NCI 2008A nnu A l Rep oR t

National Can Industries Limited

• Lucas ada • NewtoN ada • LusiaNa adikaususu • NiLLy agaiby • Ray Luis agapay • david agNew • eddie ahoLima • Jim aiNswoRth • eLiJah aisam • moh aiyub • peata akuiLa • meLda aLach • bRett aLdoNs • saLam aLi • phiLip aLLeN • adeLL aLLwood • Rosa aLoi • kumaRa amaRasekeRa • veLe amiNi • baNda amithaRathaNe • cRaig aNdeRsoN • keith aNdeRsoN • chRistopheR aNdRews • LJiLJaNa aNdRic • aNNa aNgeLis • kam ao • FRed apeLu • subRamaNiaN aRaveNdaN • aLex aRmadass • peteR aRNoLd • teRReNce aRNoLd • maRgaRita aRsova • sit aso • RichaRd asseN • david atuaN • heLeN au • iNdiRa awasthi • saLma azizi • gLeNN bacusmo • geoFFRey baLshaw • imeLda baquiR • steveN baRaghiNi • eFReN bautista • Joseph bayoNa • maRk beddows • beRNa begue • RobeRt beLFioRe • JustiNe beLL • vidosava beNJocki • aNdRew beNNett • michaeL beNtLey • caRLo beRNaRdi • JohN beRRy • JustiN biRd • keNNeth biudi • cLemeNt bLack • eLeNa bLack • RobeRt bLaiR • JeRemy bLaNdFoRd • JasoN bLaNey • daLiboR bLazevski • caNe bogdaNovski • Laisiasa bogiNivaLu • maRgaRet boLa • mioko boska • scott botica • teRiNa bowLes • duNcaN boyLe • patty bRadFoRd • daNieL bRiFFa • ateR bRimo • goRdoN bRoad • JohN bRook • NagaiRe bRosNam • daRRyL bRoughtoN • aNthoNy bRuce • maRgRet bRyaNt • RaymoNd buaRa • NeiL bucoy • heNRy wiLLiams budiN • soLimaN bugay • haNk bumote • Jed buRke • stewaRt RobeRt buRNs • Joseph buseLLi • maRisa buskuLic • maRia eLNa byRNes • seaN cachia • gaRy campbeLL • sabatiNo capRetta • maL caRR • giuseppiNa caRuso • bRadLey casey • RaFaeL casipit • pameLa cass • steve cataLaNo • bRiaN cathcaRt • deaN catteRaLL • pauL cavaNough • NiRmaLa chaNd • suResh chaNd • Louise chaNg • Jagdish chauhaN • eugeNe chavez • gaRNet chesteR- dixoN • may chiNg • tRy chou • swaRNa choudhaRy • gLeNN chuteR • taNgi cLaNcy • wayNe cLaNcy • adam cLaRk • RobeRt cLaRk • david cLaRke • steveN coe • JohN coLaiacovo • peteR coLemaN • Ross coLey • coNNie coLosimo • LuciaNo comaR • stepheN coRcoRaN • aNdRew coRdeRoy • FRaNk coRRea • maRk coRRigaLL • sam costa • coLiN couRt • FoRtuNato cRea • Lucito cRistobaL • LaNce cRomptoN • deboRah cRossmaN • Joe cuRcic • RichaRd cuRNock • LawReNce cusdiN • david daRgue • gwyN davies • LyNette dawsoN • Jack day • ivaN d’cRuz • Louis de boNo • deNNis de LeoN • NemeNcio dee • gaRy deeRiNg • aNgie deLLios • emaNueL demetita • katie dhaRma • aNthoNy dias • eLizabeth dimech • khaNg diNh • tRac diNh • oLiveR dipa • phuoc duNg do • shiRLey doeL • RoNaLd doh • kathy dovic • pauL dRakeFoRd • aLaN dRew • bRyaN duNN • hiep duoNg • veLemiR duvNJak • tiLe ekeRoma • FRaNk ektoRas • haNNa eLvey • masoRi emaiyo • michaeL eNgLaNd • paea eNosi • Lotoa epati • diaNNe esdumae • kaLoLo ese • hasNa estephaN • maRk evaNs • eveNi eveNi • pauL Faavaoga • aNthoNy FaiFai • ma’aNaima FaiFai • toNy FaiFai • peka FaLa • edwaRd Fatu • teodoRo FazoN • Fedi FeRRis • LiNda FeRRis • sam FiNau • peteR FischeR • LaNce FitzpatRick • shaNe FLitcRoFt • mathew FLoweRs • desmoNd FoeNaNdeR • tevita FoLiaki • caRL FoRsyth • michaeL FoRsyth • domeNic Foti • susaN FRaNkLiN • steveN FRigaNiotis • cipRiaNo FRoNda • eLoNa FRoNda • david FRueaN • waLLace Fu • zhigaNg Fu • tim Fuakoko • haRi gadepaLLy • Joe gaFa • Joseph gaLea • Ray gaLLacheR • wayNe gambLe • JiN gao • bRiaN gaRmoNsway • meLe gataua • tau gataua • steveN gaviN • Lucy giaccotto • wayNe gibboNs • mavRa giLchRist • evaN giLLespie • gLeN giLLick • meRe gLaNviLLe • guustaaF gLeisbeRg • RadomiR gLigoRevic • NaRayaNasamy gNaNam • JohN goLi • pRiNce goNzaLes • peteR geoRge goodchap • phiLLip goodiNg • toNy goRgievski • stoJNa goRgiovski • suak goRo • websteR gough • simoNe gouvoussis • bRaNka govedaRica • deaNadayaLaN goveNdeR • esteRa govic • RobeRt gRaNt • LiLLiaN gRay • miRko gRbic • bReNdaN gReig • diaNe gReig • gaRy gReig • maRiJa gRgat • LoRRaiNe gRiFFiN • daNieL Lee gRimes • diaNNe gRoom • shaNe guLa • LJube guLevski • FRaNcis guLum • amit gupta • do ha • huoNg my thi ha • ky ha • asmahaN habkouk • NathaLie haLes • mavis haLL • wiLLiam haLL • Lavaka hamaLa • LoviaNa hamaLa • maRgaRet hamiLtoN • eLissaR haNNa • maRk haNNa • peteR haNNaN • sheikh haq • JohN haRRigaN • gReg haRRis • mike haRRis • tRevoR haRvey • maLia hausia • debRa hawkiNs • Lee James hawkiNs • guRchaRaN hayeR • daRReN heath • LaNi heatheR • JoNathaN hesiNgut • JohN higgiNs • RichaRd matthew higgiNs • cRaig hiLL • peteR hisLop-dewaR • miNh ho • JohN hoRsbuRgh • Ray hoRsbuRgh • sioNe huFaNga • Jake hughes • keith hughes • cathRyN huitema • ashLey huNN • omaR husseiN • kiem huyNh • kim huyNh • LoNg-thaNh huyNh • meLaNie huyNh • su-ha huyNh • tam de huyNh • aFeReti iakopo • asoFa iakopo • aivaLe iese • daphNe ihaka • david ikiua • eNetama ikiua • goRaN iLic • suzaNa iLic • emaNueLe iNivaLe • daNieL isaac • peteR iwasiw • RusseLL Jacobs • Jay Jaigipa • tadeusz JaRomiNek • LakmaNa JayasiNghe • kaReN JeFFeRy • vesNa Jevtic • adam JeweLL • michaeL JohNsoN • dex Joki • JasoN JoNes • maRgaRet JoNes • Rob JoNes • suResh Joshi • mitko JosiFovski • cviJeta JovaNovic • maRa Jovcevska • michaeL JuaiN • chRistiaN JudaN • keLLie kaLopita • phiLip kamo • beNsoN kaNe • caLviN kaNe • baLdev kaNg • maNJeet kaNg • NaJib kassim • sioNe katoa • yataNg katum • teitiLaNi kauFusi • miLLy kaukau • JohN kawas • aNdReas kays • staN keebLe • daRReN keeNaN •

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The front and back covers of this report contain the names of all NCI employees, in recognition of their valuable contribution to the company’s success.

Paper used in this document contains 50% recycled fibre.

Vale

With great sadness Frank O’Halloran, one of NCI’s founders, passed away on 7 August, 2008. This front cover is a tribute to Frank’s place in NCI’s history and our respect for him.

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National Can Industries LimitedA.C.N. 006 266 799

Financial Statements and ReportsJune 30, 2008

Financial highlights 2 – 3

chairman’s Review 4

managing director’s Review 5

directors’ Report 6 – 11

auditor’s independence declaration 12

corporate governance 13 – 14

Financial Report 15 – 44

Five year Financial summary 16

income statements

for the year ended June 30, 2008 17

balance sheets

as at June 30, 2008 18

cash Flow statements

for the year ended June 30, 2008 19

statements of changes in equity

for the year ended June 30, 2008 20

Notes to the Financial statements 21 – 44

directors’ declaration 45

independent audit Report 46

asx additional information 47

shareholder information 48

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Financial HigHligHts For year ended June 30, 2008

2008 2007 % +/(-)

Sales Revenue $’000 175,180 182,003 ( 3.7)

Earnings before interest, tax, depreciation and amortisation (EBITDA) $’000 19,590 26,743 ( 26.7)

Earnings before interest and tax (EBIT) $’000 10,112 17,588 ( 42.5)

Net profit before tax (PBT) $’000 10,034 17,511 ( 42.7)

Net profit after tax (PAT) $’000 6,702 12,177 ( 45.0)

Total Assets $’000 152,064 164,322 ( 7.5)

Total Liabilities $’000 25,575 33,873 ( 24.5)

Net Assets (Shareholders Equity) $’000 126,489 130,449 ( 3.0)

Net Debt $’000 ( 12,883) ( 28,294) ( 54.5)

Depreciation and amortisation expense $’000 9,478 9,155 3.5

Interest expense $’000 78 77 1.3

Income tax expense $’000 3,332 5,334 ( 37.5)

Performance Ratios & Statistics

EBIT/Sales % 5.8 9.7

PAT/Sales % 3.8 6.7

Return on Equity(PAT/Net Assets) % 5.3 9.3

Gearing (Net Debt/Net Assets) % ( 10.2) ( 21.7)

Shares on issue 000 66,774 66,774

Earnings per share cents 10.0 18.2

Dividend per share total cents 6.0 11.0

Dividend – total $’000 4,006 7,345

Dividend – payout ratio % 59.8 60.3

Net Tangible Assets per share $ 1.87 1.93

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National Can Industries – Annual Report 2008 3

Financial HigHligHts

180.7 180.4 182.0188.4

175.2

7.9

11.4

5.3

9.3

5.2

12.8

17.6

20.0

10.19.6

13.6

20.9

18.2

10.08.7

04 05 06 07 08

Sales($M)

Return on Equity(%)

Earnings per Share(cents)

EBIT($M)

0

50

100

150

200

04 05 06 07 08

04 05 06 07 08

0

2

4

6

8

10

12

0

5

10

15

20

25

04 05 06 07 080

5

10

15

20

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In 2007/08, trading conditions were difficult in many market segments and revenue was down 4% on last year at $177 million. Profit after tax declined by 45% to $6.7 million, although after excluding significant one-off items in each year, the comparable profit in 2007/08 was 3% down on last year.

Earnings per share were 10.0 cents per share while net tangible asset backing dipped to $1.87 per share due to the weaker currencies of overseas operations.

The industry continues to undergo rationalisation, nevertheless there is excess capacity in some segments; this combined with large increases in input costs, in particular raw materials, freight and energy, has resulted in margins being squeezed.

In New Zealand, unfavourable exchange rates affected exports and sales were down on last year however earnings recovered due to tighter control of operating costs. Also, manufacturing operations were further rationalised and consolidated.

The overall financial condition of the company remains steady with shareholders equity of $126 million and a net cash balance of almost $13 million.

Dividend

The final fully franked dividend for the year is 2.0 cents per share, making a total payout of 6.0 cents per share, compared to 10.0 cents per share last year.

Finally on behalf of the Board, I thank all employees for their commitment and contribution in 2007/08. The uncertain economic outlook will provide a challenging environment for employees and for the Company to achieve its growth objectives in 2008/09.

Brian Noxon Chairman

CHAIRMAN’S REVIEWF

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National Can Industries – Annual Report 2008 5

Review of operationsRevenue for the year ended June 30, 2008 was $177 million, 4% below the previous year. Profit after tax at $6.7 million, decreased 45% on last year although after excluding significant one-off items in each year, the comparable profit in 2008 was 3% below the previous year.

packaging – australiaPackaging – Australia comprises metal can and drum manufacturing, plastic injection moulding and metal sheeting and decoration operations. The business has 8 manufacturing plants and supplies metal and plastic packaging products and services for application in paint, chemical, aerosol, industrial and food packaging markets.

Demand for metal and plastic packaging was generally flat across major segments with sales revenues falling marginally to $131 million. Last year’s changes to imported tinplate supply saw the remaining sheeting volumes move offshore. Cost pressures emerged for key inputs including raw materials, freight and energy. Escalating commodity prices particularly impacted on global steel prices with a significant price increase advised for tinplate late in the 2nd Half. Operating costs were also higher from the implementation of a new ERP system.

packaging – New zealandPackaging – New Zealand comprises metal can, drum and closure manufacturing and metal decoration operations. The business has 3 manufacturing plants and supplies metal and plastic packaging products and services for application in paint, chemical, aerosol, industrial and food packaging markets.

Sales revenues declined 14% to $37 million, reflecting the withdrawal from selected export markets made unprofitable by the strong local currency. Earnings recovered after the difficulties of the previous year with operating costs coming under improved control. One-off costs associated with the closure of a manufacturing site and consolidation of operations at an existing company site totalled $1.4 million after tax.

packaging - pNgPackaging – Papua New Guinea comprises a steel can, drum and closure manufacturing plant located in Lae, PNG. The business supplies metal packaging products for application in paint, petroleum, chemical, industrial and food packaging markets.

Sales revenue increased 30% as a surge in mining and exploration activity boosted demand for petroleum drums. Earnings improved as a result of the higher volume despite a strong rise in distribution costs.

packaging - FijiPackaging – Fiji comprises a steel can and drum manufacturing plant located in Suva, Fiji. The business supplies metal packaging products for application in paint, chemical and industrial packaging markets.

Sales and earnings were lower than the previous year, reflecting continued sluggish post-coup economic activity.

occupational health & safetyTargeted reductions in lost-time accidents and injury rates were achieved for the year, building on the sustained improvement in the company’s overall OH&S performance in recent years.

Review of Financial conditionThe overall financial position of the company remained strong. Net working capital increased $6 million as the creditors level returned to normal after the transition to imported tinplate purchases on extended payments terms was completed during the year.

Forward outlookMarket conditions look uncertain with forecasts of a slowdown in Australia and deteriorating conditions already evident in New Zealand. Significant raw material price increases for tinplate and plastic resin have been advised which could impact demand for some products and place pressure on margins. The benefits from recent capital expenditure and plant rationalisations are expected to counter some of the downside risks however Directors do not expect an improvement in 2009 earnings from the 2008 level.

Michael Tyrrell Managing Director

MANAGING DIRECTOR’S REVIEWF

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The Directors present this report on the consolidated entity consisting of National Can Industries Limited and the entities it controlled at the end of, or during, the year ended June 30, 2008.

directorsThe following persons were directors of National Can Industries Limited during the whole of the financial year and up to the date of this report:-

R. K. Horsburgh

E. B. Noxon

T. X. O’Brien

R. G. Pitcher

M. W. Tyrrell

principal activitiesDuring the year the principal continuing activities of the group consisted of the manufacture and sale of packaging products and services including metal cans, drums and pails, plastic containers, plastic pails, caps and closures, tinplate and aluminium sheeting and decoration, machine equipment and tooling. These products are manufactured in plants throughout Australia, New Zealand, Papua New Guinea and Fiji and are sold for use in a range of markets including paint, aerosol, food, chemical and beverage industries, wholesale merchants, and to export markets in a number of countries.

There were no significant changes in the nature of the activities of the consolidated entity during the year.

consolidated results and dividendsThe consolidated profit for the year attributed to the members of National Can Industries Limited was:

2008 2007

$’000 $’000

Net profit after income tax 6,702 12,177

Earnings per share Cents per share

Basic earnings per share Diluted earnings per share is not different from basic earnings per share

10.0 18.2

Number

Weighted average number of Ordinary Shares on issue used in the calculation of basic earnings per share 66,773,572

dividends

Dividends paid to members during the financial year were as follows: $’000sFinal ordinary fully franked dividend for the year ended June 30, 2007 of 7.0 cents per share paid on October 26, 2007 4,674

Interim ordinary fully franked divided for the year ended June 30, 2008 of 4.0 cents per share paid on April 24, 2008 2,671

7,345

In addition to the above dividends, since the end of the financial year, the directors have declared a final ordinary fully franked dividend of 2 cents per share ($1,335,471) to be paid on October 30, 2008 out of retained profits at June 30, 2008.

Review of operationsA review of operational performance is included on page 5.

significant changes in the state of affairsIn the opinion of Directors, there were no significant changes in the state of affairs of the consolidated entity that occurred during the financial year under review not otherwise disclosed in this report or the consolidated accounts.

significant events after the balance dateThere has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the consolidated entity, the results of these operations, or the state of affairs of the consolidated entity, in subsequent financial years.

Likely developmentsThese are summarised in the Managing Director’s Review on page 5.

environmental regulationThe consolidated entity’s operations are conducted under a wide variety of environmental protection acts and regulations. National Can Industries Limited has in place an environmental policy to ensure its operating divisions comply fully with all applicable regulations. Relevant environmental licences and permits are held at the Company’s manufacturing sites and monitoring procedures are in place to ensure compliance with licence conditions. Over the past year there have been no material breaches of the Company’s licence conditions and the consolidated entity did not experience any significant environmental incident.

The Company has in place environmental management systems designed to minimise pollution and environmental impairment risk. Regular audits are conducted at Company sites and any major environmental risks identified are reported to the consolidated entity’s Board as part the Company’s risk management program, along with other key environmental matters. During the year, no breaches of environmental regulation or legislation were reported and no major non-conformances were advised.

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National Can Industries – Annual Report 2008 7

DIRECTORS’ REPORT

Information on DirectorsE. B. NOXON, BSc, FIEAust, FAIM(Non-executive Chairman)

ExperienceIndependent non-executive director for 8 years and Chairman since January 2005. Mr. Noxon has extensive experience in manufacturing industries.

Other current directorships Non-executive chairman of Lemarne Corporation Limited (director since 1979).

Former directorships in last 3 yearsNone.

Special responsibilitiesChairman of the Board Chairman of Remuneration Committee Member of Audit Committee

Interest in shares and options40,000 ordinary shares in National Can Industries Limited

R. K. HORSBURGH, AM, B. Eng (Chem.), FAICD(Non-executive Director)

ExperienceIndependent non-executive director since November 2006. Mr. Horsburgh is the former managing director and CEO of Smorgon Steel Ltd. and has extensive experience in steel, transport and glass industries.

Other current directorships Non-executive chairman of Toll Holdings Ltd. (director since 2004) and Traffic Technologies (director since 2006).

Non-executive director of CSR Ltd. (director since 2006)

Former directorships in last 3 yearsManaging director of Smorgon Steel Ltd. from 1998 to 2007.

Special responsibilitiesMember of Remuneration Committee Member of Audit Committee

Interest in shares and options11,220 ordinary shares in National Can Industries Limited.

T. X. O’BRIEN, FCPA, (Non-executive Director)

ExperienceIndependent non-executive director since November 2004. Mr. O’Brien is currently managing director of Simplot Australia Pty Ltd and has extensive experience in food and textile manufacturing industries.

Other current directorships None.

Former directorships in last 3 yearsNone.

Special responsibilitiesMember of Remuneration Committee Member of Audit Committee

Interest in shares and options60,000 ordinary shares in National Can Industries Limited.

R. G. PITCHER, AM, FCA, FCPA(Non-executive Director)

ExperienceIndependent non-executive director for 14 years. Mr. Pitcher is founder and former principal partner of accounting and advisory firm, Pitcher Partners and has extensive experience in manufacturing industries.

Other current directorships Non-executive chairman of Cellestis Limited (director since 2001) and McMillan Shakespeare Limited (director since 2004).

Non-executive director of Reece Australia Limited (director since 2003).

Former directorships in last 3 yearsNon-executive director of Capral Aluminium Limited from 2001 to 2007.

Special responsibilitiesChairman of Audit Committee Member of Remuneration Committee

Interest in shares and optionsNone.

M. W. TYRRELL(Managing Director)

ExperienceManaging director since 2000 and executive director for 21 years. Mr. Tyrrell has extensive experience in metal and plastic packaging industries.

Other current directorships None.

Former directorships in last 3 yearsNone.

Special responsibilitiesManaging Director

Interest in shares and options33,538,906 ordinary shares in National Can Industries Limited

Company SecretaryThe company secretary is Mr. M.R. McDonald who was appointed to the position of company secretary in 2000. Mr. McDonald is also Chief Financial Officer. Mr. McDonald has held senior accounting and finance positions during more than 25 years service with the company.

Left to Right: Terry O’Brien – Director , Ron Pitcher – Director, Ray Horsburgh – Director, Brian Noxon – Chairman and

Michael Tyrrell – Managing Director.

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meetings of directorsThe number of meetings of the company’s board and of each board committee held during the year ended June 30, 2008, and the numbers of meetings attended by each director were:

Director

Board oF directorsMeetings

audit coMMittee Meetings

reMuneration coMMittee Meetings

Held (a)

attended(b)

Held(a)

attended(b)

Held(a)

attended(b)

R.K. Horsburgh 10 9 3 2 2 2

E.B. Noxon 10 9 3 2 2 2

T.X. O’Brien 10 9 3 3 2 2

R.G. Pitcher 10 10 3 3 2 2

M.W.Tyrrell 10 10 - - - -

(a) = Number of meetings held during the time the director was a member of the board/committee during the year

(b) = Number of meetings attended

Remuneration reportThe remuneration report is set out under the following main headings:

A Remuneration policy

B Company performance and shareholder wealth

C Details of remuneration

D Service agreements

E Additional information

a Remuneration policy (audited)The Remuneration Committee reviews and sets the salary of the managing director and provides broad guidelines to the managing director for executive salary setting within the National Can Group. Incentive plans for senior executives operate on the basis of achievement of set annual targets directly relating to the performance of the company and executives.

Executive RemunerationNCI’s executive remuneration policy is designed to ensure that remuneration packages:-

• are commensurate with the responsibilities and duties ofsenior executives;

• encourage and recognise the achievement of corporateobjectives and targets

• attractandmaintaintherightpersonnel foreachroleandare market competitive

In applying the remuneration policy, the Remuneration Committee also gives due consideration to the overall performance of the consolidated entity including the level of earnings and growth in shareholder wealth over financial periods.

Remuneration packages are composed of two elements:-

1. Guaranteed Pay

Base remuneration is determined by the executive’s experience, knowledge and individual performance in the role. Packages are reviewed annually with the aim of:-

• maintainingcompetitivenessinlinewithmarketrates

• recognising changes in an executive’s overall value to thecompany, be it through the acquisition of relevant skills and knowledge, or relevant experience in role

• motivatinghigherlevelsofperformance

2. Performance Pay

A discretionary incentive payment system (Performance Pay) operates for certain executives with payments dependent on achievement of short-term individual Key Performance Indicators (KPIs). The maximum level of Performance Pay is based on a percentage of the executive’s total remuneration package and is not greater than 25% for any of the company’s executives. KPIs are set annually and are based on and aligned to individual and company performance targets. Targets vary according to the role and areas of responsibility of the individual executive whilst directed towards attainment of common corporate goals such as growth in earnings and shareholder wealth, achievement of workplace safety, working capital and customer service targets. Performance against the KPIs is assessed annually and recommendations for payments determined following the end of the respective financial year.

The Remuneration Committee assesses and approves any Performance Payments for the Managing Director and ratifies the Managing Director’s assessments of Performance Pay for senior executives. In approving Performance Payments for the company’s senior management, consideration is given to the affordability of the payments, relative to the annual targets of the company.

NCI does not offer equity-based remuneration to executives or directors.

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National Can Industries – Annual Report 2008 9

DIRECTORS’ REPORT

Director RemunerationNon-executive directors are remunerated only by way of directors’ fees in the form of cash and superannuation. Apart from annual superannuation contributions, NCI does not provide any other retirement benefits to non-executive directors.

Non-executive directors do not receive equity-based remuneration nor participate in bonus or incentive schemes.

The fees payable to non-executive directors are reviewed annually and recommended by the Remuneration Committee and approved by the Board within the aggregate amount approved by shareholders. The maximum currently stands at $500,000 per annum and was approved by shareholders at the Annual General Meeting on October 24, 2006. Directors’ fees are not payable to executive directors.

Directors’ fees are set having regard for the size of the company, the time requirement of directors and market levels for comparable boards. The current base remuneration was set with effect from July 1, 2005 having previously remained unchanged since July 1 2000. The Chairman’s remuneration is inclusive of committee fees while non-executive directors who chair a committee receive additional yearly fees.

The following fees have applied during the year:-

Base feeChairman $ 120,000

Other non-executive directors $ 55,000

Additional feesAudit committee chairman $ 10,000

b company performance and shareholder wealth (audited)The table below sets out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the 5 years to June 30, 2008:

2008 2007 2006 2005 2004

Net profit after tax ($’000s) 6,702 12,177 13,939 9,099 5,834

Earnings per share (cents) 10.0 18.2 20.9 13.6 8.7

Share price at start of year ($) 1.75 1.89 1.49 1.49 1.34

Share price at end of year ($) 1.60 1.75 1.89 1.49 1.49

Interim dividend per share (cents) 4.0 4.0 4.0 3.0 2.5

Final dividend per share (cents) 2.0 7.0 6.0 3.5 3.0

Total dividend per share (cents) 6.0 11.0 10.0 6.5 5.5

c details of remuneration (audited)Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of National Can Industries Limited and the consolidated entity are set out in the tables on page 10.

The key management personnel of the consolidated entity includes the directors as per page 7 and the following executive officers who report directly to the managing director:-

M. McDonald – Chief Financial Officer

P. Sloane – Chief Operating Officer (appointed 16 July 2007)

d service agreements (audited)Remuneration and other terms of employment for the Managing Director and the specified executives are formalised in service agreements. The major provisions of these agreements are common for these employees and provide for:-

•nodefinedtermofemployment

•one(1)month’snoticeoftermination

•nodesignatedpaymentsuponterminationotherthanforredundancy

•provisionofperformance-relatedcashbonuses

e additional information – unaudited Details of remuneration: cash bonuses

For each cash bonus included in the tables on page 10, the percentage of the available bonus that was paid in the financial year, and the percentage that was forfeited because performance criteria was not met, is set out below. No part of the bonuses is payable in future years.

Name

Cash bonus

Paid % Forfeited %

M. Tyrrell 0% 100%

P. Sloane 32% 68%

M. McDonald 48% 52%

M. Robins 100% 0%

J. Harrigan 93% 7%

G. Chuter 75% 25%

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key management personnel of the consolidated entity

PrimaryPost-

emPloymentlong-term benefits

equity

Cash salary and fees

Cash bonus

non-monetarybenefits

superannuation long service leave

options total

2008 $ $ $ $ $ $ $

Non-executive directorsE.B. NoxonChairman

120,000 - - 13,200 - - 133,200

R. K. Horsburgh 55,000 - - 6,050 - - 61,050

T. X. O’Brien 55,000 - - 6,050 - - 61,050

R.G. Pitcher 65,000 - - 7,150 - - 72,150

executive directorM. W. TyrrellManaging director

340,400 - - 37,646 19,975 - 398,021

other key management personnelP. Sloane(appointed 16/7/07)

317,913 30,000 - 34,835 5,339 - 388,087

M. McDonald 184,617 30,000 - 43,205 4,588 - 262,410

other highest paid executivesM. Robins 143,211 50,674 18,195 15,495 2,621 - 230,196

G. Chuter 107,530 29,968 38,683 11,861 2,255 - 190,297

2007

Non-executive directorsE.B. NoxonChairman

120,000 - - 13,200 - - 133,200

J.M. Bertei(from 1/7/2006 to 29/3/2007)

41,250 - - 4,538 - - 45,788

R. K. Horsburgh(appointed 23/11/2006)

33,377 - - 3,671 - - 37,048

T. X. O’Brien 55,000 - - 6,050 - - 61,050

R.G. Pitcher 65,000 - - 7,150 - - 72,150

executive directorM. W. TyrrellManaging director

281,076 - - 30,712 6,899 - 318,687

other key management personnelM. McDonald 180,232 36,504 - 42,766 5,479 - 264,981

M. Robins 133,315 45,000 23,464 14,565 2,834 - 219,178

J. McCormack 157,208 - 15,831 15,721 - - 188,760

J. Harrigan 108,106 32,999 18,872 11,733 3,357 - 175,067

other highest paid executiveG. Chuter 106,206 32,980 36,476 11,454 1,684 - 188,800

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National Can Industries – Annual Report 2008 11

DIRECTORS’ REPORT

insurance of officersIn accordance with Clause 166 of the company’s constitution, the Company has entered into agreements to indemnify all directors of the Company and current and former executive officers of the Company and its controlled entities against all liabilities to persons (other than the Company or a related body corporate) which arise out of the performance of their normal duties as a director or executive officer unless the liability relates to conduct involving a lack of good faith. The Company has agreed to the indemnity of the directors and executive officers against all costs and expenses incurred in defending an action that falls within the scope of the indemnity and any resulting payments. During the financial year a related body corporate paid insurance premiums in respect of directors’ and officers’ liability insurance. The insurance contract prohibits disclosure of the premium paid. The policies do not specify separate premiums for directors or officers either individually or by a group.

Non-audit servicesThe company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the company or the consolidated entity are important.

Details of the amounts paid or payable to the auditor (Grant Thornton) for audit and non-audit services provided during the year are set out below.

The Board of Directors has considered the position and, in accordance with the advice received from the Audit Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:-

• all non-audit services have been reviewed by the AuditCommittee to ensure they do not impact the impartiality and objectivity of the auditor

• none of the services undermine the general principlesrelating to auditor independence as set out in Professional Statement F1, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

CONSOLIDATED2008 2007

$ $

assurance services – auditGrant Thornton Australian firm:

Audit and review of financial reports and other audit work under the Corporations Act 2001 120,000

Non-Grant Thornton audit firms 45,619 278,616 Total remuneration for assurance services 165,619 278,616

Taxation servicesGrant Thornton Australian firm 44,250 32,930

Non-Grant Thornton firms 18,596 13,935Total remuneration for taxation services 62,846 46,865

Brian NoxonChairman

Michael TyrrellManaging Director

Melbourne – September 9, 2008

auditor’s independence declarationA copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 12.

Rounding of amountsThe company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission, relating to ‘rounding off’ of amounts in the directors’ report. Amounts in the directors’ report have been rounded off in accordance with that Class Order to the nearest thousand dollars in accordance with that Class Order, or in certain cases, to the nearest dollar.

This report is made in accordance with a resolution of directors.For

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auditoR’s iNdepeNdeNce decLaRatioN

to the directors of National can industries LimitedIn accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of National Can Industries Limited for the year ended 30 June 2008, I declare that, to the best of my knowledge and belief, there have been:

• Nocontraventionsoftheauditorindependencerequirementsofthe Corporations Act 2001 in relation to the audit; and

• Nocontraventionsofanyapplicablecodeofprofessionalconductin relation to the audit.

GRANT THORNTON Chartered Accountants

D. A. AshmorePartner

Melbourne, September 9, 2008

ABN 13 871 256 387Level 2, 215 Spring StreetMelbourne, Victoria 3000

Liability limited by a scheme approved under Professional Standards legislation.

AuDITOR’S INDEPENDENCE DEClARATION F

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National Can Industries – Annual Report 2008 13

CORPORATE GOVERNANCE

The board of National Can Industries Limited recognises the need for the governance of the company to be maintained at standards acceptable to community expectations and in accordance with the requirements of the Australian Stock Exchange’s Principles of Good Corporate Governance and Best Practice Recommendations.

A description of the Company’s main corporate governance practices is set out below. All these practices, unless otherwise stated, were in place for the entire year.

the board of directorsThe NCI Board is accountable to shareholders for the performance of the Company.

The Board operates in accordance with the principles outlined in the Board Charter which is available upon request from the registered office. The charter describes the Board’s composition, functions and responsibilities and designates authority reserved to the Board and that delegated to management.

Board MembersDetails of the members of the Board, their experience, expertise, qualifications, term of office and independent status are set out in the Directors’ Report under the heading “Information on directors”. There are four (4) non-executive directors, all of whom are deemed independent under the principles set out below, and one (1) executive director at the date of signing the Directors’ Report. The Board keeps under review the balance of skills and experience of its Members, their independence and access to advice and information.

Board ResponsibilitiesThe Board prescribes the respective roles and responsibilities of Board and Management.

The Board is generally responsible for business strategies of the Company, overseeing the management of the Company, setting the values and standards of the Company to uphold in dealings with all stakeholders and acting as custodian of the Company’s shareholders’ interests.

The Board’s functions as set out in the Board Charter are summarized as follows:

• settingthestrategicdirectionoftheCompanyandapprovingits Business Plans, objectives and financial budgets

• reviewing and evaluating the operational and financialperformance of the Company

• overseeing the management of the Company’s capitalincluding approval of major capital expenditure projects, acquisitions and divestments

• overseeingoftheCompany’sriskmanagementandinternalcontrol systems

• ensuring the Company provides reliable and timelydisclosures to shareholders and the financial market of matters materially affecting the Company

• selecting, appointing and where appropriate removing theManaging Director

• annuallyreviewingtheperformanceandeffectivenessoftheBoard, its committees and individual directors

The Board delegates to the Managing Director the authority and power to manage the Company and its businesses within levels of authority specified by the Board from time to time.

Directors’ IndependenceAs part of the Board Charter, the Board has set out specific principles in relation to directors’ independence. These accord directly with the Australian Stock Exchange’s principles of Good Governance and Best Practice Recommendations with one exception as disclosed below.

The Board does not assess the independence of directors based on the length of a director’s service on the Board which is a departure from Principle 2 of the ASX’s Principles of Good Corporate Governance and Best Practice Recommendations. The Board does not believe that the tenure of a director can materially interfere with the director’s ability to act in the best interests of the Company or that arbitrary limits of tenure are appropriate.

No non-executive director of the Board had during the year any association or relationship with the Company that required materiality assessments of the above independence criteria. Should this situation change in the future, materiality thresholds would be determined.

Independent professional adviceIndividual directors may obtain independent professional advice in relation to their Board and Committee duties and responsibilities, with the costs borne by the Company, subject to prior consultation with and approval by the Chairman. The Board’s policy requires all Directors to be provided with a copy of such advice and to be notified if the Chairman’s approval is withheld.

Performance assessmentThe Board has adopted a formalised and structured process of assessing the performance of the Board, its committees and directors.

Evaluation of Board performance is assessed annually in terms of:-

• thecurrentanddesiredlevelofBoardengagementineacharea of functional responsibility

• thelevelofexpertiseineachareaoffunctionalresponsibility

The Chairman has responsibility for evaluating the performance of individual directors on an ongoing basis.

The charter of each Board committee requires the Committee to evaluate the Committee’s own performance, both of individual members and collectively on an annual basis.

During the reporting period, performance assessments were undertaken in accordance with the designated process summarised above.

Selection and appointment of new directors The Board is responsible for making appointments of directors to the Board. The Board undertakes this process through the application of policies and procedures covering the selection and appointment of new directors including engagement of appropriate recruitment consultants to assist in identifying individuals with the requisite skills and experience.

In accordance with the Company’s constitution, a director appointed in the period since the previous annual general meeting can hold office only until the conclusion of the next following annual general meeting of the Company and shall be eligible for election at that meeting.

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CORPORATE GOVERNANCE

Statements from Management The Managing Director and Chief Financial Officer have made the following statements to the Board:-

• that the company’s financial reports are complete andpresent a true and fair view, in all material respects, of the financial condition and operational results of the company and are in accordance with relevant accounting standards

• thattheabovestatementisfoundedonasoundsystemofriskmanagement and internal compliance and control and which implements the policies adopted by the board and that the company’s risk management and internal compliance and control is operating efficiently and effectively in all material respects.

board committeesThe Board has in place two (2) committees being the Remuneration Committee and the Audit Committee. Each Committee is comprised solely of non-executive directors and operates under a written charter, which has been approved by the Board. Copies of these charters are available upon request from the Company’s registered office.

Remuneration Committee The Committee consists of the following non-executive directors:

e b Noxon (Chairman)

R k horsburgh

t x o’brien

R g pitcher

Details of these directors’ attendance at committee meetings are set out in the Directors’ Report on page 8.

Audit CommitteeThe Committee consists of the following non-executive directors:

R g pitcher (Chairman)

R k horsburgh

e b Noxon

t x o’brien

Details of these directors’ qualifications and attendance at committee meetings are set out in the Directors’ Report on pages 7 and 8.

The committee has the appropriate financial expertise and all members are financially literate.

Risk managementThe Board oversees the Company’s risk management and internal control systems. Key financial, business and operational risks are assessed, identified and reviewed by the Board in conjunction with management. A range of policies and procedures have been adopted, as appropriate, to eliminate, manage or ameliorate the impact of these identified risks. The effectiveness of these risk management policies is reviewed by the Board on an ongoing basis.

The Board monitors the effectiveness of the Company’s internal control system through oversight and review of the internal and external audit programs. The effectiveness of monitoring compliance with laws and regulations is also regularly assessed by the Board.

Information on compliance with significant environmental regulations is set out in the Directors’ Report.

external auditorsThe Audit Committee has responsibility for the selection and appointment of the external auditors of the Company. The Committee annually makes recommendations to the Board for the appointment, reappointment or termination of the external auditor, having consideration for the independence and performance of the external auditor.

Grant Thornton was appointed as the external auditor of the company in 2007 following a tender process. It is Grant Thornton’s policy to rotate audit engagement partners on listed companies at least every five (5) years. A declaration of independence has been provided by Grant Thornton to the Audit Committee, stating that independence has been maintained during the reporting period in accordance with applicable provisions of the Corporations Act and relevant professional standards.

Remuneration policiesThe Remuneration Committee is responsible for the application and review of the Company’s remuneration policies. Policies are set out in the Remuneration Report of the Directors’ Report on pages 8 and 9.

code of conductThe Company has in place a Code of Conduct which expresses the values of NCI and the standards by which business is required to be conducted by the Company and its employees. The Code applies to all directors and employees so that all stakeholders can have confidence in the Company’s integrity and ethics in all business dealings.

The Code requires company personnel, among other things, to act with integrity and honesty in all business dealings at all times and to comply with company policies and procedures and the law.

Compliance with the Code is monitored by the Board and senior management on an ongoing basis.

The Company has also in place policies and procedures covering the purchase and sale of company shares. Prior to dealing in the company’s shares, a director or senior manager must be satisfied that he or she is not in possession of any price sensitive information and notify the Chairman of the Board accordingly. No transactions can be undertaken without acknowledgment of the notification by the Chairman.

A copy of the Code of Conduct and share trading policy is available upon request from the registered office of the Company.

disclosure management and shareholder communicationThe Company has in place policies and procedures to ensure that NCI manages the disclosure of price sensitive information effectively and in accordance with the requirements as set out by regulatory bodies. All market disclosures are approved by the Board. The Company Secretary is authorised to release approved disclosures to the Australian Stock Exchange (ASX) and is the appointed person responsible for communications with the ASX.

The Company also has adopted a Communication Strategy to provide information to shareholders about the company in a timely and effective manner. All announcements made to the ASX, including annual and half-year financial reports and information regarding general meeting notices and voting results, are placed on the Company’s web site immediately after public release.

The format of general meetings aims to encourage shareholders to actively participate in the meeting through being invited to comment or raise questions of directors and the Company’s auditors on any matter relevant to the performance and operation of the Company.

A copy of the Disclosure Management policy and Communication Strategy is available upon request from the registered office of the Company.

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National Can Industries – Annual Report 2008 15

FINANCIAl REPORT

National Can Industries Limited and its Controlled Entities

directorsE. Brian Noxon

Chairman

Ray K. Horsburgh

Terry X. O’Brien

Ronald G. Pitcher

Michael W. TyrrellManaging Director

secretary and Registered officeMark R. McDonald

National Can Industries Limited24 Groom Street,

Clifton Hill Victoria 3068 Telephone: (03) 9276 9600 Telefax: (03) 9489 3701

auditorsGrant Thornton

Ross Melville P.K.F.

bankersCommonwealth Bank of Australia

Bank of New Zealand

solicitorsRussell Kennedy

Simpson Grierson

share RegistryComputershare Investor Services Pty. Ltd.

Yarra Falls, 452 Johnston StreetAbbotsford VIC 3067

Telephone: Inside Australia 1300 850 505 Outside Australia (613) 9415 4000

stock exchangeThe Company is listed on the

Australian Stock Exchange.The Home Exchange is Melbourne.

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FIVE YEAR FINANCIAl SuMMARY yeaR eNded JuNe 30, 2008

Financial Data

2008 2007 2006 2005 2004

Sales Revenue $ 000 175,180 182,003 188,410 180,414 180,730

Earnings before interest, tax, depreciation and amortisation (EBITDA)

$ 000 19,590 26,743 29,117 22,607 20,524

Earnings before interest and tax (EBIT) $ 000 10,112 17,588 20,000 12,830 9,567

Net profit before tax (PBT) $ 000 10,034 17,511 19,938 12,626 9,050

Net profit after tax (PAT) $ 000 6,702 12,177 13,939 9,099 5,834

Current Assets $ 000 77,894 94,315 80,404 71,258 61,034

Property incl. investment, plant & equipment $ 000 67,433 63,372 61,149 60,496 66,878

Intangibles $ 000 1,521 1,535 1,506 1,542 1,553

Other Non-current Assets $ 000 5,216 5,100 5,099 4,872 4,822

Total Assets $ 000 152,064 164,322 148,158 138,168 134,287

Current Liabilities $ 000 24,051 31,080 21,890 18,181 17,156

Non-current Liabilities $ 000 1,524 2,793 3,523 3,712 5,122

Total Liabilities $ 000 25,575 33,873 25,413 21,893 22,278

Issued Capital $ 000 33,699 33,699 33,699 33,699 33,699

Reserves $ 000 2,818 6,135 3,929 6,387 6,883

Retained Profits $ 000 89,972 90,615 85,117 76,189 71,427

Total Shareholders’ Equity $ 000 126,489 130,449 122,745 116,275 112,009

Depreciation and amortisation expense $ 000 9,478 9,155 9,117 9,777 10,957

Interest expense $ 000 78 77 62 204 517

Income tax $ 000 3,332 5,334 5,999 3,527 3,216

Performance Ratios & Statistics

EBIT/Sales % 5.8 9.7 10.6 7.1 5.3

PAT/Sales % 3.8 6.7 7.4 5.0 3.2

Return on Equity (PAT/Net Assests) % 5.3 9.3 11.4 7.8 5.2

Gearing (Net Debt/Net Assets) % ( 10.2) ( 21.7) ( 22.9) ( 2.4) ( 5.8)

Shares on issue 000 66,774 66,774 66,774 66,774 66,774

Earnings per share cents 10.0 18.2 20.9 13.6 8.7

Dividend per share total cents 6.0 11.0 10.0 6.5 5.5

Dividend – total $ 000 4,006 7,345 6,677 4,340 3,673

Dividends payout ratio % 59.8 60.3 47.9 49.7 63.0

Net Tangible Assets per share $ 1.87 1.93 1.82 1.72 1.65

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National Can Industries – Annual Report 2008 17

INCOME STATEMENTS FoR the yeaR eNded JuNe 30, 2008

CONSOLIDATED PARENT ENTITY

Notes 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Revenue from continuing operations 2 176,572 183,980 7,897 7,229

Other income 2a 536 5,465

Changes in inventories of finished goods and work in progress 2,468 3,610

Raw materials and consumables used ( 74,961) ( 84,689)

Employee benefits expense ( 49,429) ( 47,991) ( 325) ( 349)

Depreciation and amortisation expenses 3 ( 9,478) ( 9,155)

Finance costs 3 ( 78) ( 77)

Distribution expense ( 9,737) ( 8,698)

Repairs and maintenance of property, plant and equipment ( 6,502) ( 6,169)

Insurance ( 2,387) ( 2,652)

Rental expense relating to operating lease payments 3 ( 2,996) ( 3,083)

Other expenses ( 13,974) ( 13,030) ( 88) ( 97)

Profit before income tax expense 3 10,034 17,511 7,484 6,783

Income tax expense 4 ( 3,332) ( 5,334) ( 42) ( 32)

Net profit attributable to members of NCI 19b 6,702 12,177 7,442 6,751

Cents

Basic earnings per share 20 10.0 18.2

Diluted earnings per share 20 10.0 18.2

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

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BAlANCE SHEETS as at JuNe 30, 2008

CONSOLIDATED PARENT ENTITY

Notes 2008 2007 2008 2007

assets $’000 $’000 $’000 $’000

Current assets

Cash and cash equivalents 6 12,883 28,294 592 484

Trade and other receivables 7 25,215 27,385 5,662 7,898

Inventories 8 39,227 37,988

Other 9 569 648

Total current assets 77,894 94,315 6,254 8,382

Non-current assets

Shares in controlled entities 28,287 28,287

Property, plant and equipment 10a 65,503 61,427

Investment properties 10b 1,930 1,945

Deferred tax assets 12 4,847 4,458 4 4

Intangible assets 11 1,521 1,535

Deferred technical agreement 369 642

Total non-current assets 74,170 70,007 28,291 28,291

Total assets 152,064 164,322 34,545 36,673

Liabilities

Current liabilities

Trade and other payables 13 12,040 19,202 17 17

Current tax liabilities 1,209 3,218 186 2,411

Provisions 14 10,802 8,660

Total current liabilities 24,051 31,080 203 2,428

Non-current liabilities

Deferred tax liabilities 16 874 1,786

Provisions 17 650 1,007

Total non-current liabilities 1,524 2,793

Total liabilities 25,575 33,873 203 2,428

Net assets 126,489 130,449 34,342 34,245

equity

Parent entity interest

Contributed equity 18 33,699 33,699 33,699 33,699

Reserves 19a 2,818 6,135

Retained profits 19b 89,972 90,615 643 546

Total equity 126,489 130,449 34,342 34,245

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

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National Can Industries – Annual Report 2008 19

CASH FlOW STATEMENTSFoR the yeaR eNded JuNe 30, 2008

CONSOLIDATED PARENT ENTITY

Notes 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Cash flows from operating activities

Receipts from trade and other debtors (Inclusive of GST) 195,146 200,656

Payments to trade and other creditors and employees (Inclusive of GST)

( 183,817) ( 184,199) ( 413) ( 465)

Income tax paid ( 6,820) ( 6,011) ( 31) ( 43)

Interest paid 3 ( 78) ( 77)

Interest received 2 1,196 1,444 552 552

Supplier contract termination settlement 2a 5,300

Dividends received 7,345 6,677

Net cash inflows from operating activities 29 5,627 17,113 7,453 6,721

Cash flows from investing activities

Payments for property, plant and equipment 10a ( 13,402) ( 10,377)

Proceeds from sale of property, plant and equipment 132 79

Payments for trademarks ( 31) ( 8)

Net cash outflows from investing activities ( 13,301) ( 10,306)

Cash flows from financing activities

Dividends paid 5 ( 7,345) ( 6,677) ( 7,345) ( 6,677)

Net cash outflows from financing activities ( 7,345) ( 6,677) ( 7,345) ( 6,677)

Net increase/(decrease) in cash held ( 15,019) 130 108 44

Cash at beginning of financial year 28,294 28,148 484 440

Effect of exchange rate change on cash ( 392) 16

Cash at end of the financial year 6 12,883 28,294 592 484

Financing arrangements 15

The above cash f low statements should be read in conjunction with the accompanying notes.

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NOTES TO THE FINANCIAl STATEMENTSSTATEMENTS OF CHANGES IN EquITYFoR the yeaR eNded JuNe 30, 2008

CONSOLIDATED PARENT ENTITY

Notes 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Total equity at the beginning of the financial year 130,449 122,745 34,245 34,171

Exchange differences on translation of foreign operations 19a ( 3,296) 2,204

Changes in value of cash flow hedge reserve 19a ( 21)

Net income recognised directly in equity ( 3,317) 2,204

Profit for the year 6,702 12,177 7,442 6,751

Total recognised income and expense for the year 3,385 14,381 7,442 6,751

Dividends provided for or paid 5 ( 7,345) ( 6,677) ( 7,345) ( 6,677)

Total equity at the end of the financial year 126,489 130,449 34,342 34,245

The above statements of changes in equity should be read in conjunction with the accompanying notes.

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National Can Industries – Annual Report 2008 21

NOTES TO THE FINANCIAl STATEMENTS

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. The financial report includes separate financial statements for National Can Industries Limited as an individual entity and the consolidated entity consisting of National Can Industries Limited and its subsidiaries.

a) Basis of preparation This general purpose financial report has been prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRSs), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Historical cost convention

These financial statements have been prepared under the historical cost convention.

Critical accounting estimates

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. There were no areas involving a higher degree of judgement or complexity, and no areas where assumptions and estimates were significant to the financial statements.

b) Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of National Can Industries Limited (‘’company’’ or ‘’parent entity’’) as at 30 June 2008 and the results of all subsidiaries for the year then ended. National Can Industries Limited and its subsidiaries together are referred to in this financial report as the Consolidated entity.

Subsidiaries are all those entities over which the Consolidated entity has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated entity. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Consolidated entity (refer to note 1(h)).

Intercompany transactions, balances and unrealised gains on transactions between Consolidated entity companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Consolidated entity.

c) Segment reportingThe consolidated entity operates in four geographical segments – Australia, New Zealand, Papua New Guinea and Fiji. Intersegment transactions are conducted on an arms length basis.

d) Foreign currency translation(i) Functional and presentation currency

Items included in the financial statements of the consolidated entity are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is National Can Industries Limited’s functional and presentation currency.

(ii) Transactions and balances

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

(iii) Consolidated entity companies

The results and financial position of the consolidated entity (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented aretranslated at the closing rate at the date of that balance sheet;

• incomeandexpensesforeachincomestatementaretranslatedat average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

• all resulting exchange differences are recognised as aseparate component of equity.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity.

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

e) Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. A sale is recorded when goods have been despatched and the associated risks passed to the customer. Interest income is recognised on a time proportion basis using the actual interest rate applicable to the deposit.

f) Income tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

1. summary of significant accounting policies

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NOTES TO THE FINANCIAl STATEMENTS

f) Income tax (cont) Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

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

National Can Industries Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.

g) Leases Controlled entities lease property and vehicles where all the risks and benefits of ownership are effectively retained by the lessor and thus these leases are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. Lease income from operating leases is recognised in income over the lease term.

h) Acquisitions of assetsThe purchase method of accounting is used to account 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 the assets given at the date of exchange plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Consolidated entity’s share of the identifiable net assets acquired is recorded as goodwill (refer to note 1(q)i). If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

i) Impairment of assetsAssets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of that impairment at each reporting date.

j) Cash and cash equivalentsCash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

k) Trade receivablesTrade accounts receivable are carried at amounts receivable at settlement. Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established

when there is objective evidence that the Consolidated entity will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is recognised in the income statement.

l) InventoriesRaw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the first in first out basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

m) DerivativesDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Consolidated entity designates certain derivatives as either; (a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or (b) hedges of highly probable forecast transactions (cash flow hedges).

The Consolidated entity documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Consolidated entity also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.

(i)Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

(ii) Cash f low hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.

Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability.

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

(iii) Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the income statement.

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NOTES TO THE FINANCIAl STATEMENTS

n) Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values.

o) Property, plant and equipmentThe consolidated entity has adopted the provisions available under AASB116, which allows the carrying value at 30 June 2004 under AGAAP to become the opening deemed cost for AIFRS at 1 July 2004.

All property, plant and equipment are stated at deemed cost less depreciation. Deemed cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Land is not depreciated.

Depreciation on other assets is calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives, as follows:

– Buildings 25-40 years

– Plant and equipment 3-12 years

– Vehicles 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(i)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.

p) Investment property Investment property, principally comprising freehold factory buildings and residential houses, is held for rental yields and is not occupied by the consolidated entity. Investment properties are carried using the cost model.

Depreciation on investment properties is calculated using the straight line method to allocate cost, net of residual value, over the estimated useful life of the asset.

q) Intangible assets (i) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Consolidated entity’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets.

Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units

represents the Consolidated entity’s investment in each country of operation by each primary reporting segment.

(ii) Patents designs and trademarks

Patents, trademarks and designs have a finite useful life and are carried at cost less accumulated amortisation and impaired losses. Amortisation is calculated using the straight line method to allocate the cost of patents, trademarks and designs over their estimated useful lives, which vary from 8 to 16 years.

(iii) Research and development

Expenditure on research and development activities, undertaken with the prospect of obtaining new technical knowledge and understanding, is recognised in the income statement as an expense when it is incurred.

r) Trade and other payablesThese amounts represent liabilities for goods and services provided to the Consolidated entity prior to the end of the year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

s) ProvisionsProvisions for claims are recognised when: the Consolidated entity has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

t) Employee benefits(i) Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for annual leave expected to be settled within 12 months of the reporting date are recognised in provisions in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iii) Prof it-sharing and bonus plans

The Consolidated entity recognises a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the profit attributable to the company’s shareholders after certain adjustments. The Consolidated entity recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

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NOTES TO THE FINANCIAl STATEMENTS

u) Contributed equityOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.

v) Dividends Provision is made for the amount of any dividend declared on or before the end of the year but not distributed at balance date.

w) Earnings per share(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

x) Rounding of amounts The company is of a kind referred to in Class order 98/0100, issued by the Australian Securities and Investments Commission, relating to the ‘’rounding off’’ of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

y) Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

z) New accounting standards and interpretationsThe following Australian Accounting Standards have been identified as those that may affect the Consolidated Entity in the initial period of application. These standards have been issued or amended and are applicable to the parent and Consolidated entity but are not mandatory for 30 June 2008 reporting periods. The standards have not been adopted in preparation of the financial statements at reporting date.

AASB amendment Application Date Application Date Of Standard for Entity

AASB 8 Operating Statements 1/1/2009 1/7/2009This amendment involves changes to segment reporting disclosures within the financial report. It will not impact the results of the Consolidated Entity.

AASB101 Presentation of Financial Statements 1/1/2009 1/7/2009This amendment requires the presentation of a statement of comprehensive income. The effect on the disclosures in the financial statements has not as yet been determined.

IFRS 3 Business Combinations & AASB3 1/1/2009 1/7/2009The revised standard introduces greater emphasis on the use of fair value through increasing the judgement and subjectivity around business combination accounting. Transaction costs will be required to be accounted for separately in the Income Statement rather than capitalised as is the current treatment.

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National Can Industries – Annual Report 2008 25

NOTES TO THE FINANCIAl STATEMENTS

2. RevenueCONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000Revenue from continuing operationsSale of Goods 175,085 181,845

Services 95 158

175,180 182,003 Other revenueRent received 55 54

Settlement discounts 86 413

Dividends received/receivable from controlled entities 7,345 6,677

Interest received from controlled entities 552 552

Interest received from other persons 1,196 1,444

Other revenues 55 66

1,392 1,977 7,897 7,229

176,572 183,980 7,897 7,229

2a. other incomeForeign exchange gains 492 165

Supplier contract termination settlement 5,300

Net gain on disposal property, plant and equipment 44 536 5,465

3. expensesProfit before income tax includes the following specific expenses:

Net loss on disposal property, plant and equipment 50

Net foreign exchange losses 52

Depreciation

Buildings 699 711

Plant and equipment 8,516 8,153

Total depreciation 9,215 8,864

Amortisation

Leasehold improvements 52 75

Patents and trademarks 6 8

Technical service fee 205 208

Total amortisation 263 291

Finance costs

Interest and finance charges paid/payable 78 77

Rental expense relating to operating lease payments 2,996 3,083

Research and development 412 255

Repairs and maintenance relating to investment properties 17 2

Bad debt expense 1 95

Superannuation contributions 2,840 2,707 33 35

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NOTES TO THE FINANCIAl STATEMENTS

4. income taxCONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000

a) Income tax expenseCurrent tax 3,790 5,755 42 32

Deferred tax ( 523) ( 320)

Under/(over) provided in prior years 65 ( 101)

3,332 5,334 42 32

Income tax expense is attributable to:

Profit from continuing operations 3,332 5,334 42 32

Deferred income tax revenue included in income tax expense comprises:

(Decrease)/increase in deferred tax assets 389 131

(Decrease) in deferred tax liabilities ( 912) ( 451)

( 523) ( 320)

b) Numerical reconciliation of income tax expense to prima facie tax payableProfit from continuing operations before income tax expense 10,034 17,511 7,484 6,783

Tax at the Australian tax rate of 30% (2007 30%) 3,010 5,253 2,245 2,035

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:

Depreciation and amortisation ( 7)

Rebateable dividends ( 2,203) ( 2,003)

Research and development ( 31) ( 23)

Sundry items 77 270

3,056 5,493 42 32

Difference in overseas tax rates 37 ( 58)

(Under)/over provision in prior years 65 ( 101)

Change in tax rates 174 Income tax expense 3,332 5,334 42 32

c) Tax consolidation legislation

National Can Industries Limited and its wholly-owned Australian controlled entities implemented the tax consolidation legislation as of 1 July 2003. The accounting policy in relation to this legislation is set out in note 1(f).

On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which, in the opinion of the directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, National Can Industries Limited.

The entities also entered into a tax funding agreement under which the wholly-owned entities fully compensate National Can Industries Limited for any current tax payable assumed and are compensated by National Can Industries Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to National Can Industries Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables (see note 7).F

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NOTES TO THE FINANCIAl STATEMENTS

5. dividendsCONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000Ordinary sharesFinal dividend for the year ended June 30, 2007

7.0 cents (2006 - 6.0 cents) per fully paid share

Fully franked based on tax paid @30% 4,674 4,006

Interim dividend for the year ended June 30, 2008 4.0 cents (2007 - 4.0 cents) per fully paid share

Fully franked based on tax paid @30% 2,671 2,671 Total dividends provided for or paid 7,345 6,677

Paid in cash in the current year 7,345 6,677

Dividends not recognised at year endIn addition to the above dividends, since the year end, the directors have declared a final dividend of 2 cents per fully paid ordinary share, fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on October 30, 2008 out of retained profits at June 30, 2008, but not recognised as a liability at year end is 1,335 4,674

Franked dividends

Franking credits available for subsequent financial years based on a tax rate of 30% (2007 - 30%) 7,226 6,970 7,226 6,970

The above amount represents the balance of the franking account as at the end of the financial year, adjusted for:

a. franking credits that will arise from the payment of the current tax liability

b. franking debits that will arise from the payment of dividends recognised as liability at the reporting date

c. franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date, and

d. franking credits that may be prevented from being distributed in subsequent financial years.

The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of controlled entities were paid as dividends.

6. current assets – cash and cash equivalents

CONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000

Cash at bank and in hand 4,923 4,506 592 484

Deposits at call 7,960 23,788 Balances per cash flow statements 12,883 28,294 592 484

a) Cash at bank and on handCash at bank is bearing floating interest rates of 2.16%. (2007 - 2.8%).

b) Deposits at callThe deposits are bearing floating interest rates of 6.58%. (2007 - 5.97%).

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NOTES TO THE FINANCIAl STATEMENTS

7. current assets – Receivables

CONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000

Trade receivables 25,254 26,871

Provision for impairment of receivables ( 176) ( 223)

25,078 26,648

Receivable from controlled entities 5,518 5,518

Other receivables 137 737 144 2,380

25,215 27,385 5,662 7,898

Provision for Impairment of ReceivablesCurrent trade receivables are non-interest bearing loans and generally on 30 day terms. Trade receivables are reviewed for impairment at balance date and a provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired. These amounts have been included in Other Expenses.

Movements in provision for doubtful receivables:Opening balance at 1 July 223 272

Charge for the year ( 1) ( 15)

Amounts written off ( 38) ( 47)

Net exchange differences ( 8) 13 Closing balance at 30 June 176 223 0 0

2008 ConsolidatedAged trade and other receivables Gross Impairment Net

$’000 $’000 $’000Not past due 24,630 - 24,630Past due 1 - 30 days 579 - 579Past due 31 - 60 days 51 (45) 6Past due 61 days or more 131 (131) 0Total 25,391 (176) 25,215

2007 ConsolidatedAged trade and other receivables Gross Impairment Net

$’000 $’000 $’000Not past due 26,777 - 26,777Past due 1 - 30 days 345 - 345Past due 31 - 60 days 209 (77) 132Past due 61 days or more 277 (146) 131Total 27,608 (223) 27,385

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National Can Industries – Annual Report 2008 29

NOTES TO THE FINANCIAl STATEMENTS

8. current assets – inventories

CONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000

Raw materials and stores – cost 17,634 19,404

Raw materials and stores – NRV 794 253

Work in progress – cost 11,457 11,314

Work in progress – NRV 1,606 1,009

Finished goods – cost 5,238 4,785

Finished goods - NRV 2,498 1,223

39,227 37,988 Inventory expenseWrite-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2008 amounted to $152,688 (2007 $48,222). This expense was included in “raw materials and consumables used” in the income statement.

9. current assets – otherPrepayments 569 648

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10a. Non-current assets – property, plant and equipment

Freehold land

Buildingsleasehold

improvementsPlant &

equipment

Plant & equipment

in course of construction

total

consolidated $’000 $’000 $’000 $’000 $’000 $’000

At 30 June 2006Cost 8,614 19,365 976 133,575 8,247 170,777 Accumulated depreciation ( 5,414) ( 681) ( 105,493) ( 111,588)Net book amount 8,614 13,951 295 28,082 8,247 59,189

Year ended 30 June 2007Opening net book amount 8,614 13,951 295 28,082 8,247 59,189 Additions 198 79 10,839 ( 739) 10,377 Disposals ( 132) ( 132)Depreciation charge ( 696) ( 75) ( 8,153) ( 8,924)Exchange differences 150 303 2 307 155 917 Closing net book amount 8,764 13,756 301 30,943 7,663 61,427

At 30 June 2007Cost 8,764 19,966 1,072 143,677 7,663 181,142 Accumulated depreciation ( 6,210) ( 771) ( 112,734) ( 119,715)Net book amount 8,764 13,756 301 30,943 7,663 61,427

Year ended 30 June 2008Opening net book amount 8,764 13,756 301 30,943 7,663 61,427 Additions 58 59 8,626 5,907 14,650 Disposals ( 86) ( 86)Depreciation charge ( 684) ( 52) ( 8,516) ( 9,252)Exchange differences ( 202) ( 316) ( 5) ( 701) ( 12) ( 1,236)Closing net book amount 8,562 12,814 303 30,266 13,558 65,503

At 30 June 2008Cost 8,562 19,517 1,108 143,616 13,558 186,361 Accumulated depreciation ( 6,703) ( 805) ( 113,350) ( 120,858)Net book amount 8,562 12,814 303 30,266 13,558 65,503

Valuations for land and buildingsThe Directors obtained independent valuations of all land and buildings owned and used by the consolidated entity as at June 30, 2007. The independent valuations were carried out by the firm of property valuers, C.B. Richard Ellis, on the basis of fair value, being the amounts for which the assets could be exchanged between willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the same location and condition.

After due consideration of these independent valuations, the directors determined a valuation of $ 46.108 million for all land and buildings owned and used by the consolidated entity as at June 30, 2008.

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NOTES TO THE FINANCIAl STATEMENTS

10b. Non-current assets – investment properties

CONSOLIDATED$’000

At 30 June 2006Cost 2,141Accumulated depreciation 181Net book amount 1,960

Year ended 30 June 2007Opening net book amount 1,960Depreciation charge 15Closing net book amount 1,945

At 30 June 2007Cost 2,141Accumulated depreciation 196Net book amount 1,945

Year ended 30 June 2008Opening net book amount 1,945Depreciation charge 15Closing net book amount 1,930

At 30 June 2008Cost 2,141Accumulated depreciation 211Net book amount 1,930

Valuations for investment propertiesThe Directors obtained independent valuations of all investment properties owned by the consolidated entity as at June 30, 2007. The independent valuations were carried out by the firm of property valuers, C.B. Richard Ellis, on the basis of fair value, being the amounts for which the assets could be exchanged between willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the same location and condition.

After due consideration of these independent valuations, the directors determined a valuation of $4.890 million for all investment properties owned by the consolidated entity as at June 30, 2008.

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11 Non-current assets – intangible assets

GoodwillPatents and trademarks

Total

consolidated $’000 $’000 $’000

At 30 June 2006Cost 9,824 144 9,968 Accumulated depreciation and impairment ( 8,396) ( 66) ( 8,462)Net book amount 1,428 78 1,506

Year ended 30 June 2007Opening net book amount 1,428 78 1,506 Additions 8 8 Amortisation charge * ( 8) ( 8)Exchange differences 29 29 Closing net book amount 1,457 78 1,535

At 30 June 2007Cost 9,885 152 10,037 Accumulated depreciation and impairment ( 8,428) ( 74) ( 8,502)Net book amount 1,457 78 1,535

Year ended 30 June 2008Opening net book amount 1,457 78 1,535 Additions 31 31 Amortisation charge * ( 6) ( 6)Exchange differences ( 39) ( 39)Closing net book amount 1,418 103 1,521

At 30 June 2008Cost 9,694 183 9,877 Accumulated depreciation and impairment ( 8,276) ( 80) ( 8,356)Net book amount 1,418 103 1,521 * Amortisation of $6,128 (2007: $7,585) is included in depreciation and amortisation expense in the income statement.

12 Non-current assets – deferred tax assets

CONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000The balance comprises temporary differences attributable to:Amounts recognised in profit and loss:

Doubtful debts 53 69

Employee benefits 3,221 3,074

Provision for redundancy and relocation 444 11

Legal costs 85Provision for audit fees 22 66 4 4

Patents amortisation 59 53

Workers compensation insurance accrual 27 40

Inventory and engineering spares adjustments 320 370

Capital losses 156 156

Property, plant and equipment depreciation 460 619

Net deferred tax assets 4,847 4,458 4 4

Movements:Opening balance at 1 July 4,458 4,327 4 4

Credited/(charged) to the income statement (note 4) 389 131

Closing balance at 30 June 4,847 4,458 4 4

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NOTES TO THE FINANCIAl STATEMENTS

13. current liabilities – payables CONSOLIDATED PARENT ENTITY

2008 2007 2008 2007

$’000 $’000 $’000 $’000

Trade payables 7,616 12,153 17 17

Other payables 4,424 7,049

12,040 19,202 17 17

14. current liabilities – provisionsEmployee entitlements 9,137 8,660

Restructuring 1,665 10,802 8,660

RestructuringProvision is made for the estimated costs in respect of announced site closure and relocation.

Movements in each class of provision during the financial year, other than employee benefits, are set out below:-

Carrying amount at start of year 0Additional provisions recognised 1,665 Carrying amount at end of year 1,665

15. Non-current liabilities – interest bearing liabilitiesThe bank loans and overdraft are secured by a negative pledge that imposes certain covenants on the consolidated entity. The negative pledge states that (subject to certain exceptions) the consolidated entity will not provide any other security over its assets, and will ensure that certain financial ratios meet the required levels.

As at June 30, 2008 the consolidated entity fully satisfied the requirements of the specified financial ratios.

Financing arrangementsUnrestricted access was available at balance date to the following lines of credit:

Bank overdraftsTotal facilities 1,068 1,073

Used at balance date

Unused at balance date 1,068 1,073

Bank loan facilitiesTotal facilities 20,209 20,527

Used at balance date

Unused at balance date 20,209 20,527

The bank overdraft facilities may be drawn at any time are payable on demand and are subject to an annual review. The bank loan facilities may be drawn at any time and have an average maturity of 2 years (2007 - 2 years).

The interest rates are 11.67% (2007 - 9.55%) on the overdraft and there are nil bank loans at June 30 2008.

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16. Non-current liabilities – deferred tax liabilities

CONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000

The balance comprises temporary differences attributable to:

Amounts recognised in profit and loss:

Depreciation 781 1,681

Patents and trademarks amortisation 31 24

Accrued foreign exchange gains 1Cash flow hedges ( 9)Prepaid rates and taxes 37 48

841 1,753

Amounts recognised directly in equity:

Post CGT revalued land and buildings 33 33Net deferred tax liabilities 874 1,786

Movements:Opening balance at 1 July 1,786 2,237

Credited/(charged) to the income statement (note 4) ( 912) ( 451)Closing balance at 30 June 874 1,786

17. Non-current liabilities – provisionsEmployee benefits 500 857

Decommissioning costs 150 150

650 1,007

Decommissioning costsProvision is made for the estimated future decommissioning costs in respect of certain properties.

18. contributed equity PARENT ENTITY

2008 2007 2008 2007

‘000 ‘000 $’000 $’000a) Share capitalOrdinary shares

Fully Paid 66,774 66,774 33,699 33,699

b) Movements in ordinary share capital: Share Issue

Date Details Number Price $’000 $’000

30 June 2006 Opening balance 66,774 $0.50 33,699 33,699

30 June 2007 Balance 66,774 $0.50 33,699 33,699

30 June 2008 Balance 66,774 $0.50 33,699 33,699

c) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Parent entity in proportion to the number of and amounts paid on the shares held.F

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NOTES TO THE FINANCIAl STATEMENTS

19. Reserves and retained profitsCONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000a) ReservesForeign currency translation reserve ( 4,000) ( 704)

Capital profits reserve 6,839 6,839

Cash flow hedge reserve ( 21) 2,818 6,135

Movements:Foreign currency translation reserve

Balance 1 July ( 704) ( 2,908)

Currency translation differences arising during the year ( 3,296) 2,204

Balance 30 June ( 4,000) ( 704)

Capital profits reserve

Opening Balance 6,839 6,837

Transfer from retained profits 2

Closing Balance 6,839 6,839

Cash flow hedge reserve

Opening Balance

Transfer to property, plant and equipment ( 21)Closing Balance ( 21)

b) Retained profitsRetained profits at the beginning of the financial year 90,615 85,117 546 472

Net profit attributable to members of NCI 6,702 12,177 7,442 6,751

Transfer to capital reserve ( 2)

Dividends provided for or paid (Note 5) ( 7,345) ( 6,677) ( 7,345) ( 6,677)

Retained profits at the end of the financial year 89,972 90,615 643 546

c) Nature and purpose of reserves

(i) Foreign currency translation reserve

Exchange differences arising on translation of the foreign controlled entities, New Zealand, PNG and Fiji are taken to the foreign currency translation reserve, as described in accounting policy note 1(d) Foreign Currency.

(ii) Capital Profits Reserve

The capital profits reserve is used to record capital gains realised from the sale of non-current assets. These gains are transferred from retained profits.

(iii) Hedging reserve - Cash flow hedges

The hedging reserve is used to record gains or losses on hedging instruments in cash flow hedges that are recognised directly in equity. Amounts are recognised in profit and loss when the associated hedged transactions affect profit and loss.

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NOTES TO THE FINANCIAl STATEMENTS

20. earnings per shareCONSOLIDATED2008 2007

Cents CentsBasic earnings per share 10.0 18.2

There are no differences between the basic, alternative and dilutive earnings per share as disclosed above.

2008 2007

Shares Shares

000 000Weighted average number of shares used as the denominator in calculating basic earnings per share.

66,774 66,774

2008 2007

$’000 $’000Reconciliation of earnings used in calculating earnings per shareNet profit 6,702 12,177

Earnings used in calculating basic earnings per share 6,702 12,177

21. Financial instrumentsFinancial Risk management policiesThe Board of Directors approves and delegates authority to company management to act on matters within set authority limits and in accordance with agreed policies including matters pertaining to management of the consolidated entity’s risk from its financial instruments. The objectives of deploying these financial risk management measures and controls are to ensure exposures are managed in accordance with agreed limits and for business purposes only, to limit fluctuations from known transactions and to avoid, to the extent possible, any losses from impairment of financial instruments.

The financial instruments of the consolidated entity comprise term and call deposits with banks, accounts receivables and payables and financial derivatives.

Financial Risk exposuresThrough its financial instruments, the consolidated entity primary exposures are to credit risk, liquidity risk and market risk.

Credit riskCredit risk refers to the risk that customers or financial institutions are unable to fulfill their contractual obligations with regard to the consolidated entity’s trade receivables, deposits and derivatives. The maximum exposure to credit risk on financial assets of the consolidated entity which have been recognised in the balance sheet, other than investments in shares, is generally the carrying amount, net of any provisions for doubtful debts.

a) Trade receivablesThe consolidated entity is exposed to credit risk primarily through trade receivables from customers. Domestic sales transactions, representing the predominant portion of the consolidated entity’s sales,

are generally conducted on 30 day credit terms forapproved customers. Credit worthiness is assessed for all new customers and credit limits applied commensurate with the applicant’s financial capacity and account usage requirements. Customers not meeting the requisite credit worthiness standards trade only on a cash sale basis. Credit account arrangements are reviewed on an ongoing basis by reference to payment patterns, account usage and other risk factors. Credit facilities are suspended or withdrawn for breaches of agreed trading terms by customers.

Export sales are generally conducted on a prepayment or bank secured basis.

The consolidated entity’s conditions of sale provide for title to goods to be retained until full payment of the goods has been received from the customer. A summary of overdue trade receivables is reported to the Board on a monthly basis. Debts adjudged to be uncollectible are periodically submitted to the Board for approval to write-off as bad debts.

At half-year and year-end, trade receivables are reviewed by management for impairment and specific provisions taken up in the accounts.

b) Deposits and derivatives with f inancial institutionsThe consolidated entity is exposed to credit risk from transactions with financial institutions relating to deposits and financial derivatives. The risk is managed by restricting the placement of deposits and derivative transactions with financial institutions approved by the Board. A summary of deposits and financial derivatives with financial institutions is provided to the Board on a monthly basis.

Liquidity riskLiquidity risk refers to the risk that the consolidated entity is unable to meet its financial obligations when they fall due.

The consolidated entity ensures that has sufficient liquidity at all times to be able to meet its financial obligations as and when they fall due through monitoring of monthly cashflows and maintaining committed and standby borrowing facilities in excess of anticipated requirements.

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NOTES TO THE FINANCIAl STATEMENTS

21. Financial instruments (cont)Market RiskMarket risk refers to the risk that changes in the prices for foreign exchange and interest rates will affect the consolidated entity’s income or value of financial instruments.

a) Foreign currency riskThe consolidated entity is exposed to foreign currency risk through sales and purchases denominated in foreign currencies.

Financial derivatives are entered into to protect against exchange rate movements and are mainly used for significant capital expenditure purchases. Foreign exchange contracts are only entered into where the consolidated entity has committed obligations or known transactions involving foreign currencies and are timed to mature when such commitments fall due.

The following foreign exchange contracts were outstanding at balance date:-

Sell Australian Dollars

Average Exchange Rate

2008 2007 2008 2007Buy Swiss francs $’000 $’000

Maturity 0-6 Months 831 0.94

Buy EurodollarMaturity 0-6 Months 448 0.60

Exposure limits have been established by the Board of Directors and details of current financial derivatives are reported to and reviewed by the Board on a monthly basis. The level of sales and non-capital expenditure purchases in foreign currencies does not represent a material exposure to foreign currency risk and these exposures are not hedged.

b) Interest rate riskThe consolidated entity is exposed to interest rate risk through its deposits with financial institutions. Deposits are made at call to maintain sufficient liquidity for short-term obligations and the balance of funds deposited for terms ranging from 30 to 90 days.

The consolidated entity’s exposure to interest rate risk and effective weighted average interest rate by maturity period is set out below. For interest rates applicable to each class of financial instrument, refer to individual notes in the financial statements.

Floating interest rate

Non-interest bearing

Total

$’000 $’000 $’0002008Financial assetsCash and deposits (note 6) 12,883 12,883 Receivables (note 7) 25,215 25,215

12,883 25,215 38,098 Weighted average interest rates 4.90%

Financial Liabilities

Bank overdrafts and loans (note 15)Trade and other creditors (note 13) 12,040 12,040

12,040 12,040 Net financial assets (liabilities) 12,883 13,175 26,058

2007 $,000 $,000 $,000

Financial assetsCash and deposits (note 6) 28,294 28,294 Receivables (note 7) 27,385 27,385

28,294 27,385 55,679 Weighted average interest rates 5.27%

Financial Liabilities

Bank overdrafts and loans (note 15)Trade and other creditors (note 13) 19,202 19,202

19,202 19,202 Net financial assets (liabilities) 28,294 8,183 36,477

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NOTES TO THE FINANCIAl STATEMENTS

21. Financial instruments (cont)Sensitivity analysisThe consolidated entity has performed a sensitivity analysis on its exposures to foreign currency risk and interest rate risk on its financial instruments at balance date.

a) Foreign currency risk sensitivity analysisThe effect on profit and equity as a result of a change in the value of the Australian Dollar to the US Dollar on financial instruments held at balance date, with all other variables remaining constant, is set out below. Management believes that the level of change used is a reasonably possible movement in exchange rate.

CONSOLIDATED PARENT ENTITY

2008 2007 2008 2007Change in profit $’000 $’000 $’000 $’000

Improvement in AUD to USD by 10% (21) (15)

Decline in AUD to USD by 10% 21 15

Change in equityImprovement in AUD to USD by 10% (21) (15)

Decline in AUD to USD by 10% 21 15

b) Interest rate risk sensitivity analysis

The effect on profit and equity as a result of changes in the interest rate on financial instruments held at balance date, with all other variables remaining constant, is set out below. Management believes that the level of change to be a reasonably possible movement in interest rates.

Change in profitIncrease in interest rate by 100 basis points 129 283

Decrease in interest rate by 100 basis points (129) (283)

Change in equityIncrease in interest rate by 100 basis points 129 283

Decrease in interest rate by 100 basis points (129) (283)

22. Remuneration of auditorsCONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$ $ $ $

During the year, the following services were paid to the auditor of the parent entity, its related practices and non-related audit firms.

a) Assurance servicesGrant Thornton Australian firm:

Audit and review of financial reports and other audit work under the Corporations Act 2001 120,000 12,000 Non-Grant Thornton audit firms for the audit and review of financial reports of any entity in the consolidated entity 45,619 278,616 12,000

Total remuneration for assurance services 165,619 278,616 12,000 12,000

b) Taxation servicesGrant Thornton Australian firm 44,250 32,930

Non-Grant Thornton audit firms 18,596 13,935

Total remuneration for taxation services 62,846 46,865

23. deed of cross guaranteeNational Can Industries Limited, NCI Holdings Pty Ltd, National Can Australia Pty Ltd (formerly NCI Packaging Pty Ltd), NCI Specialty Metal Products Pty Ltd and NCI Diversified Products Pty Ltd (formerly Pacmetal Services Pty Ltd) are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and directors’ report under Class Order 98/1418 (as amended by Class Orders 98/2017, 00/0321, 01/1087, 02/0248 and 02/1017) issued by the Australian Securities & Investments Commission.

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National Can Industries – Annual Report 2008 39

NOTES TO THE FINANCIAl STATEMENTS

23. deed of cross guarantee (cont)a) Condensed consolidated income statement and a summary of movements in consolidated retained profits

The above companies represent a “Closed Group” for the purposes of the Class Order, and as there are no other parties to the Deed of Cross Guarantee that are controlled by National Can Industries Limited, they also represent the “Extended Closed Group”.

Set out below is a condensed income statement and a summary of movements in consolidated retained profits for the year ended 30 June 2008 of the Closed Group consisting of National Can Industries Limited, NCI Holdings Pty Ltd, National Can Australia Pty Ltd (formerly NCI Packaging Pty Ltd), NCI Speciality Products Pty Ltd and NCI Diversified Products Pty Ltd (formerly Pacmetal Services Pty Ltd).

2008 2007

condensed income statement $’000 $’000

Profit before income tax expense 7,383 15,045

Income tax expense 2,252 4,236 Profit for the year 5,131 10,809

summary of movements in consolidated retained profits

Retained profits at the beginning of the financial year 68,765 64,633

Profit for the year 5,131 10,809

Dividends provided for or paid ( 7,345) ( 6,677)Retained profits at the end of the financial year 66,551 68,765

b) Condensed consolidated balance sheet

Set out below is a consolidated balance sheet as at 30 June 2008 of the Closed Group consisting of National Can Industries Limited, NCI Holdings Pty Ltd, National Can Australia Pty Ltd (formerly NCI Packaging Pty Ltd), NCI Specialty Metal Products Pty Ltd and NCI Diversified Products Pty Ltd (formerly Pacmetal Services Pty Ltd).

Current assetsCash and cash equivalents 7,871 23,853

Receivables 20,536 21,188

Inventories 26,693 27,402

Other 370 338 Total current assets 55,470 72,781

Non-current assetsInvestments in subsidiaries 4,496 4,496

Investment properties 1,930 1,945

Property, plant and equipment 56,984 50,496

Deferred tax assets 3,154 2,913

Intangible assets 639 614 Total non-current assets 67,203 60,464

Total assets 122,673 133,245

Current liabilitiesPayables 9,904 15,439

Current tax liabilities 169 2,412

Provisions 7,761 7,198 Total current liabilities 17,834 25,049

Non-current liabilitiesDeferred tax liabilities 804 1,706

Provisions 643 862 Total non-current liabilities 1,447 2,568

Total liabilities 19,281 27,617

Net assets 103,392 105,628

EquityContributed equity 33,699 33,699

Reserves 3,142 3,164

Retained profits 66,551 68,765 Total equity 103,392 105,628

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NOTES TO THE FINANCIAl STATEMENTS

24. commitmentsCONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 $’000 $’000 $’000Capital commitmentsCapital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:

Payable no later than one year 7,723 3,375

Lease CommitmentsCommitment in relation to leases contracted for at the reporting dates but not recognised as liabilities, payable:

Within one year 2,472 2,872

Later than one year and not later than five years 4,713 6,247

Later than five years 306

Representing non-cancellable operating leases 7,185 9,425

25. employee entitlementsProvision for employee entitlementsCurrent (note 14) 9,137 8,660

Non-current (note 17) 500 857

Aggregate employee entitlement liability 9,637 9,517

26. Related party transactionsa) Parent entities CONSOLIDATED PARENT ENTITY

National Can Industries Ltd is the ultimate parent entity. 2008 2007 2008 2007

b) Subsidiaries $ $ $ $

Interests in subsidiaries are set out in note 27

c) Transactions with related parties

The following transactions occurred with related parties:

Dividend revenue – Subsidiaries 7,345,093 6,677,356

Tax consolidation legislation:

Current tax payable assumed from wholly-owned tax consolidated entities

144,108 2,380,398

Other transactions:

Remuneration paid to directors of the ultimate parent entity 295,000 314,627 295,000 314,627

Contributions to superannuation funds on behalf of employees 2,839,980 2,706,896 32,450 34,609

d) Outstanding balances arising from sales/purchases of goods and servicesThe following balances are outstanding at the reporting date in relation to transactions with related parties:

Current receivables (tax funding agreement)

Wholly-owned tax consolidated entities 144,108 2,380,398

No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debts due from related parties.

e) Loans to/from related parties

Loans to subsidiaries

Beginning of the year 5,518,000 5,518,000

Interest charged 551,810 551,810

Interest received ( 551,810) ( 551,810)

End of the year 5,518,000 5,518,000

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NOTES TO THE FINANCIAl STATEMENTS

26. Related party transactions (cont)No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debts due from related parties.

f) Terms and conditions

The terms and conditions of the tax agreement are set in note 4(c).

All other transactions were made on normal commercial terms and conditions and at market rates, except that there are no fixed terms for the repayment of loans between parties. Outstanding balances are unsecured and are repayable in cash.

27. investments in controlled entitiesCountry of

IncorpParent Entity

beneficial interest %2008 2007

NCI Holdings Pty Ltd * Aust. 100 100

National Can Australia Pty Ltd (formerly NCI Packaging Pty Ltd) Aust. 100 100

NCI Specialty Metal Products Pty. Ltd. Aust. 100 100

NCI Diversified Products Pty Ltd (formerly Pacmetal Services Pty Ltd) Aust. 100 100

NCI (N.Z.) Limited NZ 100 100

NCI Packaging (N.Z.) Limited. NZ 100 100

NCI Packaging (PNG) Ltd PNG 100 100

* Part of the business is carried on in Fiji

NCI Holdings Pty Ltd owns 100% of the issued ordinary shares of all the controlled Australian entities and 100% of the issued ordinary and redeemable preference shares of NCI (N.Z.) Limited which in turn owns 99.2% of the issued ordinary shares of NCI Packaging (N.Z.) Limited. NCI Holdings Pty Ltd owns the remaining 0.8% of shares in NCI Packaging (NZ) Ltd. NCI Holdings Pty Ltd also owns 100% of the issued ordinary shares of NCI Packaging (PNG) Ltd.

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NOTES TO THE FINANCIAl STATEMENTS

28. segment informationPrimary reporting -geographical segments australia new Zealand

Papua new guinea

Fijiintersegment eliminations

consolidated

$’000 $’000 $’000 $’000 $’000 $’0002008Sales to customers outside the consolidated entity 131,234 36,860 5,821 1,265 175,180 Intersegment sales 3,178 5,435 ( 8,613) - Total sales revenue 134,412 42,295 5,821 1,265 ( 8,613) 175,180 Other revenue 1,374 403 141 10 1,928 Total segment revenue 135,786 42,698 5,962 1,275 ( 8,613) 177,108 Segment result 7,395 799 1,731 187 10,112

Unallocated revenue less expenses ( 78)Income tax expense ( 3,332)Net profit after tax 6,702 Segment assets 115,025 26,754 5,374 1,008 ( 944) 147,217 Unallocated assets 4,847 Total assets 152,064 Segment liabilities 18,309 5,426 634 67 ( 944) 23,492 Unallocated liabilities 2,083 Total liabilities 25,575 Acquisitions of property, plant and equipment,intangibles and other non current assets

12,806 548 11 37 13,402

Depreciation and amortisation expense 7,542 1,841 81 14 9,478 Other non - cash items 28 ( 5) ( 21) ( 3) ( 1)

australia new ZealandPapua new

guineaFiji

intersegment eliminations

consolidated

2007 $’000 $’000 $’000 $’000 $’000 $’000

Sales to customers outside the consolidated entity 133,307 42,876 4,477 1,343 182,003 Intersegment sales 4,851 2,583 19 1 ( 7,454) - Total sales revenue 138,158 45,459 4,496 1,344 ( 7,454) 182,003 Other revenue 7,136 202 84 20 7,442 Total segment revenue 145,294 45,661 4,580 1,364 ( 7,454) 189,445 Segment result 14,402 1,622 1,257 270 37 17,588

Unallocated revenue less expenses ( 77)Income tax expense ( 5,334)Net profit after tax 12,177 Segment assets 125,899 29,716 3,957 940 ( 648) 159,864 Unallocated assets 4,458 Total assets 164,322 Segment liabilities 23,501 5,473 501 42 ( 648) 28,869 Unallocated liabilities 5,004 Total liabilities 33,873 Acquisitions of property, plant and equipment,intangibles and other non current assets

8,506 1,679 189 3 10,377

Depreciation and amortisation expense 7,076 1,980 84 15 9,155 Other non - cash items 42 ( 84) 36 1 ( 5)

Geographical SegmentsThe consolidated entity operates in four geographical segments – Australia, New Zealand, Papua New Guinea and Fiji.

Intersegment transactions are conducted on an arms length basis.

Secondary ReportingThe consolidated entity operations are predominantly in packaging material processing and packaging manufacture which represents a single industry.

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NOTES TO THE FINANCIAl STATEMENTS

29. Reconciliation of net cash flows from operating activities to operating profit after income tax

CONSOLIDATED PARENT ENTITY2008 2007 2008 2007

$’000 ‘000 $’000 ‘000Operating profit after income tax 6,702 12,177 7,442 6,751

Depreciation and amortisation 9,478 9,155

Amounts credited to sundry provisions ( 1) ( 5)

Net (gain) loss on sale of non-current assets ( 44) 50

Net exchange differences ( 1,629) 1,123

Change in operating assets and liabilities net of effect of acquisition of entities:

(Increase) decrease in future tax benefits ( 389) ( 131)

(Decrease) increase in deferred tax payable ( 912) ( 451)

(Decrease) increase in income tax payable ( 2,009) ( 431) ( 2,225) ( 819)

(Increase) decrease in trade debtors and other receivable 2,217 ( 146) 2,236 807

(Increase) decrease in prepayments 79 95

(Increase) decrease in inventories ( 1,239) ( 13,665)

(Decrease) increase in trade and other creditors and employee entitlements ( 6,626) 9,342 ( 18)Net cash inflows from operating activities 5,627 17,113 7,453 6,721

30. key management personnel disclosuresDirectorsThe following persons were directors of National Can Industries Limited during the financial year:

Chairman – non-executive E B Noxon

Executive directorM W Tyrrell Managing Director

Non-executive directorsR K Horsburgh T X O’Brien R G Pitcher

Other key management personnelThe following persons also had authority and responsibility for planning, directing and controlling the activitives of the consolidated entity, directly or indirectly, during the financial year.

Name Position Employer

M McDonald Chief Financial Officer NCI Holdings Pty Ltd

P Sloane Chief Operating Officer NCI Holdings Pty Ltd (from 16/7/07)

Key management persons during the year ended 30 June 2007 were:-

Name Position Employer

J Harrigan Sales Manager – Australia NCI Holdings Pty Ltd

J McCormack Operations Manager NCI Packaging (NZ) Ltd

M McDonald General Manager – Administration & Finance NCI Holdings Pty Ltd

M Robins General Manager – Business Breakthrough NCI Holdings Pty Ltd

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NOTES TO THE FINANCIAl STATEMENTS

30. key management personnel disclosures (cont)Key management personnel compensation

CONSOLIDATED PARENT ENTITY

2008 2007 2008 2007

$ $ $ $

Short-term employee benefits 1,137,930 1,347,234 295,000 314,627

Post-employment benefits 148,136 150,106 32,450 34,609

Long-term employee benefits 29,902 18,569

Total 1,315,968 1,515,909 327,450 349,236

equity instrument disclosures relating to key management personnelShare holdings The number of shares in the company held during the financial year by each director of NATIONAL CAN INDUSTRIES LIMITED and other key management personnel of the consolidated entity, including their personally-related entities, are set out below. There were no shares granted during the reporting period as compensation.

2008

Balance at the start of

the year

received during the

year on exercise of

options

other changes

during the year

Balance at the end of

the year

directors of national can industries limitedordinary shares

R. K. Horsburgh 11,220 - - 11,220

E.B. Noxon 40,000 - - 40,000

T.X. O’Brien 48,500 - 11,500 60,000

R.G. Pitcher - - - -

M. W. Tyrrell 33,538,906 - - 33,538,906

other key management personnel of the consolidated entityordinary shares

M. McDonald 20,000 - - 20,000

P. Sloane - - - -

2007

directors of national can industries limitedordinary shares

J. M. Bertei - - - -

R.K. Horsburgh - - 11,220 11,220

E.B. Noxon 40,000 - - 40,000

T.X. O’Brien 40,000 - 8,500 48,500

R.G. Pitcher - - - -

M. W. Tyrrell 33,518,906 - 20,000 33,538,906

other key management personnel of the consolidated entityordinary shares

M. McDonald 20,000 - - 20,000

J. McCormack - - - -

M. Robins 4,000 - - 4,000

J. Harrigan - - - -

Other transactions with key management personnelA director, Mr. M W Tyrrell, is a director and shareholder in Tyrrell (1984) Nominees Pty Ltd. A subsidiary of National Can Industries Limited leases a factory from Tyrrell (1984) Nominees Pty Ltd. The lease is based on normal commercial terms and conditions.

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National Can Industries – Annual Report 2008 45

DIRECTORS’ DEClARATION

In the directors’ opinion:

a) the financial statements and notes set out on pages 17 to 44 are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

(ii) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2008 and of their performance for the financial year ended on that date; and

b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

c) the audited remuneration disclosures set out in of the directors’ report on pages 8 to 10 comply with Accounting Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001; and

d) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in note 23 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 23.

The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors.

Brian NoxonChairman

Michael TyrrellManaging Director

MelbourneSeptember 9, 2008F

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INDEPENDENT AuDITOR’S REPORT

iNdepeNdeNt auditoR’s RepoRt

to the members of National can industries Limited

Report on the Financial Report We have audited the accompanying financial report of National Can Industries Limited (the company) which comprises the balance sheet as at 30 June 2008, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial ReportThe directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s ResponsibilityOur responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Electronic Presentation of Audited Financial Report This auditor’s report relates to the financial report of National Can Industries Limited for the year ended 30 June 2008 included on National Can Industries Limited’s web site. The company’s directors are responsible for the integrity of their web site. We have not been engaged to report on the integrity of the National Can Industries Limited’s web site. The auditor’s report

refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial report to confirm the information included in the audited financial report presented on this web site

IndependenceIn conducting our audit, we complied with applicable independence requirements of the Corporations Act 2001.

Auditor’s OpinionIn our opinion:

a) the financial report of National Can Industries Limited is in accordance with the Corporations Act 2001, including:

• givingatrueandfairviewofthecompany’sandconsolidatedentity’s financial position as at 30 June 2008 and of their performance for the year ended on that date; and

• complyingwithAustralianAccountingStandards(includingthe Australian Accounting Interpretations) and the Corporations Regulations 2001; and

b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration We have audited the Remuneration Report included in pages 8 to 10 of the directors’ report for the year ended 30 June 2008. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s OpinionIn our opinion the Remuneration Report of National Can Industries Limited for the year ended 30 June 2008, complies with section 300A of the Corporations Act 2001.

GRANT THORNTONChartered Accountants

D. A. AshmorePartner

Melbourne, September 9, 2008

ABN 13 871 256 387Level 2, 215 Spring Street, Melbourne, Victoria 3000

Liability limited by a scheme approved under Professional Standards legislation.

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National Can Industries – Annual Report 2008 47

ASX ADDITIONAl INFORMATION

shareholdingsvoting RightsOn a show of hands, one vote for every registered holder and on a poll, one vote for each share held by registered holders.

issued capitalThe company’s issued capital at August 29, 2008 consisted of 66,773,572 ordinary shares (2007: 66,773,572)

Distribution of Shareholdings at August 29, 2008

Range No. of Shareholders No. of Shares

1 – 1,000 87 53, 491

1,001 – 5,000 251 693,138

5,001 – 10,000 92 717,211

10,001 – 100,000 106 2,784,946

100,001 and over 23 62,524,786

Total 559 66,773,572

Number of holders of a less than marketable parcel: 26 5,127

Notification of substantial shareholdingsNo. of Shares %

Tyrrell Investments and related corporations and associates 33,993,451 50.91

Salvage Pty Ltd and related corporations 8,410,493 12.59

Perpetual Trustees Australia Ltd 6,744,131 10.10

Hunter Hall Investment Management Ltd 5,845,454 8.75

Telstra Super Pty Ltd 3,567,402 5.34

top 20 ordinary shareholders (august 29, 2008) No. of Shares %

Tyrrell Investments Pty Ltd 28,192,650 42.22

Cogent Nominees Pty Ltd 6,968,198 10.44

Tyrrell (1984) Nominees Pty Ltd 5,081,296 7.61

Geminder Holdings Pty Ltd 4,409,776 6.60

Bennamon Pty Ltd 4,000,717 5.99

National Nominees Pty Ltd 3,802,503 5.69

Mr. R.R. Slack & Mr. J.E. Slack (Estate C.R.Mitchell a/c) 2,019,238 3.02

O’Halloran Investments Pty Ltd 1,901,673 2.85

RBC Dexia Investor Services Australia Nominees Pty Ltd (PIPOOLED a/c) 1,458,036 2.18

Mr. Alan John Pitman 910,655 1.36

Munitus Pty Ltd (H G & A G Stevens a/c) 563,868 0.84

Mrs Patricia Thomas 531,000 0.80

Citicorp Nominees Pty Ltd 488,587 0.73

Mr Ian Alexander 400,034 0.60

J P Morgan Nominees Australia Ltd 362,292 0.54

Mrs Kathleen Patricia Tyrrell 343,613 0.51

Mr Michael Tyrrell 264,960 0.40

Sunburst Products Pty Ltd 239,830 0.36

Atkins Consulting Group 200,000 0.30

Mrs Barbara Hughes 143,179 0.21

62,282,105 93.25

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48

SHAREHOlDER INFORMATION

Shareholder Enquiries

Shareholders with enquiries about their shareholdings should contact the company’s share registry, Computershare Investor Services Pty. Ltd.

Contact details are set out below.

Computershare Investor Services Pty. Ltd. Yarra Falls, 452 Johnston Street Abbotsford VIC 3067 P.O. Box 103 Abbotsford VIC 3067

Investor Enquiries (within Australia): 1300 850 505 Outside Australia: (613) 9415 4000 Facsimile: (613) 9473 2500 Email web.queries@computershare.com.au Website: www.computershare.com

Change of Address

Shareholders should notify the share registry in writing, immediately upon any change in their registered address.

Removal from the Annual Report mailing list

Shareholders who do not want to receive an Annual Report, or who are receiving more than one copy, should advise the share registry in writing. These shareholders will continue to receive all other shareholder information.

Consolidation of Shareholdings

Shareholders who wish to consolidate their separate shareholdings into one account should advise the share registry in writing.

Tax File Number

Shareholders wishing to record their tax file number or exemption details in relation to their shareholding in NCI should advise the share registry by telephone or in writing.

Dividends

Dividends may be paid directly to any Australian bank, building society or credit union that participates in the direct debit system. Payments are electronically credited on the dividend date and confirmed by mailed payment advice. Shareholders who want their dividends to be paid in this way should advise the share registry in writing.

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National Can Industries – Annual Report 2008 49

NCINCI Head Officewww.nci-ltd.com info@nci-ltd.com

Clifton Hill 24 Groom Street Ph. (03) 9276 9600

Packaging

NCINCI Packagingwww.nci-packaging.com info@nci-packaging.com

Victoria

Preston 90–92 Chifley Drive, Ph. (03) 9290 6800

Tullamarine 76–80 Lambeck Drive Ph. (03) 9335 6155

Bayswater 31–35 Burgess Road Ph. (03) 9729 7933

The Packaging Shop www.thepackagingshop.com.au Northcote 219 Separation Street Ph. (03) 9488 9200

New South Wales

Thornleigh Whitcroft Place Ph. (02) 9910 8500

Queensland

Rocklea 51 Reginald Street Ph. (07) 3277 4377

South Australia

Gepps Cross 15–17 Waldaree Street Ph. (08) 8359 5656

Western Australia

Welshpool 286 Treasure Road Ph. (08) 9358 5723

New Zealand

Panmure 80 Mt Wellington Highway Ph. (+649) 914 9444

Upper Hutt 62–66 Montgomery Crescent Ph. (+649) 914 9444

Papua New Guinea

Lae, Taraka Orion Road, Morobe Province Ph. (+675) 475 7110

Fiji

Lami Suva Lot 18 Wailada Industrial Estate Ph. (+679) 362 944

Services

PacmetalPacmetal Serviceswww.pacmetal-services.com service@pacmetal-services.com

Victoria

Northcote 225 Separation Street Ph. (03) 9488 9201

New South Wales

Glendenning 194 Power Street Ph. (02) 9208 6800

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