilities                                                                                                                                                        |   | 81,896     |   | 64,500     |

 

**NOTE 40. CONTINGENCIES**

Details of contingent liabilitieswhere the probability of future payments/receipts is not considered remote areset out below:
|                                              |   | **2006** | ** ** | **2005** |
|----------------------------------------------|--------|----------|------------|----------|
|                                         |   | **$m**   | ** ** | **$m**   |
| Contingent liabilities arising in respect of |   |     |       |     |
| guarantees (1)                               |   | 12.9     |       | -        |
|                                         |   |     |       |     |
| **TOTAL CONTINGENT LIABILITIES**             |   | 12.9     |       | -        |

 

(1)  Comprises mainly guarantees given by AmcorLimited in respect of certain borrowings principally in wholly ownedsubsidiaries. A subsidiary of the consolidated entity has also given aguarantee in respect of a lease held by a former subsidiary.

Details of othercontingent liabilities which, although considered remote, directors considershould be disclosed are set out below. The directors are of the opinion that provisions are not required inrespect of these matters, as it is either not probable that a future sacrificeof economic benefits will be required or the amount is not capable of reliablemeasurement.

-       Amcor Ltd has indemnifiedthe PaperlinX Limited Group in relation to potential taxation and workcoverliabilities in excess of any provisions made in the financial statements of thePaperlinX Limited Group at 31 March 2000.

-       Under the terms of the ASICClass Order 98/1418 (as amended) dated 13 August 1998, which relieved certainwholly-owned subsidiaries from the requirement to prepare audited financialstatements, Amcor Limited and certain wholly-owned subsidiaries have enteredinto an approved deed for the cross guarantee of liabilities with thosesubsidiaries identified in Note 43(1). No liabilities subject to the Deed of Cross Guarantee at 30 June 2006are expected to arise to Amcor Limited and subsidiaries, as all suchsubsidiaries were financially sound and solvent at that date.

 F-96

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**

**NOTE 40. CONTINGENCIES continued**

**CompetitionLaw Investigations**

*Leniency Application – Australia*

On 21 December 2005, the ACCC commenced legalproceedings in the Federal Court of Australia against certain Visy Groupcompanies and executives. The proceedings are in respect of alleged cartelconduct in the Australian corrugated packaging industry. The ACCC alleges thatthe Visy Group companies (being Amcor’s competitors) and executives engaged inconduct in the corrugated fibreboard container industry that wasanti-competitive, including engaging in price fixing and market sharing, incontravention of section 45 of the Australian Trade Practices Act 1974.

The ACCC also announced on 21 December 2005, thatAmcor and its former senior executives have to date received immunity fromlegal proceedings by the ACCC. The immunity was granted in accordance with theterms of the ACCC’s Leniency Policy for Cartel Conduct (June 2003): seehttp://www.accc.gov.au/content/index.phtml/itemId/459479. Accordingly, Amcor isnot the subject of any proceedings by the ACCC for a pecuniary penalty orotherwise for any alleged cartel conduct. The immunity is conditional uponcontinuing full cooperation from Amcor and its former senior executives inproviding information to the ACCC about the alleged cartel.  As a result of this grant of immunity, Amcordoes not expect to incur any pecuniary penalties arising out of the ACCCinvestigations.

*Leniency Application – New Zealand*

The NZCC is the regulatory agency responsible forenforcing New Zealand’s anti-trust laws, the Commerce Act 1986 (“Commerce Act”).

On 29 November2004 Amcor notified the NZCC that the Company may have been involved in cartelconduct in New Zealand.  Amcor appliedfor leniency pursuant to the NZCC’s Leniency Policy for Cartel Conduct (“NZLeniency Policy”).  The NZ LeniencyPolicy allows for immunity from NZCC initiated proceedings to the first personinvolved in a cartel to come forward with information about the cartel andco-operate fully with the NZCC in its investigation and prosecution of thecartel.

Amcor was granted conditional immunity on 1 December2004.  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 Leniency Policy does notexclude or limit claims by third parties who claim to have suffered loss ordamage as a result of any cartel conduct. Under the Commerce Act, third parties may pursue private claims for compensatoryor exemplary damages.

*Estimated Damages – New Zealand*

As a result of the grant of conditional immunity,Amcor does not expect to incur any pecuniary penalties arising out of the NZCCinvestigation.  It is not possible atpresent to provide either a reasonable estimate, or a reasonable estimate rangeof any amounts which might become payable by way of damages to any thirdparties who might have suffered loss as a result of any cartel conduct in NewZealand.

 F-97

----

**Amcor Limited Consolidated**

**Notes to the consolidatedfinancial statements30 June 2006**

**NOTE 40. CONTINGENCIES continued**

**ThirdParty Claims Australia**

Jarra CreekCentral Packaging Shed Pty Ltd filed a class action claim in the Federal Courtof Australia on 11 April 2006 against Amcor Ltd, Amcor Packaging (Australia)Ltd and Fibre Containers (Queensland) Pty Ltd alleging cartel behaviour andseeking declarations, injunctions and unspecified damages.

The class actionfiled in the Federal Court contains allegations only.  These are not admissions by any party andevidence will have to be proved in court. Amcor is defending the claims made in the class action.  In the event that Amcor is not whollysuccessful in defending the class action, Amcor has cross-claimed againstthose Visy Group companies, which are respondents to the ACCC penaltyproceeding, claiming contribution for any damages which may be awarded againstAmcor in the class action.

It is too earlyfor Amcor to form any view on the outcome of the litigation including any claimfor contribution against the Visy Group companies.  Equally, no reliable assessment can be madeat present of the prospects of success or the quantum of damages, if any, thatmay be awarded in either these proceedings or any proceedings which may beinstituted by third parties.

Although it is notpossible at present to establish a reasonable estimated range of damages, therecan be no assurance that any damages ultimately incurred will not be materialto the results of operations or financial condition of Amcor.

Refer note 49(4)Events Subsequent to Balance Date for an update of this contingent liability.

 F-98

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**
|                                                                                                        |   | **2006** | ** ** | **2005** |   |
|-------------------------------------------------------------------------------------------------------------|--------|----------|------------|----------|--------|
| **NOTE  41. COMMITMENTS**                                                                                   |   | **$m**   | ** ** | **$m**   |   |
|                                                                                                        |   |     |       |     |   |
| **a)  Capital expenditure contracted at the reporting date but not recognised as  liabilities as follows:** |   |     |       |     |   |
|                                                                                                        |   |     |       |     |   |
| Property, plant  and equipment:                                                                             |   |     |       |     |   |
| •   Not  later than one year                                                            |   | 141.3    |       | 49.8     |   |
| •   Later  than one year but not later than five years                                  |   | 0.2      |       | 2.9      |        |
|                                                                                                        |   |     |       |     |   |
|                                                                                                        |   | 141.5    |       | 52.7     |   |
|                                                                                                        |   |     |       |     |   |
| **b) Finance  leases**                                                                                      |   |     |       |     |   |
|                                                                                                        |   |     |       |     |   |
| Lease  expenditure contracted and provided for:                                                             |   |     |       |     |   |
| •   Not  later than one year                                                            |   | 9.8      |       | 17.5     |   |
| •   Later  than one year but not later than five years                                  |   | 53.0     |       | 61.1     |   |
| •   Later  than five years                                                              |   | 10.1     |       | 10.6     |        |
|                                                                                                        |   |     |       |     |   |
| Minimum lease  payments                                                                                     |   | 72.9     |       | 89.2     |   |
| Less: Future  finance charges                                                                               |   | (8.2     | )          | (10.8)   |   |
|                                                                                                        |   |     |       |     |   |
| **TOTAL  FINANCE LEASE LIABILITY**                                                                          |   | 64.7     |       | 78.4     |        |
|                                                                                                        |   |     |       |     |   |
| Current lease  liabilities - refer Note 24                                                                  |   | 6.9      |       | 2.2      |   |
| Non-current  lease liabilities                                                                              |   |     |       |     |   |
| - refer Note 29                                                                                             |   | 57.8     |       | 76.2     |        |
|                                                                                                        |   |     |       |     |   |
|                                                                                                        |   | 64.7     |       | 78.4     |        |

 

The consolidated entity leases equipment under finance leases expiringfrom one to 20 years. At the end of the lease term, the consolidated entity hasthe option to purchase the equipment at an agreed residual value.

 

For details of interestrate risk, refer Note 38.

**c) Operating leases**

Lease expenditure contracted but not provided for and payable:

 
| •   Not later  than one year                           |   | 125.8  |   | 150.3  |   |
|----------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| •   Later  than one year but not later than five years |   | 304.9  |   | 412.2  |   |
| •   Later  than five years                             |   | 176.7  |   | 261.5  |   |
|                                                                       |   | 607.4  |   | 824.0  |   |
|                                                                       |   |   |   |   |   |
| Less sub-lease  rental income                                              |   | (20.2  | )      | (31.0  | )      |
|                                                                       |   |   |   |   |   |
| **TOTAL  OPERATING LEASE COMMITMENTS**                                     |   | 587.2  |   | 793.0  |        |

 

The consolidated entity leases motor vehicles, plant and equipment andproperty under operating leases. Leases generally provide the consolidatedentity with a right of renewal at which time all terms are renegotiated.

 

Some leases provide for payment of incremental contingent rentals basedon movements in a relevant price index or in the event that units produced bycertain leased assets exceed a pre-determined production capacity.  Contingent rental paid during the year isdisclosed in Note 6.

 F-99

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**
|                                                                                                    | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| **NOTE  41.  COMMITMENTS continued**                                                          | ** ** | **$m**   | ** ** | **$m**   | ** ** |
|                                                                                               |       |     |       |     |       |
| **d)  Other commitments**                                                                          |       |     |       |     |       |
|                                                                                               |       |     |       |     |       |
| Expenditure  contracted but not provided for covering other supplies and services to be  provided: |       |     |       |     |       |
|                                                                                               |       |     |       |     |       |
| •   Not  later than one year                                                   |       | 64.7     |       | 58.7     |       |
| •   Later  than one year but not later than five years                         |       | 63.3     |       | 107.9    |       |
| •   Later  than five years                                                     |       | 15.7     |       | 15.5     |       |
|                                                                                               |       |     |       |     |       |
| **TOTAL  OTHER EXPENDITURE COMMITMENTS**                                                           |       | 143.7    |       | 182.1    |            |

 

**NOTE 42. BUSINESS COMBINATIONS**

 

**Summary of acquisitions**

 

Amcor acquired the following businesses during the year:

 
| ******2006**                     | ** ** | **Acquisition date**    | ** ** | **Consideration  paid  $m** | ** ** | **Net  assets  acquired  $m** |
|----------------------------------|------------|-------------------------|------------|-----------------------------|------------|-------------------------------|
| ** **                       | ** ** | ** **              | ** ** | ** **                  | ** ** | ** **                    |
| Astron LLC                       |       | 20 June 2006            |       | 0.6                         |       | 0.6                           |
|                             |       |                    |       |                        |       |                          |
| Ecuador minority interest buyout |       | 1 October 2005          |       | 5.8                         |       | 5.8                           |
|                             |       |                    |       |                        |       |                          |
| **2005**                         |       |                    |       |                        |       |                          |
|                             |       |                    |       |                        |       |                          |
| Ameripak                         |       | 12 November 2004        |       | 6.3                         |       | 1.6                           |
|                             |       |                    |       |                        |       |                          |
| Other                            |       | July &  August 2004 |       | 0.8                         |       | 0.5                           |

 

 F-100

----

**Amcor Limited ConsolidatedNotes to the consolidated financial statements30 June 2006**

**NOTE 43.  SUBSIDIARIES**
| **Parent entity and its subsidiaries** | **Notes** | **Country of  Incorporation** | **Percentage  Held by Direct  Parent Entity** |
|------------------------------------------------------------|-----------|------------------------------------|--------------------------------------------------------------|
| Amcor Limited                                              |      | Australia                          |                                                         |
| Anfor Investments Pty Ltd                                  | (1)       | Australia                          | 100%                                                         |
| Amcor PET Packaging Asia Pvt Ltd                           |      | India                              | 100%                                                         |
| Amcor Insurances Pte Ltd                                   |      | Singapore                          | 100%                                                         |
| Amcor Packaging (Asia) Pty Ltd                             | (1)       | Australia                          | 100%                                                         |
| Leigh Mardon Singapore Pte Ltd                             | (4)       | Singapore                          | 100%                                                         |
| Leigh Mardon (Penang) Sdn Bhd                              |      | Malaysia                           | 100%                                                         |
| Amcor Fibre Packaging - Asia Pte Ltd                       |      | Singapore                          | 100%                                                         |
| Amcor Flexibles Singapore Pte Ltd                          |      | Singapore                          | 100%                                                         |
| PT Indopack Pratama                                        |      | Indonesia                          | 55%                                                          |
| Amson International (Shanghai) Co Limited                  | (2)       | China                              | 100%                                                         |
| Amcor Flexibles (Zhongshan) Co Ltd                         |      | China                              | 100%                                                         |
| Amcor White Cap Asia Pacific, Inc                          |      | Philippines                        | 100%                                                         |
| Amcor Flexibles (Beijing) Co Ltd                           |      | China                              | 100%                                                         |
| Rocma Holdings Co Ltd                                      |      | Thailand                           | 94.9%                                                        |
| Amcor Nominees Pty Ltd                                     | (1)       | Australia                          | 100%                                                         |
| Amcor Investments Pty Ltd                                  | (1)       | Australia                          | 100%                                                         |
| Amcor Packaging (New Zealand) Ltd                          | (1)       | New Zealand                        | 100%                                                         |
| Amcor Finance (NZ) Ltd                                     | (1)       | New Zealand                        | 100%                                                         |
| Amcor Investments (NZ) Ltd                                 |      | New Zealand                        | 100%                                                         |
| Steel Can Components Limited                               |      | New Zealand                        | 50%                                                          |
| Amcor PET Packaging de Colombia SA                         |      | Colombia                           | 0.94%                                                        |
| Amcor Packaging (USA) Inc                                  |      | United States of America           | 100%                                                         |
| Twinpak (USA) Inc                                          |      | United States of America           | 100%                                                         |
| Amcor Holdings  Inc                                        |      | United States of America           | 100%                                                         |
| Amcor PET  Packaging USA, Inc                              |      | United States of America           | 100%                                                         |
| Pet Products  International del Peru                       |      | Peru                               | 100%                                                         |
| PET Products  International del Peru SA                    |      | Venezuela                          | 100%                                                         |
| Yoshino-Amcor,  LLC                                        |      | United States of America           | 50%                                                          |
| Amcor White Cap  Inc                                       |      | United States of America           | 100%                                                         |
| Amcor White Cap  International Inc                         |      | United States of America           | 100%                                                         |
| Bericap LLC                                                |      | United States of America           | 50%                                                          |
| Amcor Flexibles Inc                                        | (4)       | United States of America           | 100%                                                         |
| Stevens Flexible  Packaging Inc                            |      | United States of America           | 90%                                                          |
| Amcor Finance (USA) Inc                                    |      | United States of America           | 100%                                                         |
| Amcor Canadian  Capital Corporation                        |      | Canada                             | 100%                                                         |
| Amcor Finance  Canada Ltd                                  |      | Canada                             | 100%                                                         |
| Amcor de Mexico SA de CV                                   |      | Mexico                             | 1%                                                           |
| Amcor Sunclipse North America                              |      | United States of America           | 100%                                                         |
| Amcor de Mexico  SA de CV                                  |      | Mexico                             | 99%                                                          |
| Kent H Landsberg  Co de Mexico SA de CV                    |      | Mexico                             | 99%                                                          |
| Sunclipse de  Mexico SA de CV                              |      | Mexico                             | 10%                                                          |
| Sunclipse de  Mexico SA de CV                              |      | Mexico                             | 90%                                                          |
| Kent H Landsberg  Co de Mexico SA de CV                    |      | Mexico                             | 1%                                                           |
| Box Builders  (Inc)                                        |      | United States of America           | 100%                                                         |
| Corrugated  Service Orange Inc                             |      | United States of America           | 100%                                                         |
| Zetco Inc                                                  |      | United States of America           | 100%                                                         |
| Just in Time Inc                                           |      | United States of America           | 100%                                                         |

 

F-101

----

**AmcorLimited ConsolidatedNotes to the consolidated financial statements30 June 2006**

**NOTE43.  SUBSIDIARIES continued**
|                                              | **Notes** | **Country of  Incorporation** | **Percentage  Held by Direct  Parent Entity** |
|----------------------------------------------|-----------|-------------------------------|-----------------------------------------------|
|                                         |      |                          |                                          |
| Frantis Manufacturing Company Inc            |      | United States of America      | 100%                                          |
| The Anle Box & Paper Co of Indiana Inc   |      | United States of America      | 100%                                          |
| Kent H Landsberg Co of Illinois LLC          |      | United States of America      | 100%                                          |
| Kent H Landsberg Co of El Paso LP            |      | United States of America      | 99.5%                                         |
| Amcor Sunclipse Texas LLC                    |      | United States of America      | 100%                                          |
| Kent H Landsberg  Co of El Paso LP           |      | United States of America      | 0.5%                                          |
| Kent H Landsberg  Co of Dallas LP            |      | United States of America      | 0.5%                                          |
| Kent H Landsberg Co of Dallas LP             |      | United States of America      | 99.5%                                         |
| KDS Packaging & Printing Inc             |      | United States of America      | 100%                                          |
| Hanson Staple Company, Inc                   |      | United States of America      | 100%                                          |
| Amcor PET Packaging de Mexico SA de CV       |      | Mexico                        | 100%                                          |
| Amcor Plastic Containers de Mexico SA de CV  |      | Mexico                        | 100%                                          |
| Amcor PET Packaging de Honduras SA           |      | Honduras                      | 100%                                          |
| Uruguay Preform SRL                          |      | Uruguay                       | 100%                                          |
| Torrenoble SA                                |      | Uruguay                       | 100%                                          |
| Amcor PET Packaging del Ecuador SA           | (8)       | Ecuador                       | 100%                                          |
| Amcor PET Packaging de Puerto Rico, Inc      |      | Puerto Rico                   | 100%                                          |
| Vinisa Fueguina S.R.L.                       |      | Argentina                     | 100%                                          |
| Amcor Flexibles Brasil Ltda                  |      | Brazil                        | 100%                                          |
| Amcor Flexibles Puerto Rico Inc              |      | Puerto Rico                   | 100%                                          |
| Amcor PET Packaging del Peru SA              |      | Peru                          | 61%                                           |
| Amcor PET Packaging de El Salvador           |      | El Salvador                   | 100%                                          |
| Amcor Packaging (Australia) Pty Ltd          | (1)       | Australia                     | 100%                                          |
| AGAL Holdings Pty Ltd                        | (1)       | Australia                     | 100%                                          |
| Envirocrates Pty Ltd                         | (1)       | Australia                     | 100%                                          |
| PP New Pty Ltd                               | (1)       | Australia                     | 100%                                          |
| AP Chase Pty Ltd                             | (1)       | Australia                     | 100%                                          |
| Pak Pacific Corporation Pty Ltd              | (1)       | Australia                     | 100%                                          |
| ACN 002693843 Box Pty Ltd                    | (1)       | Australia                     | 100%                                          |
| Lynyork Pty Ltd                              | (1)       | Australia                     | 100%                                          |
| Fibre Containers (Qld) Pty Ltd               | (1)       | Australia                     | 100%                                          |
| Service Containers Pty Ltd                   | (1)       | Australia                     | 100%                                          |
| ACN089523919 CCC Pty Ltd                     | (1)       | Australia                     | 100%                                          |
| Rota Die International Pty Ltd               | (1)       | Australia                     | 100%                                          |
| Rota Die Pty Ltd Trustee of Rota Die Trust   | (1)       | Australia                     | 100%                                          |
| Amcor PET Packaging Canada Inc               |      | Canada                        | 100%                                          |
| Bericap Inc                                  |      | Canada                        | 51%                                           |
| Amcor PET Packaging Atlantic Inc             | (4)       | Canada                        | 73.75%                                        |
| Amcor European Holdings Pty Ltd              | (1)       | Australia                     | 100%                                          |
| Amcor Flexibles A/S                          |      | Denmark                       | 25.2%                                         |
| Amcor European Consolidated Holdings Limited |      | Cyprus                        | 100%                                          |
| Amcor Flexibles A/S                          |      | Denmark                       | 74.8%                                         |
| Amcor Flexibles  Netherlands Holding BV      |      | Netherlands                   | 100%                                          |
| Amcor Flexibles  Envi BV                     |      | Netherlands                   | 100%                                          |
| Amcor Flexibles  Hapece BV                   |      | Netherlands                   | 100%                                          |
| Amcor Flexibles  Nederland BV                |      | Netherlands                   | 100%                                          |
| Amcor Flexibles  Culemborg BV                |      | Netherlands                   | 100%                                          |
| Amcor Flexibles  Denmark A/S                 |      | Denmark                       | 100%                                          |
| Amcor Flexibles  Albertazzi Spa              |      | Italy                         | 100%                                          |
| Amcor Flexibles  Transpac SA                 |      | Belgium                       | 100%                                          |
| Amcor Flexibles  Europa Sur, SA              |      | Spain                         | 100%                                          |
| Grupo Amcor  Flexibles Hispania SL           |      | Spain                         | 100%                                          |
| Pergut  Suministros Medicos y Embalajes SL   |      | Spain                         | 100%                                          |
| Amcor Flexibles  Helio Folien GmbH           |      | Germany                       | 100%                                          |
| Amcor Flexibles  Schroeder & Wagner GmbH |      | Germany                       | 100%                                          |
| Amcor Flexibles  Deutschland GmbH            |      | Germany                       | 100%                                          |

 

F-102

----

**AmcorLimited ConsolidatedNotes to the consolidated financial statements30 June 2006**

**NOTE43.  SUBSIDIARIES continued**
|                                                                       | **Notes** | **Country  of  Incorporation** | **Percentage  Held by Direct  Parent Entity** |
|-----------------------------------------------------------------------|-----------|--------------------------------|-----------------------------------------------|
|                                                                  |      |                           |                                          |
| Immo Transpac NV                                                      |      | Belgium                        | 100%                                          |
| Amcor Flexibles Synco SA                                              |      | Belgium                        | 100%                                          |
| Amcor Flexibles UK Holdings Ltd                                       |      | United Kingdom                 | 100%                                          |
| Amcor Flexibles  Sligo Limited                                        |      | Ireland                        | 100%                                          |
| Rocma Medical  (Ireland) Limited                                      |      | Ireland                        | 100%                                          |
| Amcor Flexibles  Group Management Ltd                                 |      | United Kingdom                 | 100%                                          |
| Amcor Flexibles  Finance Ltd                                          |      | United Kingdom                 | 100%                                          |
| Amcor Flexibles  Finland OY                                           |      | Finland                        | 100%                                          |
| Flexirepro OY                                                         | (8)       | Finland                        | 76.67%                                        |
| ZAO Akerlund  & Rausing MO W                                      |      | Russia                         | 100%                                          |
| Akerlund &  Rausing SA                                            |      | Poland                         | 99.6%                                         |
| Amcor Flexibles  Drammen AS                                           |      | Norway                         | 100%                                          |
| Sidlaw Group Ltd                                                      |      | United Kingdom                 | 100%                                          |
| Amcor Flexibles  UK Ltd                                               |      | United Kingdom                 | 100%                                          |
| Amcor Flexibles  Winterbourne Ltd                                     |      | United Kingdom                 | 100%                                          |
| Sidlaw South  Gyle Ltd                                                |      | United Kingdom                 | 100%                                          |
| Amcor Flexibles  France SA                                            |      | France                         | 74.5%                                         |
| Amcor Flexibles  Neocel-Embalagens Lda                                |      | Portugal                       | 72%                                           |
| Amcor France  Healthcare SARL                                         |      | France                         | 100%                                          |
| Amcor Flexibles  SPS SASU                                             |      | France                         | 100%                                          |
| Amcor Flexibles Schupbach AG                                          |      | Switzerland                    | 100%                                          |
| Desford Limited                                                       |      | United Kingdom                 | 100%                                          |
| Leaderpack-Embalagens Flexiveis Lda                                   |      | Portugal                       | 49%                                           |
| Leaderpack-Embalagens Flexiveis Lda                                   |      | Portugal                       | 51%                                           |
| Amcor Flexibles Malmo AB                                              |      | Sweden                         | 100%                                          |
| Amcor Flexibles Lund AB                                               |      | Sweden                         | 100%                                          |
| Bizz Group AB                                                         |      | Sweden                         | 100%                                          |
| Amcor Flexibles France SA                                             |      | France                         | 25.5%                                         |
| Amcor Flexibles Neocel-Embalagens Lda                                 |      | Portugal                       | 28%                                           |
| Strabo BV                                                             |      | Netherlands                    | 100%                                          |
| Brontet BV                                                            |      | Netherlands                    | 100%                                          |
| Amcor Rentsch Industrie Holding Berlin GmbH                           |      | Germany                        | 100%                                          |
| Amcor Rentsch Novgorod                                                |      | Russia                         | 100%                                          |
| Dravik BV                                                             |      | Netherlands                    | 100%                                          |
| Amcor Services No 2                                                   |      | United Kingdom                 | 100%                                          |
| Amcor PET Packaging Europe NV/SA                                      |      | Belgium                        | 98.4%                                         |
| Amcor PET Packaging Belgium                                           |      | Belgium                        | 100%                                          |
| Amcor PET Packaging Czech Republic s.r.o.                             |      | Czech Republic                 | 90%                                           |
| Amcor White Cap Nederland BV                                          |      | Netherlands                    | 100%                                          |
| Amcor PET Packaging de Venezuela SA                                   |      | Venezuela                      | 61%                                           |
| Amcor Rentsch Portugal SA                                             |      | Portugal                       | 95.2%                                         |
| Rig Rentsch Industrie Holding AG                                      |      | Switzerland                    | 100%                                          |
| Amcor Rentsch Portugal SA                                             |      | Portugal                       | 4.8%                                          |
| SMR Stanztechnik AG                                                   |      | Switzerland                    | 49%                                           |
| Amcor Rentsch Rickenbach AG                                           |      | Switzerland                    | 100%                                          |
| Amcor Rentsch Laupen AG                                               |      | Switzerland                    | 100%                                          |
| Amcor White Cap Austria GmbH                                          |      | Austria                        | 95%                                           |
| Amcor Italia S.r.l.                                                   |      | Italy                          | 100%                                          |
| Amcor PET Packaging Iberia SA                                         |      | Spain                          | 100%                                          |
| PET Packaging Amcor Maroc S.A.R.L.                                    |      | Morocco                        | 99.99%                                        |
| Amcor Magyarorszag Csomagolastechnikai Korlatolt  Feleossegu Tarsasag |      | Hungary                        | 100%                                          |
| Amcor White Cap Holdings Polska Sp.z.o.o.                             |      | Poland                         | 100%                                          |
| Amcor PET Packaging Holdings Polska Sp.z.o.o.                         |      | Poland                         | 100%                                          |
| Amcor Mediflex Ltd                                                    |      | United Kingdom                 | 100%                                          |
| Amcor Flexibles Polska Sp.z o.o.                                      |      | Poland                         | 100%                                          |
| Amcor PET Packaging Polska Sp.z.o.o.                                  |      | Poland                         | 100%                                          |
| Amcor PET Packaging U.K. Limited                                      |      | United Kingdom                 | 100%                                          |
| Amcor PET Packaging Holdings Limited                                  |      | United Kingdom                 | 100%                                          |
| Amcor Finance Europe                                                  |      | Ireland                        | 100%                                          |

 

F-103

----

**Amcor Limited ConsolidatedNotes to the consolidated financial statements30 June 2006**

 

**NOTE 43.  SUBSIDIARIES continued**

 
|                                            | **Notes** | **Country  of  Incorporation** | **Percentage  Held by Direct  Parent Entity** |
|--------------------------------------------|-----------|--------------------------------|-----------------------------------------------|
|                                       |      |                           |                                          |
| Amcor Europe LLP                           |      | Australia                      | 1%                                            |
| Amcor Holding                              |      | United Kingdom                 | 100%                                          |
| Amcor Europe LLP                           |      | Australia                      | 99%                                           |
| Rocma Sterling                             |      | United Kingdom                 | 100%                                          |
| Amcor UK                                   |      | United Kingdom                 | 100%                                          |
| Rocma UK Limited                           |      | United Kingdom                 | 100%                                          |
| Rocma Finance                              |      | United Kingdom                 | 100%                                          |
| Amcor UK Finance  Ltd                      |      | United Kingdom                 | 100%                                          |
| Amcor European Finance  LLC                | (5)       | United States of America       | 26.2%                                         |
| Amcor Holding No  1 Ltd                    |      | United Kingdom                 | 100%                                          |
| Amcor France SNC                           |      | France                         | 100%                                          |
| Amcor PET Packaging  France SAS            |      | France                         | 100%                                          |
| Amcor PET Recycling  France SAS            |      | France                         | 100%                                          |
| Amcor International SAS                    |      | France                         | 100%                                          |
| Amcor France Holding No  1                 |      | France                         | 100%                                          |
| Astron LLC                                 | (2)       | Ukraine                        | 100%                                          |
| Amcor Europe Group  Management             |      | United Kingdom                 | 100%                                          |
| Amcor Rentsch France  SAS                  |      | France                         | 100%                                          |
| Amcor Flexibles Novgorod                   |      | Russia                         | 100%                                          |
| Amcor Investments  Germany Ltd             |      | United Kingdom                 | 100%                                          |
| Amcor Holdings Germany  GmbH               |      | Germany                        | 100%                                          |
| Amcor PET Packaging  Deutschland GmbH      |      | Germany                        | 100%                                          |
| Amcor Rentsch  Deutschland GmbH            | (4)       | Germany                        | 100%                                          |
| Amcor Flexibles  Hochheim GmbH             |      | Germany                        | 100%                                          |
| Amcor Rentsch Polska  Sp.z.o.o.            |      | Poland                         | 100%                                          |
| AFP (Europe)                               |      | United Kingdom                 | 100%                                          |
| Containers Packaging  (Europe)             |      | United Kingdom                 | 100%                                          |
| Litografia A Romero SA                     |      | Spain                          | 39.9%                                         |
| Amcor European  Finance LLC                |      | United States of America       | 73.8%                                         |
| Rocma Europe                               | (5)       | United Kingdom                 | 100%                                          |
| Amcor PET  Packaging de Colombia SA        |      | Colombia                       | 89.66%                                        |
| Amcor PET  Packaging de Argentina SA       |      | Argentina                      | 94.69%                                        |
| Amcor Holdings  (Australia) Pty Ltd        | (1)       | Australia                      | 100%                                          |
| Amcor PET  Packaging de Argentina SA       |      | Argentina                      | 5.3%                                          |
| Amcor PET  Packaging de Colombia SA        |      | Colombia                       | 9.4%                                          |
| Amcor PET  Packaging Czech Republic s.r.o. |      | Czech Republic                 | 10%                                           |
| Amcor White Cap  Austria GmbH              |      | Austria                        | 5%                                            |
| Amcor USA LLC                              |      | United States of America       | 100%                                          |
| Amcor PET  Packaging do Brasil Ltda        | (4)       | Brazil                         | 100%                                          |
| Amcor Embalagens  da Amazonia S/A          | (4)       | Brazil                         | 4.12%                                         |
| Amcor PET  Holdings do Brasil Ltda         |      | Brazil                         | 100%                                          |
| Amcor Embalagens  da Amazonia S/A          |      | Brazil                         | 95.8%                                         |

 

F-104

----

**AmcorLimited ConsolidatedNotes to the consolidated financial statements30 June 2006**

**Note 43 SUBSIDIARIES continued**

(1)          Amcor Limited and thesesubsidiary companies have entered into an approved deed for the cross guaranteeof liabilities.

Pursuant to ASIC Class Order 98/1418 (as amended)dated 13 August 1998, these wholly-owned subsidiaries are relieved from theCorporations Act 2001 requirements for preparation, audit and lodgement offinal reports.

It is a condition of the Class Order that AmcorLimited and each of these subsidiaries enter into a deed of crossguarantee.  The effect of the deed isthat Amcor Limited guarantees to each creditor payment in full of any debt inthe event of winding up any of these subsidiaries under certain provisions ofthe Corporations Act 2001.  If a windingup occurs under other provisions of the Act, Amcor Limited will only be liablein the event that after six months any creditor has not been paid in full.  These subsidiaries have also given similarguarantees in the event that Amcor Limited is wound up.

(2)          Controlled entities and businesses acquiredduring the year:

Bellgate InternationalLtd

Amson International(Shanghai) Co Limited

Astron LLC

(3)   Controlled entities and businesses soldduring the year:

Leigh Mardon PacificPackaging Pte Ltd

Beijing Leigh-MardonPacific Packaging Co Ltd

Qingdao Leigh-MardonPackaging Co Ltd

PT Amcor Indonesia

Amcor ContainersPackaging (Thailand)

Amcor France Holding No.2

Amcor White Cap Belguim

Amcor White Cap Espana SL

Amcor White Cap PolskaSp.z.o.o.

Amcor White Cap FranceSAS

Amcor White CapDeutschland GmbH

Amcor White Cap UK Ltd

Amcor White Cap UkraineLLC

Amcor Ambalaj Ticaret AS

AMB Packaging Pte Ltd

A&R Nordpak

Bellgate International Ltd

(3a)    Aspart of the disposal of the Amcor White Cap business, the following entitieshave been treated as sold even though that sale is subject to prior regulatoryapproval. The risks and rewards of ownership have effectively passed to thepurchaser on 1 June 2006.

Amcor White CapInvestments Inc

Amcor White CapProperties Inc

Amcor White Cap SouthEast Asia Inc

Amcor White CapProperties Inc

Amcor White Cap ShanghaiLtd

Amcor White Cap deVenezuela SA

Amcor White Cap do Brasil Ltda

Controlled entities andbusinesses disposed of during the financial year that meet the definition of adiscontinued operation are detailed in Note 12.

F-105

----

**AmcorLimited ConsolidatedNotes to the consolidated financial statements30 June 2006**

**NOTE 43. SUBSIDIARIES continued**
| (4)    | The following entities were renamed during the year:                          |
|--------|-------------------------------------------------------------------------------|
|   |                                                                          |
|   | Amcor Embalagens da  Amazonia S/A formerly Injepet Embalagens da Amazonia S/A |
|   | Amcor PET Packaging do  Brasil Ltda formerly Injepet Embalagens Ltda          |
|   | Amcor Flexibles Inc  formerly Amcor Flexibles Healthcare                      |
|   | Amcor PET Packaging  Atlantic Inc formerly Twinpak Atlantic Inc               |
|   | Amcor Rentsch  Deutschland GmbH formerly Amcor Rentsch GmbH (Berlin)          |
|   | Leigh-Mardon Singapore  Pte Ltd formerly St Regis Bates (Singapore) Pte Ltd   |
|   |                                                                          |
| (5)    | Companies that were incorporated during the year:                             |
|   |                                                                          |
|   | Amcor European Finance  LLC                                                   |
|   | Rocma Europe                                                                  |
|   |                                                                          |
| (6)    | Companies that were liquidated during the year:                               |
|   |                                                                          |
|   | AF Sverige                                                                    |
|   | Cardimat BV                                                                   |
|   | Amcor Plastube Inc                                                            |
|   | KH Landsberg Co de  Ciudad Juarez SA de CV                                    |
|   | ACE Packaging Sdn Bhd                                                         |
|   |                                                                          |
| (7)    | Companies that were merged or amalgamated during the  year:                   |
|   |                                                                          |
|   | Amcor Holdings Inc                                                            |
|   |                                                                          |
| (8)    | Amcor increased its investment in these companies  during the year:           |
|   |                                                                          |
|   | Amcor PET Packaging del  Ecuador SA                                           |

 

F-106

----

**AmcorLimited ConsolidatedNotes to the consolidated financial statements30 June 2006**

**NOTE 44.  DEED OF CROSS GUARANTEE**

Amcor Limited andthe subsidiaries identified in Note 43(1) are parties to a deed of crossguarantee under which each company guarantees the debts of the others.

A consolidatedincome statement and consolidated balance sheet comprising Amcor Limited andthe wholly-owned subsidiaries party to the deed, after eliminating alltransactions between parties to the deed of cross guarantee, as at 30 June, areset out below:
|                                                       | ** ** | **2006**            | ** ** | **2005**   | ** ** |
|-------------------------------------------------------|------------|---------------------|------------|------------|------------|
| ** **                                            | ** ** | **$m**              | ** ** | **$m**     | ** ** |
|                                                  |       |                |       |       |       |
| **Summarised  income statement and retained profits** | ** ** | ** **          | ** ** | ** ** | ** ** |
| ** **                                            | ** ** | ** **          | ** ** | ** ** | ** ** |
| Profit before related  income tax expense             |       | 38.1                |       | 170.8      |       |
| Income tax  expense (i)                               |       | (2.0                | )          | (102.0     | )          |
|                                                  |       |                |       |       |       |
| Profit from  continuing operations                    |       | 36.1                |       | 68.8       |       |
| Retained profits  at beginning of financial year      |       | 1,238.5             |       | 1,415.0    |       |
| Aggregate of  amounts transferred (ii)                |       | -    |       | 6.1        |       |
| Actuarial  gains/losses recognised directly in equity |       | (4.4                | )          | 8.9        |       |
| Adjustment on  transition to AIFRS, net of tax        |       | (6.3                | )          | 30.0       |       |
|                                                  |       |                |       |       |       |
|                                                  |       | 1,263.9             |       | 1,528.8    |       |
|                                                  |       |                |       |       |       |
| Dividends  recognised during the financial year       |       | (298.8              | )          | (290.2     | )          |
|                                                  |       |                |       |       |       |
| **RETAINED PROFITS AT END OF  FINANCIAL YEAR**        |       | 965.1               |       | 1,238.6    |       |

 
| (i) In 2005 this  includes a tax benefit of $32.9 million on asset impairments in Australasia      |   |
|----------------------------------------------------------------------------------------------------|--------|
| (ii) Relates to  entities which have entered into the Deed of Cross Guarantee for the first  time. |   |

 

F-107

----

**Amcor Limited ConsolidatedNotes to the consolidated financial statements30 June 2006**

 

|                                                 | ** ** | **2006**            | ** ** | **2005**            | ** ** |
|-------------------------------------------------|------------|---------------------|------------|---------------------|------------|
| **NOTE  44. DEED OF CROSS GUARANTEE continued** | ** ** | **$m**              | ** ** | **$m**              | ** ** |
| ** **                                      | ** ** | ** **          | ** ** | ** **          | ** ** |
| **Summarised  balance sheet**                   | ** ** | ** **          | ** ** | ** **          | ** ** |
|                                            |       |                |       |                |       |
| **Current  assets**                             | ** ** | ** **          | ** ** | ** **          | ** ** |
| Cash and cash  equivalents                      |       | 15.4                |       | 7.0                 |       |
| Trade and other  receivables                    |       | 3,244.5             |       | 2,978.4             |       |
| Inventories                                     |       | 365.9               |       | 360.8               |       |
| Other financial  assets                         |       | 9.3                 |       | -    |       |
| **Total  current assets**                       |       | 3,635.1             |       | 3,346.2             |       |
|                                            |       |                |       |                |       |
| **Non-current  assets**                         | ** ** | ** **          | ** ** | ** **          | ** ** |
| Other financial  assets                         |       | 3,808.8             |       | 4,139.2             |       |
| Property, plant  and equipment                  |       | 1,576.6             |       | 1,597.4             |       |
| Deferred tax  assets                            |       | 151.2               |       | 120.6               |       |
| Intangible  assets                              |       | 190.8               |       | 186.7               |       |
| Other  non-current assets                       |       | 40.5                |       | 45.0                |       |
| **Total  non-current assets**                   |       | 5,767.9             |       | 6,088.9             |       |
|                                            |       |                |       |                |       |
| **Total  assets**                               |       | 9,403.0             |       | 9,435.1             |       |
|                                            |       |                |       |                |       |
| **Current  liabilities**                        | ** ** | ** **          | ** ** | ** **          | ** ** |
| Trade and other  payables                       |       | 417.4               |       | 382.0               |       |
| Interest bearing  liabilities                   |       | 2,791.0             |       | 2,861.3             |       |
| Subordinated  convertible securities            |       | 246.0               |       | -    |       |
| Other financial  liabilities                    |       | 2.9                 |       | -    |       |
| Current tax  liabilities                        |       | 49.1                |       | 62.0                |       |
| Provisions                                      |       | 139.9               |       | 142.7               |       |
| **Total  current liabilities**                  |       | 3,646.3             |       | 3,448.0             |       |
|                                            |       |                |       |                |       |
| **Non-current  liabilities**                    | ** ** | ** **          | ** ** | ** **          | ** ** |
| Trade and other  payables                       |       | 0.7                 |       | 1.0                 |       |
| Interest bearing  liabilities                   |       | 1,721.9             |       | 1,446.5             |       |
| Subordinated  convertible securities            |       | -    |       | 301.1               |       |
| Deferred tax liabilities                        |       | 295.8               |       | 276.9               |       |
| Provisions                                      |       | 37.4                |       | 38.3                |       |
| Retirement  benefit obligations                 |       | 39.7                |       | 62.4                |       |
|                                            |       |                |       |                |       |
| **Total  non-current liabilities**              |       | 2,095.5             |       | 2,126.2             |       |
|                                            |       |                |       |                |       |
| **Total  liabilities**                          |       | 5,741.8             |       | 5,574.2             |       |
|                                            |       |                |       |                |       |
| **Net  assets**                                 |       | 3,661.2             |       | 3,860.9             |       |
| ** **                                      | ** ** | ** **          | ** ** | ** **          | ** ** |
| **Equity**                                      | ** ** | ** **          | ** ** | ** **          | ** ** |
| Contributed  equity                             |       | 2,810.3             |       | 2,725.5             |       |
| Reserves                                        |       | (48.7               | )          | (37.7               | )          |
| Retained profits                                |       | 899.6               |       | 1,173.1             |       |
|                                            |       |                |       |                |       |
| **Total  equity**                               |       | 3,661.2             |       | 3,860.9             |       |

 

F-108

----

**AmcorLimited ConsolidatedNotes to the consolidated financial statements30 June 2006**

**NOTE 45.  INVESTMENTSIN ASSOCIATES**

**(a)Carrying amounts**

Information relating toassociated entities is set out below:
|                                       |       |                   |       | **Ordinary Share  ownership interest** |       |       |       |       |       |
|---------------------------------------|------------|------------------------|------------|----------------------------------------|------------|------------|------------|------------|------------|
|                                  |       |                   |       |                                   |       |       |       |       |       |   |   |
| **Name of associate entity**          | ** ** | **Principal activity** | ** ** | **2006**                               | ** ** | **2005**   | ** ** | **2006**   | ** ** | **2005** | ** ** |
| ** **                            | ** ** | ** **             | ** ** | **%**                                  | ** ** | **%**      | ** ** | **$m**     | ** ** | **$m** | ** ** |
| ** **                            | ** ** | ** **             | ** ** | ** **                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Tien Wah Press (M) Sdn  Bhd           |       | Print  packaging       |       | 25.0                                   |       | 25.0       |       | 7.2        |       | 6.6 |   |
|                                  |       |                   |       |                                   |       |       |       |       |       |   |   |
| Vision Grande Group  Holdings Limited |       | Tobacco  packaging     |       | 40.1                                   |       | 16.9       |       | 275.9      |       | 34.1 |   |
|                                  |       |                   |       |                                   |       |       |       | 283.1      |       | 40.7 |   |

 

Tien Wah Press (M)Sdn Bhd is incorporated in Malaysia.

Vision GrandeGroup Holdings Limited is incorporated in Hong Kong.

The balance datesfor Tien Wah Press (M) Sdn Bhd and Vision Grande Group Holdings Limited areboth 31 December 2005.  The balance datesare different from those of the consolidated entity due to commercial reasonsand the listing requirements of these entities on the Malaysian and Hong Kongstock exchanges respectively.

For Tien Wah Press(M) Sdn Bhd, the latest publicly available financial information is unauditedresults for the three months ended 31 March 2006.  This information, in conjunction with theaudited results for the twelve months result ended 31 December 2005, has formedthe basis for determining the consolidated entity’s share of profits for the 12month period to 30 June 2006.

For Vision GrandeHoldings Limited, an interim profit announcement providing unaudited resultsfor the 6 months to June 2006 was made to the Hong Kong stock exchange on 15August 2006.  This result, in conjunctionwith the audited results for the twelve months ended 31 December 2005, hasformed the basis for the consolidated entity’s share of profits for the 12months ended 30 June 2006.
|                                                         | ** ** | **2006** | ** ** | **2005**      | ** ** |
|---------------------------------------------------------|------------|----------|------------|---------------|------------|
|                                                    | ** ** | **$m**   | ** ** | **$m**        | ** ** |
| **(b)  Movements in carrying amounts**                  |       |     |       |          |       |
|                                                    |       |     |       |          |       |
| Carrying amount  at the beginning of the financial year |       | 40.7     |       | 6.7           |       |
| Adjustment on  adoption of AASB 132 and AASB 139        |       | 7.2      |       | -   |       |
| Share of profits  after income tax                      |       | 9.8      |       | 1.8           |       |
| Dividends  received/receivable                          |       | (6.4     | )          | (0.2          | )          |
| Share of  movement in exchange fluctuation reserve      |       | (8.8     | )          | (0.2          | )          |
| Acquisitions at  fair value                             |       | 226.3    |       | 34.2          |       |
| Foreign exchange  fluctuation                           |       | 14.3     |       | (1.6          | )          |
| Carrying amount  at the end of the financial year       |       | 283.1    |       | 40.7          |       |
|                                                    |       |     |       |          |       |
| **(c)  Fair value of listed investments in associates** |       |     |       |          |       |
|                                                    |       |     |       |          |       |
| Tien Wah Press  (M) Sdn Bhd                             |       | 7.8      |       | 8.6           |       |
|                                                    |       |     |       |          |       |
| Vision Grande  Group Holdings Limited                   |       | 410.5    |       | 59.4          |       |
|                                                    |       | 418.3    |       | 68.0          |       |
|                                                    |       |     |       |          |       |
| **(d)  Share of associates’ profits or losses**    |       |     |       |          |       |
|                                                    |       |     |       |          |       |
| Profit before  income tax                               |       | 10.7     |       | 2.1           |       |
| Income tax  expense                                     |       | (0.9     | )          | (0.3          | )          |
| Profit after  income tax                                |       | 9.8      |       | 1.8           |       |

 

F-109

----

**AmcorLimited ConsolidatedNotes to the consolidated financial statements30 June 2006**

**NOTE 46. RECONCILIATION OF PROFITAFTER RELATED INCOME TAX TO NET CASH PROVIDED BY OPERATING ACTIVITIES**
|                                                                         | ** ** | **2006**   | ** ** | **2005**      | ** ** |
|-------------------------------------------------------------------------|------------|------------|------------|---------------|------------|
| **Cash  flows from operating activities**                               | ** ** | **$m**     | ** ** | **$m**        | ** ** |
| Profit for the  financial year                                          |       | 379.2      |       | 258.4         |       |
| Depreciation of  property, plant and equipment                          |       | 442.6      |       | 436.5         |       |
| Amortisation of  leased assets                                          |       | 9.4        |       | 7.7           |       |
| Amortisation of  other intangibles                                      |       | 21.4       |       | 17.6          |       |
| Non-cash  retirement benefit expense                                    |       | 42.0       |       | 21.0          |       |
| Asset  impairments                                                      |       | 66.8       |       | 227.0         |       |
| Asset impairment  reversals                                             |       | (7.1       | )          | (2.7          | )          |
| Interest  capitalised                                                   |       | (2.1       | )          | (3.7          | )          |
| Finance charges  on capitalised leases                                  |       | 3.3        |       | 4.0           |       |
| Unwind of discount  on provisions                                       |       | 2.5        |       | 2.5           |       |
| Grant income  recognised                                                |       | (2.4       | )          | -   |       |
| Net (gain)/loss  on disposal of non-current assets                      |       | (4.3       | )          | (8.6          | )          |
| Net (gain)/loss  on disposal of business/controlled entities            |       | (0.4       | )          | (3.8          | )          |
| Fair value gains  on other financial assets at fair value through       |       |       |       |          |       |
| income statement                                                        |       | (11.4      | )          | -   |       |
| Share of net  profits of associates not received as dividends           |       | (9.7       | )          | (1.8          | )          |
| Net foreign  exchange (gain)/loss                                       |       | (0.9       | )          | (2.0          | )          |
| Non cash  significant item                                              |       | 20.0       |       | 72.7          |       |
| Other sundry  items                                                     |       | 11.0       |       | 2.1           |       |
| **Operating  profit before changes in working capital and provisions**  |       | 959.9      |       | 1,026.9       |       |
| ** **                                                              | ** ** | ** ** | ** ** | ** **    | ** ** |
|  - Decrease /  (increase) in other operating assets                |       | 27.0       |       | 13.0          |       |
|  - Decrease /  (increase) in other operating liabilities           |       | (98.7      | )          | (6.8          | )          |
|  - Increase /  (decrease) in income tax payable and deferred taxes |       | 3.2        |       | (6.2          | )          |
|  - Increase /  (decrease) in other provisions                      |       | (39.1      | )          | (66.2         | )          |
|                                                                    |       |       |       |          |       |
|  - (Increase)  / decrease in trade and other receivables           |       | 28.6       |       | (167.4        | )          |
|  - Increase in  inventories                                        |       | (2.0       | )          | (165.5        | )          |
|  - Increase /  (decrease) in trade and other payables              |       | 85.2       |       | 273.9         |       |
|                                                                    |       |       |       |          |       |
| Movement in  working capital                                            |       | 111.8      |       | (59.0         | )          |
|                                                                    |       |       |       |          |       |
| Net cash from  operating activities                                     |       | 964.1      |       | 901.8         |       |
|                                                                    |       |       |       |          |       |
| **NOTE  47. NON-CASH INVESTING AND FINANCING ACTIVITIES**               | ** ** | ** ** | ** ** | ** **    | ** ** |
|                                                                    |       |       |       |          |       |
| Convertible securities                                                  |       | 121.5      |       | 0.1           |       |

 

Convertible securities of$121.5 million (2005: $0.1 million) were converted into 18,203,363 fully paidordinary shares.

F-110

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 48. SHARE BASED PAYMENTS**

**(a)****          Employee Share PurchasePlan (‘ESPP’)**

In 1985 theconsolidated entity established the ESPP. The following sub-plans have been implemented pursuant to this plan.

**(i)****            Employee IncentiveShare Plan (‘EISP’)**

Under the EISP, shares were offered for the benefit ofall full-time employees, permanent part-time employees and executive directorsof the Company with more than twelve months service.  The number of shares offered depended uponthe Company’s annual increase in earnings per share (before significantitems).  It was offered on the followingbasis: an increase in earnings per share of less than 5% would result in nooffer; from 5% to 10%, an offer of 100 shares; of more than 10%, an offer of200 shares would be made.  Thisperformance condition was chosen to assess the granting of the EISP sharesbecause it was transparent and measurable against objective data.  A paper, prepared by management, waspresented to the Human Resources Committee which reviewed the actual outcomesof the performance condition achieved for the financial year against thetargets set within the plan.  TheCommittee then recommended to the Board whether there would be an issue ofshares under the plan based on the criteria set out above.

Under the EISP, shares were issued at a 40% discountto the prevailing market price of Amcor Limited share, but in 2004 this wasamended to a 25% discount.  Thesubscription amount was funded by an interest-free loan from the Company withthe exception of Senior Executives who were not provided with the loanfacility.  Dividends on the shares areapplied in repayment of the loan balance. If the employee leaves the Company, the employee may repay the loan orthe shares are sold and the proceeds are applied to discharge the loan.  The employee is not liable for any deficiencyupon such discharge.

This sub-plan has been discontinued for theforeseeable future and there were no outstanding EISP shares at 30 June 2005and none were granted or exercised during the year ended 30 June 2006.

**(ii)****        Senior Executive RetentionShare Plan (‘SERSP’)**

Under the SERSP, the Board may nominate certain seniorexecutives as being eligible to receive fully paid ordinary shares in partsatisfaction 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, unlessthe employee ceases employment later than 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 restriction period for cause or poor performance.  The shares subject to the SERSP carry fulldividend entitlements and voting rights.

Rather than involving performance hurdles, theseretention shares are used to reward outstanding levels of previous performance,with the intention to retain key Senior Executives by:

-       tyingthe longer term interests of Senior Executives more closely to those of itsshareholders;

-                    providingexposure for those Senior Executives to the Company’s development; and,

-                    providing anincentive for those Senior Executives to stay with the Company for some time inthe future by providing such Senior Executives with Amcor Limited shares whichmust be retained for certain periods of time to gain full access to theirvalues.

F-111

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 48. SHARE BASED PAYMENTScontinued**

Details of thetotal movement in shares issued under the SERSP during the years ended 30 June2006 and 30 June 2005 are shown in the table below:
|                                             | ** ** | ** **    | ** ** | **Weighted**                                                | ** ** | ** **    | ** ** | **Weighted**                                                | ** ** |
|---------------------------------------------|------------|---------------|------------|-------------------------------------------------------------|------------|---------------|------------|-------------------------------------------------------------|------------|
|                                        | ** ** | ** **    | ** ** | **average**                                                 | ** ** | ** **    | ** ** | **average**                                                 | ** ** |
|                                        | ** ** | **2006**      | ** ** | **fair value**                                              | ** ** | **2005**      | ** ** | **fair value**                                              | ** ** |
|                                        | ** ** | **No.**       | ** ** | **$         ** | ** ** | **No.**       | ** ** | **$         ** | ** ** |
|                                        |       |          |       |                                                        |       |          |       |                                                        |       |
| Outstanding at  beginning of financial year |       | 550,425       |       | 7.15                                                        |       | 581,925       |       | 7.15                                                        |       |
| Exercised                                   |       | (505,425      | )          | 6.89                                                        |       | (31,500       | )          | 7.51                                                        |       |
|                                        |       |          |       |                                                        |       |          |       |                                                        |       |
| Outstanding at  end of financial year       |       | 45,000        |       | 6.68                                                        |       | 550,425       |       | 7.15                                                        |       |
| Exercisable at end of  financial year       |       | -   |       | -                                                 |       | -   |       | -                                                 |       |

 

**b) Employee share/option plan(‘ESOP’)**

In 1985, theconsolidated entity also established the Employee Share/Option Plan.  Under the ESOP, partly paid shares or optionsover shares in the company can be issued to executive officers and directors(including directors who are executives) and senior staff members selected bythe directors.

The partly paidshares are issued at the closing market price at the time of issue on the dateof allotment.  The call outstanding onlybecomes payable on termination, 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 as per the Australian Stock Exchange ListingRules.

Options grantedunder the ESOP may be issued upon such terms and subject to such conditions asthe directors of the company determine at the time.  Options granted under the ESOP areexercisable at a price equal to the closing market share price of Amcor Limitedshares traded on the Australian Stock Exchange at the date on which the optionswere granted or a weighted average market price during a period up to andincluding the date of grant.  The optionsare granted with performance hurdles established by the directors of AmcorLimited.

Options aregranted under the ESOP at no consideration and carry no dividend entitlement orvoting rights until they are exercised to ordinary shares on a one-for-onebasis.

They are issuedfor a term of up to ten years and the options cannot be transferred and are notquoted on any exchange.

For the majorityof options issued in the years ended June 30, 2006 and June 30, 2005,executives and certain members of staff are generally only eligible to exercisethe options if returns on average funds employed exceed targeted levels at theend of the financial reporting period in which the options were granted.  Returns on funds employed are defined asEarnings Before Interest Tax and Amortisation (‘EBITA’) divided by averagefunds employed.

Details of thetotal movement in options issued under the ESOP during the two years ended June30, 2006 are shown in the table below:
|                                             | ** ** | ** ** | ** ** | **Weighted**                                          | ** ** | ** **          | ** ** | **Weighted**                                          | ** ** |
|---------------------------------------------|------------|------------|------------|-------------------------------------------------------|------------|---------------------|------------|-------------------------------------------------------|------------|
|                                        | ** ** | ** ** | ** ** | **average**                                           | ** ** | ** **          | ** ** | **average**                                           | ** ** |
|                                        | ** ** | **2006**   | ** ** | **fair value**                                        | ** ** | **2005**            | ** ** | **fair value**                                        | ** ** |
|                                        | ** ** | **No.**    | ** ** | **$        ** | ** ** | **No.**             | ** ** | **$        ** | ** ** |
|                                        |       |       |       |                                                  |       |                |       |                                                  |       |
| Outstanding at  beginning of financial year |       | 19,100,965 |       | 7.23                                                  |       | 23,865,420          |       | 7.18                                                  |       |
| Granted                                     |       | 750,000    |       | 6.78                                                  |       | 5,921,500           |       | 6.84                                                  |       |
| Exercised                                   |       | (1,903,000 | )          | 5.35                                                  |       | (2,069,000          | )          | 5.84                                                  |       |
| Expired                                     |       | (186,000   | )          | 5.11                                                  |       | -    |       | -                                      |       |
| Cancelled                                   |       | (2,274,953 | )          | 7.39                                                  |       | (8,616,955          | )          | 7.14                                                  |       |
| Outstanding at  end of financial year       |       | 15,487,012 |       | 7.45                                                  |       | 19,100,965          |       | 7.23                                                  |       |
| Exercisable at end of  financial year       |       | 5,775,780  |       | 7.68                                                  |       | 4,728,000           |       | 6.25                                                  |       |

 

F-112

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 48. SHARE BASED PAYMENTScontinued**

**c) Other compensation plans**

Entitlement plansare an alternative to the ESPP and the ESOP and are in place in countries wherethe company is unable to issue shares or options.  Participants are offered entitlements and,over the period during which employees hold their entitlements, their valuewill mirror the fluctuating value of Amcor’s shares, including (in the case ofthe EBPP) all dividends paid on the shares during this time.

**(i)****            Employee bonus paymentplan (‘EBPP’)**

The EBPP is an equivalent to the EISP and enables thecompany to offer employees an equivalent plan where the share plan isunavailable in certain countries.  Underthe EBPP, participants were offered entitlements which were equivalent to 60%of the weighted average price of Amcor shares, and, over the period duringwhich employees held their entitlements their value mirrored the fluctuatingvalue of Amcor’s shares, including all dividends paid on the shares during thistime.  The consolidated entity hedged itsexposure to fluctuations in the value of the underlying Amcor shares.  Employees are only able to convert theirentitlements into a cash bonus payment when they left the company or threeyears had passed since the date on which entitlements were originally issued.

Offers of new entitlements under the EBPP have been discontinued forthe foreseeable future.

**(ii)****        Senior executive retentionpayment plan (‘SERPP’)**

From time to time, the Board may nominate certainemployees in Belgium, New Zealand, Poland, Switzerland and the USA as beingeligible to participate in the SERPP.  Inthese circumstances, instead of fully paid ordinary shares, entitlements areissued in part satisfaction of an employee’s remuneration for the relevantfinancial year.  The value of each Planentitlement is linked to the performance of Amcor Limited shares (including thevalue of accrued dividends).  Planentitlements may be converted into cash payment after the 5 year restrictionperiod has expired, provided that the employee has not been dismissed for causeor poor performance during this time.  Ifthe employee voluntarily ceases employment within four or five years from thedate the Plan entitlements were issued, the employee forfeits 40% or 20% oftheir Plan entitlements (respectively).

The CEO, in conjunction with senior management, makesrecommendations to the Human Resources Committee nominating high performingemployees to receive retention shares or the equivalent.  The Committee reviews the recommendationsand, if approved, makes a recommendation to the Board which finally determineswhether the incentives are granted.  Whengranted, these plans operate to provide Senior Executives the opportunity toshare in the growth in value of the Company and will encourage them to improvethe long term performance of the Company and its returns to shareholders.  This plan also helps to attract and retainskilled and experienced Senior Executives and provide them with incentive tohave a greater involvement and focus on the longer term goals of the Company.

Details of entitlements issued during the two years ended June 30, 2006are shown in the table below:
|                                             | ** ** | ** **          | ** ** | **Weighted**                                          | ** ** | ** **          | ** ** | **Weighted**                                          | ** ** |
|---------------------------------------------|------------|---------------------|------------|-------------------------------------------------------|------------|---------------------|------------|-------------------------------------------------------|------------|
|                                        | ** ** | ** **          | ** ** | **average**                                           | ** ** | ** **          | ** ** | **average**                                           | ** ** |
|                                        | ** ** | **2006**            | ** ** | **fair value**                                        | ** ** | **2005**            | ** ** | **fair value**                                        | ** ** |
|                                        | ** ** | **No.**             | ** ** | **$        ** | ** ** | **No.**             | ** ** | **$        ** | ** ** |
|                                        |       |                |       |                                                  |       |                |       |                                                  |       |
| Outstanding at  beginning of financial year |       | 108,000             |       | 6.70                                                  |       | 108,000             |       | 6.97                                                  |       |
| Exercised                                   |       | (30,000             | )          | 6.69                                                  |       | -    |       | -                                      |       |
| Outstanding at  end of financial year       |       | 78,000              |       | 6.68                                                  |       | 108,000             |       | 6.70                                                  |       |
| Exercisable at end of  financial year       |       | -    |       | -                                      |       | -    |       | -                                      |       |

 

F-113

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 48. SHARE BASED PAYMENTScontinued**

**(iii)****    Share Appreciation Option Plan(‘SAOP’)**

The ShareAppreciation Option Plan offered executive directors the opportunity to receiveoptions subject to certain performance targets being met.  This plan closed in 1999.  Details of entitlements exercised during thetwo years ended June 30, 2006 are shown in the table below:
|                                             | ** ** | ** **                | ** ** | **Weighted**                                                | ** ** | ** **                | ** ** | **Weighted**                                                | ** ** |
|---------------------------------------------|------------|---------------------------|------------|-------------------------------------------------------------|------------|---------------------------|------------|-------------------------------------------------------------|------------|
|                                        | ** ** | ** **                | ** ** | **average**                                                 | ** ** | ** **                | ** ** | **average**                                                 | ** ** |
| ** **                                  | ** ** | **2006**                  | ** ** | **fair value**                                              | ** ** | **2005**                  | ** ** | **fair value**                                              | ** ** |
|                                        | ** ** | **No.**                   | ** ** | **$         ** | ** ** | **No.**                   | ** ** | **$         ** | ** ** |
|                                        |       |                      |       |                                                        |       |                      |       |                                                        |       |
| Outstanding at  beginning of financial year |       | -     |       | -                                       |       | 40,000                    |       | 1.74                                                        |       |
| Exercised                                   |       | -     |       | -                                       |       | (40,000                   | )          | 1.74                                                        |       |
| Outstanding at  end of financial year       |       | -     |       | -                                       |       | -     |       | -                                       |       |
| Exercisable at end of  financial year       |       | -     |       | -                                       |       | -     |       | -                                       |       |

 

**(iv)****       Share AppreciationEntitlements (‘SAE’)**

Share AppreciationEntitlements may be issued to employees who take part of their bonus by way ofentitlements.  During the period theemployee holds them, the value of entitlements will be equivalent to thefluctuating value of Amcor Limited Shares. Details of entitlements issued during the two years ended June 30, 2006are shown in the table below.
|                                             | ** ** | ** ** | ** ** | **Weighted**                                    | ** ** | ** **                | ** ** | **Weighted**                                    | ** ** |
|---------------------------------------------|------------|------------|------------|-------------------------------------------------|------------|---------------------------|------------|-------------------------------------------------|------------|
|                                        | ** ** | ** ** | ** ** | **average**                                     | ** ** | ** **                | ** ** | **average**                                     | ** ** |
| ** **                                  | ** ** | **2006**   | ** ** | **fair value**                                  | ** ** | **2005**                  | ** ** | **fair value**                                  | ** ** |
|                                        | ** ** | **No.**    | ** ** | **$       ** | ** ** | **No.**                   | ** ** | **$       ** | ** ** |
|                                        |       |       |       |                                            |       |                      |       |                                            |       |
| Outstanding at  beginning of financial year |       | 605,132    |       | 1.65                                            |       | 810,265                   |       | 1.59                                            |       |
| Exercised                                   |       | (255,132   | )          | 1.56                                            |       | (205,133                  | )          | 1.40                                            |       |
| Cancelled                                   |       | (100,000   | )          | 1.89                                            |       | -     |       | -                           |       |
| Outstanding at  end of financial year       |       | 250,000    |       | 1.66                                            |       | 605,132                   |       | 1.65                                            |       |
| Exercisable at end of  financial year       |       | 250,000    |       | 1.66                                            |       | 555,132                   |       | 1.67                                            |       |

 

**(v)****           Cash-settled EmployeeShare Plan Options**

Cash-settledemployee share plan options are issued to employees residing in jurisdictionsthat, for statutory reasons, are not covered by option plans describedabove.  The cash-settled employee shareplan option plans operate in a manner similar to other option plans, althoughno entitlements to actual shares or options exist. Details of entitlementsissued during the two years ended June 30, 2006 are shown in the table below.
|                                             | ** ** | ** **                | ** ** | **Weighted**                                    | ** ** | ** ** | ** ** | **Weighted**                                    | ** ** |
|---------------------------------------------|------------|---------------------------|------------|-------------------------------------------------|------------|------------|------------|-------------------------------------------------|------------|
|                                        | ** ** | ** **                | ** ** | **average**                                     | ** ** | ** ** | ** ** | **average**                                     | ** ** |
| ** **                                  | ** ** | **2006**                  | ** ** | **fair value**                                  | ** ** | **2005**   | ** ** | **fair value**                                  | ** ** |
|                                        | ** ** | **No.**                   | ** ** | **$       ** | ** ** | **No.**    | ** ** | **$       ** | ** ** |
|                                        |       |                      |       |                                            |       |       |       |                                            |       |
| Outstanding at  beginning of financial year |       | 1,611,350                 |       | 1.52                                            |       | 1,384,000  |       | 1.70                                            |       |
| Granted                                     |       | -     |       | -                           |       | 455,000    |       | 1.03                                            |       |
| Cancelled                                   |       | (316,900                  | )          | 1.54                                            |       | (227,650   | )          | 1.64                                            |       |
| Outstanding at  end of financial year       |       | 1,294,450                 |       | 1.52                                            |       | 1,611,350  |       | 1.52                                            |       |
| Exercisable at end of  financial year       |       | 617,600                   |       | 1.94                                            |       | 280,000    |       | 1.76                                            |       |

 

F-114

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 48. SHARE BASED PAYMENTScontinued**

As describedabove, an employee share scheme has been established where the consolidatedentity may grant options over the ordinary shares of Amcor Limited to executivedirectors, executives and certain members of staff of the consolidatedentity.  The options, issued for nilconsideration, are granted in accordance with performance guidelinesestablished by the directors of Amcor Limited. The options are issued for up to a term of 10 years.  The options cannot be transferred and willnot be quoted on the Australian Stock Exchange.

**(vi)****       CEO Options**

On 27 October2005, 750,000 options were issued to the Managing Director of AmcorLimited.  Options were issued in threeindividual tranches of 250,000 options. The number of options that will ultimately vest will be based on theoutcome of a Total Shareholders Return test to be performed at pre-determinedtimes for each tranche (TSR).  Therelative performance of Amcor’s average TSR is to be compared against theaverage TSR of a comparator group of companies similar to Amcor Limited andwill determine the ultimate number of options to be received.  Details of entitlements issued during the twoyears ended 30 June 2006 are shown in the table below.
|                                             | ** ** | ** **          | ** ** | **Weighted**                                    | ** ** | ** **          | ** ** | **Weighted**                                    | ** ** |
|---------------------------------------------|------------|---------------------|------------|-------------------------------------------------|------------|---------------------|------------|-------------------------------------------------|------------|
|                                        | ** ** | ** **          | ** ** | **average**                                     | ** ** | ** **          | ** ** | **average**                                     | ** ** |
| ** **                                  | ** ** | **2006**            | ** ** | **fair value**                                  | ** ** | **2005**            | ** ** | **fair value**                                  | ** ** |
|                                        | ** ** | **No.**             | ** ** | **$       ** | ** ** | **No.**             | ** ** | **$       ** | ** ** |
|                                        |       |                |       |                                            |       |                |       |                                            |       |
| Outstanding at  beginning of financial year |       | -    |       | -                                |       | -    |       | -                                |       |
| Granted                                     |       | 750,000             |       | 1.01                                            |       | -    |       | -                                |       |
| Outstanding at  end of financial year       |       | 750,000             |       | 1.01                                            |       | -    |       | -                                |       |
| Exercisable at end of  financial year       |       | -    |       | -                                |       | -    |       | -                                |       |

 

**(vii)****    CEO performance rights**

On 27 October2005, 300,000 performance rights were issued to the Managing Director of AmcorLimited.  Performance rights represent anentitlement to receive an equivalent share in Amcor Limited.  Performance rights were issued in threeindividual tranches of 100,000 rights. The number of performance rights that will ultimately vest will be basedon the outcome of a TSR test to be performed at pre-determined times for eachtranche.  The relative performance ofAmcor’s average TSR is to be compared against the average TSR of a comparatorgroup of companies similar to Amcor Limited and will determine the ultimatenumber of performance rights to be received. Details of entitlements issued during the two years ended 30 June 2006are shown in the table below.
|                                             |       | ** **    |       | **Weighted**                                          |       |          |       | **Weighted**                                          |       |
|---------------------------------------------|------------|---------------|------------|-------------------------------------------------------|------------|---------------|------------|-------------------------------------------------------|------------|
|                                        | ** ** | ** **    | ** ** | **average**                                           | ** ** | ** **    | ** ** | **average**                                           | ** ** |
| ** **                                  | ** ** | **2006**      | ** ** | **fair value**                                        | ** ** | **2005**      | ** ** | **fair value**                                        | ** ** |
|                                        | ** ** | **No.**       | ** ** | **$        ** | ** ** | **No.**       | ** ** | **$        ** | ** ** |
|                                        |       |          |       |                                                  |       |          |       |                                                  |       |
| Outstanding at  beginning of financial year |       | -   |       | -                                           |       | -   |       | -                                           |       |
| Granted                                     |       | 300,000       |       | 4.15                                                  |       | -   |       | -                                           |       |
| Outstanding at end of  financial year       |       | 300,000       |       | 4.15                                                  |       | -   |       | -                                           |       |
| Exercisable at end of  financial year       |       | -   |       | -                                           |       | -   |       | -                                           |       |

 

F-115

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 48.SHARE BASED PAYMENTS continued - (d) Summary of optionsgranted**

 
| Grant date                     | ** ** | **Exercise date  on or after** | ** ** | **Expiry date** | ** ** | **Exercise  price** | ** ** | **Number of  options at  beginning of  year** | ** ** | **Options  granted** | ** ** | **Options  lapsed**  | ** ** | **Options  cancelled** | ** ** | **Options  exercised** | ** ** | **Weighted  average share  price at date  options  exercised** | ** ** | **Number of options  at end of year** | ** ** | **Aggregate Intrinsic Value** | ** ** | **Proceeds  received** | ** ** | **Date  Issued**     | ** ** |
|-------------------------------------|------------|-----------------------------------------------|------------|----------------------|------------|---------------------|------------|--------------------------------------------------------------|------------|----------------------|------------|----------------------|------------|------------------------|------------|------------------------|------------|-------------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|-----------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                          | ** ** | ** **                                    | ** ** | ** **           | ** ** | **$ **         | ** ** | ** **                                                   | ** ** | ** **           | ** ** | ** **           | ** ** | ** **             | ** ** | ** **             | ** ** | **$**                                                                         | ** ** | **On issue**                                              | ** ** | **Exercisable**                         | ** ** | **On issue**      | ** ** | **Exercisable**      | ** ** | **$** | ** ** | ** ** | ** ** |
| **Consolidated and Company - 2006** |       |                                          |       |                 |       |                |       |                                                         |       |                 | ** ** | ** **           | ** ** | ** **             | ** ** | ** **             | ** ** | ** **                                                                    | ** ** | ** **                                                     | ** ** | ** **                              | ** ** | ** **             | ** ** | ** **           | ** ** |
|                                |       |                                          |       |                 |       |                |       |                                                         |       |                 |       |                 |       |                   |       |                   |       |                                                                          |       |                                                           |       |                                    |       |                   |       |                 |       |   |   |   |   |
| 14-Sep-00                           |       | 14-Sep-03                                     |       | 14-Sep-05            |       | 5.16                |       | 366,000                                                      |       | -     |       | 36,000               |       | -       |       | 330,000                |       | 6.66                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 1,702,800 |   | Various |   |
| 01-Oct-00                           |       | 01-Oct-00                                     |       | 01-Oct-05            |       | 5.10                |       | 237,000                                                      |       | -     |       | 30,000               |       | -       |       | 207,000                |       | 6.69                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 1,055,700 |   | Various |   |
| 13-Sep-01                           |       | 13-Sep-04                                     |       | 13-Sep-06            |       | 6.02                |       | 727,500                                                      |       | -     |       | -     |       | 5,000                  |       | 210,000                |       | 6.93                                                                          |       | 512,500                                                        |       | 512,500                                 |       | 338,250                |       | 338,250              |       | 1,264,200 |   | Various |   |
| 01-Oct-01                           |       | 01-Oct-01                                     |       | 01-Oct-06            |       | 6.03                |       | 100,000                                                      |       | -     |       | -     |       |                   |       | -       |       |                                                                          |       | 100,000                                                        |       | 100,000                                 |       | 65,000                 |       | 65,000               |       | -     |   | -     |   |
| 01-Oct-01                           |       | 01-Oct-01                                     |       | 01-Oct-05            |       | 5.10                |       | 464,000                                                      |       | -     |       | 60,000               |       | -       |       | 404,000                |       | 6.69                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 2,060,400 |   | Various |   |
| 01-Oct-02                           |       | 01-Oct-02                                     |       | 01-Oct-05            |       | 5.10                |       | 676,000                                                      |       | -     |       | 60,000               |       | -       |       | 616,000                |       | 6.70                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 3,141,600 |   | Various |   |
| 01-Oct-02                           |       | 01-Oct-02                                     |       | 01-Oct-06            |       | 6.03                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       |                                                                          |       | 100,000                                                        |       | 100,000                                 |       | 65,000                 |       | 65,000               |       | -     |   | -     |   |
| 01-Oct-02                           |       | 01-Oct-02                                     |       | 01-Oct-07            |       | 7.25                |       | 40,000                                                       |       | -     |       | -     |       | -       |       | -       |       |                                                                          |       | 40,000                                                         |       | 40,000                                  |       | -       |       | -     |       | -     |   | -     |   |
| 01-Oct-03                           |       | 01-Oct-03                                     |       | 01-Oct-06            |       | 6.03                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       |                                                                          |       | 100,000                                                        |       | 100,000                                 |       | 65,000                 |       | 65,000               |       | -     |   | -     |   |
| 01-Oct-03                           |       | 01-Oct-03                                     |       | 01-Oct-07            |       | 7.25                |       | 40,000                                                       |       | -     |       | -     |       | -       |       | -       |       |                                                                          |       | 40,000                                                         |       | 40,000                                  |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 01-Nov-05                                     |       | 01-Nov-12            |       | 8.20                |       | 3,919,080                                                    |       | -     |       | -     |       | 521,400                |       | -       |       |                                                                          |       | 3,397,680                                                      |       | 3,397,680                               |       | -       |       | -     |       | -     |   | -     |   |
| 13-Oct-03                           |       | 01-Nov-05                                     |       | 01-Nov-12            |       | 8.20                |       | 118,800                                                      |       | -     |       | -     |       | 39,600                 |       | -       |       |                                                                          |       | 79,200                                                         |       | 79,200                                  |       | -       |       | -     |       | -     |   | -     |   |
| 20-Oct-03                           |       | 01-Nov-05                                     |       | 01-Nov-12            |       | 8.20                |       | 26,400                                                       |       | -     |       | -     |       | -       |       | -       |       |                                                                          |       | 26,400                                                         |       | 26,400                                  |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 01-Nov-02                                     |       | 01-Jul-07            |       | 7.30                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       |                                                                          |       | 100,000                                                        |       | 100,000                                 |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 30-Sep-03                                     |       | 01-Jul-07            |       | 7.30                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       |                                                                          |       | 100,000                                                        |       | 100,000                                 |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 30-Sep-04                                     |       | 01-Jul-07            |       | 7.30                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       |                                                                          |       | 100,000                                                        |       | 100,000                                 |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 30-Sep-03                                     |       | 01-Jul-07            |       | 7.40                |       | 772,500                                                      |       | -     |       | -     |       | 447,500                |       | 50,000                 |       | 7.56                                                                          |       | 275,000                                                        |       | 275,000                                 |       | -       |       | -     |       | 370,000 |   | Various |   |
| 01-Nov-02                           |       | 30-Sep-04                                     |       | 01-Jul-07            |       | 7.40                |       | 805,000                                                      |       | -     |       | -     |       | -       |       | -       |       |                                                                          |       | 805,000                                                        |       | 805,000                                 |       | -       |       | -     |       | -     |   | -     |   |
| 23-Mar-04                           |       | 23-Mar-07                                     |       | 23-Mar-10            |       | 7.87                |       | 481,490                                                      |       | -     |       | -     |       | 31,150                 |       | -       |       |                                                                          |       | 450,340                                                        |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 24-Mar-04                           |       | 24-Mar-07                                     |       | 24-Mar-10            |       | 7.87                |       | 4,161,195                                                    |       | -     |       | -     |       | 206,925                |       | -       |       |                                                                          |       | 3,954,270                                                      |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 31-May-04                           |       | 24-Mar-07                                     |       | 24-Mar-10            |       | 7.87                |       | 17,800                                                       |       | -     |       | -     |       | -       |       |                   |       |                                                                          |       | 17,800                                                         |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 02-Aug-04                           |       | 02-Aug-07                                     |       | 02-Aug-10            |       | 6.84                |       | 5,588,200                                                    |       | -     |       | -     |       | 1,014,978              |       | 86,000                 |       | 7.24                                                                          |       | 4,487,222                                                      |       | -                        |       | -       |       | -     |       | 588,240 |   | Various |   |
| 02-May-05                           |       | 02-Aug-07                                     |       | 02-Aug-10            |       | 6.84                |       | 60,000                                                       |       | -     |       | -     |       | 8,400                  |       | -       |       |                                                                          |       | 51,600                                                         |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 27-Oct-05                           |       | 01-Jan-08                                     |       | 31-Dec-10            |       | 6.78                |       | -                                             |       | 250,000              |       | -     |       | -       |       | -       |       |                                                                          |       | 250,000                                                        |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 27-Oct-05                           |       | 01-Jul-08                                     |       | 30-Jun-11            |       | 6.78                |       | -                                             |       | 250,000              |       | -     |       | -       |       | -       |       |                                                                          |       | 250,000                                                        |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 27-Oct-05                           |       | 01-Jan-09                                     |       | 31-Dec-11            |       | 6.78                |       | -                                             |       | 250,000              |       | -     |       | -       |       | -       |       |                                                                          |       | 250,000                                                        |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
|                                |       |                                          |       |                 |       |                |       | 19,100,965                                                   |       | 750,000              |       | 186,000              |       | 2,274,953              |       | 1,903,000              |       |                                                                          |       | 15,487,012                                                     |       | 5,775,780                               |       | 533,250                |       | 533,250              |       | 10,182,940 |   |   |   |

 

F-116

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 48.SHARE BASED PAYMENTS continued - (d) Summary of optionsgranted continued**

 
| Grant date                     | ** ** | **Exercise date  on or after** | ** ** | **Expiry date** | ** ** | **Exercise  price** | ** ** | **Number of  options at  beginning of  year** | ** ** | **Options  granted** | ** ** | **Options  lapsed**  | ** ** | **Options  cancelled** | ** ** | **Options  exercised** | ** ** | **Weighted  average share  price at date  options  exercised** | ** ** | **Number of options  at end of year** | ** ** | **Aggregate Intrinsic Value** | ** ** | **Proceeds  received** | ** ** | **Date  Issued**     | ** ** |
|-------------------------------------|------------|-----------------------------------------------|------------|----------------------|------------|---------------------|------------|--------------------------------------------------------------|------------|----------------------|------------|----------------------|------------|------------------------|------------|------------------------|------------|-------------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|-----------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                          | ** ** | ** **                                    | ** ** | ** **           | ** ** | **$ **         | ** ** | ** **                                                   | ** ** | ** **           | ** ** | ** **           | ** ** | ** **             | ** ** | ** **             | ** ** | **$**                                                                         | ** ** | **On issue**                                              | ** ** | **Exercisable**                         | ** ** | **On issue**      | ** ** | **Exercisable**      | ** ** | **$** | ** ** | ** ** | ** ** |
| **Consolidated and Company - 2005** |       |                                          |       |                 |       |                |       |                                                         |       |                 | ** ** | ** **           | ** ** | ** **             | ** ** | ** **             | ** ** | ** **                                                                    | ** ** | ** **                                                     | ** ** | ** **                              | ** ** | ** **             | ** ** | ** **           | ** ** |
|                                |       |                                          |       |                 |       |                |       |                                                         |       |                 |       |                 |       |                   |       |                   |       |                                                                          |       |                                                           |       |                                    |       |                   |       |                 |       |   |   |   |   |
| 16-Sep-99                           |       | 16-Sep-02                                     |       | 16-Sep-04            |       | 6.47                |       | 432,500                                                      |       | -     |       | -     |       | -       |       | 432,500                |       | 7.30                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 2,798,275 |   | Various |   |
| 08-Nov-99                           |       | 08-Nov-99                                     |       | 8-Nov-04             |       | 5.43                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | 100,000                |       | 7.44                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 543,000 |   | Various |   |
| 31-Jul-00                           |       | 31-Jul-00                                     |       | 31-Jul-05            |       | 5.10                |       | 42,500                                                       |       | -     |       | -     |       | -       |       | 42,500                 |       | 7.55                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 216,750 |   | Various |   |
| 18-Aug-00                           |       | 01-Oct-01                                     |       | 01-Oct-05            |       | 5.67                |       | 1,000,000                                                    |       | -     |       | -     |       | 1,000,000              |       | -       |       | -                                                              |       | -                                               |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 18-Aug-00                           |       | 01-Oct-02                                     |       | 01-Oct-05            |       | 5.67                |       | 1,000,000                                                    |       | -     |       | -     |       | 1,000,000              |       | -       |       | -                                                              |       | -                                               |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 18-Aug-00                           |       | 01-Oct-03                                     |       | 01-Oct-05            |       | 5.67                |       | 1,000,000                                                    |       | -     |       | -     |       | 1,000,000              |       | -       |       | -                                                              |       | -                                               |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 14-Sep-00                           |       | 14-Sep-03                                     |       | 14-Sep-05            |       | 5.16                |       | 570,000                                                      |       | -     |       | -     |       | -       |       | 204,000                |       | 7.39                                                                          |       | 366,000                                                        |       | 366,000                                 |       | 563,640                |       | 563,640              |       | 1,052,640 |   | Various |   |
| 01-Oct-00                           |       | 01-Oct-00                                     |       | 01-Oct-05            |       | 5.10                |       | 283,000                                                      |       | -     |       | -     |       | -       |       | 46,000                 |       | 7.43                                                                          |       | 237,000                                                        |       | 237,000                                 |       | 379,200                |       | 379,200              |       | 234,600 |   | Various |   |
| 15-Feb-01                           |       | 15-Feb-01                                     |       | 15-Feb-06            |       | 5.24                |       | 100,000                                                      |       | -     |       | -     |       | 100,000                |       | -       |       | -                                                              |       | -                                               |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 13-Sep-01                           |       | 13-Sep-04                                     |       | 13-Sep-06            |       | 6.02                |       | 1,282,500                                                    |       | -     |       | -     |       | 65,000                 |       | 490,000                |       | 7.43                                                                          |       | 727,500                                                        |       | 727,500                                 |       | 494,700                |       | 494,700              |       | 2,949,800 |   | Various |   |
| 01-Oct-01                           |       | 01-Oct-01                                     |       | 01-Oct-06            |       | 6.03                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       | -                                                              |       | 100,000                                                        |       | 100,000                                 |       | 67,000                 |       | 67,000               |       | -     |   | -     |   |
| 01-Oct-01                           |       | 01-Oct-01                                     |       | 01-Oct-05            |       | 5.10                |       | 608,000                                                      |       | -     |       | -     |       | -       |       | 144,000                |       | 7.37                                                                          |       | 464,000                                                        |       | 464,000                                 |       | 742,400                |       | 742,400              |       | 734,400 |   | Various |   |
| 01-Oct-01                           |       | 01-Oct-01                                     |       | 01-Oct-05            |       | 6.62                |       | 50,000                                                       |       | -     |       | -     |       | -       |       | 50,000                 |       | 7.83                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 331,000 |   | Various |   |
| 01-Oct-01                           |       | 01-Oct-01                                     |       | 01-Oct-05            |       | 5.30                |       | 10,000                                                       |       | -     |       | -     |       | -       |       | 10,000                 |       | 7.62                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 53,000 |   | Various |   |
| 01-Oct-01                           |       | 01-Oct-01                                     |       | 01-Oct-05            |       | 5.24                |       | 40,000                                                       |       | -     |       | -     |       | 40,000                 |       | -       |       | -                                                              |       | -                                               |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 14-Aug-02                           |       | 01-Oct-04                                     |       | 30-Sep-08            |       | 8.20                |       | 1,000,000                                                    |       | -     |       | -     |       | 1,000,000              |       | -       |       | -                                                              |       | -                                               |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 14-Aug-02                           |       | 01-Oct-05                                     |       | 30-Sep-08            |       | 8.20                |       | 1,000,000                                                    |       | -     |       | -     |       | 1,000,000              |       | -       |       | -                                                              |       | -                                               |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 14-Aug-02                           |       | 01-Oct-06                                     |       | 30-Sep-08            |       | 8.20                |       | 1,000,000                                                    |       | -     |       | -     |       | 1,000,000              |       | -       |       | -                                                              |       | -                                               |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 01-Oct-02                           |       | 01-Oct-02                                     |       | 01-Oct-05            |       | 5.10                |       | 946,000                                                      |       | -     |       | -     |       | -       |       | 270,000                |       | 7.36                                                                          |       | 676,000                                                        |       | 676,000                                 |       | 1,081,600              |       | 1,081,600            |       | 1,377,000 |   | Various |   |
| 01-Oct-02                           |       | 01-Oct-02                                     |       | 01-Oct-05            |       | 6.62                |       | 50,000                                                       |       | -     |       | -     |       | -       |       | 50,000                 |       | 7.83                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 331,000 |   | Various |   |
| 01-Oct-02                           |       | 01-Oct-02                                     |       | 01-Oct-05            |       | 5.30                |       | 10,000                                                       |       | -     |       | -     |       | -       |       | 10,000                 |       | 7.62                                                                          |       | -                                               |       | -                        |       | -       |       | -     |       | 53,000 |   | Various |   |
| 01-Oct-02                           |       | 01-Oct-02                                     |       | 01-Oct-05            |       | 5.24                |       | 40,000                                                       |       | -     |       | -     |       | 40,000                 |       | -       |       | -                                                              |       | -                                               |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 01-Oct-02                           |       | 01-Oct-02                                     |       | 01-Oct-06            |       | 6.03                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       | -                                                              |       | 100,000                                                        |       | 100,000                                 |       | 67,000                 |       | 67,000               |       | -     |   | -     |   |
| 01-Oct-02                           |       | 01-Oct-02                                     |       | 01-Oct-07            |       | 7.25                |       | 40,000                                                       |       | -     |       | -     |       | -       |       | -       |       | -                                                              |       | 40,000                                                         |       | 40,000                                  |       | -       |       | -     |       | -     |   | -     |   |
| 01-Oct-03                           |       | 01-Oct-03                                     |       | 01-Oct-06            |       | 6.03                |       | 180,000                                                      |       | -     |       | -     |       | -       |       | 80,000                 |       | 6.85                                                                          |       | 100,000                                                        |       | 100,000                                 |       | 67,000                 |       | 67,000               |       | 482,400 |   | Various |   |
| 01-Oct-03                           |       | 01-Oct-03                                     |       | 01-Oct-07            |       | 7.25                |       | 40,000                                                       |       | -     |       | -     |       | -       |       | -       |       | -                                                              |       | 40,000                                                         |       | 40,000                                  |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 01-Nov-05                                     |       | 01-Nov-12            |       | 8.20                |       | 4,577,320                                                    |       | -     |       | -     |       | 658,240                |       | -       |       | -                                                              |       | 3,919,080                                                      |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 13-Oct-03                           |       | 01-Nov-05                                     |       | 01-Nov-12            |       | 8.20                |       | 145,200                                                      |       | -     |       | -     |       | 26,400                 |       | -       |       | -                                                              |       | 118,800                                                        |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 20-Oct-03                           |       | 01-Nov-05                                     |       | 01-Nov-12            |       | 8.20                |       | 26,400                                                       |       | -     |       | -     |       | -       |       | -       |       | -                                                              |       | 26,400                                                         |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 01-Nov-02                                     |       | 01-Jul-07            |       | 7.30                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       | -                                                              |       | 100,000                                                        |       | 100,000                                 |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 30-Sep-03                                     |       | 01-Jul-07            |       | 7.30                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       | -                                                              |       | 100,000                                                        |       | 100,000                                 |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 30-Sep-04                                     |       | 01-Jul-07            |       | 7.30                |       | 100,000                                                      |       | -     |       | -     |       | -       |       | -       |       | -                                                              |       | 100,000                                                        |       | 100,000                                 |       | -       |       | -     |       | -     |   | -     |   |
| 01-Nov-02                           |       | 30-Sep-03                                     |       | 01-Jul-07            |       | 7.40                |       | 892,500                                                      |       | -     |       | -     |       | 60,000                 |       | 60,000                 |       | 7.73                                                                          |       | 772,500                                                        |       | 772,500                                 |       | -       |       | -     |       | 444,000 |   | Various |   |
| 01-Nov-02                           |       | 30-Sep-04                                     |       | 01-Jul-07            |       | 7.40                |       | 945,000                                                      |       | -     |       | -     |       | 60,000                 |       | 80,000                 |       | 7.73                                                                          |       | 805,000                                                        |       | 805,000                                 |       | -       |       | -     |       | 592,000 |   | Various |   |
| 23-Mar-04                           |       | 23-Mar-07                                     |       | 23-Mar-10            |       | 7.87                |       | 671,000                                                      |       | -     |       | -     |       | 189,510                |       | -       |       | -                                                              |       | 481,490                                                        |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 24-Mar-04                           |       | 24-Mar-07                                     |       | 24-Mar-10            |       | 7.87                |       | 5,263,500                                                    |       | -     |       | -     |       | 1,102,305              |       | -       |       | -                                                              |       | 4,161,195                                                      |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 31-May-04                           |       | 24-Mar-07                                     |       | 24-Mar-10            |       | 7.87                |       | 20,000                                                       |       | -     |       | -     |       | 2,200                  |       | -       |       | -                                                              |       | 17,800                                                         |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 02-Aug-04                           |       | 02-Aug-07                                     |       | 02-Aug-10            |       | 6.84                |       | -                                             |       | 5,861,500            |       | 23,300               |       | 250,000                |       | -       |       | -                                                              |       | 5,588,200                                                      |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
| 02-May-05                           |       | 02-Aug-07                                     |       | 02-Aug-10            |       | 6.84                |       | -                                             |       | 60,000               |       | -     |       |                   |       |                   |       | -                                                              |       | 60,000                                                         |       | -                        |       | -       |       | -     |       | -     |   | -     |   |
|                                |       |                                          |       |                 |       |                |       | 23,865,420                                                   |       | 5,921,500            |       | 23,300               |       | 8,593,655              |       | 2,069,000              |       |                                                                          |       | 19,100,965                                                     |       | 4,728,000                               |       | 3,462,540              |       | 3,462,540            |       | 12,192,865 |   |   |   |

 

F-117

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 48. SHARE BASED PAYMENTScontinued**

**(e) Fair value of options granted**

The fair value ofeach option is estimated on the date of grant, using a Black-Scholesoption-pricing model that takes into account the exercise price, the term ofthe option, the vesting and performance criteria, the market condition criteria(where applicable), the impact of dilution, the non-tradeable nature of theoption, the share price at grant date and expected price volatility of theunderlying share, the expected dividend yield and the risk free interest ratefor the term of the option.  For the yearended 30 June 2006, the fair value at grant date was independentlydetermined.  Historically, the fair valuehas been determined by a Directors’ valuation. The following weighted average assumptions were used for grants made inthe years to 30 June 2006 and 30 June 2005:
|                                                             |   | **2006**   | ** ** | **2005**   |
|-------------------------------------------------------------|--------|------------|------------|------------|
|                                                        |   | ** ** | ** ** | ** ** | ** ** |
| Expected dividend yield  (%)                                |   | 5.00       |       | 4.70       |   |
|                                                        |   |       |       | ** ** | ** ** |
| Expected price  volatility of the company’s shares (%) |   | 22.00      |       | 20.00      |   |
|                                                        |   |       |       | ** ** | ** ** |
| Share price at grant  date ($)                              |   | 6.69       | ** ** | 6.84       |   |
|                                                        |   |       |       | ** ** | ** ** |
| Exercise price ($)                                          |   | 6.78       |       | 6.84       |   |
|                                                        |   |       |       | ** ** | ** ** |
| Historical volatility  (%)                                  |   | 22.00      |       | 20.00      |   |
|                                                        |   |       |       | ** ** | ** ** |
| Risk-free interest rate  (%)                                |   | 5.40       |       | 5.60       |   |
|                                                        |   |       |       | ** ** | ** ** |
| Expected life of option (years)                             |   | 5.50       |       | 5.00       |   |

 

The dividend yieldreflects the assumption that the current dividend payout will continue with noanticipated changes.  The expected lifeof the options is based on historical data and is not necessarily indicative ofexercise patterns that may occur.  Theexpected volatility reflects the assumption that the historical volatility isindicative of future trends, which may not necessarily be the actual outcome.

For specific details ofgrant dates and exercise prices – refer Note 48(d).

**(f) Expenses arising fromshare-based payment transactions**

Total expensesarising from share-based payment transactions recognised during the period aspart of employee benefit expense were as follows:
|                                                      | ** ** | **2006** | ** ** | **2005**      | ** ** |
|------------------------------------------------------|------------|----------|------------|---------------|------------|
|                                                 | ** ** | **$m**   | ** ** | **$m**        | ** ** |
|                                                 |       |     |       |          |       |
| **Equity  settled share based payment transactions** |       |     |       |          |       |
| Options issued  under employee option plan           |       | 3.3      |       | 4.4           |       |
| Performance  rights issued                           |       | 0.2      |       | -   |       |
|                                                 |       |     |       |          |       |
| **Cash  settled share based payment transactions**   |       |     |       |          |       |
| Cash settled share based payments                    |       | (0.7     | )          | -   |       |
| ** **                                           |       | 2.8      |       | 4.4           |       |
| Accruals and other  creditors                        |       | 2.6      |       | -   |       |

 

F-118

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 48. SHARE BASED PAYMENTScontinued**

**(g) Liabilities for share-basedpayments**
|                                                               | ** ** | **2006**      | ** ** | **2005**      | ** ** |
|---------------------------------------------------------------|------------|---------------|------------|---------------|------------|
|                                                          | ** ** | **$m**        | ** ** | **$m**        | ** ** |
|                                                          |       |          |       |          |       |
| **Cash  settled share based payments liability**              | ** ** | ** **    | ** ** | ** **    | ** ** |
| Shares                                                        |       | 1.6           |       | -   |       |
| Shares -  Overseas                                            |       | 0.3           |       | -   |       |
| Options                                                       |       | 0.7           |       | -   |       |
| ** **                                                    |       | 2.6           |       | -   |       |
|                                                          |       |          |       |          |       |
| **Intrinsic  value for vested cash settled shares liability** | ** ** | ** **    | ** ** | ** **    | ** ** |
| Shares                                                        |       | 1.5           |       | -   |       |
| Options                                                       |       | -   |       | -   |       |
| ** **                                                    |       | 1.5           |       | -   |       |

 

Due to the exercise pricefor vested options being greater than the market value at 30 June 2006 ($6.68),fully vested cash settled share options have an intrinsic value of zero.

**NOTE 49 EVENTS SUBSEQUENT TOBALANCE DATE**

The followingsubsequent events have occurred since 30 June 2006:

1.               Acquisitionof Shareholding in K Laser

On 3 July 2006 Amcor announced it had entered into anagreement to subscribe for new shares to purchase a 16.67% shareholding in KLaser China; a subsidiary of the Taiwan publicly listed K Laser Technology (HK)Company Ltd for a consideration of approximately $13.4 million (US$10million).  Amcor has options to invest afurther $20.1 million (US$15 million) in new shares and acquire existing sharesfor $16.9 million (US$12.6 million) to increase its shareholding in K LaserChina to 50.1% over the next two years.

Amcor will also purchase 5.6 million new shares in KLaser Technology, for a consideration of $4.7 million (US$3.5 million), givingit a 4.2% shareholding in that company. K Laser has an option to require Amcor to invest a further $11.0 million(US$8.2 million) in K Laser Technology over the next two years upon theexercise of Amcor’s options in K Laser China.

2.               AmcorShare Buy-back on Conversion of PRIDES

Amcor announced on 6 July 2006 that it intends toimplement a share buy-back program to acquire shares equivalent to the numberof new shares issued on conversion of the PRIDES.

Amcor’s PRIDES are convertible subordinated debtsecurities that pay a semi-annual coupon of 7.25% p.a. and give holders a rightto convert into American Depository Receipts (ADRs) representing ordinaryshares of Amcor at a prescribed conversion rate any time prior to 19 November2006.  Any PRIDES not converted before 19November 2006 become perpetual debt on that date and may be redeemed at Amcor’selection at face value at any time from that date.

Subject to market conditions and any adverse businessor other developments impacting Amcor, it is also intended to immediately redeemany PRIDES that remain unconverted on 19 November 2006.

There were $243.2 million (US$181.6 million) of PRIDESon issue at 30 June 2006 compared to $308 million (US$230 million) at June2005.  Approximately $64.3 million (US$48million) in PRIDES were converted into approximately 10 million ordinary sharesduring June.

The conversion of all remaining PRIDES would result inthe further issue of around 37 million Amcor ordinary shares at the exchangerate and share price prevailing around the date of this report.

F-119

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

 

**NOTE 49 EVENTS SUBSEQUENT TO BALANCE DATEcontinued**

3.               AmcorFibre Packaging Australasia Restructuring

Amcor announced on 23August 2006 a major restructuring to the fibre packaging business inAustralasia to substantially improve earnings and returns.  The main components of this plan involveassessment of a new paper recycling mill, to be located in Botany, New South Wales,the closure of the small recycling paper mill, located in Spearwood, WesternAustralia and substantial restructuring in the corrugated box plants.  This will involve the closure of the plant atBox Hill, Victoria, and the upgrading of the two remaining Victorian plants.

4.               ThirdParty Claim

Cadbury Schweppes filed aproceeding in the Federal Court of Australia on 15 December 2006 against AmcorLimited and Amcor Packaging (Australia) Pty Ltd alleging cartel behaviourbetween Amcor and Visy (and related contract claims). Cadbury Schweppes claimsdamages and rectification of certain supply contracts. Although the amountclaimed totals approximately $120 million, certain of the claims overlap.

The Cadbury Schweppesaction filed appears to adopt portions of the ACCC’s proceedings in relation tothe corrugated business. These allegations in the ACCC proceeding are yet to beproved in court and have been denied by Visy.

The Cadbury Schweppesaction also alleges additional cartel conduct affecting certain supplycontracts with Amcor and other matters in relation to various Amcor businesses.These extended allegations appear to be widely speculative.

Amcor will be vigorouslydefending these allegations and is considering making application to the Courtfor a strike-out at the appropriate time. The issues of liability and loss areextremely complex and need to be established as a basis for compensation. Asthe litigation could take some years it is too early for Amcor to determinewith certainty on the probable outcome. It is not currently possible to determinethe financial impact, if any, of the ultimate outcome.

F-120

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIANEQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS**

**(1) Reconciliation of equity reported under previous AGAAP to equity underAIFRS**

**(a) At thedate of transition to AIFRS: 1 July 2004**
|                                                            | ** ** | ** **          | ** ** | **Previous  AGAAP** | ** ** | **Effect of  transition  to AIFRS** | ** ** | **AIFRS** | ** ** |
|------------------------------------------------------------|------------|---------------------|------------|---------------------|------------|-----------------------------------------------|------------|-----------|------------|
| ** **                                                 | ** ** | **Notes**           | ** ** | **$m**              | ** ** | **$m**                                        | ** ** | **$m**    | ** ** |
| **Current assets**                                         |       |                |       |                |       |                                          |       |      |       |
| Cash and cash equivalents                                  |       | (n)                 |       | 131.0               |       | 17.3                                          |       | 148.3     |       |
| Trade and other receivables                                |       | (a),  (f), (n)      |       | 1,551.4             |       | 182.4                                         |       | 1,733.8   |       |
| Inventories                                                |       |                |       | 1,369.6             |       | -                                   |       | 1,369.6   |       |
| **Total current assets**                                   |       |                |       | 3,052.0             |       | 199.7                                         |       | 3,251.7   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Non-current assets**                                     |       |                |       |                |       |                                          |       |      |       |
| Investments accounted for using the equity method          |       | (n)                 |       | 6.7                 |       | -                                   |       | 6.7       |       |
| Other financial assets                                     |       | (b),  (n)           |       | 88.0                |       | (34.3                                         | )          | 53.7      |       |
| Property, plant and equipment                              |       | (c),  (d), (e), (g) |       | 4,745.0             |       | 62.6                                          |       | 4,807.6   |       |
| Deferred tax assets                                        |       | (f)                 |       | 238.8               |       | 162.5                                         |       | 401.3     |       |
| Intangible assets                                          |       | (e)                 |       | 2,062.7             |       | 83.9                                          |       | 2,146.6   |       |
| Other non-current assets                                   |       |                |       | 93.2                |       | (1.1                                          | )          | 92.1      |       |
| **Total non-current assets**                               |       |                |       | 7,234.4             |       | 273.6                                         |       | 7,508.0   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Total assets**                                           |       |                |       | 10,286.4            |       | 473.3                                         |       | 10,759.7  |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Current liabilities**                                    |       |                |       |                |       |                                          |       |      |       |
| Trade and other payables                                   |       | (d),  (h)           |       | 1,831.1             |       | 5.9                                           |       | 1,837.0   |       |
| Interest bearing liabilities                               |       | (a),  (d)           |       | 728.5               |       | 201.0                                         |       | 929.5     |       |
| Current tax liabilities                                    |       |                |       | 77.4                |       | -                                   |       | 77.4      |       |
| Provisions                                                 |       | (g)                 |       | 339.7               |       | (4.7                                          | )          | 335.0     |       |
|                                                       |       |                |       | 2,976.7             |       | 202.2                                         |       | 3,178.9   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Non-current liabilities**                                |       |                |       |                |       |                                          |       |      |       |
| Trade and other payables                                   |       | (d),  (h)           |       | 13.2                |       | 26.2                                          |       | 39.4      |       |
| Interest bearing liabilities                               |       | (d)                 |       | 1,776.2             |       | 172.8                                         |       | 1,949.0   |       |
| Subordinated convertible securities                        |       |                |       | 332.3               |       | -                                   |       | 332.3     |       |
| Deferred tax liabilities                                   |       | (f)                 |       | 388.5               |       | 196.7                                         |       | 585.2     |       |
| Provisions                                                 |       | (g)                 |       | 33.4                |       | 48.7                                          |       | 82.1      |       |
| Retirement benefit obligations                             |       | (i)                 |       | 58.5                |       | 267.7                                         |       | 326.2     |       |
| **Total non-current liabilities**                          |       |                |       | 2,602.1             |       | 712.1                                         |       | 3,314.2   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Total liabilities**                                      |       |                |       | 5,578.8             |       | 914.3                                         |       | 6,493.1   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Net assets**                                             |       |                |       | 4,707.6             |       | (441.0                                        | )          | 4,266.6   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Equity**                                                 |       |                |       |                |       |                                          |       |      |       |
| Contributed equity                                         |       | (b)                 |       | 3,351.9             |       | (33.9                                         | )          | 3,318.0   |       |
| Reserves                                                   |       | (c),  (j)           |       | (349.2              | )          | 349.9                                         |       | 0.7       |       |
| Retained profits                                           |       | (l)                 |       | 1,614.3             |       | (757.1                                        | )          | 857.2     |       |
| Total equity attributable to equity holders of the  parent |       |                |       | 4,617.0             |       | (441.1                                        | )          | 4,175.9   |       |
| Minority interest                                          |       |                |       | 90.6                |       | 0.1                                           |       | 90.7      |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Total  equity**                                          |       |                |       | 4,707.6             |       | (441.0                                        | )          | 4,266.6   |       |

 

F-121

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIANEQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS continued**

**(b) At the end date of the last reporting period under previous AGAAP:30 June 2005**
|                                                            | ** ** | ** **          | ** ** | **Previous  AGAAP** | ** ** | **Effect of  transition  to AIFRS** | ** ** | **AIFRS** | ** ** |
|------------------------------------------------------------|------------|---------------------|------------|---------------------|------------|-----------------------------------------------|------------|-----------|------------|
| ** **                                                 | ** ** | **Notes**           | ** ** | **$m**              | ** ** | **$m**                                        | ** ** | **$m**    | ** ** |
| **Current assets**                                         |       |                |       |                |       |                                          |       |      |       |
| Cash and cash equivalents                                  |       | (n)                 |       | 210.8               |       | 19.0                                          |       | 229.8     |       |
| Trade and other receivables                                |       | (a),  (f), (n)      |       | 1,685.9             |       | 138.8                                         |       | 1,824.7   |       |
| Inventories                                                |       |                |       | 1,440.1             |       | -                                   |       | 1,440.1   |       |
| **Total current assets**                                   |       |                |       | 3,336.8             |       | 157.8                                         |       | 3,494.6   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Non-current assets**                                     |       |                |       |                |       |                                          |       |      |       |
| Investments accounted for using the equity method          |       | (n)                 |       | 40.7                |       | -                                   |       | 40.7      |       |
| Other financial assets                                     |       | (b),  (n)           |       | 79.3                |       | (26.5                                         | )          | 52.8      |       |
| Property, plant and equipment                              |       | (c),  (d), (e), (g) |       | 4,400.1             |       | 26.7                                          |       | 4,426.8   |       |
| Deferred tax assets                                        |       | (f)                 |       | 176.2               |       | 173.7                                         |       | 349.9     |       |
| Intangible assets                                          |       | (e)                 |       | 1,766.9             |       | 231.1                                         |       | 1,998.0   |       |
| Other non-current assets                                   |       |                |       | 98.9                |       | (2.6                                          | )          | 96.3      |       |
| **Total non-current assets**                               |       |                |       | 6,562.1             |       | 402.4                                         |       | 6,964.5   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Total assets**                                           |       |                |       | 9,898.9             |       | 560.2                                         |       | 10,459.1  |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Current liabilities**                                    |       |                |       |                |       |                                          |       |      |       |
| Trade and other payables                                   |       | (d),  (h)           |       | 1,991.8             |       | 4.2                                           |       | 1,996.0   |       |
| Interest bearing liabilities                               |       | (a),  (d)           |       | 729.2               |       | 158.0                                         |       | 887.2     |       |
| Current tax liabilities                                    |       |                |       | 82.5                |       | -                                   |       | 82.5      |       |
| Provisions                                                 |       | (g)                 |       | 290.4               |       | (1.1                                          | )          | 289.3     |       |
| **Total current liabilities**                              |       |                |       | 3,093.9             |       | 161.1                                         |       | 3,255.0   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Non-current liabilities**                                |       |                |       |                |       |                                          |       |      |       |
| Trade and other payables                                   |       | (d),  (h)           |       | 0.7                 |       | 30.9                                          |       | 31.6      |       |
| Interest bearing liabilities                               |       | (d)                 |       | 1,747.8             |       | 169.5                                         |       | 1,917.3   |       |
| Subordinated convertible securities                        |       |                |       | 301.1               |       | -                                   |       | 301.1     |       |
| Deferred tax liabilities                                   |       | (f)                 |       | 292.8               |       | 224.5                                         |       | 517.3     |       |
| Provisions                                                 |       | (g),  (h)           |       | 44.9                |       | 55.0                                          |       | 99.9      |       |
| Retirement benefit obligations                             |       | (i)                 |       | 55.1                |       | 303.8                                         |       | 358.9     |       |
| **Total non-current liabilities**                          |       |                |       | 2,442.4             |       | 783.7                                         |       | 3,226.1   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Total liabilities**                                      |       |                |       | 5,536.3             |       | 944.8                                         |       | 6,481.1   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Net assets**                                             |       |                |       | 4,362.6             |       | (384.6                                        | )          | 3,978.0   |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Equity**                                                 |       |                |       |                |       |                                          |       |      |       |
| Contributed equity                                         |       | (b)                 |       | 3,348.1             |       | (26.0                                         | )          | 3,322.1   |       |
| Reserves                                                   |       | (c),  (j)           |       | (510.9              | )          | 362.7                                         |       | (148.2    | )          |
| Retained profits                                           |       | (l)                 |       | 1,446.9             |       | (720.8                                        | )          | 726.1     |       |
| Total equity attributable to equity holders of the  parent |       |                |       | 4,284.1             |       | (384.1                                        | )          | 3,900.0   |       |
| Minority interest                                          |       |                |       | 78.5                |       | (0.5                                          | )          | 78.0      |       |
|                                                       |       |                |       |                |       |                                          |       |      |       |
| **Total  equity**                                          |       |                |       | 4,362.6             |       | (384.6                                        | )          | 3,978.0   |       |

 

F-122

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIANEQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS continued**

**(2) Reconciliation of profit under previous AGAAP to profit under AIFRSfor the year ended 30 June 2005**
|                                              | ** ** | ** **          | ** ** | **Previous  AGAAP** | ** ** | **Effect of  transition  to AIFRS** | ** ** | **AIFRS** | ** ** |
|----------------------------------------------|------------|---------------------|------------|---------------------|------------|-----------------------------------------------|------------|-----------|------------|
| ** **                                   | ** ** | **Notes**           | ** ** | **$m**              | ** ** | **$m**                                        | ** ** | **$m**    | ** ** |
|                                         |       |                |       |                |       |                                          |       |      |       |
| **Sales revenue**                            |       |                |       | 11,099.6            |       | -                                   |       | 11,099.6  |       |
| Cost of sales                                |       | (c),  (d), (g), (i) |       | (9,304.8            | )          | 20.6                                          |       | (9,284.2  | )          |
|                                         |       |                |       |                |       |                                          |       |      |       |
| **Gross profit**                             |       |                |       | 1,794.8             |       | 20.6                                          |       | 1,815.4   |       |
|                                         |       |                |       |                |       |                                          |       |      |       |
| Other income                                 |       | (c),  (h)           |       | 174.7               |       | (90.9                                         | )          | 83.8      |       |
| Sales and marketing expenses                 |       |                |       | (303.2              | )          | 0.2                                           |       | (303.0    | )          |
| General and administration expenses          |       | (b),  (e), (i)      |       | (1,225.3            | )          | 164.5                                         |       | (1,060.8  | )          |
| Research and development costs               |       |                |       | (39.7               | )          | -                                   |       | (39.7     | )          |
| Share of net profit of associates            |       |                |       | 1.8                 |       | -                                   |       | 1.8       |       |
|                                         |       |                |       |                |       |                                          |       |      |       |
| **Profit from operations**                   |       |                |       | 403.1               |       | 94.4                                          |       | 497.5     |       |
|                                         |       |                |       |                |       |                                          |       |      |       |
| Financial income                             |       | (k)                 |       | -         |       | 20.9                                          |       | 20.9      |       |
| Financial expenses                           |       | (d),  (g), (i)      |       | (158.1              | )          | (29.2                                         | )          | (187.3    | )          |
|                                         |       |                |       |                |       |                                          |       |      |       |
| **Net finance costs**                        |       |                |       | (158.1              | )          | (8.3                                          | )          | (166.4    | )          |
|                                         |       |                |       |                |       |                                          |       |      |       |
| **Profit before related income tax expense** |       |                |       | 245.0               |       | 86.1                                          |       | 331.1     |       |
|                                         |       |                |       |                |       |                                          |       |      |       |
| Income tax expense                           |       | (f)                 |       | (58.8               | )          | (13.9                                         | )          | (72.7     | )          |
|                                         |       |                |       |                |       |                                          |       |      |       |
| ** **                                   |       |                |       |                |       |                                          |       |      |       |
| **Profit after related income tax expense**  |       |                |       | 186.2               |       | 72.2                                          |       | 258.4     |       |
|                                         |       |                |       |                |       |                                          |       |      |       |
| Profit attributable to:                      |       |                |       |                |       |                                          |       |      |       |
| Members of Amcor Limited                     |       |                |       | 173.2               |       | 72.1                                          |       | 245.3     |       |
| Minority Interest                            |       |                |       | 13.0                |       | 0.1                                           |       | 13.1      |       |
|                                         |       |                |       |                |       |                                          |       |      |       |
|                                         |       |                |       |                |       |                                          |       |      |       |
|                                         |       |                |       | 186.2               |       | 72.2                                          |       | 258.4     |       |

 

F-123

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIANEQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS continued**

**(3) Reconciliation of the cash flow statement under previous AGAAP toAIFRS for the year ended 30 June 2005**
|                                                                                      | ** ** | ** ** | ** ** | **Previous  AGAAP** | ** ** | **Effect of  transition  to AIFRS** | ** ** | **AIFRS** | ** ** |
|--------------------------------------------------------------------------------------|------------|------------|------------|---------------------|------------|-----------------------------------------------|------------|-----------|------------|
| ** **                                                                           | ** ** | **Notes**  | ** ** | **$m**              | ** ** | **$m**                                        | ** ** | **$m**    | ** ** |
| **Cash flows from  operating activities**                                            |       |       |       |                |       |                                          |       |      |       |
| Receipts from customers (inclusive  of goods and services and sales tax)             |       | (a)        |       | 10,936.7            |       | 42.0                                          |       | 10,978.7  |       |
| Payments to suppliers and  employees (inclusive of goods and services and sales tax) |       | (a),(d)    |       | (9,900.0            | )          | 21.7                                          |       | (9,878.3  | )          |
| Dividends received                                                                   |       |       |       | 0.6                 |       | -                                             |       | 0.6       |       |
| Other income received                                                                |       |       |       | 71.3                |       | -                                             |       | 71.3      |       |
| Finance income received                                                              |       |       |       | 20.6                |       | -                                             |       | 20.6      |       |
| Finance expenses paid                                                                |       | (a),(d)    |       | (156.3              | )          | (19.3                                         | )          | (175.6    | )          |
| Income taxes paid                                                                    |       |       |       | (115.5              | )          | -                                             |       | (115.5    | )          |
|                                                                                 |       |       |       |                |       |                                          |       |      |       |
| **Net cash from operating  activities**                                              |       |       |       | 857.4               |       | 44.4                                          |       | 901.8     |       |
|                                                                                 |       |       |       |                |       |                                          |       |      |       |
| **Cash flows from  investing activities**                                            |       |       |       |                |       |                                          |       |      |       |
| Repayment of loans by  associated companies and other persons                        |       |       |       | 4.8                 |       | -                                             |       | 4.8       |       |
| Payments for controlled  entities and businesses, net of cash                        |       |       |       | (45.5               | )          | -                                             |       | (45.5     | )          |
| Payments for property,  plant and equipment                                          |       |       |       | (647.4              | )          | -                                             |       | (647.4    | )          |
| Proceeds on disposal of  controlled entities and businesses                          |       |       |       | 10.8                |       | -                                             |       | 10.8      |       |
| Proceeds on disposal of  property, plant and equipment                               |       |       |       | 77.4                |       | -                                             |       | 77.4      |       |
|                                                                                 |       |       |       |                |       |                                          |       |      |       |
| **Net cash from investing  activities**                                              |       |       |       | (599.9              | )          | -                                             |       | (599.9    | )          |
|                                                                                 |       |       |       |                |       |                                          |       |      |       |
| **Cash flows from  financing activities**                                            |       |       |       |                |       |                                          |       |      |       |
| Proceeds from share issues,  convertible securities and calls on partly-paid shares  |       |       |       | (3.3                | )          | 16.2                                          |       | 12.9      |       |
| Proceeds from borrowings                                                             |       | (a)        |       | 3,719.0             |       | 157.0                                         |       | 3,876.0   |       |
| Payments for shares bought  back                                                     |       |       |       | -                   |       | (15.4                                         | )          | (15.4     | )          |
| Repayment of borrowings                                                              |       | (a),(d)    |       | (3,504.3            | )          | (202.1                                        | )          | (3,706.4  | )          |
| Principal lease repayments                                                           |       |       |       | (18.1               | )          | -                                             |       | (18.1     | )          |
| Dividends and other equity  distributions paid                                       |       |       |       | (346.6              | )          | -                                             |       | (346.6    | )          |
|                                                                                 |       |       |       |                |       |                                          |       |      |       |
| **Net cash from financing  activities**                                              |       |       |       | (153.3              | )          | (44.3                                         | )          | (197.6    | )          |
|                                                                                 |       |       |       |                |       |                                          |       |      |       |
| **Net increase/(decrease)  in cash held**                                            |       |       |       | 104.2               |       | 0.1                                           |       | 104.3     |       |
| **Cash and cash  equivalents at the beginning of the financial year**                |       |       |       | 121.1               |       | -                                             |       | 121.1     |       |
| Effects of exchange rate  changes on cash and cash equivalents                       |       |       |       | (11.5               | )          | (0.1                                          | )          | (11.6     | )          |
|                                                                                 |       |       |       |                |       |                                          |       |      |       |
| **Cash and cash equivalents at the end of the financial year**                       |       |       |       | 213.8               |       | -                                             |       | 213.8     |       |

 

F-124

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIANEQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS continued**

**(4)Financial instruments**

The consolidated entityhas elected not to restate comparative information for financial instrumentswithin the scope of Accounting Standards *AASB 132 FinancialInstruments: Disclosure and Presentation* and *AASB 139Financial Instruments: Recognition and Measurement.*  For details of transition adjustments made at1 July 2005, refer Note 1(z).

**(5) Notes tothe reconciliations**

**(a)****          Securitised receivables**

Under AIFRS, securitised trade receivables have beenrecognised on balance sheet as the special purpose entity established for thesecuritisation is considered to be controlled in accordance with UIGInterpretation 112 Consolidation - Special Purpose Entities. AIFRS considersthe majority allocation of the expected risks and benefits in determiningcontrol.

The effect is:

*(i)**                                  At1 July 2004*

For the consolidated entity, current receivables andcurrent interest bearing liabilities increased by $197.9 million.

*(ii)**                              At30 June 2005*

For the consolidated entity, current receivables andcurrent interest bearing liabilities increased by $157.0 million.

In the cash flow statement, receipts from customersincreased by $42.0 million, payments to suppliers decreased by $5 million,finance costs paid increased by $5 million, repayment of borrowings hasincreased by $199.7 million and proceeds from borrowings increased by $157.0million.

**(b)****          Share based payments**

Under *AASB 2 Share-basedPayments,*from 1 July 2004, the consolidated entity is required torecognise an expense for those options granted under Amcor employee shareoption plans after 7 November 2002 but that had not vested by 1 January2005.  In addition, employee share loans arederecognised and adjusted against issued capital.

The effect of this is:

*(i)**                                  At1 July 2004*

For the consolidated entity, there has been a decreasein other financial assets of $34.3 million and a decrease in issued capital of$33.9 million, an increase in share based payments reserve of $0.7 million anda decrease in retained earnings of $1.1 million.

*(ii)**                              At30 June 2005*

For the consolidated entity, there has been a decreasein other financial assets of $26.5 million and a decrease in issued capital of$26.0 million and a decrease in retained earnings of $4.9 million and anincrease in shared based payment reserve of $4.4 million.  The impact on net profit before income taxexpense for the year ended 30 June 2005 was an expense of $3.7million.

F-125

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIANEQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS continued**

**(c)****          Property,plant and equipment**

Property, plantand equipment is measured at cost or deemed cost under AIFRS.  On transition, the balance of the assetrevaluation reserve was derecognised and adjusted against retained earnings.

Property, plantand equipment of the consolidated entity is affected by the following adjustments:

·                  Thereversal of particular sale and leaseback arrangements which are not recognisedas such for AIFRS, refer Note 50(d).

·                  Under*AASB 116 Property, Plant and Equipment*,the consolidated entity is required to expense start-up and relocation costs*,* and capitalise decommissioning costs into the cost of anasset as explained in Note 50(g).

·                  Inaddition, software costs previously recognised in plant and equipment arereclassified to intangible assets, refer Note 50(e).

·                  Achange in the basis of impairment testing from a test of the recoverable amountof non-current assets using profit multiples and undiscounted cash flows, ordiscounted cash flows as deemed appropriate under AGAAP, to the AIFRS policy oftesting the recoverable amount of cash generating units using discounted cashflows.

Under AIFRS, thegain or loss on the disposal of property, plant and equipment will berecognised on a net basis as a gain or loss, rather than separately recognisingthe consideration received as revenue.

The effect of thisis:

*(i)**                                  At1 July 2004*

For the consolidated entity, there has been anincrease in property plant and equipment of $62.6 million, a decrease in theasset revaluation reserve by $136.9 million and an increase in retainedearnings of $199.5 million.

*(ii)**                              At30 June 2005*

For the consolidated entity, there has been anincrease in property plant and equipment of $26.7 million and a decrease in theasset revaluation reserve of $130.2 million.

An amount of $69.2million has been reclassified from other income to cost of sales.

F-126

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIANEQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS continued**

**(d)****            Leases**

*Sale and Leaseback*

In July 2001, theconsolidated entity entered into a sale and leaseback transaction in relationto a number of properties occupied by businesses within the Amcor Australasiabusiness group. Under AIFRS, this transaction does not qualify for sale andleaseback accounting.  The consolidatedentity has recognised this transaction as a secured borrowing and theproperties were reinstated on the balance sheet and recorded as an asset.Payments made under the relevant agreements are apportioned between interestexpense and the loan liability.

The effect of this is:

*(i)**                                  At1 July 2004*

For the consolidated entity, there has been anincrease in property, plant and equipment of $163.3 million, and an increase innon current interest bearing liabilities of $170.7 million and a decrease incurrent payables of $0.2 million, with a corresponding reduction in retainedearnings of $7.2 million.

*(ii)**                              At30 June 2005*

For the consolidated entity, there has been anincrease in property, plant and equipment of $161 million, and an increase innon current interest bearing liabilities of $168.3 million and a decrease incurrent payables of $0.4 million, with a corresponding reduction in retainedearnings of $6.9 million.  The impact onnet profit before income tax expense for the year ended 30 June 2005 was anexpense of $1.9 million.

In the cash flow statement, interest paid increased by$14.3 million, repayment of borrowings increased by $2.4 million and paymentsto suppliers decreased by $16.7 million.

*Operatingleases*

The consolidatedentity, in applying *AASB 117 Leases*,recognises lease rental expense on a straight line basis where the annualoperating lease rental payment is known to escalate or decline over the leaseterm by a set amount.

The effect of this is:

*(i)**                                  At1 July 2004*

For the consolidated entity, there has been anincrease in current lease payables of $4.2 million and non current payables of$3.3 million with a corresponding decrease in retained earnings of $7.5million.

*(ii)**                              At30 June 2005*

For the consolidated entity, there has been anincrease in current lease payables of $4.6 million and non current payables of$2.9 million.  Including the effect offoreign currency translation this has resulted in a decrease in retainedearnings of $8.9 million.  The impact onnet profit before income tax expense for the year ended 30 June 2005 was anexpense of $1 million.

F-127

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO INTERNATIONALFINANCIAL REPORTING STANDARDS continued**

**(e)****          Businesscombinations and intangible assets**

As permitted bythe election available under AASB 1, the classification and accountingtreatment of business combinations that occurred prior to transition date havenot been restated in preparing the 1 July 2004, opening AIFRS balancesheet.  The assets and liabilities aresubject to the other requirements of AASB 1, as discussed below.

Businesscombinations that occurred on or after 1 July 2004 have been restated to complywith AIFRS.  All business combinationsare accounted for using the purchase method.

In respect ofacquisitions prior to transition date, goodwill is measured at its deemed cost,which represents the amount recorded under AGAAP, adjusted forreclassifications of other intangible assets not meeting the AIFRS recognitioncriteria.  Goodwill and intangible assetswith an indefinite useful life are not subject to amortisation, but are testedfor impairment annually.

On transition,intangible assets including goodwill have been reviewed to ensure they arecapable of recognition under AASB 138 *Intangible Assets*andtested for impairment.

Certain softwareassets have been reclassified from property, plant and equipment to intangibleassets on transition to AIFRS.

The effect of the aboveis:

*(i)**                                  At1 July 2004*

For the consolidated entity, there has been anincrease in other intangible assets of $83.9 million and a decrease inproperty, plant and equipment of an equivalent amount.

*(ii)**                              At30 June 2005*

For the consolidated entity, there has been anincrease in other intangible assets of $115.8 million and a decrease inproperty, plant and equipment of an equivalent amount.  In addition, there has been an increase ingoodwill of $127.2 million and a corresponding decrease in amortisationexpense.

The consolidated entity utilised $10.5 million ofpreviously unrecognised tax losses in the year ending 30 June 2005 which underAIFRS, on transition were recognised as a write-down in the value of goodwill.

**(f)****            Incometaxes**

Under previous AGAAP, deferred tax balances weredetermined using the income statement method, in which items were onlytax-effected if they were included in the determination of pre-tax accountingprofit or loss and/or taxable income or loss. In addition, current and deferredtaxes could not be recognised directly in equity.

The application of*AASB 112 Income Taxes*has resulted inthe recognition of deferred tax assets relating to the additional liabilitiesrecorded under AIFRS for defined benefit plans and decommissioning provisionsand an increase in deferred tax liabilities relating to revalued assets nowcarried at deemed cost, previously unrecognised securitised assets and anadditional liability due to deductible goodwill.

F-128

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50 IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO INTERNATIONALFINANCIAL REPORTING STANDARDS continued**

Under AIFRS, current tax is the expected tax payableon the taxable income for the year, using tax rates enacted or substantivelyenacted at reporting date, and any adjustments to tax payable in respect ofprevious years.

The effect of the aboveis:

*(i)**                                  At1 July 2004*

For the consolidated entity, there has been anincrease in deferred tax assets of $162.5 million, an increase in deferred taxliabilities of $196.7 million and a decrease in retained earnings of $34.2million.

*(ii)**                              At30 June 2005*

For the consolidated entity, there has been anincrease in deferred tax assets of $173.7 million and an increase in deferredtax liabilities of $224.5 million. Income tax expense for the year has increased by $13.9 million.

**(g)****                     Decommissioningprovisions**

Under AIFRS, the present value of the estimated costsof dismantling and removing an asset and restoring the site on which it islocated is recognised as an asset within property, plant and equipment and as aprovision where a legal or constructive obligation exists.   At each reporting date, the liability isremeasured in line with changes in discount rates, timing and estimated cashflows.  Any changes in the liability areadded or deducted from the related asset, other than the unwinding of thediscount which is recognised as interest in the income statement as it occurs.

The consolidated entity has certain operating leasesthat require the asset to be returned to the lessor in its originalcondition.  Under previous AGAAP, thecosts of restoration were not recognised until the expenditure was incurred.   Under AIFRS, a provision for restorationcosts is recognised over the period of the lease and is measured as theexpected cost of restoration at each reporting date.

The effect of the aboveis:

*(i)**                                  At1 July 2004*

For the consolidated entity, there has been anincrease in property, plant and equipment of $19.9 million, an increase inprovisions $52.4 million and a decrease in retained earnings of $32.5 million.

*(ii)**                              At30 June 2005*

For the consolidated entity, there has been anincrease in property, plant and equipment of $17.4 million, an increase inprovisions $52.3 million and, including the effect of foreign currencytranslation, retained earnings has decreased by $37 million. The increase indepreciation and interest expense has reduced net profit before income taxexpense by $3.9 million for the year ending 30 June 2005.

F-129

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIANEQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS continued**

**h)****             Governmentgrants**

Under previous AGAAP, contributions from governmentgrants to the acquisition of assets were recognised as revenue at the fairvalue of the grant received, when the consolidated entity gained control of thecontribution.  Under AIFRS, grantsrelating to the purchase of property, plant and equipment are included innon-current liabilities as deferred income and are credited to the incomestatement on a straight line basis over the expected lives of the relatedassets.

The effect of the aboveis:

*(i)**                                  At1 July 2004*

For the consolidated entity, there has been anincrease in trade and accounts payable of $20.2 million with an equivalentreduction in retained earnings.  .

*(ii)**                              At30 June 2005*

For the consolidated entity, there has been anincrease in trade and accounts payable of $28 million, a decrease in currentreceivables of $2.7million and, including the effect of foreign currencytranslation, retained earnings has decreased by $32.4 million.  The impact on other income for the yearending 30 June 2005 is $9.6 million.

**i)****                Definedbenefit plans**

Under AIFRS, the consolidated entity’s net obligationin respect of defined benefit superannuation plans is calculated separately foreach plan by estimating the amount of future benefit that employees have earnedin return for their service in the current and prior periods; that benefit isdiscounted to determine its present value, and the fair value of any planassets is deducted.

When the employee entitlements under the plan areimproved, the proportion of the increased benefit relating to past service byemployees is recognised as an expense in the income statement on a straightline basis over the average period until the benefits become vested. To theextent that the benefits vest immediately, the expense is recognisedimmediately in the income statement.

Where the calculation results in a net benefit to theconsolidated entity, the recognised asset is limited to the net total of anyunrecognised past service costs and the present value of any future refundsfrom the plan or reductions in future contributions to the plan.

Actuarial gains and losses that arise subsequent to 1July 2004 are recognised directly in retained earnings.

The effect of the aboveis:

*(i)**                                  At1 July 2004*

For the consolidated entity, there has been anincrease in defined benefit obligations of $267.7 million, resulting in a totaldefined benefit obligation of $326.2 million. In addition $2.6 million of surplus plan assets were recognisedresulting in a total reduction in retained earnings of $265.1 million.

*(ii)**                              At30 June 2005*

For the consolidated entity, there has been anincrease in defined benefit obligations of $303.8 million, an increase insurplus plan assets of $0.4 million and a total reduction in retained earningsof $334 million.   The impact on netprofit before income tax expense for the year ended 30 June 2005 is an increasein expenses of $10.4 million.

F-130

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTING AUSTRALIANEQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS continued**

**j)****                Foreigncurrency**

The consolidatedentity elected under *AASB 1* to resetthe Exchange Fluctuation Reserve (EFR) balance under AGAAP at 1 July 2004 tonil.  For the consolidated entity, at 1July 2004 an amount of $486.1 million has been reclassified from EFR toretained earnings.  This adjustmentresulted in a $469.3 million reclassification at 30 June 2005.

For theconsolidated entity, $6.1 million of EFR was taken direct to retained earningsunder AGAAP. This entry was reversed under AIFRS, as the balance of EFR wastaken to retained earnings at 1 July 2004.

**k)****            Financeincome**

Finance income hasbeen reclassified from other income in the income statement. This resulted in areclassification of $20.9 million for the consolidated entity and $323.1million for the company, to finance income for the year ended 30 June 2005.

**l)****                Retainedearnings**

The impact of thetransition to AIFRS on retained earnings is summarised below:
|                                                                                    | ** ** | ** ** | ** ** | **1 July 2004** | ** ** | **30 June  2005** | ** ** |
|------------------------------------------------------------------------------------|------------|------------|------------|---------------------------|------------|------------------------|------------|
| ** **                                                                         | ** ** | **Notes**  | ** ** | **$m**                    | ** ** | **$m**                 | ** ** |
| ** **                                                                         |       |       |       |                      |       |                   |       |
| AIFRS  reconciliation:                                                             |       |       |       |                      |       |                   |       |
| - transfer from  asset revaluation reserve                                         |       | (c)        |       | 136.9                     |       | 130.2                  |       |
| - transfer from  exchange fluctuation reserve                                      |       | (j)        |       | (486.1                    | )          | (469.3                 | )          |
| - recognition of  deficits in defined benefit plans and actuarial gains and losses |       | (i)        |       | (265.1                    | )          | (334.0                 | )          |
| - AGAAP  amortisation of goodwill                                                  |       | (e)        |       | -               |       | 127.2                  |       |
| - recognition of  the net impact of decommissioning provisions                     |       | (g)        |       | (32.5                     | )          | (37.0                  | )          |
| - derecognition  of start up and relocation costs                                  |       | (c)        |       | (34.9                     | )          | (37.7                  | )          |
| - lease  adjustments                                                               |       | (d)        |       | (14.7                     | )          | (15.8                  | )          |
| - deferral of  government grants                                                   |       | (h)        |       | (20.2                     | )          | (32.4                  | )          |
| - tax loss  utilisation charge to goodwill                                         |       | (e)        |       | -               |       | (10.5                  | )          |
| - other  adjustments                                                               |       |       |       | (6.3                      | )          | (6.2                   | )          |
| - taxation  effect of above adjustments                                            |       | (f)        |       | 86.8                      |       | 94.0                   |       |
| - other tax  adjustments                                                           |       | (f)        |       | (121.0                    | )          | (129.3                 | )          |
|                                                                               |       |       |       |                      |       |                   |       |
| **Total adjustment to retained  earnings**                                         |       |       |       | (757.1                    | )          | (720.8                 | )          |

 

**m)****          Earnings per share**

Under AIFRS, basic and diluted earnings per share arecalculated using the net profit after income tax expense from continuingoperations attributable to the ordinary equity holders of the parent entity.The earnings per share, calculated on the AIFRS adjusted results, compared tothe previous AGAAP results are:
|                                          | ** ** | **AGAAP  30 June  2005** | ** ** | **AIFRS  30 June  2005** | ** ** |
|------------------------------------------|------------|-------------------------------|------------|-------------------------------|------------|
| Basic EPS from  continuing operations:   |       | 13.8                          |       | 22.0                          |       |
| Diluted EPS from  continuing operations: |       | 13.7                          |       | 21.9                          |       |

 

F-131

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 50. IMPACT OF ADOPTINGAUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS continued**

**n)****    Reclassification of balance sheet line balances**

Shortterm deposits were reallocated from trade and other receivables to cash andcash equivalents on transition to AIFRS. For the consolidated entity, $17.3 million was reclassified at 1 July,2004 and $19 million at 30 June 2005.  Noreclassification was required for the company.

Investmentsaccounted for using the equity method have been separately disclosed on theface of the balance sheet. This has been reclassified from the AGAAP balancesheet category ‘other financial assets’.

Non current receivables, as disclosed under AGAAP, are included innon current other financial assets under AIFRS.

**o)****     Reclassification of cash flow statement line items**

In the consolidated entity, payments relating to share buybackshave been separately disclosed in the cash flow statement and reallocated from proceedsfrom share issues, convertible securities and calls on partly-paid shares.

F-132

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 51RECONCILIATION OF ACCOUNTS TO US GAAP**

Thefinancial statements of the consolidated entity are prepared in accordance withAIFRS (refer Note 1), which differs in certain significant respects fromaccounting 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 AIFRS.

**Reconciliation to US GAAP**

Thefollowing is a summary of the major differences to consolidated net income forthe years ended June 30, 2006 and 2005 that would be required if US GAAP hadbeen applied instead of AIFRS. 
|                                                                                                                                          | ** ** | ** **  | ** **      | **For the Years Ended June 30  (in millions of A$)** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------|-----------------|----------------------------------------------------------------------------------------------|------------|
| ** **                                                                                                                               | ** ** | **Note**    | **2006**        | ** **                                                                                   | **2005**   | ** ** |
| ** **                                                                                                                               |       |        |            |                                                                                         |       |   |   |
| **Consolidated Statements of Income**                                                                                                    |       |        |            |                                                                                         |       |   |   |
| AIFRS  profit attributable to members of Amcor Ltd                                                                                       |       |        |            | 351.3                                                                                        |       | 245.3 |   |
| Add  back loss from discontinued operations

                                                                                       |       |        |            | 37.4                                                                                         |       | 19.2 |   |
|  

AIFRS  after tax profit from continuing operations                                                                               |       |        |            | 388.7                                                                                        |       | 264.5 |   |
| Property,  plant and equipment                                                                                                           |       | 51          | (II)(a)         | (13.1)                                                                                       |       | 40.8 |   |
| Onerous  contracts                                                                                                                       |       | 51          | (II)(b)         | (11.2)                                                                                       |       | 5.5 |   |
| Pension  plans                                                                                                                           |       | 51          | (II)(c)         | (21.7)                                                                                       |       | (15.7) |   |
| Goodwill                                                                                                                                 |       | 51          | (II)(d)         | 10.1                                                                                         |       | 6.4 |   |
| Employee  share schemes                                                                                                                  |       | 51          | (II)(e)         | (3.2)                                                                                        |       | (2.8) |   |
| Financial  Instruments                                                                                                                   |       | 51          | (II)(f)         | (17.6)                                                                                       |       | (1.9) |   |
| PACRS                                                                                                                                    |       | 51          | (II)(h)         | 0.3                                                                                          |       | (62.1) |   |
| Restructuring                                                                                                                            |       | 51          | (II)(j)         | 11.2                                                                                         |       | 17.9 |   |
| Investment  in Associate -Vision Grande                                                                                                  |       | 51          | (II)(k)         | (24.6)                                                                                       |       | - |   |
| Other  minor adjustments                                                                                                                 |       | 51          | (II)(l)         | (0.1)                                                                                        |       | (2.3) |   |
| Tax  effect of above adjustments, net                                                                                                    |       |        |            | 10.4                                                                                         |       | 5.1 |   |
| Differences  in application of GAAP on taxes

                                                                                      |       | 51          | (II)(i)         | (8.4)                                                                                        |       | (13.2) |   |
| ** **

**Net income from continuing operations**

** **                                                                        | ** ** | ** **  | ** **      | **320.8**                                                                                    | ** ** | **242.2** | ** ** |
| ** **                                                                                                                               | ** ** | ** **  | ** **      | ** **                                                                                   | ** ** | ** ** | ** ** |
| Loss  from discontinued operations, net of income taxes according to US GAAP

                                                      |       | 51 

  | (II)(m)

  | (166.2)

                                                                               |       | (36.5)

  |   |
| ** **

**Net income in accordance with US GAAP**

** **                                                                        |       |        |            | 154.6                                                                                        |       | 205.7 |   |
| **Other comprehensive income/(loss), net of taxes:**                                                                                     | ** ** | ** **  | ** **      | ** **                                                                                   | ** ** | ** ** | ** ** |
| Foreign  currency translation adjustment                                                                                                 |       | 51          | (II)(p)         | 222.1                                                                                        |       | (175.0) |   |
| Unrealized  gains/(losses) on available for sale investments, net of tax expense of $0.5  million (net of tax benefit 2005 $1.0 million) |       |        |            | (0.6)                                                                                        |       | (2.3) |   |
| Pension  plan additional minimum liability, net of tax (expense)/benefit of ($9.5)  million (2005 $15.4 million)

                  |       | 51 

  | (II)(c)

  | 21.5

                                                                                  |       | (34.9)

  |   |
|  

Total  other comprehensive income/(loss)

                                                                                  |       |        |            | 243.0                                                                                        |       | (212.2) |   |
| ** **

**Comprehensive income/(loss) according to US GAAP**

** **                                                             | ** ** | ** **  | ** **      | **397.6**                                                                                    | ** ** | **(6.5)** | ** ** |

 

Foreign currencytranslation gains (losses) reclassified to net income was A$(104.7) million, A$(4.8) million million for the years ended June 30, 2006 and 2005, respectively.

F-133

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June2006**

**NOTE 51RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**
|                                                                                                                                  | ** ** | ** ** | ** ** | **For the Years Ended June 30  (in millions of A$, except for  share and per share data)** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|--------------------------------------------------------------------------------------------|------------|
| ** **                                                                                                                       | ** ** | ** ** | ** ** | **2006**                                                                                   | ** ** | **2005** | ** ** |
|                                                                                                                             |       |       |       |                                                                                       |       |   |   |
| **Accumulated other comprehensive loss balances  (net of taxes):**                                                               | ** ** | ** ** | ** ** | ** **                                                                                 | ** ** | ** ** | ** ** |
| Foreign currency translation adjustment                                                                                          |       | 51(II)(p)  |       | (448.8)                                                                                    |       | (670.9) |   |
| Unrealized gains/(losses) on available for sale  investments, net of tax benefit of zero (net of tax benefit 2005 $0.3  million) |       |       |       | (1.8)                                                                                      |       | (1.2) |   |
| Pension plan  additional minimum liability, net of tax benefit of $22.4 million (2005 $31.9  million)                            |       | 51(II)(c)  |       | (52.0)                                                                                     |       | (73.5) |   |
| ** **

**Total accumulated other comprehensive loss**

** **                                                           | ** ** | ** ** | ** ** | **(502.6)**                                                                                | ** ** | **(745.6)** | ** ** |
| ** **                                                                                                                       | ** ** | ** ** | ** ** | ** **                                                                                 | ** ** | ** ** | ** ** |
| **Earnings per share calculation according to US  GAAP**                                                                         | ** ** | ** ** | ** ** | ** **                                                                                 | ** ** | ** ** | ** ** |
|                                                                                                                             |       |       |       |                                                                                       |       |   |   |
| Net profit from continuing operations                                                                                            |       |       |       | 320.8                                                                                      |       | 242.2 |   |
| Effect of  assumed conversion                                                                                                    |       |       |       | 14.9                                                                                       |       | -    |   |
| Diluted net  profit from continuing operations                                                                                   |       |       |       | 335.7                                                                                      |       | 242.2 |   |
|                                                                                                                             |       |       |       |                                                                                       |       |   |   |
| **Reconciliation of average number of shares**                                                                                   | ** ** | ** ** | ** ** | ** **                                                                                 | ** ** | ** ** | ** ** |
| Basic average number of shares (m’s)                                                                                        |       |       |       | 879.7                                                                                      |       | 879.0 |   |
| Effect of partly paid shares (m’s)                                                                                          |       |       |       | 0.1                                                                                        |       | 0.1 |   |
| Effect of employee options (m’s)                                                                                            |       |       |       | 0.3                                                                                        |       | 1.4 |   |
| Effect of  convertible securities (m’s)                                                                                     |       |       |       | 48.8                                                                                       |       | -   |   |
| Dilutive average number of shares (m’s)                                                                                     |       |       |       | 928.9                                                                                      |       | 880.5 |   |
|                                                                                                                             |       |       |       |                                                                                       |       |   |   |
| **Basic earnings per share calculated in  accordance with US GAAP**                                                              |       |       |       |                                                                                       |       |
| - from continuing operations                                                                                                     |       |       |       | $0.36                                                                                      |       | $0.28 |   |
| - from discontinued operations                                                                                                   |       |       |       | ($0.18)                                                                                    |       | ($0.05) |   |
| Net income                                                                                                                       |       |       |       | $0.18                                                                                      |       | $0.23 |   |
| ** **                                                                                                                       | ** ** | ** ** | ** ** | ** **                                                                                 | ** ** | ** ** | ** ** |
| **Dilutive earnings per share calculated in  accordance with US GAAP:**                                                          | ** ** | ** ** | ** ** | ** **                                                                                 | ** ** |
| - from continuing operations                                                                                                     |       |       |       | $0.36                                                                                      |       | $0.28 |   |
| - from discontinued operations                                                                                                   |       |       |       | ($0.18)                                                                                    |       | ($0.05) |   |
| Net income                                                                                                                       |       |       |       | $0.18                                                                                      |       | $0.23 |   |

 

Excluded from thecomputation of diluted earnings per share above is the following table ofpotential common shares:
|                                 | ** ** | **(in millions)** | ** ** | **(in millions)** | ** ** |
|---------------------------------|------------|-------------------|------------|-------------------|------------|
| Potential common  shares (1)    |       | 85.3              |       | 144.8             |       |
| Options over common  shares (2) |       | 10.7              |       | 15.9              |       |

 
| (1) | The 7.25% Undated Subordinated Convertible Unsecured  Notes and the Perpetual Amcor Convertible Reset Securities (PACRS) are  considered to be potential common stock and have been included in the  computation of diluted earnings per share to the extent they are dilutive. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Options over common shares have been included in the  computation of diluted earnings per share when the average market price of  common shares exceeds their exercise price.                                                                                                   |

F-134

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 51RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

The following arethe differences in the consolidated balance sheet, specifically total assets,as at June 30, 2006 and 2005 that would be required if US GAAP had been appliedinstead of AIFRS.
|                                                                | ** ** | ** ** | ** ** | **At June 30  (in millions of A$)** | ** ** |
|----------------------------------------------------------------|------------|------------|------------|-------------------------------------|------------|
| ** **                                                     | ** ** | **Note**   | **2006**   | ** **                          | **2005**   | ** ** |
| ** **                                                     | ** ** | ** ** | ** ** | ** **                          | ** ** | ** ** | ** ** |
| **Consolidated  Balance Sheets**                               | ** ** | ** ** | ** ** | ** **                          | ** ** | ** ** | ** ** |
| ** **                                                     | ** ** | ** ** | ** ** | ** **                          | ** ** | ** ** | ** ** |
| Total Assets  reported using AIFRS                             |       |       |       | 10,155.5                            |       | 10,459.1 |   |
| Property, plant  and equipment                                 |       | 51         | (II)(a)    | (131.3)                             |       | (105.0) |   |
| Pension plans                                                  |       | 51         | (II)(c)    | 80.5                                |       | 46.9 |   |
| Goodwill                                                       |       | 51         | (II)(d)    | 521.2                               |       | 494.2 |   |
| Financial  instruments                                         |       | 51         | (II)(f)    | 38.0                                |       | 6.6 |   |
| Business  combinations                                         |       | 51         | (II)(g)    | (94.5)                              |       | (88.0) |   |
| PACRS                                                          |       | 51         | (II)(h)    | 0.5                                 |       | 3.2 |   |
| Differences in  application of US GAAP on deferred taxes       |       | 51         | (II)(i)    | 44.1                                |       | (25.1) |   |
| Restructuring                                                  |       | 51         | (II)(j)    | -                                   |       | - |   |
| Investment in  Associate -Vision Grande                        |       | 51         | (II)(k)    | (65.4)                              |       | - |   |
| Other minor  adjustments                                       |       | 51         | (II)(l)    | (3.5)                               |       | (3.8) |   |
| Deferred tax  effect of above adjustments                      |       |       |       | (9.1)                               |       | 4.5 |   |
| ** **

**Total  Assets according to US GAAP**

** ** | ** ** | ** ** | ** ** | **10,536.0**                        | ** ** | **10,792.6** | ** ** |

 

F-135

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 51RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

The following is asummary of the major adjustments to consolidated shareholders’ equity as atJune 2006 and 2005 that would be required if US GAAP had been applied insteadof AIFRS.
|                                                                             | ** ** | ** ** | ** ** | **At June 30  (in millions of A$)** | ** ** |
|-----------------------------------------------------------------------------|------------|------------|------------|-------------------------------------|------------|
| ** **                                                                  | ** ** | **Note**   | ** ** | **2006**                            | ** ** | **2005** | ** ** |
|                                                                        |       |       |       |                                |       |   |   |
| **Consolidated  Shareholders’ Equity at Year End**                     | ** ** | ** ** | ** ** | ** **                          | ** ** | ** ** | ** ** |
| ** **                                                                  | ** ** | ** ** | ** ** | ** **                          | ** ** | ** ** | ** ** |
| Shareholders’  Equity reported using AIFRS                             |       |       |       | 3,520.4                             |       | 3,900.0 |   |
| Property, plant  and equipment                                              |       | 51 (II)(a) |       | (147.8)                             |       | (121.2) |   |
| Onerous  contracts                                                          |       | 51 (II)(b) |       | 11.7                                |       | 22.9 |   |
| Pension plans                                                               |       | 51 (II)(c) |       | 218.8                               |       | 228.4 |   |
| Goodwill                                                                    |       | 51 (II)(d) |       | 471.0                               |       | 442.6 |   |
| Financial  instruments                                                      |       | 51 (II)(f) |       | 27.5                                |       | (18.1) |   |
| Business  combinations                                                      |       | 51 (II)(g) |       | (75.7)                              |       | (70.3) |   |
| PACRS                                                                       |       | 51 (II)(h) |       | 11.0                                |       | (597.8) |   |
| Differences in  application of GAAP on deferred taxes                       |       | 51 (II)(i) |       | 44.1                                |       | 76.0 |   |
| Restructuring                                                               |       | 51 (II)(j) |       | 30.5                                |       | 17.4 |   |
| Investment in  Associate - Vision Grande                                    |       | 51 (II)(k) |       | (65.4)                              |       | -    |   |
| Other minor  adjustments                                                    |       | 51 (II)(l) |       | (0.4)                               |       | (4.7) |   |
| Income tax  effect of above adjustments

                              |       |       |       | 6.4                                 |       | 9.0 |   |
| ** **

**Shareholders’ Equity according  to US GAAP**

** ** | ** ** | ** ** | ** ** | **4,052.1**

** **             | ** ** | **3,884.2**

** ** | ** ** |

 

**RollForward Analysis of Shareholders’ Equity under US GAAP**
| Opening shareholders’ equity  according to US GAAP                 |       | 3,884.2     |       | 4,169.6                   |       |
|-------------------------------------------------------------------------|------------|-------------|------------|---------------------------|------------|
| Net income in  accordance with US GAAP                                  |       | 154.6       |       | 205.7                     |       |
| Exercise of  employee options                                           |       | 20.9        |       | 7.8                       |       |
| Other  comprehensive income / (loss)                                    |       | 243.0       |       | (212.2)                   |       |
|                                                                    |       |        |       |                      |       |
| Employee share  scheme compensation expense                             |       | 5.6         |       | 7.3                       |       |
| Ordinary shares  issued                                                 |       | 121.5       |       | 11.6                      |       |
| Share buy back                                                          |       | (57.8)      |       | (15.4)                    |       |
| Redemption of  PACRS1                                                   |       | (21.1)      |       | -     |       |
| Final 2005  dividend paid 28 September 2005                             |       | (149.3)     |       | (140.6)                   |       |
| Interim 2006  dividend paid 31 March 2006

                        |       | (149.5)     |       | (149.6)                   |       |
|  

Closing  shareholders’ equity according to US GAAP

  | ** ** | **4,052.1** | ** ** | **3,884.2**               | ** ** |

 

F-136

----

**Amcor Limited Consolidated**

**Notes to the consolidated financial statements**

**30 June 2006**

**NOTE 51RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

**I) Basisof Presentation**

Consolidated CashFlow Statements

The Consolidated CashFlow Statement on page F-5, prepared in accordance with AIFRS (in accordancewith IAS 7/AASB 107) presents substantially the same information that isrequired under US GAAP.  However adifference exists between AIFRS and US GAAP with regard to the definition ofcash and cash equivalents.

The definition of cashand cash equivalents under US GAAP is similar to AIFRS, except bank overdraftsare not included in cash and cash equivalents and as a result movements in thebalances of overdrafts are classified as financing cash flows.

Foreign CurrencyTranslation

The consolidated entity translates the financial statements ofsubsidiaries in hyper-inflationary economies in accordance with InternationalAccounting Standard No.21 “The effects of changes in foreign exchange rates” asamended in 1993, using the historical cost-constant currency approach.  Such amounts presented comply with financialstatement requirements of Form 20-F and are different from thatrequired by US GAAP.

 

The consolidated entity made an adjustment to the foreign currencytranslation loss included in the other comprehensive loss as previously reportedin 2005, to properly present the translation adjustment.  As a result, an adjustment of $4.8 million hasbeen recorded to increase the foreign currency translation loss and othercomprehensive loss.  The othercomprehensive loss was previously presented as $1.7 million, and the adjustmentof $4.8 million results in an adjusted other comprehensive loss of $6.5million.

 

Adoption of newstandard

In May 2005, the Financial Accounting Standards Board(FASB) issued Statement of Financial Accounting Standard (SFAS) ‘AccountingChanges and Error Corrections’ (SFAS 154) which replaced APB No. 20‘Accounting Changes’ and SFAS No. 3 ‘Reporting Accounting Changes inInterim Financial Statements’. The standard changes the requirements inaccounting and disclosure for a change in accounting principles and correctionof errors. Under SFAS 154, voluntary changes in accounting principles are to bereported using retrospective application unless it is impracticable to doso.  The consolidated entity has earlyadopted this standard effective for the year ending 30 June 2006.  This standard is consistent with the entity’saccounting policy under AIFRS and there was no impact of adopting thisstandard.

In December 2004, the FASB issued SFAS No. 123 Revised(SFAS 123R), ‘Share-Based Payment”. SFAS 123R revises SFAS 123 and supersedesAccounting Principles Board opinion 25. SFAS 123R requires all share-basedpayment transactions to be recognised at fair values in the financialstatements. SFAS 123R also establishes fair value as the measurement method inaccounting for share-based payments to employees. SFAS 123R was applicable toAmcor from 1 July 2005. There was no significant effect on the US GAAPaccounting for share-based payments as a result of adopting this standard.

Deferred Taxes

The consolidated entity made an adjustment to totalassets previously reported in 2005 to properly classify deferred taxassets.  Previously, $284.4 million ofdeferred tax assets were netted against deferred tax liabilities on aconsolidated basis rather than on a tax jurisdiction basis as required by USGAAP.  As a result, these deferred taxassets should have been reported in total assets.  This adjustment has no effect on thepreviously reported amounts of net income, comprehensive income, total equity,cash flows, or segment results.  Totalassets were previously reported as $10,508.2 million.  The adjustment of $284.4 million results inadjusted assets of $10,792.6 million.

F-137

----

**Amcor Limited Consolidated**

**Notes to the consolidated financialstatements**

**30 June 2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

**II) US GAAP Adjustments**

(a)     Property, Plant and Equipment

Revaluations

Certain land, landimprovements and buildings have been revalued by the consolidated entity atvarious times in prior financial periods. These revaluation increments and decrements have overall increased thecarrying value of the assets and accordingly the depreciation charges have beenincreased above those which would be required on an historical cost basis.  Where assets have been devalued below cost,these write-downs have been taken to profit and loss.  US GAAP adjustments eliminate the effects ofthese items and consequently adjust depreciation to reflect the difference incarrying value of property, plant and equipment.

On adoption of AIFRS thecarrying value of the previously revalued assets under AGAAP was deemed to becost.  As a result this difference incarrying amounts between US GAAP and AIFRS will become a permanent adjustment.

The above differences inasset carrying values also causes differences in reported gains and losses onthe sale of property, plant and equipment. Gains and losses for AIFRS are based on consideration less deemed costnet of accumulated depreciation.  For USGAAP purposes, gains and losses are determined having regard to depreciatedhistorical cost.

Sale and leasebacktransactions where less than substantially all of the use of the property wasretained

Certain properties weresold during the years ended June 30, 2005 and leased back under operating lease agreements.  All of the profit was recognised at the dateof sale under AIFRS as the sale was considered to be at fair value.  For US GAAP purposes, however, as more than aminor part but not substantially all of the use of the property was retained,profit in excess of the present value of the minimum lease payments has beenrecognised at the date of sale, while the balance has been deferred and will beamortised over the life of lease against the future operating lease payments.

Impairment Groups

During the year endedJune 30, 2006, under AIFRS asset impairments of $66.8 million (2005: $227.0million) were booked.  Impairmentassessments were made on a discounted cash flow basis and included the impactof revaluations in the carrying value of assets.  For US GAAP reporting purposes $24.7 million(2005: $60.6 million) of this impairment was reversed on the basis that iteither related to the AIFRS revalued component of assets or that under therequirements of SFAS 144 ‘Accounting for the impairment on disposal oflong-lived assets’ in the first instance on an undiscounted basis the assetswere not impaired.  The reversal ofimpairments effects depreciation which is then higher under US GAAP compared toAIFRS.

The table below outlinesthe impact on gross profit, assets and shareholders’ equity of the aboveadjustments:
|                                                                | ** ** | Years Ended June 30  (in millions of A$) | ** ** |
|----------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|
| ** **                                                     | ** ** | **Gross Profit**                                                  | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                     | ** ** | **2006**                                                               | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                                           |       |                                                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Revaluations**                                               |       |                                                                   |       |   |   |   |   |   |   |   |   |   |   |
| Depreciation effect                                            |       | 0.7                                                                    |       | 0.7 |   | 52.1 |   | 50.8 |   | 52.1 |   | 50.8 |   |
| Gain on disposal                                               |       | -                                                                      |       | 3.9 |   | - |   | - |   | - |   | 3.9 |   |
| Adjustment to revaluation surplus                              |       | 0.8                                                                    |       | - |   | (208.1) |   | (216.4) |   | (208.2) |   | (220.2) |   |
|                                                           |       |                                                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Sale & Leaseback –** Profit  on sale not recognised |       | 0.2                                                                    |       | (9.0) |   | - |   | - |   | (16.4) |   | (16.4) |   |
|                                                           |       |                                                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Impairment groups**                                          |       | (14.8)                                                                 |       | 45.2 |   | 24.7 |   | 60.6 |   | 24.7 |   | 60.7 |   |
| ** **                                                     |       |                                                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Total Property, Plant and Equipment adjustments**            |       | **(13.1)**                                                             | ** ** | **40.8** | ** ** | **(131.3)** | ** ** | **(105.0)** | ** ** | **(147.8)** | ** ** | **(121.2)** | ** ** |

 

F-138

----

**Amcor Limited Consolidated**

**Notes to the consolidated financialstatements**

**30 June 2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TOUS GAAP (Continued)**

(b)    Onerous contracts

Under AIFRS, provisionsfor future operating losses are prohibited. However, Amcor does recognise a provision for onerous contracts wherethe unavoidable costs of meeting the consolidated entity’s obligation underthese contracts exceeds the economic benefits expected to be received.

Under US GAAP, aliability for costs to terminate contracts before the end of their term isrecognised and measured at fair value when the entity terminates thecontract.  In addition, when the entityceases to use the right conveyed by the contract, a liability is recognised forcosts that will continue to be incurred under a contract for its remaining termwithout economic benefit to the entity.

The table below outlinesthe impact on gross profit, assets and shareholders’ equity of the aboveadjustments:
|                                                                | ** ** | **Years Ended June 30  (in millions of A$)** | ** ** |
|----------------------------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                                     | ** ** | **Gross Profit**                                                      | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                     | ** ** | **2006**                                                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                                     | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Onerous contracts**                                          | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Reversal of provision and recognition of current  year expense |       | (11.2)                                                                     |       | 5.5 |   | - |   | - |   | 11.7 |   | 22.9 |   |
|                                                           |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **Total  Provisions adjustments**                              | ** ** | **(11.2)**                                                                 | ** ** | **5.5** | ** ** | **-** | ** ** | **-** | ** ** | **11.7** | ** ** | **22.9** | ** ** |

 

(c)     Pension Plans

Under AIFRS the defined benefit pension expensecomprises current and past service costs, interest cost on defined benefitobligations and the effect of curtailments or settlements, net of expectedreturns on plan assets.  Actuarial gainsand losses are charged or credited to equity. Pension assets or liabilities are recognised in the balance sheet infull, adjusted for any future taxes that are funded by the entity.

Under US GAAP the cost of providing defined benefitpension plans is determined on a consistent basis with AIFRS, except thatactuarial gains and losses are recognised systematically through netincome.  The net assets or liabilitiesarising from pension and post-retirement benefit schemes are also measuredconsistent with AIFRS.

The consolidated entity is not a party to any materialagreements with its employees in respect of post retirement or othercompensation benefits (other than pension plans) except for those amounts whichare provided for in the financial statements in accordance with variousstatutory entitlements.

As a result of theacquisition of AFE A/S and Schmalbach-Lubeca in 2003, certain liabilities foraccrued benefit costs were recorded for US GAAP purposes, with a correspondingadjustment to goodwill.

The table below outlinesthe impact on gross profit, assets and shareholders’ equity of the aboveadjustments.
|                                               | ** ** | **Years Ended June 30  (in millions of A$)** | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                    | ** ** | **Gross Profit**                                                      | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                    | ** ** | **2006**                                                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                    | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Pension plans**                             | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Prepaid/(accrued) pension costs               |       | (21.7)                                                                     |       | (15.7) |   | 70.7 |   | 37.1 |   | 229.5 |   | 258.4 |   |
| Recognition of minimum liability:             |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income adjustment         |       | -                                                                          |       | - |   | - |   | - |   | (51.9) |   | (73.5) |   |
| Intangible assets recognized                  |       | -                                                                          |       | - |   | 9.8 |   | 9.8 |   | 9.8 |   | 9.8 |   |
| Acquired funds                                |       | -                                                                          |       | - |   | 31.4 |   | 33.7 |   | 31.4 |   | 33.7 |   |
|                                          |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| ** **                                    | ** ** | **(21.7)**                                                                 | ** ** | **(15.7)** | ** ** | **111.9** | ** ** | **80.6** | ** ** | **218.8** | ** ** | **228.4** | ** ** |
| **Less: Goodwill included in Note 51(II)(d)** | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | **(31.4)** | ** ** | **(33.7)** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                    | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Total  Pension Plan adjustments**           | ** ** | **(21.7)**                                                                 | ** ** | **(15.7)** | ** ** | **80.5** | ** ** | **46.9** | ** ** | **218.8** | ** ** | **228.4** | ** ** |

 

F-139

----

**Amcor Limited Consolidated**

**Notes to the consolidated financialstatements**

**30 June 2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TOUS GAAP (Continued)**

(d)   Goodwill

Amortisation and impairment of goodwill

Prior to 1989 under AGAAP, goodwill was written off inthe year of acquisition.  For US GAAPpurposes this goodwill has been reinstated. Under AGAAP, and subsequent to1989, acquired goodwill was amortized in equal instalments over a maximum of 20years.

As from, 1 July 2004, the consolidated group adoptedAIFRS.  Under AIFRS, goodwill is assessedfor impairment. On adoption of AIFRS, the consolidated entity reversedpreviously amortised goodwill from July 1 2004 to restate the comparativeperiod to be in compliance with AIFRS.

For US GAAP purposes, up until July 1, 2002, certaingoodwill with an expected life greater than 20 years was permitted to beamortized 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.

Therefore, although the treatment of goodwill has beenaligned under AIFRS and US GAAP, there is a permanent difference arising fromthe previous write off and amortisation of goodwill under AGAAP up to 1 July2004 which was not reversed on adoption of AIFRS.

Therealization of previously unrecognized tax losses results in an adjustment togoodwill under both AIFRS and US GAAP. Under AIFRS this charge is recognized in gross profit whereas for USGAAP it is included in tax expense $10.1 million (2005: $9.9 million).

Pre-acquisition costs

Includedin goodwill is an adjustment to expense $6.7 million of pre-acquisition costsrelated to the acquisition of Schmalbach-Lubeca, which were capitalised underprevious AGAAP but expensed for US GAAP. This will continue to be a permanent difference between AIFRS and USGAAP.

Theimpact of the above GAAP differences on gross profit, assets and shareholders’equity is as follows:
|                                                            | ** ** | **For Years Ended June 30  (in millions of A$)** | ** ** |
|------------------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|
| ** **                                                 | ** ** | **Gross profit**                                                               | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                 | ** ** | **2006**                                                                            | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| Adjustment for:                                            |       |                                                                                |       |   |   |   |   |   |   |   |   |   |   |
|  - Schmalbach  pre-acquisition costs                  |       | -                                                                                   |       | - |   | (6.7) |   | (6.5) |   | (6.7) |   | (6.5) |   |
|  - Pensions  (Note 51(II)(c))                         |       | -                                                                                   |       | - |   | 31.4 |   | 33.7 |   | - |   | - |   |
|                                                       |       |                                                                                |       |   |   |   |   |   |   |   |   |   |   |
| Impairment of Goodwill                                     |       | -                                                                                   |       | - |   | - |   | (25.0) |   | - |   | (25.0) |   |
|                                                       |       |                                                                                |       |   |   |   |   |   |   |   |   |   |   |
| Reinstatement and tax loss utilization impact on  goodwill |       | 10.1                                                                                |       | 6.4 |   | 496.5 |   | 492.0 |   | 477.7 |   | 474.1 |   |
| ** **                                                 | ** ** | ** **                                                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Total  Goodwill Adjustments**                            | ** ** | **10.1**                                                                            | ** ** | **6.4** | ** ** | **521.2** | ** ** | **494.2** | ** ** | **471.0** | ** ** | **442.6** | ** ** |

 

(e)     Employee Share/Option Schemes

Under AIFRS, compensation expense for equityinstruments issued is calculated at fair value. Where instruments have been issued subject to performance hurdle terms andconditions being satisfied, the compensation expense has been adjusted toreflect the likelihood of hurdle conditions being met.  In accordance with AIFRS transitionalprovisions, compensation expense has not been recognized for equity instrumentsgranted before 7 November 2002 and vested before 1 January 2005.  These transition provisions are notapplicable for US GAAP purposes. Accordingly a reconciling difference is recorded in respect of theinstruments granted before 7 November 2002.

To recognize compensation expense in accordance withUS GAAP, the consolidated entity has prospectively applied, effective July 1,2005,  the recognition and disclosurerequirements of SFAS 123R (revised 2004) ‘Share-Based Payments’.  Accordingly, compensation expense for alloptions issued in the current financial year is calculated in accordance withthe “fair value” requirements of SFAS 123R using an option pricing model.

F-140

----

**Amcor Limited Consolidated**

**Notes to the consolidated financialstatements**

**30 June 2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TOUS GAAP (Continued)**

(e)     Employee Share/Option Schemes(cont’d)

Where options have been issued subject to performancehurdle terms and conditions being satisfied, the compensation expense has beenadjusted to reflect the likelihood of hurdle conditions being met.

For the year ended 30 June 2005, to recognisecompensation expense in accordance with US GAAP, the consolidated entityprospectively applied, effective July 1, 2002, the recognition and disclosurerequirements of SFAS 123 ‘Accounting for Stock Compensation’, as amended bySFAS 148 ‘Accounting for Stock Compensation – Transition and Disclosure’.Accordingly, compensation expense for all options issued in the previousfinancial year was calculated in accordance with the “fair value” requirementsof SFAS 123 using a Black-Scholes option pricing model. Where options wereissued subject to performance hurdle terms and conditions being satisfied, thecompensation expense was adjusted to reflect the likelihood of hurdle conditionsbeing met.

The costs incurred in maintaining these employee shareschemes are charged as a compensation expense for US GAAP reportingpurposes.  Under AIFRS, these costs areoffset against shareholders’ equity.

The impact of the above GAAP differences on grossprofit, assets and shareholders’ equity is presented in the table below.
|                                              | ** ** | **Years Ended June 30  (in millions of A$)** | ** ** |
|----------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                   | ** ** | **Gross Profit**                                                      | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                   | ** ** | **2006**                                                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                   | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Employee Share Schemes**                   | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Compensation expense                         |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| Options                                      |       | (0.9)                                                                      |       | (0.4) |   | - |   | - |   | - |   | - |   |
| Shares issued for nil consideration          |       | (0.5)                                                                      |       | (0.8) |   | - |   | - |   | - |   | - |   |
| Cash settled employee entitlements           |       | (1.0)                                                                      |       | - |   | - |   | - |   | - |   | - |   |
| Costs of maintenance                         |       | (0.8)                                                                      |       | (1.6) |   | - |   | - |   | - |   | - |   |
|                                         |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **Total  Employee Share Scheme adjustments** | ** ** | **(3.2)**                                                                  | ** ** | **(2.8)** | ** ** | **-** | ** ** | **-** | ** ** | **-** | ** ** | **-** | ** ** |

 

At June 30, 2006 thetotal compensation cost related to non-vested awards not yet recognised was$5.0m. The periods over which this compensation cost is expected to berecognized are as follows: 1 year ($3.4m), 1-2 years ($0.6m), 2-3 years($0.5m), 3-4 years ($0.4m) and 4-5 years ($0.1).

(f)    Financial Instruments

Hedgingand Derivatives

Thenature of the consolidated entity’s business activities involves the managementof various financial and market risks, including those related to currencyexchange rates, interest rates and commodity prices.  The consolidated entity uses derivativefinancial instruments to mitigate or eliminate certain of those risks.

Previouslyunder AGAAP, derivative financial instruments may have had hedge accountingtreatment applied if the hedging derivatives were effective in reducing theexposure being hedged and were designated as a hedge at the inception of thecontract.  Hedging derivatives wereaccounted for in a manner consistent with the accounting treatment of thehedged items.

Effectivefrom July 1, 2000, the consolidated entity adopted the requirements of SFAS 133‘Accounting for Derivatives and Hedging Activities’ for US GAAP purposes.

SFAS 133, as amended, standardizes the accounting forderivative instruments and hedging activities and requires that derivativeinstruments be recognized as assets and liabilities in the balance sheet attheir fair values.  If certain conditionsare 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.

 

F-141

----

# **AmcorLimited Consolidated**

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(f)     Financial Instruments (cont’d)

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.

Asof 1 July 2005, the consolidated entity adopted AASB 132 *FinancialInstruments: Disclosure and Presentation* and AASB 139 *Financial Instruments:* R*ecognition and Measurement*,refer note 1(z).

Thehedge designation requirements under SFAS 133 vary in certain respects from previousAGAAP and as a result, the consolidated entity did not met the relevantrequirements under US GAAP for cash flow, fair value and net investment hedgesto qualify for hedge accounting criteria under US GAAP.  Under US GAAP, derivatives that do not qualifyfor hedge accounting are accounted for at fair value with gains and lossesrecorded in current earnings.  Derivativeswhich qualified for hedge accounting under AIFRS did not meet the requirementsfor hedge accounting under US GAAP due to more stringent requirements arounddocumenting hedge ineffectiveness.

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 previous AGAAP 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 the consolidatedentity did not satisfy the relevant hedge accounting criteria.  Therefore the purchase consideration for theSchmalbach-Lubeca acquisition was valued at the relevant market rate, and thegain on the hedge was recognised in net income.

For the year ended June 30, 2002 while the US dollar net investmenthedging for the Consolidated Entity was assessed as effective for previous AGAAPreporting purposes, under the specific criteria for correlation as set out inSFAS 133 ‘Accounting for Derivative Instruments and Hedging Activities’  an amount was assessed as ineffective.  This created a permanent difference whenreconciling AIFRS to US GAAP.

Loanorigination and securitised property costs

Under AIFRS loanorigination and securitised property costs are netted against the liabilityrecorded and amortised over the life of theloan using the effective interest rate method. Under US GAAP the loan origination and securitised property costs arerecorded as a separate deferred asset and amortised on the same basis as underAIFRS.

F-142

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(f)     Financial Instruments (cont’d)

The table below outlines the impact on gross profit, assets andshareholders’ equity of the above adjustments.
|                                                                                                  | ** ** | **Years ended June 30  (in millions of A$)** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                                                                       | ** ** | **Gross Profit**                                                      | ** ** | **Assets** | ** ** | **Shareholders’  Equity** | ** ** |
| ** **                                                                                       | ** ** | **2006**                                                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                                                                             |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Net  market value of derivatives**                                                 |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  **Recognition  and movement in the net market value of **  **derivatives |       | 13.4                                                                       |       | (3.1 | ) | -    |   | (1.5 | ) | -    |   | (16.3 | ) |
| **  **Net  deferred hedge gains/(losses) brought to account                            |       | (31.0                                                                      | )          | 2.6 |   | -    |   | (35.4 | ) | -    |   | (34.1 | ) |
|                                                                                             |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Deferred  gain on hedge**                                                          |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  **Recognition  of hedge gain                                                       |       | -                                                           |       | -    |   | 31.3 |   | 35.6 |   | 31.3 |   | 35.6 |   |
| ** **                                                                                       |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Loan  origination and securitised property costs**                                 |       | -                                                           |       | (1.4 | ) | 6.7 |   | 7.9 |   | -    |   | 0.5 |   |
|                                                                                             |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Net  investment hedge**                                                            |       | -                                                           |       | -    |   | -    |   | -    |   | (3.8 | ) | (3.8 | ) |
| ** **                                                                                       |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Total Financial  Instruments adjustments**                                         | ** ** | **(17.6**                                                                  | **)**      | **(1.9** | **)** | **38.0** | ** ** | **6.6** | ** ** | **27.5** | ** ** | **(18.1** | **)** |

 

(g)    Business Combinations

Thefollowing relates to the Amcor Flexibles Europe (‘AFE’) A/S transaction whichoccurred on June 29, 2001, whereby the European Flexible operations merged withDanisco 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).

This will continue to be a permanent difference between AIFRS and US GAAP.

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 liability uponthe acquisition of this business under the previous AGAAP.  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 previous AGAAP, it contains specific qualifying criteria, and where thesecriteria were not satisfied an adjustment to the restructuring provision wasrecorded.

This will continue to be a permanent difference between AIFRS and US GAAP.

F-143

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June 2006**

**NOTE 51 RECONCILIATION OFACCOUNTS TO US GAAP (Continued)**

(g)    Business Combinations (cont’d)

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).

This will continue to be a permanent difference between AIFRS and US GAAP.

Thefollowing amounts relate to the July 1, 2003 AFE A/S transaction, whereby theremaining minority interest shareholding was acquired for $165.1 million:

Minority Interest Acquisition

As noted above under ‘Restructuring provision adjustments’ and ‘Otherfair value adjustments’, a portion of these items established under theprevious AGAAP 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 the previous AGAAP.

This will continue to be a permanent difference between AIFRS and US GAAP.

The table below outlines the impact on gross profit, assets andshareholders’ equity of the above adjustments.
|                                                                                     | ** ** | **Years Ended June 30  (in millions of A$)** | ** ** |
|-------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                                                          | ** ** | **Gross Profit**                                                      | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                                          | ** ** | **2006**                                                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                                                          |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  June  29, 2001 AFE Merger**                                           |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  **Gains on sale of  assets                                            |       | -                                                                          |       | - |   | 8.8 |   | 8.1 |   | 8.8 |   | 8.1 |   |
| **  **Restructuring  provisions disallowed **  **under  US GAAP |       | -                                                                          |       | - |   | (103.9 | ) | (96.8 | ) | (73.9 | ) | (68.5 | ) |
| **  **Other fair value  adjustments                                       |       | -                                                                          |       | - |   | (20.2 | ) | (18.9 | ) | (10.6 | ) | (9.9 | ) |
|                                                                                |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Total June 29, 2001 AFE Transaction  adjustments**                    | ** ** | **-**                                                                      | ** ** | **-** | ** ** | **(115.3** | **)** | **(107.6** | **)** | **(75.7** | **)** | **(70.3** | **)** |
| ** **                                                                          |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  July 1, 2003 AFE Transaction**                                        |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  **Minority interest acquisition                                       |       | -                                                                          |       | - |   | 20.8 |   | 19.6 |   | - |   | - |   |
|                                                                                |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Total June 30, 2003 AFE Transaction  adjustments**                    | ** ** | **-**                                                                      | ** ** | **-** | ** ** | **20.8** | ** ** | **19.6** | ** ** | **-** | ** ** | **-** | ** ** |
|                                                                                |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Total Business Combination    adjustments**                 | ** ** | **-**                                                                      | ** ** | **-** | ** ** | **(94.5** | **)** | **(88.0** | **)** | **(75.7** | **)** | **(70.3** | **)** |

 

(h)    Perpetual Non-cumulative Subordinated Convertible Reset Unsecured Notes(“PACRS”)

For the year ended 30 June 2005 the PACRS wereclassified as equity for AIFRS purposes. As of 1 July 2005, the consolidated entity adopted AASB 132 *Financial Instruments: Disclosure and Presentation* and AASB139 *Financial Instruments:* R*ecognition and Measurement*, refer note 1(z).   The effect of adopting these standards wasto reclassify the PACRS as debt.

 

These instruments are classified as debt for USGAAP purposes.  Therefore this balancesheet classification difference exists only for the period ended 30 June 2005.

 

The PACRS are considered to have beneficial conversion features, asPACRS holders are able to convert the PACRS into Amcor Limited shares at adiscount to the market value of Amcor Limited shares. For the year ended 30June 2006 for AIFRS purposes, the conversion discount has been offset againstthe carrying value of the PACRS at amortised cost. Over the life of the PACRS,these amounts are recognised in the income statement using the effectiveinterest method. For US GAAP purposes, the beneficial conversion features havebeen recorded by allocating a portion of the proceeds equal to their intrinsicvalue to additional paid-in capital (equity). The debt discount resulting fromthis allocation of proceeds to the beneficial conversion features is recognisedas interest expense over the minimum period from the date of issuance to theearliest conversion date.

 

F-144

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June 2006**

**NOTE 51 RECONCILIATION OFACCOUNTS TO US GAAP (Continued)**

(h)     Perpetual Non-cumulative Subordinated Convertible Reset Unsecured Notes(“PACRS”) (cont’d)

In addition, under AIFRS, for the year ended 30 June 2006, thetransactions costs associated with the PACRS have been netted off against theliability.  Under US GAAP these costshave been recorded as a separate deferred asset.  There is no effect on US GAAP net income forthis difference.

The table below outlines the impact on gross profit, assets andshareholders’ equity of the above adjustments.
|                                                                                         | ** ** | **Years Ended June 30  (in millions of A$)** | ** ** |
|-----------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                                                              | ** ** | **Gross Profit**                                                      | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                                              | ** ** | **2006**                                                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                                                              |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  PACRS**                                                                   |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  **Reclassification  of balances                                           |       | -                                                           |       | -    |   | 13.3 |   | 13.3 |   | -    |   | (596.6 | ) |
| **  **Amortization of  capitalized **  **transaction costs          |       | -                                                           |       | (2.9 | ) | (12.8 | ) | (10.1 | ) | -    |   | (10.1 | ) |
| **  **Interest expense  recorded as **  **distribution under  AIFRS |       | -                                                           |       | (52.3 | ) | -    |   | -    |   | -    |   | -    |   |
| **  **Beneficial  conversion feature                                          |       | -                                                           |       | -    |   | -    |   | -    |   | 11.0 |   | 32.1 |   |
| **  **Amortization of  beneficial **  **conversion feature          |       | 0.3                                                                        |       | (6.9 | ) | -    |   | -    |   | -    |   | (23.2 | ) |
|                                                                                    |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Total PACRS adjustments**                                                 | ** ** | **0.3**                                                                    | ** ** | **(62.1** | **)** | **0.5** | ** ** | **3.2** | ** ** | **11.0** | ** ** | **(597.8** | **)** |

 

(i)      Income Taxes

The consolidated entity applies SFAS 109 ‘Accounting for Income Taxes’in preparing its US GAAP information. Accounting for income taxes under AIFRS is under the balance sheetmethod, and is consistent in all major respects to SFAS 109.

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 future assessable income ofa nature and amount sufficient to enable the benefit of the deductions to berealized;

·        the entities continue to comply with theconditions for deductibility imposed by income tax law; and

·        changes in income tax legislation do not adversely affect the ability ofthe entities to realize the benefits of the deductions.

Management considers the scheduled reversal of deferred tax liabilities,projected future taxable income, and tax planning strategies in making thisassessment.  A valuation allowance is providedagainst the deferred tax asset for the portion of that asset that is not likelyto be realized based on management’s assessment of future taxable income.  During the year there was a decrease in thevaluation allowance of $23.2million (2005 increase $47.0 million).  As at June 30, 2006, a valuation allowance of$250.4million (2005 $273.6million) has been provided against deferred taxassets.  This valuation allowance relatesto carried forward tax losses and timing assets.

The consolidated entity acquired tax-effected $150.8 million in carriedforward net operating losses (calculated at June 30, 2006 rates of exchange) aspart of the acquisition of the Schmalbach-Lubeca, CNC and Sunclipsebusinesses.  A valuation allowance wasprovided against the full value of these deferred tax assets, based onmanagement’s assessment that it was more likely than not that these benefitswould not be realized. During the year, $10.1 million (calculated at June 30,2006 rates of exchange) (2005 $9.9 million) of these carried forward tax losseswere realized.  To date $40.9 million(2005 $30.8 million) calculated at June 30, 2006 rates of exchange of carriedforward losses have been utilized.  ForAIFRS purposes, the recognition of these utilised losses as a deferred taxasset was included as part of the current year income tax expense. Therealization of these tax losses has resulted in a corresponding adjustment togoodwill.  Under US GAAP the adjustmentto Goodwill is recognized in tax expense, whereas under AIFRS the adjustment isrecognized in gross profit.  Theremaining carried forward tax losses related to the acquisition of theSchmalbach-Lubeca, CNC and Sunclipse businesses at June 30, 2006 are $109.8million(2005 $119.9 million at June 30, 2006 rates of exchange).  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.

F-145

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(i)      Income Taxes (cont’d)

The consolidated entity has not recognized a deferred tax liability forthe undistributed earnings of its foreign subsidiaries that arose in 2006 andprior years because the consolidated entity currently does not expect those unremittedearnings to reverse and become taxable in the foreseeable future.  A deferred tax liability will be recognizedwhen the consolidated entity is no longer able to demonstrate that it plans topermanently reinvest the undistributed earnings.  The determination of the unrecognizeddeferred tax liability is not practicable.

Income tax expense

For the year ended June 30, 2006 $85.3 million profit (2005 $106.2million profit) of the total US GAAP pre tax profit from continuing operations of$438.8 million profit (2005 $336.9 million profit) relates to domesticoperations, whilst the balance of $353.5 million profit (2005 $230.7 millionprofit) relates to foreign operations. Income tax expense attributable to income from continuing operations calculatedin accordance with US GAAP consists of:

|                                           | ** ** | **(in millions of A$)** | ** **   |
|-------------------------------------------|------------|----------------------------------------|--------------|
| ** **                                | ** ** | **Current**                            | **Deferred** | **Total** | ** ** |
| ** **                                |       |                                   |         |   |   |   |   |
| **  Year  ended June 30, 2006** |       |                                   |         |   |   |   |   |
| **  **Domestic                  |       | 21.3                                   |         | (3.8 | ) | 17.5 |   |
| **  **Foreign  jurisdiction     |       | 76.4                                   |         | 6.5 |   | 82.9 |   |
| ** **                                |       |                                   |         |   |   |   |   |
| ** **                                |       |                                   |         |   |   |   |   |
| ** **                                |       | 97.7                                   |         | 2.7 |   | 100.4 |   |
| **  Year  ended June 30, 2005** |       |                                   |         |   |   |   |   |
| **  **Domestic                  |       | (9.6                                   | )            | 40.6 |   | 31.0 |   |
| **  **Foreign  jurisdiction     |       | 68.1                                   |         | (8.4 | ) | 59.7 |   |
|                                      |       |                                   |         |   |   |   |   |
|                                      |       |                                   |         |   |   |   |   |
|                                      |       | 58.5                                   |         | 32.2 |   | 90.7 |   |

 

Income tax expense from continuing operations attributable to income was$100.4 million and $90.7 million for the years ended June 30, 2006 and June 30,2005 respectively and differed from amounts computed by applying the Australianincome tax rate of 30% to pre-tax income as a result of the following:
|                                                                                                                                                | ** ** | **Years Ended June 30**                   | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|
| ** **                                                                                                                                     | ** ** | **(in millions of A$)**                   | ** ** |
| ** **                                                                                                                                     | ** ** | ** **                                               | ** ** | ** ** | ** ** |
| ** **                                                                                                                                     | ** ** | **        2006** | ** ** | **        2005** | ** ** |
|                                                                                                                                           |       |                                                     |       |   |   |
|                                                                                                                                           |       |                                                     |       |   |   |
| **  **Computed  “expected” tax expense                                                                                     |       | 131.6                                                    |       | 101.1 |   |
| **  **Increase/(reduction)  in income taxes resulting from;                                                                          |       |                                                     |       |   |   |
| Different overseas tax rates                                                                                                                   |       | 12.8                                                     |       | (9.8) |   |
| Capital structures                                                                                                                             |       | (66.9)                                                   |       | (41.6) |   |
| Amortization/write down of goodwill                                                                                                            |       | (1.7)                                                    |       | (4.3) |   |
| Change in estimate of prior year tax provision                                                                                                 |       | (11.9)                                                   |       | (10.3) |   |
| Utilisation of tax losses and recognition of  previously unbooked deferred tax liabilities, fully provided deferred tax  assets and tax losses |       | (12.3)                                                   |       | 26.0 |   |
| Tax benefit on significant items not recognised                                                                                                |       | 13.4                                                     |       | 13.4 |   |
| Other                                                                                                                                          |       | 35.4                                                     |       | 16.2 |   |
|                                                                                                                                           |       |                                                     |       |   |   |
| **  Actual Income Tax  Expense**                                                                                                     |       | 100.4                                                    |       | 90.7 |   |
| ** **                                                                                                                                     |       |                                                     |       |   |   |

F-146

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(i)      Income Taxes (cont’d)

Total income tax expense (benefit) for the years ended June 30, 2006 and2005 (in millions A$) was allocated as follows:

|                                                                                                                      | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|----------------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                                                           | ** ** | ** ** | ** ** | ** ** | ** ** |
| Income from  continuing operations                                                                                   |       | 100.4      |       | 90.7       | ** ** |
| Discontinued  operations                                                                                             |       | (6.5)      |       | 3.5        | ** ** |
| Goodwill, for initial recognition of acquired tax  benefits that were previously included in the valuation allowance |       | (10.1)     |       | (10.2)     |       |
| Other  comprehensive loss                                                                                            |       | (6.4)      |       | (16.4)     |       |
|                                                                                                                 |       |       |       |       |       |
| Total                                                                                                                |       | 77.4       |       | 67.6       |       |
|                                                                                                                 |       |       |       |       |       |

 

Deferred Taxes

The disclosure of deferred tax assets and liabilities calculated inaccordance with US GAAP is set out below:
|                                                                                          | ** ** | **Years Ended June 30** | ** ** |
|------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                               | ** ** | **(in millions of A$)** | ** ** |
| ** **                                                                               | ** ** | **2006**                               | ** ** | **2005** | ** ** |
|                                                                                     |       |                                   |       |   |   |
| Deferred Tax Liabilities                                                                 |       |                                   |       |   |   |
| Plant and equipment, due to differences in  depreciation                                 |       | 456.6                                  |       | 335.6 |   |
| Exchange fluctuation reserve                                                             |       | 26.1                                   |       | 6.4 |   |
| Intangible assets                                                                        |       | 47.1                                   |       | 65.0 |   |
| Supply contract deposits                                                                 |       | 11.9                                   |       | 11.4 |   |
| Other                                                                                    |       | 27.6                                   |       | 5.9 |   |
| Set off of deferred tax assets throughout the Group  pursuant to set-off provisions      |       | (39.8)                                 |       | (8.8) |   |
|                                                                                     |       |                                   |       |   |   |
| Total Deferred Tax Liability                                                             |       | 529.5                                  |       | 415.5 |   |
|                                                                                     |       |                                   |       |   |   |
|                                                                                     |       |                                   |       |   |   |
| Deferred Tax Assets                                                                      |       |                                   |       |   |   |
| Impairment of trade receivables                                                          |       | 7.9                                    |       | 5.9 |   |
| Employee benefits provision                                                              |       | 91.5                                   |       | 65.1 |   |
| Valuation of inventory                                                                   |       | 17.8                                   |       | 12.2 |   |
| Other provisions                                                                         |       | 33.5                                   |       | 44.5 |   |
| Carried forward tax losses                                                               |       | 329.0                                  |       | 347.5 |   |
| Accruals/ Other                                                                          |       | 152.1                                  |       | 98.0 |   |
| Cash flow hedges                                                                         |       | 20.4                                   |       | - |   |
| Exchange fluctuation reserve                                                             |       | 19.6                                   |       | (6.4) |   |
| Set off of deferred tax liabilities throughout the  Group pursuant to set-off provisions |       | (39.8)                                 |       | (8.8) |   |
|                                                                                     |       |                                   |       |   |   |
|                                                                                     |       |                                   |       |   |   |
| Total Gross Deferred Tax Assets                                                          |       | 632.0                                  |       | 558.0 |   |
|                                                                                     |       |                                   |       |   |   |
| Less valuation allowance                                                                 |       | (250.4)                                |       | (273.6) |   |
|                                                                                     |       |                                   |       |   |   |
|                                                                                     |       |                                   |       |   |   |
| Total Net  Deferred Tax Assets                                                           |       | 381.6                                  |       | 284.4 |   |
|                                                                                     |       |                                   |       |   |   |

 

F-147

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(i)      Income Taxes (cont’d)

Differencesin Application of GAAP on Deferred Taxes

This adjustment reflects the following items:

Acquired tax losses

The consolidated entity acquired tax-effected $150.8 million in carriedforward net operating losses (calculated at 30 June 2006 rates of exchange) aspart of the acquisition of the Schmalbach-Lubeca, CNC and Sunclipsebusinesses.  A valuation allowance wasprovided against the full value of these deferred tax assets, based onmanagement’s assessment that it was more likely than not that these benefitswould not be realized. During the year, $10.1million (calculated at 30 June 2006rates of exchange) (2005 $10.2 million) of these carried forward tax losseswere realized.  To date $41.0million(2005 $29.8 million) of carried forward losses have been utilized.  For AIFRS purposes, the recognition of theseutilised losses as a deferred tax asset was included as part of the currentyear income tax expense. The realization of these tax losses has resulted in acorresponding adjustment to goodwill.  Under US GAAP the adjustment to Goodwill isrecognized in tax expense, whereas under AIFRS the adjustment is recognized ingross profit.  The remaining carriedforward tax losses related to the acquisition of the Schmalbach-Lubeca, CNC andSunclipse businesses at June 30, 2006 are $109.8million (2005 $116.3 million at30 June 2005 rates of exchange).  Avaluation allowance continues to be provided against the full value of thesedeferred tax assets, based on management’s assessment that it is more likelythan not that these remaining benefits will not be realized.

Business combination deferred taxes

The impact of the GAAP differences on deferred taxes associated with theadjustments set out in Note 51(II)(g) ‘Business Combinations’.

Other

Theapplication of AIFRS has resulted in the recognition of additional deferred taxassets and deferred tax liabilities relating to revalued assets now carried atdeemed cost, previously unrecognized securitized assets and deductiblegoodwill.  These adjustments to thecarrying value of deferred tax assets and deferred tax liabilities haveresulted in AIFRS to US GAAP adjustments to reflect the appropriate carryingvalue of deferred tax assets and deferred tax liabilities under US GAAP.

The table below outlines the impact on gross profit, assets andshareholders’ equity of the above adjustments.
|                                                                                   | ** ** | **Years Ended June 30  (in millions of A$)** | ** ** |
|-----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                                                        | ** ** | **Gross Profit**                                                      | ** ** | **Assets** | **`** | **Shareholders’ Equity** | ** ** |
| ** **                                                                        | ** ** | **2006**                                                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                                                              |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Differences in application of   GAAP  on Deferred Taxes** | ** ** | **(8.4**                                                                   | **)**      | **(13.2** | **)** | **44.1** | ** ** | **(25.1** | **)** | **44.1** | ** ** | **76.0** | ** ** |

 

(j)      Restructuring

During the years ended 30 June 2006 and 2005 restructuring costs wererecorded for AIFRS relating to site exit costs and termination ofemployees.  While the criteria foraccruing costs associated with business restructurings, as set out in SFAS 146 ‘CostsAssociated with Disposal Activities’, are fundamentally consistent with thoseof AIFRS, it contains very specific qualifying criteria for employeetermination and requires exit costs to be expensed only as incurred.  US GAAP prohibits the recognition of aliability based solely on an entity’s commitment to a plan. Where the criteriafor recognition of employee terminations were not satisfied an adjustment tothe restructuring provision was recorded.

F-148

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(j)      Restructuring (cont’d)

The table below outlines the impact on gross profit, assets andshareholders’ equity of the above adjustments.
|                               | ** ** | **Years Ended June 30  (in millions of A$)** | ** ** |
|-------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                    | ** ** | **Gross Profit**                                                      | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
|                          | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|                          | ** ** | **2006**                                                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
|                          |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Restructuring** | ** ** | **16.4**                                                                   | ** ** | **17.9** | ** ** | **-** | ** ** | **-** | ** ** | **30.5** | ** ** | **17.4** | ** ** |

 

(k)     Investment in Associate -Vision Grande

Fair value of derivatives

Differences exist on accounting for options acquired as part of theacquisition of shares in Vision Grande. Under AIFRS these options were considered to be derivative instruments,carried at fair value, and ultimately formed part of the acquisition cost ofthe equity investment.  Under US GAAPthey did not meet the requirements for net settlement and therefore were notconsidered to be derivatives and were carried at cost.

Partial gain on sale of subsidiaries

A partial gain has been recognised on the disposal of certainsubsidiaries to Vision Grande.  Uponsubsequent dilution of Amcor’s interest in Vision Grande, a further gain hasbeen recognised under AIFRS, which is not recognised for US GAAP purposes.

Gain on dilution

The consolidated entity recognised a gain when its interest in VisionGrande became diluted, as a result of a share issue by Vision Grande.

The gain is based on the net assets and carrying value of Vision Grande,which are different between AIFRS and US GAAP. As a result, there is a difference in the gain as calculated under USGAAP.

The table below outlines the impact on gross profit, assets andshareholders’ equity of the above adjustments.
|                                                                                   | ** ** | **Years Ended June 30  (in millions of A$)** | ** ** |
|-----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                                                        | ** ** | **Gross Profit**                                                      | ** ** | **Assets** | ** ** | **Shareholders’ Equity** | ** ** |
| ** **                                                                        | ** ** | ** **                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                        | ** ** | **2006**                                                                   | ** ** | **2005   ** | ** ** | **2006** | ** ** | **2005   ** | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                                                              |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  **Reversal  of fair value of derivatives                            |       | (31.9                                                                      | )          | - |   | (72.4 | ) | - |   | (72.4 | ) | - |   |
| **  **Reversal of  partial gain on sale of **  **subsidiaries |       | (2.6                                                                       | )          | - |   | (2.5 | ) | - |   | (2.5 | ) | - |   |
| **  **Gain  on dilution                                                 |       | 9.9                                                                        |       | - |   | 9.5 |   | - |   | 9.5 |   | - |   |
|                                                                              |       |                                                                       |       |   |   |   |   |   |   |   |   |   |   |
| **  Total Vision Grande  adjustments**                                  | ** ** | **(24.6**                                                                  | **)**      | **-** | ** ** | **(65.4** | **)** | **-** | ** ** | **(65.4** | **)** | **-** | ** ** |

 

(l)    Other minor adjustments

Other adjustments includeaccounting for differences between AIFRS and US GAAP relating to research anddevelopment expenditure and asset retirement obligations and historical AGAAPto US GAAP differences relating to the treatment of unrealised gains onavailable for sale investments.

Under AIFRS, costs in theresearch phase are expensed and only costs in the development phase arecapitalised if the product is technically and commercially feasible andadequate resources are available to complete the development.  Capitalised development expenditure isamortised over the period of time during 

F-149

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June2006**

which the benefits are expectedto arise.  Under US GAAP, research anddevelopment expenditure costs are expensed as incurred.

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(l)      Other minor adjustments (cont’d)

The consolidated entity’saccounting policy for the treatment of asset retirement obligations isreasonably consistent with US GAAP, except that unlike AIFRS the fair value ofthe liability is not remeasured for changes in the risk-free interest rate usedto discount the provision.  In addition,the US GAAP provision was established on adoption of SFAS 143 “Accounting forAsset Retirement Obligations” effective 1 July 2002, using the risk-freeinterest rate applicable at that time. In addition, the company has aregulatory obligation regarding the method of handling and disposing ofexisting asbestos installations when it is removed or disturbed. The companyhas no plans to remove or disturb existing installations and there isinsufficient information to reasonably estimate potential settlement dates.Accordingly, no liability has been raised for these asset retirementobligations because of the indeterminate settlement dates.

The consolidated entity accountedfor investments in listed and unlisted securities under the previous AGAAPpolicy until 1 July 2005, when the AIFRS financial instruments standards wereadopted.  Refer note 1(z).  Under previous AGAAP these investments wereaccounted for at cost, less provision for permanent diminutions in value.  The adoption of the new accounting policy forinvestments in listed and unlisted securities eliminates the GAAP differencesfor the year ended 30 June 2006.

(m)    DiscontinuedOperations

On 23 February 2006, acontrolled entity announced the disposal of its White Cap Metal Closures businessfor $333 million with effect from 1 June 2006.

On23 February 2006, a controlled entity announced the disposal of the AsianCorrugated business for $12.9 million with effect from 28 February 2006.

Operatingresults for these plants (on a US GAAP basis) are summarized as follows (A$millions):
|                                                             | ** ** | **2006** | ** ** | **2005** | ** ** |
|-------------------------------------------------------------|------------|----------|------------|----------|------------|
| **  **Revenues  from sale of goods                |       | 404.9    |       | 466.5    |       |
| **  **Loss  on sale of discontinued operation     |       | (148.2)  |       | -        |       |
| **  **Income  before taxes                        |       | (172.7)  |       | (33.0)   |       |
| **  **Income  taxes                               |       | 6.5      |       | (3.5)    |       |
| **  **Income  (loss) from discontinued operations |       | (166.2)  |       | (36.5)   |       |

 

Income (loss) from discontinued operations on an AIFRS and US GAAP basisis reconciled as follows:
|                                                                                                                                               | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                                                                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                                                                                                                          |       |       |       |       |       |
| **  **Loss from  discontinued operations calculated under AIFRS                                                                     |       | (37.4)     |       | (19.2)     |       |
| **  **Impairment of  property, plant and equipment not recognised under **  **US  GAAP recognised on disposal (1)         |       | (10.6)     |       | 16.0       |       |
| **  **Defined benefit  reporting obligations for discontinued calculated **  **differently  between AIFRS and US GAAP (2) |       | (14.9)     |       | (1.4)      |       |
| **  **Goodwill relating  to discontinued operations recognised under US **  **GAAP  included in disposal (3)              |       | 15.0       |       | (26.7)     |       |
| **  **Goodwill  associated with financial instruments recognised under US **  **GAAP included in disposal (4)             |       | (7.8)      |       | -          |       |
| **  **Asset retirement  obligation calculated differently between AIFRS **  **and  US GAAP (5)                            |       | 0.1        |       | (2.0)      |       |
| **  **Exchange  Fluctuation Reserve (6)                                                                                             |       | (110.6)    |       | -          |       |
| **  **Tax Effect of  above adjustment                                                                                               |       | -          |       | (3.2)      |       |
|                                                                                                                                          |       |       |       |       |       |
| **  **Loss  from discontinued operations calculated under US GAAP                                                                   |       | (166.2     | )          | (36.5)     |       |
|                                                                                                                                          |       |       |       |       |       |

 

F-150

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June 2006**

**NOTE 51 RECONCILIATION OFACCOUNTS TO US GAAP (Continued)**

(m)          Discontinued Operations (cont’d)

(1)   Referalso to 51(ll) (a) Property, Plant and Equipment for further commentaryregarding AIFRS and US GAAP differences.

(2)   Referalso to 51 (ll) (c) Pension Plans for further commentary

(3)   Referalso to 51 (ll) (d) Goodwill for further commentary

(4)   Referalso to 51 (ll) (f) Financial Instruments for further commentary

(5)   Referalso to 51 (ll) (k) Other Minor Adjustments for further commentary

(6)   Under both AIFRS and US GAAP,the portion of exchange fluctuation reserve/ foreign currency translationreserve attributable to disposed subsidiaries must be included in thecalculation of any profit or loss on disposal. This amount for US GAAP willinclude the impact of foreign currency translation differences calculated priorto July 1, 2004. Under AIFRS, the foreign currency translation reserve wasreset to nil at June 30, 2004 by transferring the balance at the time toretained earnings.

** **(n)   Recent Changes to US GAAP

InSeptember 2005, the Emerging Issues Task Force (EITF) of the FinancialAccounting Standards Board (FASB) reached a consensus in Issue No. 04-13 ‘Accountingfor Purchases and Sales of Inventory with the Same Counterparty’ (EITF 04-13).This is applicable for new inventory arrangements entered into, ormodifications or renewals of existing arrangements occurring for annual reportingperiods beginning after 15 March 2006. Entities that enter into inventorypurchase and sales transactions with the same counterparty, in contemplation ofone another, should combine the transactions and treat them as non-monetaryexchanges involving inventory. The consolidated entity is currently assessingthe impact of EITF 04-13.

InMarch 2006, the EITF of the FASB reached a consensus in Issue No. 06-3 ‘HowTaxes Collected From Customers and Remitted to Governmental Authorities Shouldbe Presented in the Income Statement (That is, Gross versus Net Presentation)’(EITF 06-3). The disclosure required by the consensus will be applicable forannual reporting periods beginning after 15 December 2006. This permitscompanies to elect to present on either a gross or net basis based on theiraccounting policy. This applies to sales and other taxes that are imposed onand concurrent with individual revenue producing transactions between a sellerand a customer. The gross basis includes the taxes in revenues and costs; thenet basis excludes the taxes from revenues. The consensus would not apply totax systems that are based on gross receipts or total revenues. Theconsolidated entity is currently assessing the impact of EITF 06-3.

InJune 2006, FASB Interpretation No. 48 ‘Accounting for Uncertainty inIncome Taxes – An Interpretation of FASB Statement No. 109’ (FIN 48) wasissued. FIN 48 requires tax benefits from an uncertain position to berecognised if it is ‘more likely than not’ that the position is sustainable,based on its technical merits. The interpretation also requires qualitative andquantitative disclosures, including discussion of reasonably possible changesthat might occur in recognised tax benefits over the next 12 months, adescription of open tax years by major jurisdiction, and a roll-forward of allunrecognised tax benefits. FIN 48 first applies for the consolidated entityfrom 1 July 2007. The consolidated entity is currently assessing theimpact of adopting FIN 48.

InNovember 2005, the FASB issued FASB Staff Position SFAS 123(R)-3 ‘TransitionElection Related to Accounting for the Tax Effects of Share-Based PaymentAwards’ (FSP 123(R)-3). FSP 123(R)-3 provides an alternative method thatestablishes a computational component to arrive at the beginning balance of theaccumulated paid-in capital pool related to employee compensation and asimplified method to determine the subsequent impact of the accumulated paid-incapital pool of employee awards that are fully vested and outstanding upon theadoption of SFAS 123R. The application of this FSP will not have a materialimpact on the consolidated entity’s financial position or results ofoperations.

InNovember 2005, the FASB issued FASB Staff Position Nos. SFAS 115-1 and SFAS124-1 ‘The Meaning of Other-Than-Temporary Impairment and its Application toCertain Investments’. This FSP addresses the determination as to when aninvestment is considered impaired and whether that impairment is other-than—temporary,and the measurement of an impairment loss. This FSP also includes accountingconsiderations subsequent to the recognition of an other-than-temporaryimpairment. The application of this FSP will not have a material impact on theconsolidated entity’s financial position or results of operations.

InOctober 2005, the FASB issued FASB Staff Position SFAS 123(R)-2 ‘PracticalAccommodation to the Application of Grant Date as Defined in SFAS 123R’ (FSP123(R)-2). FSP 123(R)-2 provides guidance on

F-151

----

Amcor Limited Consolidated

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(n)    Recent Changes to US GAAP (cont’d)

theapplication of grant date as defined in SFAS 123R. In accordance with SFAS123R, a grant date of award exists if the award is a unilateral grant and thekey terms and conditions of the award are expected to be communicated to anindividual recipient within a relatively short time period form the date ofapproval. The application of this FSP will not have a material impact on theconsolidated entity’s financial position or results of operations.

InFebruary 2006, the FASB issued Statement of Financial Accounting StandardNo. 155 ‘Accounting for Certain Hybrid Financial Instruments’ (SFAS 155).SFAS 155 provides entities with relief from having to separately determine thefair value of an embedded derivative that would otherwise have to be bifurcatedfrom its host contract in accordance with SFAS 133. SFAS 155 allows an entityto make an irrevocable election to measure such a hybrid financial instrumentat fair value in its entirety, with changes in fair value recognised inearnings. Additionally, SFAS 155 requires that interest in securitisedfinancial assets be evaluated to identify whether they are freestandingderivatives or hybrid financial instruments containing an embedded derivativethat requires bifurcation (previously these were exempt from SFAS 133). SFAS155 is effective for all financial instruments acquired, issued or subject to are-measurement event occurring after the beginning of an entity’s first fiscalyear that begins after 15 September 2006. The consolidated entity iscurrently assessing the impact of adopting SFAS 155.

In September 2006, the FASBissued SFAS No. 157 “Fair Value Measurements.” SFAS No. 157 defines fair value,establishes a framework for measuring fair value in accordance with U.S. GAAP,and expands disclosures about fair value measurements. The statement clarifiesthat the exchange price is the price in an orderly transaction between marketparticipants to sell an asset or transfer a liability at the measurement date.The statement emphasizes that fair value is a market-based measurement and notan entity-specific measurement. It also establishes a fair value hierarchy usedin fair value measurements and expands the required disclosures of assets andliabilities measured at fair value.” SFAS No. 157 is effective for financialstatements issued for fiscal years beginning after November 15, 2007, andinterim periods within those fiscal years. The Company is currently evaluatingthe impact of adoption of this on the Company’s financial condition, results ofoperation or liquidity.

In September 2006, the FASBissued SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension andOther Postretirement Plans.” SFAS No. 158 amends SFAS statements No. 87, 88,106 and 132(R). SFAS No. 158 requires employers to recognize in its statementof financial position an asset for a plan’s overfunded status or a liabilityfor a plan’s underfunded status. Secondly, it requires employers to measure theplans assets and obligations that determine its funded status as of the end ofthe fiscal year. Lastly, employers are required to recognize changes in thefunded status of a defined benefit postretirement plan in the year that thechanges occur with the changes reported in comprehensive income. The standardis required to be adopted by entities having fiscal years ending after December15, 2006. The Company is currently evaluating the impact of adoption of this onthe Company’s financial condition, results of operation or liquidity.

InSeptember 2006, the SEC issued SAB No.108 ‘Quantifying Financial Misstatements’,which provides guidance on the process of quantifying financial statement misstatements.In SAB No. 108, the SEC staff establishes an approach that requiresquantification of the financial statement errors, under both the iron-curtainand the roll-over methods, based on the effects of the error on each of theconsolidated entity’s financial statements and the related financial statementdisclosures. SAB No. 108 is generally effective for annual financial statementsin the first fiscal year ending after 15 November, 2006. The transitionprovisions of SAB No. 108 permits existing public companies to record the cumulativeeffect in the first year ending after 15 November, 2006 by recording correctingadjustments to the carrying values of the assets and liabilities as of thebeginning of that year with the offsetting adjustment recorded to the openingbalance of retained earnings. The consolidated entity is currently assessingthe impact of adopting SAB No. 108.

F-152

----

# **AmcorLimited Consolidated**

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(o)    Retirement Benefit Obligations
| PENSIONS                                                                                          | ** ** | ** ** | **For the Years Ended June 30  (in millions of A$)** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|------------|----------------------------------------------------------------------------------------------|------------|
| ** **                                                                                        | ** ** | ** ** | ** **                                                                                   | ** ** | ** ** |
| ** **                                                                                        | ** ** | **2006**   | ** **                                                                                   | **2005**   | ** ** |
| Employer  contributions made by the consolidated entity to Defined Benefit Funds during  the year |       | 104.2      |                                                                                         | 42.3       |   |
|                                                                                              |       |       |                                                                                         |       |   |

 
|                                                      | ** ** | **For the Year Ended 30 June(in millions of A$)** | ** ** |
|------------------------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|
| ** **                                           | ** ** | ** **                                                                                | ** ** | ** ** | ** ** |
| ** **                                           | ** ** | **Domestic**                                                                              | ** ** | **Foreign** | ** ** |
| ** **                                           | ** ** | **2006**                                                                                  | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                                 |       |                                                                                      |       |   |   |   |   |   |   |
| Change  in benefit obligation                        |       |                                                                                      |       |   |   |   |   |   |   |
| Benefit  obligation at beginning of year             |       | 236.5                                                                                     |       | 236.1 |   | 670.5 |   | 587.9 |   |
| Foreign  currency exchange variation                 |       | -                                                                                         |       | - |   | 36.0 |   | (48.1) |   |
| Service  cost                                        |       | 22.6                                                                                      |       | 16.8 |   | 28.4 |   | 26.4 |   |
| Interest  cost                                       |       | 13.3                                                                                      |       | 15.6 |   | 33.2 |   | 29.8 |   |
| Plan  participants’ contributions               |       | 2.6                                                                                       |       | 2.5 |   | 10.7 |   | 10.4 |   |
| Actuarial  (gain)/loss                               |       | 32.3                                                                                      |       | 12.4 |   | (4.9) |   | 101.2 |   |
| Expenses  (including tax)                            |       | (11.3)                                                                                    |       | (3.2) |   | (3.2) |   | (2.4) |   |
| Benefits  paid from plan assets                      |       | (19.5)                                                                                    |       | (4.1) |   | (31.4) |   | (24.9) |   |
| Benefits  paid directly by consolidated entity       |       | -                                                                                         |       | - |   | (4.2) |   | (1.7) |   |
| Settlement                                           |       | -                                                                                         |       | (39.6) |   | (47.4) |   | (8.1) |   |
| Past  service costs                                  |       | -                                                                                         |       | - |   | 0.9 |   | - |   |
| Curtailment                                          |       | -                                                                                         |       | - |   | (0.9) |   | - |   |
| Plan  converted to defined benefit from accumulation |       | -                                                                                         |       | - |   | 70.1 |   | - |   |
| Estimated  benefit obligation at end of year         |       | 276.5                                                                                     |       | 236.5 |   | 757.8 |   | 670.5 |   |
|                                                 |       |                                                                                      |       |   |   |   |   |   |   |
| Change  in plan assets                               |       |                                                                                      |       |   |   |   |   |   |   |
| Fair  value of plan assets at beginning of year      |       | 206.9                                                                                     |       | 208.7 |   | 419.2 |   | 402.1 |   |
| Exchange  rate adjustment                            |       | -                                                                                         |       | - |   | 24.1 |   | (30.8) |   |
| Expected  return on plan assets                      |       | 15.5                                                                                      |       | 13.7 |   | 27.2 |   | 25.0 |   |
| Actuarial  gain/(loss)                               |       | 12.0                                                                                      |       | 10.7 |   | 25.3 |   | 22.8 |   |
| Consolidated  entity contribution                    |       | 44.2                                                                                      |       | 18.2 |   | 60.0 |   | 24.1 |   |
| Plan  participants’ contributions               |       | 2.6                                                                                       |       | 2.5 |   | 10.7 |   | 10.4 |   |
| Benefits  paid from plan assets                      |       | (19.5)                                                                                    |       | (4.1) |   | (31.4) |   | (24.9) |   |
| Expenses                                             |       | (7.1)                                                                                     |       | (3.2) |   | (2.9) |   | (2.4) |   |
| Settlement                                           |       | -                                                                                         |       | (39.6) |   | (0.3) |   | (7.1) |   |
| Plan  converted to defined benefit from accumulation |       | -                                                                                         |       | - |   | 64.2 |   | - |   |
| Fair  value of plan assets at end of year            |       | 254.6                                                                                     |       | 206.9 |   | 596.1 |   | 419.2 |   |
|                                                 |       |                                                                                      |       |   |   |   |   |   |   |
| Reconciliation  of Funded Status                     |       |                                                                                      |       |   |   |   |   |   |   |
|                                                 |       |                                                                                      |       |   |   |   |   |   |   |
| Funded  status                                       |       | (21.9)                                                                                    |       | (29.6) |   | (161.7) |   | (251.3) |   |
| Unrecognized  net actuarial loss                     |       | 84.6                                                                                      |       | 68.1 |   | 120.6 |   | 153.4 |   |
| Unrecognized  prior service cost                     |       | -                                                                                         |       | 0.4 |   | 0.4 |   | 0.6 |   |
| Unrecognized  net transition obligation              |       | -                                                                                         |       | - |   | 11.4 |   | 11.5 |   |
| Net  amount recognised                               |       | 62.7                                                                                      |       | 38.9 |   | (29.3) |   | (85.8) |   |
| Adjustment  to recognise minimum liability           |       | -                                                                                         |       | - |   | (79.8 |   | (108.0) |   |
| Prepaid/(accrued)  benefit cost                      |       | 62.7                                                                                      |       | 38.9 |   | (109.1) |   | (193.8) |   |

F-153

----

# **AmcorLimited Consolidated**

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(o)    Retirement Benefit Obligations (cont’d)
|                                                                                                  | ** ** | **For the Year Ended 30 June(in millions of A$)** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|
| ** **                                                                                       | ** ** | **Domestic**                                                                              | ** ** | **Foreign** | ** ** |
| ** **                                                                                       | ** ** | **2006**                                                                                  | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| **Net periodic pension cost included the following  components:**                                | ** ** | ** **                                                                                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Service  cost                                                                                    |       | 22.6                                                                                      |       | 16.8 |   | 28.4 |   | 26.4 |   |
| Interest  cost                                                                                   |       | 13.3                                                                                      |       | 15.6 |   | 33.2 |   | 29.8 |   |
| Expected  return on plan assets                                                                  |       | (15.5)                                                                                    |       | (13.7) |   | (27.3) |   | (25.0) |   |
| Recognized  net actuarial loss                                                                   |       | 3.8                                                                                       |       | 5.0 |   | 8.0 |   | 3.3 |   |
| Net  amortization and deferral costs                                                             |       | 0.4                                                                                       |       | 0.7 |   | 1.2 |   | 0.3 |   |
| Expected  change in contribution tax                                                             |       | (4.2)                                                                                     |       | - |   | (0.3 |   | - |   |
| Amortization  of net obligation                                                                  |       | -                                                                                         |       | - |   | 1.0 |   | - |   |
| Termination  benefit arising due to settlement/disposal of business (as required under  SFAS 88) |       | -                                                                                         |       | 11.7 |   | (45.1) |   | (1.2) |   |
|                                                                                             |       | 20.4                                                                                      |       | 36.1 |   | (0.9) |   | 33.6 |   |
| **Weighted average assumptions used to determine  net periodic cost as at June 30 2005:**        |       |                                                                                      |       |   |   |   |   |   |   |
| Discount  rate                                                                                   |       | 6.0%                                                                                      |       | 6.8% |   | 4.8% |   | 5.3% |   |
|                                                                                             |       |                                                                                      |       |   |   |   |   |   |   |
| Rate  of increase in future salary levels                                                        |       | 4.5%                                                                                      |       | 5.0% |   | 3.2% |   | 3.4% |   |
| Expected  long-term rate of return on assets                                                     |       | 7.0%                                                                                      |       | 7.0% |   | 5.8% |   | 6.0% |   |
| ** **                                                                                       |       |                                                                                      |       |   |   |   |   |   |   |
| **Weighted average assumptions used to determine  benefit obligations as at June 30 2006:**      |       |                                                                                      |       |   |   |   |   |   |   |
| Discount  rate                                                                                   |       | 5.8%                                                                                      |       | 6.0% |   | 4.9% |   | 4.7% |   |
| Rate of increase in  future salary levels                                                        |       | 4.5%                                                                                      |       | 4.5% |   | 3.5% |   | 3.4% |   |

 

Notes:

(1)          Reconciliation of Funded Status
|                                                          | ** ** | **For the Year Ended 30 June(in millions of A$)** | ** ** |
|----------------------------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|
| ** **                                               | ** ** | **Domestic**                                                                              | ** ** | **Foreign** | ** ** |
| ** **                                               | ** ** | **2006**                                                                                  | ** ** | **2005** | ** ** | **2006** | ** ** | **2005** | ** ** |
| Funded  status                                           |       | (21.9)                                                                                    |       | (29.6) |   | (161.8) |   | (251.3) |   |
| Unrecognized  net actuarial loss                         |       | 84.6                                                                                      |       | 68.1 |   | 120.6 |   | 153.4 |   |
| Unrecognized  prior service cost                         |       | -                                                                                         |       | 0.4 |   | 0.4 |   | 0.6 |   |
| Unrecognized  net transition obligation                  |       |                                                                                      |       | - |   | 11.4 |   | 11.5 |   |
|                                                     |       |                                                                                      |       |   |   |   |   |   |   |
| Net  amount recognised                                   |       | 62.7                                                                                      |       | 38.9 |   | (29.4) |   | (85.8) |   |
| **Amounts recognized in the balance sheet consist  of:** | ** ** | ** **                                                                                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Prepaid/(accrued)  benefit cost                          |       | 62.7                                                                                      |       | 38.9 |   | (109.2 | ) | (193.8 |   |
| Intangible  assets                                       |       | -                                                                                         |       | - |   | 8.5 |   | 9.7 |   |
| Accumulated  other comprehensive income                  |       | -                                                                                         |       | - |   | 70.8 |   | 104.6 |   |
| Foreign  Currency Translation Reserve                    |       | -                                                                                         |       | - |   | 0.5 |   | (6.3) |   |
|                                                     |       |                                                                                      |       |   |   |   |   |   |   |
| Net amount recognised                                    |       | 62.7                                                                                      |       | 38.9 |   | (29.4) |   | (85.8) |   |

F-154

----

# **AmcorLimited Consolidated**

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(o)    Retirement Benefit Obligations (cont’d)

(2)          Additional information for pension plans withaccumulated benefit obligations in excess of plan assets at June 30, 2006 and June30, 2005
|                                 | ** ** | ** ** | **2006** | ** ** | **2005** | ** ** |
|---------------------------------|------------|------------|----------|------------|----------|------------|
| ** **                      | ** ** | ** ** | **$m**   | ** ** | **$m**   | ** ** |
| Projected  benefit obligation   |       |       | 569.3    |       | 591.0    |       |
| Accumulated  benefit obligation |       |       | 521.9    |       | 533.0    |       |
| Fair value of plan  assets      |       |       | 407.4    |       | 344.3    |       |

 

All domestic plans have plan assets which exceed the accumulated benefitobligations.

(3)          Allocation of assets
|                                              | ** ** | ** **    | ** ** | **Domestic** | ** ** | **Foreign** | ** ** |
|----------------------------------------------|------------|---------------|------------|--------------|------------|-------------|------------|
| ** **                                   | ** ** | **Benchmark** | ** ** | **2006**     | ** ** | **2006**    | ** ** |
| **Plan  Assets at end of Year**              | ** ** | ** **    | ** ** | ** **   | ** ** | ** **  | ** ** |
| Weighted Average of Fair Value of Assets by: |       |          |       |         |       |        |       |
| Equity  securities                           |       | 50%           |       | 69%          |       | 47%         |       |
| Debt securities                              |       | 37%           |       | 21%          |       | 40%         |       |
| Real estate                                  |       | 5%            |       | 0%           |       | 6%          |       |
| Other                                        |       | 8%            |       | 10%          |       | 7%          |       |
| Total                                        |       | 100.0%        |       | 100.0%       |       | 100.0%      |       |

 

(4)          Accumulated benefit obligation

The accumulated benefit obligation for all domestic defined benefitpension plans at June 30, 2006 was $222.7million  (2005: $178.2 million ).

The accumulated benefit obligation for all foreign defined benefitpension plans at June 30, 2006 was $681.2 million (2005: $602.3million).

(5)          Movement in other comprehensive income

The movements in the minimum liability included in other comprehensiveincome for the years ended June 30, 2006 and June 30, 2005 were a decrease of $33.8 million and an increase of $49.4 million respectively.

(6)          Estimated future benefit payments
| Fiscal year ending: | ** ** | **Domestic** | ** ** | **Foreign** | ** ** |
|-------------------------------|------------|--------------|------------|-------------|------------|
| 30 June 2007                  |       | 25.8         |       | 21.4        |       |
| 30 June 2008                  |       | 22.4         |       | 21.1        |       |
| 30 June 2009                  |       | 25.0         |       | 23.1        |       |
| 30 June 2010                  |       | 25.1         |       | 24.5        |       |
| 30 June 2011                  |       | 23.6         |       | 25.8        |       |
| Next 5 years                  |       | 134.3        |       | 165.7       |       |
| Total                         |       | 256.2        |       | 281.6       |       |

 

(7)          Estimated future contributions

Employer contributions to the defined benefit pension plans are based onrecommendations by the plans’ actuaries. Actuarial assessments are made periodically.

Employer contributions to defined benefit funds for the consolidatedentity during the financial year ending 30 June 2007 are expected to total$16.4 million for domestic plans and $20.7 million for foreign plans.

F-155

----

# **AmcorLimited Consolidated**

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(o)    Retirement Benefit Obligations (cont’d)

(8)          Expected return on asset assumption

The expected return on plan assets assumption is determined by weightingthe expected long-term return for each asset class by the benchmark allocationof assets to each class.  The returnsused for each class are net of tax and investment fees.

(9)          Investment strategy

The investment strategies forthe consolidated entity’s defined benefit plans are varied, with the plansseeking to achieve moderate to high returns within a given risk profile.  Investment target strategies for the materialdefined benefit plans include:

·                  High returns in thelong term, while tolerating a reasonably high degree of volatility of returnsover the short period.

·                  A balance ofequity, debt securities and fixed income securities, which would be expected toproduce a moderately high return over the long-term, with only a moderatedegree of variability of returns over short periods.

·                  Where investmentsare made in equity securities, ensuring there is an appropriate mix of domesticand international securities.

·                  To achieve returnsgreater than a pre-determined percentage above the prevailing inflation rate.

·                  To ensure all legalobligations are met.

F-156

----

# **AmcorLimited Consolidated**

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(o)    Retirement Benefit Obligations (cont’d)

**NON PENSIONS**

Details of the funded status of foreign definedbenefit non-pension post-employment plans and of the net periodic pension costas prepared by consulting actuaries, are set out below in accordance with SFAS132R.  While not related to AIFRS thedetails support the reconciliation to US GAAP set out in Note 51.
|                                                | ** ** | For the Year Ended 30  June(in millions of A$) | ** ** |
|------------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|
| ** **                                     | ** ** | **Foreign**                                                                       | ** ** |
| ** **                                     | ** ** | ** **                                                                        | ** ** | ** ** | ** ** |
| ** **                                     | ** ** | **2006**                                                                          | ** ** | **2005** | ** ** |
| Change in benefit obligation                   |       |                                                                              |       |   |   |
|                                           |       |                                                                              |       |   |   |
| Benefit obligation at beginning of year        |       | 33.5                                                                              |       | 26.1 |   |
| Foreign currency exchange variation            |       | 2.7                                                                               |       | (2.0) |   |
| Service cost                                   |       | 1.8                                                                               |       | 3.0 |   |
| Interest cost                                  |       | 1.3                                                                               |       | 1.5 |   |
| Curtailment                                    |       | (1.8)                                                                             |       | - |   |
| Settlement                                     |       | (1.1)                                                                             |       | - |   |
| Actuarial (gain)/loss                          |       | (8.0)                                                                             |       | 6.3 |   |
| Other                                          |       | 0.8)                                                                              |       | - |   |
| Benefits paid from plan assets                 |       | (0.5)                                                                             |       | (0.2) |   |
| Benefits paid directly by consolidated entity  |       | (1.1)                                                                             |       | (1.2) |   |
| Estimated benefit obligation at end of year    |       | 27.6                                                                              |       | 33.5 |   |
|                                           |       |                                                                              |       |   |   |
| Change in plan assets                          |       |                                                                              |       |   |   |
| Fair value of plan assets at beginning of year |       | 0.2                                                                               |       | - |   |
| Exchange rate adjustment                       |       | 0.1                                                                               |       | - |   |
| Consolidated entity contribution               |       | 0.4                                                                               |       | 0.4 |   |
| Settlement                                     |       | (0.3)                                                                             |       | - |   |
| Benefits paid from plan assets                 |       | (0.4)                                                                             |       | (0.2) |   |
| Fair value of plan assets at end of year       |       | -                                                                                 |       | 0.2 |   |
|                                           |       |                                                                              |       |   |   |
| Reconciliation of Funded Status                |       |                                                                              |       |   |   |
|                                           |       |                                                                              |       |   |   |
| Funded status                                  |       | (27.6)                                                                            |       | (33.3) |   |
| Unrecognized net actuarial loss                |       | 0.9                                                                               |       | 10.2 |   |
| Unrecognized net transition obligation         |       | 3.6                                                                               |       | 3.9 |   |
|                                           |       |                                                                              |       |   |   |
| Net amount recognised                          |       | (23.1)                                                                            |       | (19.2) |   |
| Adjustment to recognise minimum liability      |       | (7.3)                                                                             |       | (0.9) |   |
|                                           |       |                                                                              |       |   |   |
| Prepaid/(accrued)  benefit cost                |       | (30.4)                                                                            |       | (20.1) |   |

F-157

----

# **AmcorLimited Consolidated**

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(o)    Retirement Benefit Obligations (cont’d)
|                                                                                             | ** ** | **For the Year Ended 30 June** | ** ** |
|---------------------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                                  | ** ** | ** **                                              | ** ** |
|                                                                                             | ** ** | **(in millions of A$)**                  | ** ** |
| ** **                                                                                  | ** ** | **Foreign**                                             | ** ** |
| ** **                                                                                  | ** ** | **2006**                                                | ** ** | **2005** | ** ** |
| **Net periodic pension cost included the following  components:**                           | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Service cost                                                                                |       | 1.8                                                     |       | 3.0 |   |
| Interest cost                                                                               |       | 1.3                                                     |       | 1.5 |   |
| Recognised loss on curtailment                                                              |       | 0.3                                                     |       | - |   |
| Recognized net actuarial loss                                                               |       | -                                                       |       | 0.1 |   |
| Net amortization and deferral costs                                                         |       | 0.5                                                     |       | 0.3 |   |
|                                                                                        |       | 3.9                                                     |       | 4.9 |   |
| **Weighted average assumptions used to determine  net periodic cost as at June 30 2005:**   |       |                                                    |       |   |   |
| Discount rate                                                                               |       | 4.9%                                                    |       | 5.8% |   |
| Rate of increase in future salary levels                                                    |       | 0.5%                                                    |       | 0.6% |   |
| Expected long-term rate of return on assets                                                 |       | N/A                                                     |       | NIA |   |
| ** **                                                                                  |       |                                                    |       |   |   |
| **Weighted average assumptions used to determine  benefit obligations as at June 30 2006:** |       |                                                    |       |   |   |
| Discount rate                                                                               |       | 5.3%                                                    |       | 4.9% |   |
| Rate of increase  in future salary levels                                                   |       | 0.3%                                                    |       | 0.5% |   |

 

Notes:

(10)     Reconciliation of Funded Status
|                                                          | ** ** | **For the Year Ended 30 June** | ** ** |
|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                               | ** ** | ** **                                              | ** ** |
| ** **                                               | ** ** | **(in millions of A$)**                  | ** ** |
| ** **                                               | ** ** | **Foreign**                                             | ** ** |
| ** **                                               | ** ** | **2006**                                                | ** ** | **2005** | ** ** |
| Funded status                                            |       | (27.6)                                                  |       | (33.3) |   |
| Unrecognized net actuarial loss                          |       | 0.9                                                     |       | 10.2 |   |
| Unrecognized prior service cost                          |       | 3.6                                                     |       | - |   |
| Unrecognized net transition obligation                   |       | -                                                       |       | 3.9 |   |
|                                                     |       |                                                    |       |   |   |
| Net amount recognised                                    |       | (23.1)                                                  |       | (19.2) |   |
| **Amounts recognized in the balance sheet consist  of:** | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Prepaid/(accrued) benefit cost                           |       | (30.4)                                                  |       | (20.1) |   |
| Intangible assets                                        |       | 3.6                                                     |       | - |   |
| Accumulated other comprehensive income                   |       | 3.7                                                     |       | 0.9 |   |
| Outside equity interest                                  |       | -                                                       |       | - |   |
|                                                     |       |                                                    |       |   |   |
| Net amount  recognised                                   |       | (23.1)                                                  |       | (19.2) |   |

F-158

----

# **AmcorLimited Consolidated**

# **Notes tothe consolidated financial statements**

**30 June2006**

**NOTE 51 RECONCILIATION OF ACCOUNTS TO US GAAP (Continued)**

(o)    Retirement Benefit Obligations (cont’d)

(11) Additional information for defined benefit non-pension post-employmentplans with accumulated benefit obligations in excess of plan assets at June 30, 2006 and June 30, 2005
|                                 | ** ** | **2006** | ** ** | **2005** | ** ** |
|---------------------------------|------------|----------|------------|----------|------------|
| ** **                      | ** ** | **$m**   | ** ** | **$m**   | ** ** |
| Projected  benefit obligation   |       | 27.6     |       | 33.6     |       |
| Accumulated  benefit obligation |       | 26.9     |       | 32.8     |       |
| Fair value of plan  assets      |       | -        |       | 0.2      |       |

 

(12)     Allocation of assets

Plan assets represent nil

(13)     Accumulated benefit obligation

The accumulated benefit obligation for defined benefit non-pension post-employmentplans at June 30, 2006 was $26.9million (2005: $32.8 million).

(14)    Movement in other comprehensive income

The increase in the minimum liability included in other comprehensiveincome for the years ended June 30, 2006 and June 30, 2005 were $2.8 millionand $0.9 million respectively.

(15)    Estimated future benefit payments
| Fiscal year ending: | ** ** | **Foreign** | ** ** |
|-------------------------------|------------|-------------|------------|
| 30 June 2007                  |       | 2.4         |       |
| 30 June 2008                  |       | 1.5         |       |
| 30 June 2009                  |       | 1.7         |       |
| 30 June 2010                  |       | 1.8         |       |
| 30 June 2011                  |       | 1.7         |       |
| Next 5 years                  |       | 8.9         |       |
| Total                         |       | 18.0        |       |

 

(16)    Estimated future contributions

Employer contributions for defined benefit non-pension liabilitiesduring the fiscal year ending June 30, 2007 are expected to total $0.5 millionfor foreign plans.

(17)    Effects of Changes in Assumed Medical Cost Trend Rates

A 1% decrease in medical cost trend rates would be expected to reduceservice and interest cost components and the value of the defined benefit obligationby $0.2 million and $2.1 million respectively. A 1% increase in medical cost trend rates would be expected to increaseservice and interest cost components and the value of the defined benefitobligation by $0.2 million and $2.6 million respectively.

(p)           Exchange Fluctuation Reserve (EFR)

Under AIFRS the consolidatedentity elected under AASB 1 First-time Adoption of Australian Equivalents toInternational Financial Reporting Standards to reset the EFR to nil bytransferring the balance to retained earnings. Refer to Note 50 (j) for further details of the amounts involved.  This created a permanent difference whenreconciling from AIFRS to US GAAP.

F-159

----

Pursuantto the 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/ Peter Day                     |   |
|                    |                              |   |
|                    | W Peter Day                       |   |
|                    | Executive General Manager Finance |   |
|                    |                              |   |
| Date: January  15, 2007 |                              |   |

 

----