Capital Discipline

We are focused on constantly improving the management of our balance sheet and operating cash flow to deliver improved performance for shareholders. When we do this, we can most effectively direct our capital expenditure to opportunities where we know we have the greatest market impact. We control our spending well to ensure we maintain a strong business.

What is our goal?

Capital Discipline allows us to allocate investment spending such that our environment is always safe, our assets are properly maintained, operating cost is reduced, and the business grows. The process discipline allows us to prioritize investment needs, while ensuring that the business maintains a positive free cash flow.

We achieve our goal by having the right processes and infrastructure

The Operating Plan (budget) and the Strategic Planning process, provide the basis of the investment and capital plan. These plans detail the level of investment required to maintain the business as well as to grow the business. In addition, goals are established to continually improve our average working capital as a percent to sales.

The Capital Management Group (‘CMG’), made up of a number of corporate executives, is responsible for setting Amcor wide guidelines and providing direction to our businesses in all aspects of improving our capital performance. In order to ensure we are managing our capital properly, we have disciplined processes for:

• the allocation, approval and monitoring of our investments
• monitoring and improving our cash flow performance across the group

A Delegation of Authority (‘DOA’) is established for each business group that provides spending approval limits for each business group. Spending levels greater than the business group delegation require Amcor Corporate approval, through the Capital Expenditure Review Group (‘CERG’).

Our investments

The Capital Expenditure Review Group (‘CERG’), reviews investment projects where the project exceeds the business group DOA. The CERG assesses investment attractiveness across a number of criteria including:

• the attractiveness of the market
• value to be created by the investment
• benchmark returns by country (higher returns required in certain markets)

A Post Capital Review (‘PCR’) is conducted to ensure that we have achieved the investment objectives and captured key learnings.

Our cashflow

Over the past three years, Amcor has achieved positive free cash flows. A key contributor to this result is our disciplined approach to capital spend and working capital. This has resulted in an improved balance sheet. Most importantly this has allowed us to continue to pay a strong dividend to our shareholders as well as to reinvest in growing markets around the world.