Amcor Half Year Results

Transcription

1 Amcor Half Year Results Investor Presentation Ron Delia Managing Director & CEO Michael Casamento CFO

2 Disclaimer Forward looking statements This presentation contains forwardlooking statements that involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to Amcor. Forward-looking statements can generally be identified by the use of forward-looking words such as may, will, expect, intend, plan, seeks, estimate, anticipate, believe. continue, or similar words. No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including Amcor). In addition, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that any forward looking statements will be achieved. Actual future events may vary materially from the forward looking statement and the assumptions on which the forward looking statements are based. Given these uncertainties, readers are cautioned not to place undue reliance on such forward looking statements. In particular, we caution you that these forward looking statements are based on management s current economic predictions and assumptions and business and financial projections. Amcor s business is subject to uncertainties, risks and changes that may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forwardlooking statements. The factors that may affect Amcor s future performance 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; and General changes in the economic conditions of the major markets in which Amcor operates. These forward looking statements speak only as of the date of this presentation. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rule. Amcor disclaims any obligation or undertaking to publicly update or revise any of the forward looking statements in this presentation, whether as a result of new information, or any change in events conditions or circumstances on which any statement is based. Non-IFRS information Certain non-ifrs financial information has been presented within this news release. This information is presented to assist in making appropriate comparisons with prior periods and to assess the operating performance of the business. Amcor uses these measures to assess the performance of the business and believes that the information is useful to investors. Non- IFRS information, including average funds employed have not been extracted from Amcor s annual financial report and have not been subject to review by the auditors. Half year results available information Amcor has today released a package of information relating to its financial results for the half ended 31 December Information contained in this presentation should be read in conjunction with information contained in the associated News Release and Webcast, available at 2

3 Safety Lost time frequency rate Recordable case frequency rate to 2012 data includes the demerged Orora business to 2015 are shown exclusive of Orora and 2015 includes acquired businesses from the first day of ownership to 2014 excludes acquired businesses for the first 12 months of ownership. Committed to our goal of no injuries 3

4 Overview Strong result with constant currency EPS up 10.2% Strong RoAFE of 20.2% Solid cash flow enabling: Dividend of 19.0 US cents Completion of US$500 million on-market share buy-back 6 acquisitions either announced or completed since 30 June 2015 US, China, India, Brazil & South Africa Strong result delivered despite conditions remaining subdued in a number of countries 4

5 Half year results US$ million Dec 14 Dec 15 % Constant currency % Sales revenue 4, ,547.7 (5.4) 3.3 PBIT (5.7) 4.3 PBIT / Sales margin (%) PAT (4.9) 6.6 EPS (US cents) (1.5) 10.2 Operating cash flow (1.1) 15.9 RoAFE (%) Dividend (US cents) Dividend (AUD cents) Strong constant currency earnings growth PAT up 6.6% EPS up 10.2% Negative currency impact of US$37m on PAT Improved shareholder returns Dividend of 19.0 US cents Dividend paid as 26.7 AUD cents up 9.5% US$500m share buy back completed Continued operating improvements RoAFE increased from 19.2% to 20.2% Strong financial position Net debt / PBITDA 2.5 Strong financial performance and shareholder returns 5

6 Strong constant currency PBIT growth 3% 7% 2% Acquisition benefits 4% 5% Organic growth by market: Developed markets 4% Emerging markets 6% PBIT Growth Adjustments(1) Adjusted PBIT growth Stronger than expected organic growth in Rigid Plastics and Tobacco Packaging (1) Adjustments include non repeating 9.2 million one off gain on sale of excess land in Turkey in the prior year and variation in corporate costs. 6

7 Flexibles Adjusted PBIT up 6.1% (1) in constant currency terms Negative impact of CHF:EUR strength Tobacco Packaging Particularly strong performance Europe and Asia strong however North America weak Flexible Packaging excluding Tobacco Solid performance Strong growth in Eastern Europe Subdued performance in Western Europe, Asia and North America. Euro million Dec 14 Dec 15 Reported % Constant currency Sales revenue 2,521 2, PBIT Adjusted PBIT (2) Adjusted PBIT/Sales margin % AFE 2,529 2, RoAFE % Operating cash flow % Solid performance with higher RoAFE 1. Constant currency and excluding 9.2 million gain on sale of land in Turkey in the prior period 2. Excluding 9.2 million gain on sale of land in Turkey in the prior period 7

8 Flexibles full year outlook for 2015/16 The full year earnings outlook for the flexibles business has marginally improved compared with the guidance given in August The business is expected to deliver modest constant currency earnings growth in the 2015/16 year, compared with PBIT of million in the 2014/15 year.

9 Rigid Plastics Strong earnings performance PBIT up 10% RoAFE above 20% Strong volume performance across the business, partly driven by timing of new business awards Volume benefits partially offset by adverse mix USD million Dec 14 Dec 15 % Sales revenue 1,563 1,562 (0.1) PBIT AFE 1,599 1,513 (5.4) PBIT/AFE % Operating cash flow (21.0) (45.8) (118.1) Strong performance with continued improvement in RoAFE 9

10 Rigid Plastics full year outlook for 2015/16 Strong growth in earnings notwithstanding challenging economic conditions in Brazil, Argentina and Venezuela. 10

11 Cash flow US$ million Dec 14 Dec 15 Comments PBITDA Up 4.2% on a constant currency basis Interest (72.8) (56.8) Lower due to FX and lower average cost of debt Tax (69.8) (91.4) Refunds received in prior period Capital expenditure (156.3) (162.2) In line with D&A including restructuring costs (1) Working capital (325.0) (264.0) Average working capital to sales improved from 9.2% to 8.2% Other Mainly non cash PBITDA and proceeds from PP&E disposals Operating cash flow Dividends (253.2) (257.4) Free cash flow (150.2) (155.5) Share buy-back - (222.2) Reduced weighted average number of shares by 3.2% for the half Solid cash performance. Expected full year free cash flow remains ~US$200-US$300m 1. Based on $162 million capital expenditure plus $16m of cash restructuring costs 11

12 Balance sheet and debt profile Balance sheet Jun 15/ Dec 14 (1) Dec 15 Net debt (US$ million) 2,880 3,524 Net finance costs (US$ million) PBITDA interest cover (x) Net debt / PBITDA (x) Debt profile Dec 15 Fixed / floating interest rate ratio 37% fixed Bank debt / total debt 20% bank Undrawn committed facilities US$514 m Non current debt maturity (years) 3.9 Balance sheet remains strong Leverage at 2.5 x Interest cover strong at 8.9 x FY16 interest expense US$165-$175m Liquidity Diverse mix Balanced maturity profile US$275m facility due to mature in December Comparative period reflects net debt at 30 June 2015, PBITDA interest cover, net debt/pbitda based on earnings for the year ended 31 December 2014 and net finance costs for the six months ended 31 December

13 Amcor shareholder value creation model Dividend (~$500m) Growth in line with EPS ~ 4% Strong, defensive cash flow Reinvestment (~$400m) Organic EPS growth of ~ 3-4% Total shareholder value of 10-15% per annum with low volatility Acquisitions and/or buy-backs (~$ m) EPS growth of ~ 2-7% 13

14 Total value creation of 14.0% for the half year Dividend yield of 4% Constant currency PAT growth 7% Value creation of 14.0% Reduction in average number of shares on issue 3% Multiple sources of value under resilient shareholder value creation model 14

15 Where to from here.

16 Amcor is well positioned Amcor Today Position of strength Focused portfolio leadership positions, good industry structure, significant emerging market exposure Differentiated capabilities The Amcor Way Disciplined cash and capital deployment Resilient shareholder value creation model Operating environment Increasingly dynamic Lower growth relative to longer term trends Shorter cycle / more rapid change Fast, bold customer / competitor / supplier reactions Amcor has the capabilities and experience needed to capture opportunities 16

17 Opportunities for Amcor Areas of focus Generating our own growth (customer focus, innovation, M&A) Increasing agility and adapting our operations (organisation, processes, cost structure, asset base) Strengthening and engaging our talent (right players in right positions, deeper bench) Capturing value market share gains investing in new plants Philippines, Indonesia and USA 6 acquisitions announced since 30 June in each Business Group ongoing footprint consolidation reorganisation of flexible packaging business Flexibles Americas management team in place Accelerating efforts in each area to capture value 17

18 Summary Strong result with constant currency EPS up 10.2% Strong RoAFE of 20.2% Solid cash flow enabling: Dividend of 19.0 US cents Completion of US$500 million on-market share buy-back 6 acquisitions announced or completed since 30 June 2015 Solid foundation to build on for future growth Strong result delivered despite conditions remaining subdued in some key markets 18

19 Half Year Results Appendix slides

20 Shareholder value creation of 14.0% 14.0% 12.0% 10.0% Contribution to constant currency PBIT growth Acquisitions 2% Organic growth 5% Emerging markets 6% Developed markets 4% Contribution to Shareholder Value 3.9% 3.2% 10.1% 14.0% 8.0% 6.0% 4.0% 2.0% 4% 3% 7% 2% 5% 5.5% 1.4% 0.0% PBIT growth Adjustments Adjusted growth After tax PBIT Interest Tax rate Minorities Share buyback Total EPS Growth Dividend Yield Shareholder Value Creation Adjustments includes 9.2 million one off gain on sale of excess land in Turkey and corporate costs. Dividend yield is based on an annualised dividend of 19.0 US cents per share (Australian dollar equivalent of 26.7 cents per share), divided by share price of A$13.72 on 1 July

21 Half year results Strong constant currency earnings growth Key drivers Benefits from acquisitions Underlying organic growth of 5% Improved shareholder returns RoAFE increased to 20.2% Interim dividend of 19.0 US cps Reduction in average number of shares on issue on completion of US$500 million share buy-back US$ million Dec 14 Dec 15 % Constant currency % Sales revenue 4, ,547.7 (5.4) 3.3 PBIT (5.7) 4.3 PBIT / Sales margin (%) PAT (4.9) 6.6 EPS (US cents) (1.5) 10.2 Operating cash flow (1.1) PBIT/AFE (%) Strong performance with improvement in RoAFE 21

22 Results US$ million Dec 14 Dec 15 Sales revenue 4, ,547.7 Average exchange rates Dec 14 Dec 15 USD:Euro PBITDA Depreciation and amortisation (183.1) (175.3) PBIT Net finance costs (91.8) (78.2) Profit before tax Income tax expense (91.7) (88.3) Non-controlling interest (14.0) (17.0) Profit after tax Currency impact Negative PBIT impact of US$52 million from currency translation Negative PAT impact of US$37 million from currency translation 22

23 FX Translation impact PAT currency exposures (1) Euro:USD USD, 35-40% Euro, 25-30% Other currencies, 30-40% 1. Approximate range. 2. Includes all currencies other than USD and Euro. Increase in USD to Euro rate H1 16 vs H1 15 US$ million impact on PAT for H1 16 Increase in Jan 16 average USD to Euro rate against H1 16 average 16% % Weighted average increase in USD to other currencies rate H1 16 vs H1 15 Other currencies (2) :USD US$ million impact on PAT for H1 16 Increase in Jan 16 weighted average USD to other currencies rate against H1 16 weighted average 18% % 23

24 Cash flow US$ million Dec 14 Dec 15 PBITDA Interest (72.8) (56.8) Tax (69.8) (91.4) Capital expenditure (156.3) (162.2) Movements in working capital (325.0) (264.0) Other Operating cash flow Dividends (253.2) (257.4) Free cash flow (150.2) (155.5) Acquisitions & growth capex (net of divestments) (40.9) (137.6) Movements in share capital / other (49.9) (418.3) Increase in net debt (241.0) (711.4) 24

25 Finance and cash expectations FY16 Net financing costs between US$165 and US$175 million Cash costs in line with P&L charge Effective tax rate between 21% and 23% Cash tax 85-95% of P&L charge Corporate costs US$70 US$75 million taking into account current exchange rates Cash reinvested into the business equal to depreciation and amortisation Cash reinvested via capital expenditure and restructuring costs 25

26 Working capital performance Amcor average working capital to sales (1) (%) 9.8% 10.0% 9.0% 9.5% 9.2% 8.2% Dec 10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Working capital to sales ratio continues to improve (1) Working capital to sales for December 2013, 2014 and 2015 exclude the demerged Orora business. Prior periods are presented inclusive of Orora. 26

27 Debt profile US$ million Facility Drawn at 31 Dec 2015 (1) Overdrafts/Leases 130 Commercial paper (2) 958 CY CY Debt currency profile Other 13% Euro 26% CY2018 1,298 1,043 CY2019 1, CY CY AUD 19% CY CY (1) Gross debt excluding cash and cash equivalents. (2) Commercial paper backed up by bank facilities maturing in CY2019 and CY2020 USD 42% 27

28 Focused portfolio and balanced global footprint FY15 Sales Rigid Plastics 35% Western Europe 32% Australia, NZ 5% FY15 Sales Emerging Markets 32% (1) Flexibles 65% Nth America 31% 1. Includes Amcor share of AMVIG sales Focused portfolio Global footprint 28

29 Focused portfolio by substrate and end market FY15 sales by substrate FY15 sales by end market Fibre 14% Aluminium 14% Tobacco Packaging 14% Home & Personal Other care 2% 3% Healthcare 14% Food 32% Common substrates Plastics 72% Beverage 34% Defensive end markets 29

30 Historic performance Half yearly sales revenue (million) Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Flexibles ,940 2,248 2,329 2,272 2,411 2,534 2,553 2,467 2,529 2,521 2,711 2,706 Rigid Plastics US$ 1,272 1,203 1,064 1,194 1,417 1,693 1,625 1,740 1,497 1,682 1,490 1,702 1,563 1,754 1,562 Orora A$ 1,564 1,421 1,398 1,402 1,470 1,366 1,479 1,393 Investments /Other US$ Total (1) US$ 3,868 3,393 3,521 5,106 5,848 6,438 6,275 6,306 4,719 5,025 4,796 5,168 4,809 4,803 4,548 (1) Total US dollar sales from Dec 08 to Dec 12 reflects total sales as reported in Australian dollars, converted at the average exchange rate for the period. Total sales revenue from Dec 08 to Jun 12 includes the demerged Orora business. Dec 12 onwards is presented excluding Orora. 30

31 Historic performance Half yearly PBIT (million) Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Flexibles Rigid Plastics US$ Orora (1) A$ Investments /Other US$ - (7) (10) - (6) (14) (16) (24) (22) (16) (24) (15) (17) (25) (19) Total (1) US$ (1) Total US dollar PBIT from Dec 08 to Dec 12 reflects total PBIT as reported in Australian dollars, converted at the average exchange rate for the period. Total PBIT from Dec 08 to Jun 12 includes the demerged Orora business. Dec 12 onwards is presented excluding Orora. 31

32 Historic performance Average funds employed (million) Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Flexibles 1,033 1, ,463 2,195 2,209 2,195 2,199 2,447 2,457 2,515 2,498 2,529 2,560 2,611 Rigid Plastics US$ 1,655 1,601 1,453 1,460 1,786 1,804 1,798 1,753 1,738 1,699 1,649 1,630 1,599 1,582 1,513 Orora (1) A$ 1,732 1,713 1,575 1,605 1,679 1,592 1,638 1,632 Investments /Other US$ Total (1) US$ 4,907 4,708 4,614 5,368 6,913 7,025 7,024 6,907 5,355 5,421 5,628 5,581 5, ,831 (1) Total US dollar AFE from Dec 08 to Dec 12 reflects total AFE as reported in Australian dollars, converted at the average exchange rate for the period. Total AFE from Dec 08 to Jun 12 includes the demerged Orora business. Dec 12 onwards excludes Orora. 32

33 Flexibles Historic performance half yearly sales Sales million Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Europe, Middle East ,360 1,552 1,604 1,492 1,558 1,503 1,563 1,475 1,556 1,231 1,341 1,315 and Africa (1) Americas (1) Tobacco Packaging Asia Pacific Eliminations (3) (2) - (5) (6) (10) (11) (14) (13) (14) (14) (14) (13) (13) (68) Total ,940 2,248 2,329 2,272 2,411 2,534 2,553 2,467 2,529 2,521 2,711 2,706 (1) Sales for Dec 2008 through to June 2014 are based on the legacy Flexibles Europe and Americas business group. Effective 1 July 2015 the Flexibles Europe and Americas business group was separated into two separate busiensses Flexibles Europe, Middle East and Africa and Flexibles Americas. Comparative information for Dec 14 and Jun 15 has been restated accordingly. 33

34 Flexibles raw material input costs Resins Aluminium Rolling quarterly weighted average index for Western European Polyethylene & Polyethylene resins and film and PET film expressed in Euro s Rolling quarterly average index for LME aluminium prices expressed in Euro s 34

35 Rigid Plastics Historic performance half yearly sales Sales US$ million Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 North America ,203 1,104 1, , , , Latin America Bericap BG/India (3) (5) (2) (2) (1) (1) - - Total 1,272 1,203 1,064 1,194 1,417 1,693 1,625 1,740 1,497 1,682 1,490 1,702 1,563 1,754 1,562 35

36 Rigid Plastics product mix North America Sales revenue (1) USD 988 million Total Sales revenue (1) USD 1,562 million Latin America Sales revenue (1) USD 497 million 24% 21% 16% 37% 47% 19% 34% 65% 39% (1) Sales for the half year ended 31 December CSDW Custom Diversified Products 36

37 Rigid Plastics North America Custom Containers Diversified Products 8,000 7, (7) 4 13 Million units 6,000 5,000 4,000 3,000 2,000 1,000 7,075 7,279 Sales revenue (US$ millions) H Growth H H Raw material pass through Acquistion Improved mix / Growth H

38 Investments / other PBIT (US$ million) Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Dec 15 AMVIG Glass Tubing Corporate costs (1) (71.5) (73.7) (63.7) (59.7) (61.9) (30.2) Total (19.6) (39.7) (37.5) (39.8) (40.6) (18.7) Corporate costs for FY16 expected to be US$70-US$75 million (1) (1) In the 2012/13, 2013/14 and 2014/15 years, corporate costs included net one-off benefits. In both the 2013/14 and 2014/15 years this benefit was approximately A$11 million and related to benefits from changes to pension plans and legal claims. (2) Taking into account current exchange rates for the June 2016 half year. 38

39 Historical acquisitions Business group Country Completion date Currency Acquisition price (Local currency millions) EBITDA Multiple Acquired sales Synergy: (Local currency Acquired millions) sales Alcan Packaging Flexibles Global H USD 1, ,100 5% Alcan Medical Flexibles Flexibles Europe, Middle East & Africa USA H USD Ball Plastics Packaging Rigid Plastics USA H USD % B-Pack Due Flexibles Europe, Middle East & Africa Italy H Euro Techni-Chem Flexibles Asia Pacific Australia H AUD 40 Beijing VPS minority interests Flexibles Asia Pacific China H AUD Aperio Flexibles Asia Pacific Australia H AUD % International Playcard & Label Company Tobacco Packaging Argentina H USD 16 Uniglobe Flexibles Asia Pacific India H AUD Aluprint Tobacco Packaging Mexico H USD Chengdu minority interests Flexibles Asia Pacific China H AUD Shorewood Tobacco Packaging Global H USD % Jiangsu Shenda Group Flexibles Asia Pacific China H RMB Parry Enterprises India Flexibles Asia Pacific India H AUD Detmold Flexibles Asia Pacific Australia H AUD Bella Prima Flexibles Asia Pacific Indonesia H AUD Zhongshan TianCai Flexibles Asia Pacific China H RMB Nampak Flexibles Flexibles Europe, Middle East & Africa South Africa H ZAR Souza Cruz in-house packaging Tobacco Packaging Brazil H BRL Packaging India Private Limited Flexibles Asia Pacific India H INR 1, Encon Rigid Plastics USA H USD Deluxe Packages Flexibles Americas USA H USD BPI China Flexibles Asia Pacific China H2 2016F USD 13.0 Average annual spend US$200 million, attractive multiples and strong synergy opportunities 39

40 Non-IFRS information The following notes provide further details of certain non-ifrs financial measures used throughout this presentation: Operating cash flow is cash flow from operating activities calculated in accordance with IFRS and extracted from Amcor s financial statements, adjusted to take into account capital expenditure and other items. This measure is reconciled to cash flow from operating activities as follows: H1 15 H1 16 Operating cash flow Capital expenditure Proceeds on disposal of PP&E (68.8) (1.5) Other items Cash flow from operating activities Free cash flow is Operating cash flow (refer above) less dividends paid during the period calculated in accordance with IFRS and extracted from Amcor s financial statements. Movement in net debt is reconciled to the net increase in cash held calculated in accordance with IFRS and extracted from Amcor s financial statements as follows: H1 15 H1 16 Proceeds from borrowings (2,503.3) (3,594.0) Repayment of borrowings 2, ,126.0 Net increase in cash held (146.9) (103.6) Effects of exchange rate changes on cash and cash equivalents (7.1) (140.1) Other items (Increase)/decrease in net debt (241.0) (711.4) 40

41 News Release 15 February 2016 AMCOR ANNOUNCES PROFIT RESULT FOR HALF YEAR ENDED 31 DECEMBER 2015 Highlights for half year ended 31 December 2015 On a constant currency basis, earnings per share (EPS) was up 10.2% to 29.3 cents (1) ; On a constant currency basis PAT was up 6.6% to US$342.6 million (1) ; Profit after tax of US$305.5 million, including the negative translation impact from the higher US dollar of US$37 million; Returns, measured as profit before interest and tax to average funds employed of 20.2% (1) ; Operating cash flow, after net capital expenditure, of US$101.9 million (2) ; and Dividend per share (DPS) of 19.0 US cents. Paid as 26.7 AUD cents, up 9.5%. In announcing the result, Amcor s Managing Director & CEO, Mr Ron Delia said: The business delivered an outstanding first half result with strong growth in earnings and returns. Earnings per share, on a constant currency basis increased 10.2% reflecting strong profit growth and the benefit of a US$500 million share buy-back completed during the period. Cash generation was solid and returns remained above 20%. All Amcor business units performed well during the half year. The key drivers of strong earnings growth were higher volumes in both the Rigid Plastics and Tobacco Packaging businesses. There were also benefits from recent acquisitions and continued improvement in operating performance. Since 30 June 2015, the business has announced or completed six acquisitions in the USA, South Africa, Brazil, China and India. This is an important component of Amcor s growth strategy and we continue to find opportunities that deliver strong value for shareholders. Amcor has a strong foundation to build on, and an excellent track record of ongoing improvement. Amcor is well positioned in an increasingly dynamic world and has substantial opportunities to leverage the existing portfolio to generate growth. (1) Certain non-ifrs financial information has been presented within this news release. This information is presented to assist in making appropriate comparisons with prior periods and to assess the operating performance of the business. Amcor uses these measures to assess the performance of the business and believes that the information is useful to investors. Non-IFRS information, including constant currency growth rates and average funds employed, have not been not been audited. (2) After capital expenditure and proceeds from sale of property, plant and equipment. Amcor has released to the Australian Securities Exchange a presentation on its financial results for the half year ended 31 December This is available at Page 1

42 Business Group Performance Commenting on the business performance, Mr Delia said: The Flexible Packaging segment delivered solid adjusted constant currency earnings growth of 6.1% and achieved returns of 24.6%. The key drivers of earnings growth were higher tobacco packaging volumes, benefits from prior period acquisitions and strong organic growth in emerging markets. The Rigid Plastics business had an outstanding half year with earnings up 10% and returns above 20%. There was strong volume growth in the North American operations with higher volumes in all the main product segments, and continued earnings growth in Latin America. Outlook The full year outlook is for higher earnings than the 2014/15 year, expressed in constant currency terms. For further information please contact: Tracey Whitehead Acting Executive General Manager Corporate Affairs Amcor Limited Ph: ENDS Page 2

43 News Release 15 February 2016 AMCOR ANNOUNCES INTERIM PROFIT RESULT Highlights for half year ended 31 December 2015 Profit after tax of US$305.5 million, including the negative translation impact from the higher US dollar of US$37 million; On a constant currency basis PAT was up 6.6% to US$342.6 million (1) ; Earnings per share (EPS) was 26.2 cents. On a constant currency basis, EPS was up 10.2% to 29.3 cents (1). This includes the benefit of a 3.2% reduction in the weighted average number of shares on issue, following completion of a US$500 million share buy-back during the period; Returns, measured as profit before interest and tax to average funds employed of 20.2% (1) ; Operating cash flow, after net capital expenditure, of US$101.9 million (2) ; and Dividend per share (DPS) of 19.0 US cents. Paid as 26.7 AUD cents, up 9.5%. (US$ million) 1H15 1H16 % Constant Currency % Sales revenue 4, ,547.7 (5.4) 3.3 PBITDA (5.4) 4.2 PBIT (5.7) 4.3 PAT (4.9) 6.6 EPS (US cents) (1.5) 10.2 Operating cash flow (2) (1.1) Cash from operating activities Key ratios 1H15 1H16 PBIT/Average funds employed (%) (1) PBIT/Sales (%) Net PBITDA interest cover (times) Net debt / PBITDA (times) DPS (US cents) Refer to page 10 for definitions of various measures used within this news release. (1) Certain non-ifrs financial information has been presented within this news release. This information is presented to assist in making appropriate comparisons with prior periods and to assess the operating performance of the business. Amcor uses these measures to assess the performance of the business and believes that the information is useful to investors. Non-IFRS information, including average funds employed and adjusted PBIT, have not been extracted from Amcor s interim financial report and have not been subject to review by the auditors. (2) Operating cash flow is after capital expenditure and proceeds from sale of property, plant and equipment. Refer note (a) operating cash flow on page 10 for further information. Amcor has released to the Australian Securities Exchange a presentation on its financial results for the half year ended 31 December This is available at Page 1

44 Financial result Consolidated Income (US$ million) 1H15 1H16 Sales revenue 4, ,547.7 PBITDA Depreciation and amortisation (183.1) (175.3) PBIT Net finance costs (91.8) (78.2) Profit before tax Income tax expense (91.7) (88.3) - Non-controlling interest (14.0) (17.0) Profit after tax Consolidated balance sheet (US$ million) 30/06/15 31/12/15 Current assets 3, ,126.5 Property, plant and equipment 2, ,484.7 Intangible assets 1, ,899.7 Investments and other assets Total assets 8, ,177.1 Current interest-bearing liabilities 1, ,395.3 Non-current interest-bearing liabilities 2, ,617.3 Payables, provisions and other liabilities 3, ,945.3 Total equity 1, ,219.2 Total liabilities and equity 8, ,177.1 Operating cash flow (US$ million) 1H15 1H16 PBITDA Net interest paid (72.8) (56.9) Income tax paid (69.8) (91.4) Capital expenditure (156.3) (162.2) Movement in working capital (325.0) (264.0) Other Operating cash flow Dividends and other equity distributions (253.2) (257.4) Free cash flow (150.2) (155.5) Acquisitions / divestments (40.9) (137.6) Share buy-back / other movements in share capital Foreign exchange rate changes and hedges / other (55.2) (280.3) 5.3 (138.0) Increase in net debt (1) (241.0) (711.4) (1) Refer note (c) movement in net debt on page 10 for further information. Exchange rate sensitivity For the half year ended 31 December 2015, the negative impact on profit after tax of translating non US dollar earnings into US dollars for reporting purposes was approximately US$37 million. Of this amount, approximately US$14 million reflects a 16% increase in the average exchange rate for the US dollar against the Euro, from in the prior half year to in the current half year. The remaining US$23 million reflects an 18% increase in the weighted average exchange rate for the US dollar against all other currencies. Net debt and net finance costs Net debt was US$3,523.6 million at 31 December 2015, and leverage, measured as net debt over PBITDA was 2.5 times. During the half year ended 31 December 2015, the following refinancings were completed: a US$425 million syndicated multi-currency facility due to mature in August 2015 was refinanced for five years and increased to US$565.4 million; and a US$615 million syndicated multi-currency facility due to mature in October 2016 was extended for two years and increased to US$776.6 million. The next sizeable refinancing is in December 2016 with a US$275 million United States Private Placement borrowing due to mature. Page 2

45 Dividend The Directors declared an unfranked interim dividend for 2016 of 19.0 US cents per share, in line with the 2015 interim dividend. The dividend will be paid in Australian dollars, and the amount received will be 26.7 cents, which is 9.5% higher than the 2015 interim dividend payment. The payment of 26.7 cents reflects the dividend declared in US dollars converted at an exchange rate of This rate reflects the average exchange rate over the five days ending 8 February % of the dividend is sourced from the Conduit Foreign Income Account. The ex-dividend date will be 23 February 2016, the record date will be 25 February 2016 and the payment date will be 22 March Share buy-back On 20 October 2015, Amcor completed the US$500 million on-market share buy-back announced on 17 February million shares were bought back at an average price of A$ This represents 4.0% of the total number of shares on issue at the time the buy-back was announced. The buy-back resulted in a 3.2% reduction in the weighted average number of shares used to calculate earnings per share for the half year ended 31 December Conference call Amcor is hosting a conference call with investors and analysts to discuss these results today, February 15, 2016 at 11:30 am AEDT. Investors are invited to listen to a live audiocast of the conference call at our website, in the Investors section. A replay of the audiocast will also be available on our website within 24 hours. Segment information Segment analysis (US$ million) 1H15 Sales revenue PBIT ROAFE% 1H16 Sales revenue PBIT ROAFE% Flexibles 3, , Rigid Plastics 1, , Investments / Other / Intersegment - (16.9) - (18.7) TOTAL 4, , Page 3

46 Flexibles The Flexibles segment includes the Flexibles Europe, Middle East and Africa, Flexibles Americas, Flexibles Asia Pacific and Tobacco Packaging businesses. 1H15 1H16 Change 1H15 1H16 Change Constant Currency change Earnings US$ mill US$ mill % mill mill % % Sales revenue 3,246 2,986 (8.0) 2,521 2, PBIT (10.7) Adjusted PBIT (1) (8.0) Adjusted operating margin (%) Average funds employed 3,256 2,881 (11.5) 2,529 2, PBIT/AFE (%) USD:Euro average exchange rate Cash flow PBITDA Capital Expenditure (76.2) (100.9) (59.2) (91.5) Movement in Working Capital (158.9) (59.1) (123.4) (53.5) Other Operating cash flow (1) 1H15 earnings adjusted to reflect a one off gain of 9.2 million related to the sale of excess land in Turkey. This one off gain was disclosed at the first half last year. The Flexibles segment had a solid half year with adjusted constant currency PBIT up 6.1%. This 6.1% increase reflects higher demand in the tobacco packaging business as customers built inventories ahead of tax increases and regulatory changes, benefits from prior period acquisitions and strong organic growth in emerging markets. Underlying demand in developed markets remained subdued and there was an unfavourable impact on earnings from movements in the Swiss Franc against the Euro of approximately 7 million. Operating margins were in line with the prior period after adjusting for a one off gain of 9.2 million related to the sale of excess land in Turkey. Margins for the half year were negatively impacted by acquired businesses. Returns, measured as PBIT over average funds employed, increased to 24.6%. Flexibles Europe, Middle East and Africa The Flexibles Europe, Middle East and Africa business sells into the defensive end market segments of food and healthcare. The major end markets served, making up approximately 95% of sales, are pharmaceutical, snacks and confectionery, cheese and yoghurt, fresh produce, beverage, pet food as well as wine and spirit closures. The business had a good half year with sales and earnings higher than the prior year in constant currency terms. This reflects growth in Eastern Europe and strong cost control. Demand in developed markets remained stable. In the European region, volumes were higher in the capsules, cheese and single serve coffee segments. Pet food and confectionery, particularly in Eastern Europe, experienced strong growth. This was offset by weakness in the liquid beverage and multi-serve coffee segments. Page 4

47 The overall business remained focused on innovation and simplification to significantly enhance the customer value proposition and improve product mix. Costs and operating efficiencies improved during the half and there are opportunities to further improve performance in these areas going forward. On 1 July 2015 the ZAR 250 million (US$22 million) acquisition of Nampak Flexibles was completed. The business, renamed Amcor Flexibles South Africa, is the market leader in South Africa and generates revenue of approximately ZAR 1.1 billion (US$94 million) from the sale of flexible packaging for the beverage, food and home care end markets. The business services many of Amcor s existing global customers and provides a platform for growth in the African region. Flexibles Americas The Flexibles Americas business produces flexible packaging for customers in the medical and pharmaceutical, fresh produce, snack food and personal care segments. The business performed well during the half with earnings higher than last year in constant currency terms. improvement and operating efficiencies offset subdued demand in some end markets. Strong cost In North America, there was some weakness in the medical segment and volumes were lower than the prior year. Within the specialty food end markets, the trend towards high barrier packaging for organic, fresh or additive free products continues. In South America, Amcor s business is focused on the medical, pharmaceutical and food segments. This is a high growth region for flexible packaging and there are a number of opportunities for the business to accelerate growth. On 31 December 2015, the US$45 million acquisition of Deluxe Packages was completed. The business operates one well invested manufacturing plant with attractive technologies, capabilities and highly skilled co-workers in Yuba City, California. Revenues of approximately US$42 million are generated from the supply of high performance flexible packaging products to customers in the fresh food and snack food segments. This acquisition will enhance growth in priority segments by strengthening Amcor s customer value proposition with a combined east and west coast footprint. Flexibles Asia Pacific The Flexibles Asia Pacific business has 40 plants in eight countries throughout the region. The business performed well during the half year against a backdrop of challenging economic conditions in many of its key markets. In China, the business has benefited from prior period acquisitions, with the Jiangsu Shenda and Zhongshan TianCai businesses delivering strong earnings growth during the half. However, organic growth has remained challenging over the last 12 months. The business experienced considerable customer destocking that adversely impacted demand in the December 2014 and March 2015 quarters. Since that time, demand has improved on a sequential basis and volumes in the current half year were higher than the June 2015 half. Despite this trend, volumes remained below the same period last year although margins have been maintained. The businesses in Singapore, India and Indonesia have performed well achieving strong volume growth. The results for Indonesia and India also benefited from the acquisitions of Bella Prima Packaging and Packaging India Private Limited respectively. The business in Thailand was adversely impacted by weaker demand due to ongoing economic difficulties in that country. On 13 July 2015, the INR 1,650 million (US$26 million) acquisition of Packaging India Private Limited (PIPL) was completed. PIPL generates sales of approximately INR 2,500 million (US$40 million) from three plants located in the North and South of India and produces flexible packaging predominately for the food and personal care markets. This acquisition provides an opportunity for the business to further expand its customer base and value proposition in the high growth Indian market. Construction of a new flexibles packaging plant in the Philippines is expected to be completed in the June 2016 half year. This greenfield plant will be dedicated to a large multinational customer in the fast moving consumer goods segment, and provides an excellent opportunity to further expand the business in the Philippines and continue to improve the customer value proposition in the high growth South East Asian region. Page 5

48 Overall demand in the Australian market remained subdued during the half year. The recently acquired Detmold business continues to perform well and is delivering to expectations. The performance of the business in New Zealand has improved significantly following the implementation of a comprehensive improvement plan in the last financial year, and earnings were higher during the half which reflects improved mix and strong cost performance. Tobacco Packaging The Tobacco Packaging business had a particularly strong half year with earnings higher than the same period last year. As the leader in product innovation and the only manufacturer with a global footprint, the business is well positioned to support customers as they focus on premiumisation of brands, growth in emerging markets and cost improvement initiatives. The business continues to secure additional volumes for higher value-add cartons across multiple regions. Volumes in Europe were significantly higher as customers increased inventories during the half year. In Russia and Turkey demand was higher ahead of tax increases that came into effect on 1 January 2016, and across European Union member states, demand has increased ahead of the second Tobacco Packaging Directive coming into effect in May Across the European region, it is anticipated there will be a period of customer destocking and hence lower volumes in the June 2016 half year. In the Americas earnings were lower than last year reflecting lower volumes and higher operating costs. On 1 September 2015, the BRL 98 million (US$30 million) acquisition of Souza Cruz s internal tobacco packaging operations in Brazil was completed. Souza Cruz is majority-owned by British American Tobacco plc and is the market leader in the Brazilian cigarette market. This investment is supported by a long-term supply agreement between Amcor and Souza Cruz and annual sales are expected to be approximately BRL 200 million (US$63 million). In Asia, the business had an excellent half year driven by industry growth and market share gains. The business was successful in securing new volumes for a multinational customer within the Philippines market in the June 2015 half year. Capital works on a new greenfield plant in Indonesia commenced during the year. The new plant will supply both existing and new customers and better position the business to be awarded additional new volumes. It is expected construction of the plant will be completed in the June 2016 half year. Outlook The full year earnings outlook for the flexibles business has marginally improved compared with the guidance given in August The business is expected to deliver modest constant currency earnings growth in the 2015/16 year, compared with PBIT of million in the 2014/15 year. For the December 2015 half, tobacco packaging volumes were significantly higher due to customers increasing inventories. It is expected a period of customer destocking will occur over the next six months, and tobacco packaging volumes in the June 2016 half year are expected to be lower than the same period last year. Page 6

49 Rigid Plastics 1H15 1H16 Change Earnings US$ mill US$ mill % Sales revenue 1,563 1,562 (0.1) PBIT Operating Margin (%) Average funds employed 1,599 1,513 (5.4) PBIT/AFE (%) Cash flow PBITDA (1) Capital Expenditure (75.7) (53.2) Movement in Working Capital (177.6) (212.6) Other Operating cash flow (21.0) (45.8) (1) Includes share of net profit of equity accounted investments. The Rigid Plastics business had an outstanding half year with PBIT of US$153.5 million, 10.4% higher than the prior period. Returns, measured as PBIT over average funds employed increased from 17.4% to 20.3%. Sales revenue for the business remained in line with the previous year at US$1,562 million. For the half year, the average cost of PET resin was lower than the same period last year negatively impacting reported sales. North America Beverage The North American Beverage business had a strong half year achieving higher earnings than the same period last year. This reflects higher volumes and strong cost performance, partly offset by unfavourable product mix. Excluding the acquired Encon business, total organic volume growth was 9.6% compared with last year. The business benefited from the full period impact of market share gains secured during the 2015 financial year and also won additional spot volumes during the half. In addition there was strong market demand for the PET container format. The business was also successful in increasing share with regional customers following investment over the past two years in manufacturing platforms targeting smaller run volumes. In the hot-fill custom beverage segment, organic volume growth was 7%, with good growth in value-add speciality containers for isotonics and iced tea in particular. In the carbonated soft drink and water segment, organic volume growth was 11%. On 28 October 2015, the US$55 million acquisition of Encon, a privately owned preform manufacturing business in the United States was completed. The business operates from four manufacturing sites, producing the majority of preforms from one large scale plant located in Dayton, Ohio. The business generates revenues of approximately US$110 million servicing both existing and new customers. Given the manufacturing overlap, the acquisition will deliver considerable operating synergies and generate strong returns. It is expected that integration costs of approximately US$3 million will be incurred in the June 2016 half year. Page 7

50 North America Diversified Products The Diversified Products segment consists of rigid plastic containers predominately for the pharmaceutical / healthcare, food, alcoholic beverage and personal care / homecare markets. The business had a good half and delivered higher earnings compared with last year. attractive markets, favourable product mix and improvements in operating costs. This reflects volume growth in Latin America The Latin American operations performed well and earnings were higher than the same period last year. This reflects the benefit of higher volumes partly offset by negative mix. Volumes were 8.7% higher than last year, driven by market growth in several countries and new business wins, particularly in Brazil. Difficult economic conditions resulted in modest volume declines in Argentina. Economic conditions in Venezuela have deteriorated during the period and this has impacted the business environment. As a result, Amcor elected to change the rate it used to consolidate earnings for the half into US dollars from 6.3 Bolivars to the US dollar to 13.5 Bolivars to the US dollar. The negative impact on earnings of this change in translation rate for the half has been offset by higher selling prices. Bericap The Bericap North America joint venture is managed and reported within the Rigid Plastics segment. This business produces plastic closures for beverage containers and has plants in Ontario, Canada, and in California and South Carolina in the United States. The business achieved higher earnings and sales than the same period last year which reflects higher volumes. Outlook The full year earnings outlook for the Rigid Plastics business has improved compared with the guidance given in August The business is expected to achieve strong earnings growth in the 2015/16 year. The following factors are expected to influence earnings for the second half of the 2016 financial year: continued growth in Latin America notwithstanding the challenging conditions in Venezuela, Brazil and Argentina; continued solid volume growth in North America although at rates lower than those achieved in the December 2015 half year. This reflects timing of market share gains and lower spot volumes relative to the June 2015 half; and integration costs associated with the Encon acquisition of approximately US$3 million.. Page 8

51 Investments / Other PBIT 1H15 US$ mill 1H16 US$ mill AMVIG Corporate costs (31.4) (30.2) Total (16.9) (18.7) Investments / Other include corporate costs and equity accounted earnings from the 48% interest in the Hong Kong publicly listed company AMVIG Holdings Limited (AMVIG). As AMVIG typically releases its financial results after Amcor, profit reported by Amcor will reflect management s best estimate of earnings for the most recent six month period. Any true up adjustment required following the announcement of AMVIG s profit is taken up by Amcor in the subsequent half year period. A favourable true up adjustment of US$3.1 million was included in the first half result for last year and was disclosed in February For the 2015/16 year, corporate costs are expected to be in the range of US$70-US$75 million taking into current exchange rates. Cash flow 1H16 (US$ million) Flexibles Rigid Plastics Investments / Other Consolidated PBITDA (1) (13.9) Capital Expenditure (100.9) (53.2) (8.1) (162.2) (Increase)/decrease in working capital (59.1) (212.6) 7.7 (264.0) Other items Interest (56.8) (56.8) Tax (91.4) (91.4) Operating cash flow (45.8) (151.0) (1) Includes share of net profit of equity accounted investments. Page 9

52 Appendix information The following financial acronyms have been used within this announcement: PAT Profit after tax. Within Amcor s interim financial report, PAT equals Profit for the financial period attributable to owners of Amcor Limited. PBIT Profit before interest and tax. Within Amcor s interim financial report, PBIT equals Profit from operations. PBITDA Profit before interest, tax, depreciation and amortisation. PBITDA is derived by deducting Depreciation and Amortisation of intangible assets extracted from Amcor s interim financial report from PBIT. AFE Average funds employed. ROAFE Return on Average funds employed, calculated as PBIT over Average funds employed. EPS Earnings per share. IFRS International Financial Reporting Standards DPS Dividend per share The following notes provide further details of certain non-ifrs financial measures used within this announcement: (a) Operating cash flow is cash flow from operating activities calculated in accordance with IFRS and extracted from Amcor s interim financial report, adjusted to take into account capital expenditure and other items. This measure is reconciled to cash flow from operating activities as follows: US$ million 1H15 1H16 Operating cash flow Capital expenditure Proceeds from sale of PP&E (68.8) (1.5) Other items Cash flow from operating activities (b) Free cash flow is Operating cash flow (refer note (a) above) less dividends paid during the period calculated in accordance with IFRS and extracted from Amcor s interim financial report. (c) Movement in net debt is reconciled to the net increase in cash held calculated in accordance with IFRS and extracted from Amcor s interim financial report as follows: 1H15 US$ million 1H16 US$ million Proceeds from borrowings (2,503.3) (3,594.0) Repayment of borrowings 2, ,126.0 Net decrease in cash held (146.9) (103.6) Effects of exchange rate changes on cash and cash equivalents (7.1) (140.1) Other items Increase in net debt (241.0) (711.4) Page 10

53 Appendix 4D Rule 4.2A.3 Half year report AMCOR LIMITED ABN Details of the reporting period and the previous corresponding period Reporting Period: Half-Year Ended 31 December 2015 Previous Corresponding Period: Half-Year Ended 31 December Results for announcement to the market 2.1 Revenues from ordinary activities From Continuing Operations From Discontinued Operations 2.2 Net profit from ordinary activities after tax, attributable to members down n/a USD million 5.4% to 4,547.7 down 4.9% to Net profit for the period, attributable to members down 4.9% to Dividends Current period 2.4 Interim dividend payable 22 March Final dividend (in respect of prior year) paid 30 September 2015 Amount per security (US cents) 19.0 cents 21.0 cents Franked amount per security Nil Nil Previous corresponding period 2.4 Interim dividend 19.0 cents Nil 2.5 Record date for determining entitlements to the dividend Interim dividend 25 February Brief explanation of figures in 2.1 to 2.4 : i) Dividends in the current period and previous corresponding period are unfranked. Dividends to non-residents are sourced from the parent entity s Conduit Foreign Income Account. As a result, 100% of the dividend paid to a non-resident will not be subject to Australian withholding tax. ii) Refer to attached press release for further details relating to 2.1 to Net tangible assets 31 December June December 2014 Net tangible asset backing per ordinary security US$(0.70) US$(0.39) US$(0.05) 4. Control gained or lost over entities during the period having a material effect Refer to the attached Interim Financial Report, Note 3 Businesses acquired, no businesses were disposed of during the period. Appendix 4D Page 1

54 5. Details of individual dividends and payment dates Refer to the attached Interim Financial Report, Note 5 Dividends. 6. Details of dividend reinvestment plan The Dividend Reinvestment Plan (DRP) is in operation. No discount is available under the DRP. Issue price will be calculated on the arithmetic average of the weighted average price for the nine ASX Trading Days from 1 to 11 March 2016 inclusive. The last date for receipt of election notices for the DRP is 26 February Shares allotted under the DRP rank equally with existing fully paid ordinary shares of Amcor Limited. 7. Details of associates and joint venture entities At 31 December 2015 the group held a 47.6% interest in AMVIG Holdings Ltd ( AMVIG ) a tobacco packaging company listed on the Hong Kong Stock Exchange. In the six months to 31 December 2015 the group recognised a share of associates profit of US$11.6 million (six months to 31 December 2014: US$14.5 million profit) relating to this associate investment. At 31 December 2015 the Group held a 50.0% interest in a joint venture, DISCMA AG ( DISCMA ), a Swiss company. In the six months to 31 December 2015 the group recognised a share of associates loss of US$0.4 million (six months to 31 December 2014: US$0.2 million loss) relating to this joint venture. 8. For foreign entities, which set of accounting standards is used in compiling the report International Financial Reporting Standards 9. The Interim Financial Report is not subject to a review report that is subject to a modified opinion, emphasis of matter or other matter paragraph (a copy of the review report is included in the half-year accounts attached). The Interim Financial Report should be read in conjunction with the most recent annual financial report. 15 February Date:... Julie McPherson Company Secretary Appendix 4D Page 2

55 Date: 12/02/2016 3:22 PM A M C O R L I M I T E D A.B.N INTERIM FINANCIAL REPORT 31 DECEMBER 2015

56 Contents Directors Report... 2 Auditor s Independence Declaration... 3 Income statement... 4 Statement of comprehensive income... 5 Statement of financial position... 6 Statement of changes in equity... 7 Cash flow statement... 8 Notes to interim financial report 1. Summary of significant accounting policies Segment information Businesses acquired Contributed equity Dividends Financial instruments Borrowings Venezuela Contingencies Subsequent events...18 Directors Declaration...19 Independent Auditor s Review Report...20 This interim financial report was approved by the Directors on 15 February The Directors have the power to amend and reissue the interim financial report. 1

57 Amcor Limited and its controlled entities Directors Report The Directors present their report on the consolidated entity consisting of Amcor Limited and its controlled entities at the end of, or during, the half year ended 31 December Directors The following persons were Directors of Amcor Limited during or since the end of the half year: Name Period of directorship Non-executive G R (Graeme) Liebelt - Chairman Director since 2012 appointed Chairman 17 December 2013 J G (John) Thorn Director since 2004 J L (Jeremy) Sutcliffe Director since 2009 K J (Karen) Guerra Director since 2010 A (Armin) Meyer Director since 2010 P V (Paul) Brasher Director since 2014 E (Eva) Cheng Director since 2014 Executive R S (Ron) Delia Director since 2015 Review of operations A review of the operations of the consolidated entity during the half year, and the results of those operations is contained in Amcor's Statement to the Australian Stock Exchange and Media Release dated 15 February Dividend Since 31 December 2015 the Directors have determined an interim dividend on ordinary shares, expected to be paid on 22 March 2016, of approximately US$220.0 million. This represents a dividend of 19.0 US cents per share unfranked, of which 100% is to be sourced from the Conduit Foreign Income Account. The financial effect of this dividend has not been brought to account in the consolidated financial statements for the six months ended 31 December 2015 and will be recognised in subsequent financial reports. Auditor s Independence Declaration A copy of the auditor s independence declaration, as required under Section 307C of the Corporations Act 2001, is set out on page 3. Rounding Off The consolidated entity is of a kind referred to in the Australian Securities and Investments Commission Class Order 98/0100 dated 10 July 1998 and in accordance with that Class Order, amounts in the financial report and Directors report have been rounded off to the nearest US$100,000 or, where the amount is US$50,000 or less, zero, unless specifically otherwise stated. Signed in accordance with a resolution of the Directors, dated at Melbourne, this 15th day of February G R Liebelt Chairman 2

58 Auditor s Independence Declaration As lead auditor for the review of Amcor Limited for the half-year ended 31 December 2015, I declare that to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and b) no contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of Amcor Limited and the entities it controlled during the period. John Yeoman Partner PricewaterhouseCoopers Melbourne 15 February 2016 PricewaterhouseCoopers, ABN Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: , F: , Liability limited by a scheme approved under Professional Standards Legislation.

59 Amcor Limited and its controlled entities Income statement For the six months ended 31 December 2015 US$ million Note Revenue from sale of goods 2 4, ,809.0 Cost of sales (3,633.2) (3,891.5) Gross profit Other income Sales and marketing expenses (103.2) (109.1) General and administration expenses (349.7) (336.3) Research costs (33.5) (32.6) Share of net profit of equity accounted investments Profit from operations Finance income Finance expenses (93.6) (105.2) Net finance costs (78.2) (91.8) Profit before related income tax expense Income tax expense (88.3) (91.7) Profit for the financial period Profit attributable to: Owners of Amcor Limited Non-controlling interest Earnings per share for profit attributable to the ordinary equity holders of Amcor Limited Cents Cents Basic earnings per share Diluted earnings per share The above income statement should be read in conjunction with the accompanying notes to the interim financial report. 4

60 Amcor Limited and its controlled entities Statement of comprehensive income For the six months ended 31 December 2015 US$ million Profit for the financial period Other comprehensive income/(loss) Items that may be reclassified subsequently to profit or loss: Cash flow hedges Changes in fair value of cash flow hedges Tax on cash flow hedges 1.0 (0.5) Exchange differences on translating foreign operations Exchange differences on translation of foreign operations (211.4) (34.0) Net investment hedge of foreign operations (62.0) (123.1) Share of equity accounted investees exchange fluctuation reserve 0.1 (6.1) Tax on exchange differences on translating foreign operations (12.1) 4.1 Items that will not be reclassified to profit or loss: Retained earnings Actuarial gains/(losses) on defined benefit plans 41.4 (83.5) Tax on actuarial (gains)/losses on defined benefit plans (10.5) 22.7 Other comprehensive income/(loss) for the financial period, net of tax (252.4) (215.8) Total comprehensive income for the financial period Total comprehensive income attributable to: Owners of Amcor Limited Non-controlling interest (32.6) The above statement of comprehensive income should be read in conjunction with the accompanying notes to the interim financial report. 5

61 Amcor Limited and its controlled entities Statement of financial position As at 31 December 2015 December June US$ million Note Current assets Cash and cash equivalents Trade and other receivables 1, ,468.5 Inventories 1, ,213.9 Other financial assets Other current assets Total current assets 3, ,413.0 Non-current assets Equity accounted investments Other financial assets Property, plant and equipment 2, ,566.7 Deferred tax assets Intangible assets 1, ,845.3 Retirement benefit assets Other non-current assets Total non-current assets 5, ,134.1 Total assets 8, ,547.1 Current liabilities Trade and other payables 2, ,345.7 Interest-bearing liabilities 1, ,012.7 Other financial liabilities Current tax liabilities Provisions Total current liabilities 3, ,674.4 Non-current liabilities Interest-bearing liabilities 2, ,572.6 Deferred tax liabilities Provisions Retirement benefit obligations Other non-current liabilities Total non-current liabilities 3, ,285.7 Total liabilities 6, ,960.1 NET ASSETS 1, ,587.0 Equity Contributed equity 4 1, ,680.6 Reserves (913.3) (666.5) Retained earnings Total equity attributable to the owners of Amcor Limited 1, ,466.2 Non-controlling interest TOTAL EQUITY 1, ,587.0 The above statement of financial position should be read in conjunction with the accompanying notes to the interim financial report. 6

62 Amcor Limited and its controlled entities Statement of changes in equity For the six months ended 31 December 2015 Attributable to owners of Amcor Limited US$ million Contributed equity Reserves Retained earnings Total Noncontrolling interest Total equity Balance at 1 July ,680.6 (666.5) , ,587.0 Profit for the financial period Total other comprehensive income/(loss) - (233.6) 30.8 (202.8) (49.6) (252.4) Total comprehensive income/(loss) for the financial period - (233.6) (32.6) 70.1 Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs and related tax Purchase of treasury shares (17.3) - - (17.3) - (17.3) Dividends paid - - (246.5) (246.5) (10.9) (257.4) Share buy-back (204.1) - - (204.1) - (204.1) Settlement of options and performance rights 27.2 (27.2) Share-based payments expense Non-controlling interest buy-out - - (0.3) (0.3) (0.2) (0.5) Balance at 31 December ,513.8 (913.3) , ,219.2 US$ million Contributed equity Reserves Retained earnings Total Noncontrolling interest Total equity Balance at 1 July ,072.0 (414.3) , ,139.1 Profit for the financial period Total other comprehensive income/(loss) - (152.2) (60.9) (213.1) (2.7) (215.8) Total comprehensive income/(loss) for the financial period - (152.2) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs and related tax 29.9 (3.4) Shares purchased on-market to satisfy exercise of options and rights under share-based payment plans (33.6) - - (33.6) - (33.6) Dividends paid - - (247.1) (247.1) (6.0) (253.1) Settlement of options and performance rights 24.6 (24.6) Share-based payments expense Non-controlling interest buy-out - - (2.4) (2.4) (8.2) (10.6) Acquisition of controlled entities and businesses Balance at 31 December ,092.9 (579.8) , ,005.4 The above statement of changes in equity should be read in conjunction with the accompanying notes to the interim financial report. 7

63 Amcor Limited and its controlled entities Cash flow statement For the six months ended 31 December 2015 US$ million Cash flows from operating activities Profit from continuing operations Depreciation, amortisation and net impairment losses Non-cash retirement benefit expense/(gain) 3.1 (5.3) Net finance costs Net gain on disposal of non-current assets (1.0) (27.0) Share of net profits of equity accounted investments (11.2) (14.5) Net foreign exchange loss/(gain) Share-based payments expense Other sundry items (23.9) (14.0) Income tax expense Operating cash flows before changes in working capital and provisions Decrease/(Increase) in trade and other receivables 0.8 (31.0) - (Increase)/Decrease in inventories (38.2) (1.8) - Decrease/(Increase) in other operating assets (Decrease)/Increase in trade and other payables (224.0) (278.8) - Increase/(Decrease) in provisions 9.4 (14.5) - (Decrease)/Increase in employee benefits and other operating liabilities (14.8) (14.4) Dividends received Interest received Interest expense (70.3) (83.8) Income tax paid (91.4) (69.8) Net cash flows from operating activities Cash flows from investing activities Granting/(Repayment) of loans to associated companies and other persons 2.0 (1.0) Payments for acquisition of controlled entities, businesses and associates, net of cash acquired (137.6) (41.7) Payments for property, plant and equipment and intangible assets (162.2) (156.3) Proceeds on disposal of associates, controlled entities and businesses Proceeds on disposal of property, plant and equipment Net cash flows from investing activities (296.3) (129.4) The above cash flow statement should be read in conjunction with the accompanying notes to the interim financial report. 8

64 Amcor Limited and its controlled entities Cash flow statement (continued) For the six months ended 31 December 2015 US$ million Cash flows from financing activities Proceeds from share issues Share buy-back (222.2) - Shares purchased on-market and settlement of forward contracts (73.7) (65.5) Payments for treasury shares (17.3) (19.6) Proceeds on capital contribution from non-controlling interest - (1.5) Proceeds from borrowings 3, ,503.3 Repayment of borrowings (3,126.0) (2,414.7) Principal lease repayments (0.8) (1.2) Dividends paid (257.4) (253.2) Net cash flows from financing activities (70.5) (222.5) Net decrease in cash held (103.6) (146.9) Cash and cash equivalents at the beginning of the financial period Effects of exchange rate changes on cash and cash equivalents (140.1) (7.1) Cash and cash equivalents at the end of the financial period Reconciliation of cash and cash equivalents For purposes of the Cash Flow Statement, cash and cash equivalents includes cash on hand and at bank and short term money market investments, net of outstanding bank overdrafts. Cash and cash equivalents as at the end of the financial year as shown in the Cash Flow Statement is reconciled to the related items in the Statement of Financial Position as follows: Cash and cash equivalents Bank overdrafts (35.1) (53.4) Cash and cash equivalents at the end of the financial period The consolidated entity operates in 43 countries around the world some of which impose restrictions over cash movement. The estimated restricted cash balance at 31 December 2015 is between US$70.0 million and US$80.0 million. At 30 June 2015 the estimated restricted cash balance was between US$95.0 million and US$105.0 million. The above cash flow statement should be read in conjunction with the accompanying notes to the interim financial report. 9

65 Amcor Limited and its controlled entities Notes to the interim financial report For the six months ended 31 December Summary of significant accounting policies Amcor Limited (the Company ) is a company domiciled in Australia. This interim financial report includes the financial statements of the Company and its subsidiaries (together referred to as the Group ) and the Group s interest in equity accounted investments, as at and for the half year ended 31 December The Annual Report of the Group as at and for the year ended 30 June 2015 is available upon request from the Company s registered office at 109 Burwood Road, Hawthorn 3122, Victoria, Australia or at (a) Basis of preparation of the condensed consolidated interim financial report The interim financial report is a general purpose financial report which has been prepared in accordance with the requirements of Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act The interim financial report does not include all of the information required for a full financial report, and should be read in conjunction with the Annual Report of the Group as at and for the year ended 30 June 2015 and any public announcements made by Amcor Limited and its controlled entities during the half year in accordance with continuous disclosure obligations arising under the Corporations Act The Group is of a kind referred to in ASIC Class Order 98/0100 dated 10 July 1998 and in accordance with that Class Order, amounts in the interim financial report have been rounded off to the nearest US$100,000 or, where the amount is US$50,000 or less, zero, unless otherwise specifically stated. The accounting policies applied by the Group in this interim financial report are the same as those applied by the Group in its Annual Report as at and for the year ended 30 June 2015 and the corresponding interim reporting period. There have been no changes to the accounting standards. Since 30 June 2015 the Group has not adopted any accounting standards issued but not yet effective. 2. Segment information An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. Segment disclosures are consistent with the information reviewed by Amcor s chief operating decision makers, the Group Management Team (GMT). The GMT consists of the Managing Director and Chief Executive Officer and his direct reports and provides strategic direction and management oversight of the day to day activities of the Group in terms of monitoring results, approving capital expenditure decisions and the strategic plans for the business. Segment performance is evaluated based on operating profit before interest and tax and is measured consistently with profit and loss in the consolidated financial report. Group financing (including finance income and costs) and income tax are managed on a group basis and are not allocated to operating segments. (a) Description of reporting segments The Group is organised on a global basis into the following reporting segments: Amcor Rigid Plastics This segment manufactures rigid plastic containers for a broad range of predominantly beverage and food products, including carbonated soft drinks, water, juices, sports drinks, milk-based beverages, spirits and beer, sauces, dressings, spreads and personal care items and plastic caps for a wide variety of applications. Amcor Flexibles This reporting segment represents the aggregation of four operating segments each of which manufactures flexible and film packaging for their respective industries. The operating segments are: Amcor Flexibles Europe, Middle East & Africa which provides packaging for the food and beverage industry including confectionery, coffee, fresh food and dairy, pet food packaging, champagne and wine closures. Amcor Flexibles Americas business produces flexible packaging for customers in the medical and pharmaceutical, fresh produce and snack food segments. Amcor Tobacco Packaging which manufactures flexible packaging for specialty folding cartons for tobacco packaging and other industries. Amcor Flexibles Asia Pacific which provides packaging for the food and beverage industry including confectionery, coffee, fresh food and dairy and packaging for the pharmaceutical sector and home and personal care. 10

66 Amcor Limited and its controlled entities Notes to the interim financial report For the six months ended 31 December Segment information (continued) These operating segments share similar characteristics as they are engaged in the printing and packaging of fast moving consumer products. Management believe that it is appropriate to aggregate these four operating segments as one reporting segment due to the similarities in the nature and operations of each operating segment. Other/Investments This segment holds the Group s equity accounted investments in the associate AMVIG Holdings Limited (AMVIG) and the joint venture Discma AG (Discma). AMVIG is principally involved in the manufacture of tobacco packaging, while Discma s operations primarily relate to the development and licensing of packaging product innovations. This segment also includes the Corporate function of the Group. (b) Notes to and forming part of the segment information The segment information is prepared in conformity with the accounting policies of the Group and the accounting standard AASB 8 Operating Segments. Segment revenues, expenses and results include transfers between segments. Such transfers between segments are generally priced on an arm s length basis and are eliminated on consolidation. The segment profit measure reported to the GMT for the purposes of resource allocation and assessment is profit before interest, related income tax expense and significant items and therefore excludes the effects of non-recurring income and expenditure from the operating segments. Furthermore the profit measure includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis but excludes interest income and expenditure and other finance costs, as this type of activity is driven by the central Amcor Group Treasury function, which manages the cash position of the Group. Comparative information has been presented in conformity with the identified reporting segments of the Group as at the reporting date in accordance with AASB 8. 11

67 Amcor Limited and its controlled entities Notes to the interim financial report For the six months ended 31 December Segment information (continued) (c) Segment information provided to the GMT The following segment information was provided to the GMT for the reportable segments for the six months ended 31 December The comparative for profit and loss items and for average funds employed is the six months ended 31 December 2014 whilst for balance sheet items it is 30 June 2015: Amcor Rigid Plastics Amcor Flexibles Other/Investments Total US$ million Reportable segment revenue Revenue from sale of goods 1, , , , , ,809.0 Inter-segment revenue Total reportable segment revenue 1, , , , , ,809.0 Reportable segment profit/(loss) Profit/(loss) before depreciation, amortisation, interest, related income tax expense (13.9) (13.6) Depreciation and amortisation (66.5) (68.0) (104.0) (111.8) (4.8) (3.3) (175.3) (183.1) Profit/(loss) before interest and related income tax expense Other Share of net profits of equity accounted investments Net impairment losses on property, plant and equipment and other non-current assets Acquisition of property, plant and equipment and intangibles (18.7) (16.9) (3.7) (9.3) (0.2) (1.0) - - (3.9) (10.3) Receivables , ,413.4 Inventory , ,213.9 Payables (695.0) (864.6) (1,188.7) (1,312.5) (82.8) (105.6) (1,966.5) (2,282.7) Management Working Capital (24.7) (64.9) (50.4) Average funds employed 1, , , , , ,393.6 Equity accounted investments

68 Amcor Limited and its controlled entities Notes to the interim financial report For the six months ended 31 December Businesses acquired US$ million 2015 Cash and cash equivalents 2.2 Trade and other receivables 36.7 Inventories 40.4 Property, plant and equipment 62.0 Deferred tax assets 1.7 Intangible assets 26.6 Other non-current assets 0.3 Trade and other payables (37.0) Current interest-bearing liabilities (5.3) Current tax liabilities 0.1 Current provisions (2.8) Deferred tax liabilities (5.9) Non-current provisions (3.6) Retirement benefit obligations (0.1) Other non-current liabilities (0.1) Fair value of net identifiable assets acquired Add goodwill 67.5 Bargain purchase recognised in other income (6.1) Total Purchase consideration Cash paid Cash paid prior year (prepayment) 20.5 Deferred consideration 20.0 Total purchase consideration Cash flows on acquisition Cash consideration - paid current year Prior year deferred consideration - paid current year 3.0 Less: cash acquired (2.2) Outflow of cash Acquisition made in the six months to 31 December 2015 Nampak Flexibles On 1 July 2015 the Group acquired Nampak Flexibles, the market leader in flexible packaging in South Africa. Nampak Flexibles has three plants with extrusion, lamination and conversion capabilities and generates sales of approximately ZAR 1.1 billion (US$94.0 million) per annum. The business services leading multi-national and domestic customers in the beverage, food and home care end markets. The acquisition price was US$ 22.6 million (ZAR million). No purchase price adjustments have been recorded as at 31 December 2015, acquired net assets reported equate to US$22.6 million. Packaging India Private Limited On 13 July 2015 the Group acquired Packaging India Private Limited (PIPL) from Essel Propack, a publicly listed specialty packaging company. PIPL has three plants located in the North and South of India and produces flexible packaging products predominantly for the food and personal care markets. The business services leading multinational and local customers and generates sales of approximately US$40.0 million (INR 2,500.0 million) per annum. The purchase price was US$23.2 million (INR 1,474.9 million). Preliminary purchase price adjustments have been recorded resulting in goodwill of US$ 11.1 million at 31 December

69 Amcor Limited and its controlled entities Notes to the interim financial report For the six months ended 31 December Businesses acquired (continued) Souza Cruz tobacco packaging operations On 1 September 2015 the Group acquired 100% of the tobacco packaging operations of Souza Cruz located in, Cachoeirinha, Rio Grande do Sul in Brazil for US$30.1 million (BRL 98.1 million). Souza Cruz is majority owned by British American Tobacco plc (BAT) and is the market leader in the Brazilian cigarette market. The investment is supported by a long term supply contract between Amcor and Souza Cruz. The purchase price includes US$23.6 million (BRL 74.8 million) paid on closing, US$4.6 million (BRL 17.0 million) deferred consideration and US$1.9 million (BRL 6.3 million) earn-out payable over 4 years subject to specific hurdles prior to the end of year 4. Preliminary purchase price adjustments have been recorded at 31 December 2015 and a bargain purchase of US$3.1 million has been recorded in other income. Amcor believes the bargain purchase has arisen due to Souza Cruz exiting a non-core business in the country. Encon On 28 October 2015 the Group acquired the United States preform manufacturing business of the privately owned Encon. The consideration payable was US$53.3 million, US$39.8 million was paid on the acquisition date and a maximum of US$13.5 million is subject to earn out arrangements, payable over 5 years. Encon generates revenues of approximately US$110.0 million per annum servicing both Amcor s existing customers and new customers within the beverage, food and household segments. The business operates four manufacturing sites, producing the majority of preforms from one large scale plant located in Dayton, Ohio. Preliminary balance sheet numbers have been included at 31 December 2015 and goodwill of US$24.1 million has been recorded. Deluxe Packages On 31 December 2015 the Group acquired Deluxe Packages, a privately owned flexibles packaging business for US$47.4 million which included US$1.3 million of cash within the business. Deluxe operates one manufacturing plant in Yuba City, California. The business generates revenues of approximately US$42.0 million per annum providing highperformance flexible packaging products to customers in the fresh food and snack segments. Preliminary balance sheet information has been included at 31 December 2015 which results in goodwill of US$32.1 million being recorded. 14

70 Amcor Limited and its controlled entities Notes to the interim financial report For the six months ended 31 December Contributed equity Ordinary shares Ordinary shares issued are classified as equity and are fully paid, have no par value and carry one vote per share and the right to dividends. Incremental costs directly attributable to the issue of new shares or the exercise of options are recognised as a deduction from equity, net of any related income tax benefit. Treasury shares Treasury shares are shares in the Company that are held by the Amcor Employee Share Trust for the purpose of issuing shares to employees under the Group s Employee Share Plans. Treasury shares are recognised at cost and deducted from equity, net of any income tax effects. When the treasury shares are subsequently sold or re-issued any consideration received, net of any directly attributable costs and income tax effects, is recognised as an increase in equity. Any difference between the carrying amount and the consideration, if re-issued, is recognised in retained earnings. Repurchase of share capital Where the Group purchases the Company s own equity instruments, as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. The amount of the consideration paid, including directly attributable costs, is recognised as a deduction from contributed equity, net of any related income tax effects. Six months Twelve months 31 December June 2015 No. '000 US$ million No. '000 US$ million Ordinary shares Balance at beginning of period 1,181,415 1, ,206,685 2,086.1 Exercise of options under the Long Term Incentive Plan 8, , Exercise of performance rights under the Long Term Incentive Plan Exercise of performance rights under the Equity Management Incentive Plan Exercise under the Senior Executive Retention Share Plan 1, , Forward contract settled to satisfy exercise of options and rights under Employee Share Plans Treasury shares used to satisfy exercise of options and rights under Employee Share Plans Share buy-back (1) - (10,854) (23,274) - (35.0) (222.2) - (13,535) (25,270) (78.7) (87.6) (277.5) Balance at end of period 1,158,141 1, ,181,415 1,716.9 Treasury shares Balance at beginning of period (3,433) (36.3) (1,507) (14.1) Acquisition of shares by the Amcor Employee Share Trust (1,800) (17.3) (7,036) (77.7) Forward contract settled (7,400) - (5,300) - Employee Share Plan issue 10, , Shares purchased on-market to satisfy the exercise of options and rights under Employee Share Plans - - (1,400) (14.0) Share buy- back, shares not cancelled at 30 June 2015 (1) 1, (1,725) (18.1) Balance at end of period (54) (0.5) (3,433) (36.3) Total contributed equity 1,158,087 1, ,177,982 1,680.6 (1) Share buy-back The Company announced a US$500 million on market share buy-back on 17th February 2015 and purchases commenced on 16th March US$295.6 million and 27.0 million shares were purchased to 30 June 2015, out of which US$18.1 million and 1.7 million shares were not cancelled at year end as they settled after year end. The share buy-back was completed on 22nd October 2015, a total of 48.5 million shares were purchased and cancelled at a cost of US$499.7 million 15

71 Amcor Limited and its controlled entities Notes to the interim financial report For the six months ended 31 December Dividends US Cents per share Total amount US$ million US Cents per share Total amount US$ million (i) Dividends provided for or paid during the period Final dividend paid on 30 September 2015 unfranked (2014: 30 September 2014 unfranked) of which 100% was sourced from the Conduit Foreign Income Account (2014: 100%) (ii) Dividends not recognised at period end The directors have determined an interim dividend, expected to be paid on 22 March 2016 unfranked (2014: 26 March 2015 unfranked) of which 100% is to be sourced from the Conduit Foreign Income Account (2014: 100%) Financial instruments Fair value of financial instruments The Group has a number of financial instruments which are not measured at fair value in the balance sheet. For the majority of these instruments, the fair values approximate their carrying amounts. Differences between carrying amount and fair value were identified for the following instruments at 31 December December June 2015 US$ million Total carrying value Total fair value Total carrying value Total fair value Financial liabilities US Dollar notes , ,077.0 Euro notes Eurobond , ,063.7 Swiss bond , , , ,483.9 The financial assets and liabilities which are measured at fair value in the balance sheet were not significant at 31 December

72 Amcor Limited and its controlled entities Notes to the interim financial report For the six months ended 31 December Borrowings Financing arrangements During the period the syndicated multi-currency facility to support uncommitted commercial paper programs (Tranche A) was increased from US$425.0 million to US$565.4 million maturing on 17 July Tranche B of the syndicated multi-currency facility was increased from US$615.0 million to a limit of US$776.6 million and matures on 31 October The 2010 Euro US Private Placement Notes of 50.0 million matured on 1 September Contractual maturities During the period, the US$275.0 million of US Private Placement Notes due 15 December 2016 was moved from Noncurrent to Current Interest-bearing liabilities. 8. Venezuela As at 31 December 2015, the Venezuelan Government operated a three-tiered exchange rate mechanism for exchanging Bolivars into US dollars including: The government-operated National Center of Foreign Commerce (CENCOEX), which has a fixed exchange rate of 6.3 Bolivars per US dollar, mainly intended for the import of essential goods and services by designated industry sectors. The auction-based Supplementary Foreign Currency Administration System (now known as SICAD) is intended for certain transactions, including foreign investments, and has an exchange rate of 13.5 Bolivars per US dollar. An open market Marginal Foreign Exchange System (SIMADI), established in February 2015, which is available to companies and individuals to exchange foreign currency based on supply and demand. The Venezuelan economic environment has deteriorated during the period and this has impacted the business environment, including increased variability in access to the various exchange rate mechanisms. Accordingly, Amcor has elected to change its translation rate from the CENCOEX 6.3 Bolivars per US dollar rate used for 30 June 2015 to 13.5 Bolivars per US dollar at 31 December As Venezuela is a hyperinflationary economy the new exchange rate was applied to translate both the profit and loss for the period and the balance sheet at 31 December This has reduced the level of restricted cash, the detail of which is referenced in the reconciliation of cash and cash equivalents on page 9. Key judgements and estimates The profitability of the Venezuelan operations and its ability to maintain and repatriate funds to the Group, may be adversely impacted by changes in the fiscal or regulatory regimes, currency devaluation, difficulties in interpreting or complying with the local laws of Venezuela or changes to the current political, judicial or administrative policies. Management continues to monitor developments closely both from an operational and accounting related stand point. 17

73 Amcor Limited and its controlled entities Notes to the interim financial report For the six months ended 31 December Contingencies Details of the contingent liabilities of the Group are set out below. Under the terms of the ASIC Class Order 98/1418 (as amended) dated 13 August 1998, which relieved certain wholly-owned subsidiaries from the requirement to prepare audited financial statements, Amcor Limited and certain wholly-owned subsidiaries have entered into an approved deed for the cross guarantee of liabilities with those subsidiaries identified in the 2015 Annual Report (refer note 6.4). No liabilities subject to the Deed of Cross Guarantee at 31 December 2015 are expected to arise to Amcor Limited and subsidiaries, as all such subsidiaries were financially sound and solvent at that date. There have been no changes to the entities forming part of the deed of cross guarantee during the six months ended 31 December 2015 The Group operates in many territories around the globe under different direct and indirect tax regimes. From time to time the Group receives assessments for additional tax from revenue authorities which, having consulted with experts including external counsel, it believes are unfounded. Nonetheless, at any point in time matters will be under discussion and review with revenue authorities for which a theoretical exposure may exist. Specifically, the Brazil operations have received a series of excise and income tax claims from the local tax authorities which are being challenged via a court process. In the opinion of outside counsel these claims have a remote likelihood of being upheld, however as these cases progress through the court system in Brazil, Amcor is required to pledge assets, provide letters of credit and/or deposit cash with the courts to continue to defend the cases. The Group will continue to provide such pledges in the future as the matters are being vigorously defended by Amcor. At this stage, it is not possible to make a reasonable estimate of the amount or range of expense that could result from an unfavourable outcome in respect of these or any additional assessments that may be issued in the future as penalties and interest may be applied should the entity be unsuccessful in defending the cases. Management continues to monitor with the support of external counsel and all means are being examined in order to minimise any exposure The Directors are of the opinion that provisions are not required in respect of these matters, as it is either not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement. 10. Subsequent events On 27 January 2016 Amcor announced an agreement to acquire BPI China, the Chinese subsidiary of UK based British Polythene Industries PLC for US$13.0 million. BPI China has one plant located in Xinhui, South China which produces flexible packaging products for export and domestic customers. 18

74 Amcor Limited and its controlled entities Directors Declaration For the half year ended 31 December 2015, in the opinion of the Directors of Amcor Limited (the Company ): 1. the financial statements and notes are in accordance with the Corporations Act 2001 including: a. complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and b. giving a true and fair view of the Group s financial position as at 31 December 2015 and its performance for the half year ended on that date; and 2. there are reasonable grounds to believe that Amcor Limited will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Directors, dated at Melbourne, this 15 th day of February G R Liebelt Chairman 19