Adelaide Brighton Ltd Annual Report 2010
Adelaide Brighton Ltd
ABN 15 007 596 018
Level 1
157 Grenfell Street
Adelaide
South Australia 5000
GPO Box 2155
Adelaide SA 5001
Telephone (08) 8223 8000
Facsimile (08) 8215 0030
Web www.adbri.com.au
Adelaide Brighton Ltd is a leading, integrated construction
materials and lime producing group of companies focused
on the engineering, infrastructure and resource sectors.
The Group’s principal activities are the production and marketing
of clinker, cement and lime products, premixed concrete and
aggregates, and concrete products. Adelaide Brighton originated
in 1882 and is a S&P/ASX200 company with 1,600 employees
and operations in all Australian states and territories.
Cement and Lime
Adelaide Brighton is a market leader in cement and lime in South Australia, Western Australia,
and the Northern Territory through its Adelaide Brighton Cement, Cockburn Cement and
Northern Cement operations. It also has strategic operations in the eastern states through its
Morgan Cement grinding facility in New South Wales, and its 50% owned cement supply joint
ventures in Queensland (Sunstate Cement) and Victoria (Independent Cement and Lime).
Concrete and Aggregates
Adelaide Brighton has a modest position in the premixed concrete markets through
Hy-Tec in Victoria, New South Wales and south east Queensland, and a 50% joint
venture in northern Victoria and southern New South Wales with the Mawson Group.
The Company has an emerging position in aggregate supply, with strategic reserves
at Austen Quarry, west of Sydney, through the Mawson Group in northern Victoria
and southern New South Wales and Hurd Haulage in northern New South Wales.
Concrete Products
Under the brand of Adbri Masonry, Adelaide Brighton holds
the number one market position in Australia in the masonry
products market, with operations in Queensland, New South
Wales, Victoria, Tasmania and South Australia.
Customers and sustainability
The major end-use markets for Adelaide Brighton’s
products include residential and non-residential
construction, engineering construction, alumina,
and gold mining and production. The Company’s
commitment to sustainable development is
demonstrated through a range of actions
implemented across a balanced program of
business based initiatives. Adelaide Brighton
believes that setting and achieving sustainability
objectives throughout its organisation positions it
for long term competitive business performance.
Cover quotation: study by the
American Concrete Institute
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30
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48
94
95
96
2010 highlights
Chairman’s report
Managing Director’s report
Financial results
Review of operations
Cement and Lime
Concrete and Aggregates
Concrete Products
Joint ventures
Map of operations
Sustainability
Corporate governance
Directors
Shareholder information
Directors’ report
Remuneration report
Financial statements
Auditor’s independence declaration
Independent audit report
Financial history
The Adelaide Brighton logo, the MCI logo, the Cockburn Cement logo,
the Swan Cement logo, the Northern Cement logo, the Hy-Tec logo,
the Adbri Masonry logo, the Hurd Haulage logo and the Kancon logo
are trade marks of Adelaide Brighton Ltd or its related bodies corporate
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
Revenue of $1,072.9 million -
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
an increase of 8.7%
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
Earnings before interest and tax of
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
$216.2 million - a 16.7% increase
Earnings before interest, tax, depreciation
Earnings before interest, tax, depreciation
Earnings before interest, tax, depreciation
Earnings before interest, tax, depreciation
Earnings before interest, tax, depreciation
Earnings before interest, tax, depreciation
and amortisation of $269.0 million -
and amortisation of $269.0 million -
and amortisation of $269.0 million -
and amortisation of $269.0 million -
and amortisation of $269.0 million -
and amortisation of $269.0 million -
an 11.1% increase
an 11.1% increase
an 11.1% increase
an 11.1% increase
an 11.1% increase
an 11.1% increase
Profi t before tax of $202.2 million -
Profi t before tax of $202.2 million -
Profi t before tax of $202.2 million -
Profi t before tax of $202.2 million -
Profi t before tax of $202.2 million -
Profi t before tax of $202.2 million -
a 19.9% increase
a 19.9% increase
a 19.9% increase
a 19.9% increase
a 19.9% increase
a 19.9% increase
Net profi t attributable to members of
Net profi t attributable to members of
Net profi t attributable to members of
Net profi t attributable to members of
Net profi t attributable to members of
Net profi t attributable to members of
$151.5 million - an increase of 23.1%
$151.5 million - an increase of 23.1%
$151.5 million - an increase of 23.1%
$151.5 million - an increase of 23.1%
$151.5 million - an increase of 23.1%
$151.5 million - an increase of 23.1%
Earnings per share increased by
Earnings per share increased by
Earnings per share increased by
Earnings per share increased by
Earnings per share increased by
Earnings per share increased by
17.2% to 23.9 cents (20.4 cents pcp)
17.2% to 23.9 cents (20.4 cents pcp)
17.2% to 23.9 cents (20.4 cents pcp)
17.2% to 23.9 cents (20.4 cents pcp)
17.2% to 23.9 cents (20.4 cents pcp)
17.2% to 23.9 cents (20.4 cents pcp)
Final total dividend of 11.5 cents, franked
Final total dividend of 11.5 cents, franked
Final total dividend of 11.5 cents, franked
Final total dividend of 11.5 cents, franked
Final total dividend of 11.5 cents, franked
Final total dividend of 11.5 cents, franked
to 100%, in addition to the total interim
to 100%, in addition to the total interim
to 100%, in addition to the total interim
to 100%, in addition to the total interim
to 100%, in addition to the total interim
to 100%, in addition to the total interim
dividend of 10.0 cents, franked to 100%
dividend of 10.0 cents, franked to 100%
dividend of 10.0 cents, franked to 100%
dividend of 10.0 cents, franked to 100%
dividend of 10.0 cents, franked to 100%
dividend of 10.0 cents, franked to 100%
Cash fl ow from operations increased
Cash fl ow from operations increased
Cash fl ow from operations increased
Cash fl ow from operations increased
Cash fl ow from operations increased
Cash fl ow from operations increased
to $188.5 million
to $188.5 million
to $188.5 million
to $188.5 million
to $188.5 million
to $188.5 million
Gearing1 reduced to 15.9%
Gearing1 reduced to 15.9%
Gearing111 reduced to 15.9%
Gearing1 reduced to 15.9%
reduced to 15.9%
reduced to 15.9%
Gearing
Gearing
(19.6% pcp) due to reduced debt levels
(19.6% pcp) due to reduced debt levels
(19.6% pcp) due to reduced debt levels
(19.6% pcp) due to reduced debt levels
(19.6% pcp) due to reduced debt levels
(19.6% pcp) due to reduced debt levels
Interest cover increased to 15.4 times
Interest cover increased to 15.4 times
Interest cover increased to 15.4 times
Interest cover increased to 15.4 times
Interest cover increased to 15.4 times
Interest cover increased to 15.4 times
(11.1 times pcp)
(11.1 times pcp)
(11.1 times pcp)
(11.1 times pcp)
(11.1 times pcp)
(11.1 times pcp)
$ millions
$ millions
Rev
Revenue
2010
2010
2009
2009
1,072.9
987.2
Depreciation and Amortisation
Depreciation and Amortisation
(52.8)
(52.8)
(56.8)
(56.8)
Earnings before interest and tax (“EBIT”)
Ea
Net interest2
Net interest
Pr
Profi t before tax
Tax expense
Tax expense
Net profi t after tax
Ne
Non-controlling interests
Non-controlling interests
216.2
(14.0)
202.2
(50.8)
(50.8)
151.4
0.1
0.1
185.3
(16.7)
168.6
(45.4)
(45.4)
123.2
(0.1)
(0.1)
Net profi t attributable to members
Net profi t attributable to members
151.5
151.5
123.1
123.1
Earnings per share (cents)
Ea
Total dividends per share - fully franked (cents)3
Total dividends per share - fully franked (cents)
Net debt (A$ millions)
Net debt (A$ millions)
Net debt/equity (%)
Net debt/equity (%)
23.9
21.5
148.4
148.4
15.9%
20.4
13.5
175.4
175.4
19.6%
1 Net debt/equity
2 Interest shown gross in the Income Statement with interest income included in revenue
3 Includes special dividends of 5.0 cents in 2010
y
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a
m
m
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l
i
a
c
n
a
n
F
i
$m
Profi t after tax
180
150
120
90
60
30
0
06
07
08
09
10
c/share
Dividends per share
25
20
15
10
5
0
09
103
061 072 08
1 Includes 6.0 cents special dividend
2 Includes 3.5 cents special dividend
3 Includes 5.0 cents special dividend
$m
Cash fl ow from operations
200
150
100
50
0
%
60
50
40
30
20
10
0
%
20
15
10
5
0
06
07
08
09
10
Gearing: net debt to equity
06
07
08
09
10
Return on shareholders funds
06
07
08
09
10
Times
Interest cover EBITDA basis
20
15
10
5
0
06
07
08
09
10
Adelaide Brighton’s long term strategy to grow shareholder returns
delivered improved profi tability, strong operating cash fl ows, a reduction
in net debt and an increase in ordinary and special dividends.
Board
Malcolm Kinnaird AC retired from the Board
in May 2010 after a very successful 13 years
as Chairman. While he was at the helm,
Adelaide Brighton delivered signifi cant growth
in earnings and shareholder returns. I thank
Mr Kinnaird for his long and dedicated service
and acknowledge his extensive contribution
to the Company.
Ken Scott-Mackenzie joined the Board in
July 2010 as a non-executive Director and
member of the Company’s Independent
Directors’ Committee. Mr Scott-Mackenzie
has more than 35 years’ experience in
infrastructure, construction and mining
services gained in Australia and South
Africa, and a background in the fi nancial,
legal and commercial aspects of projects.
In early April 2011, the Board appointed
Arlene Tansey as a non-executive Director.
Ms Tansey has spent over 25 years as a
senior executive in business and fi nancial
services with a background in investment
banking and securities law gained in
Australia and the United States.
During 2010, the Board held several of its
meetings in regional centres around Australia.
It intends to continue to visit Company sites
especially where new businesses have been
recently acquired to ensure it has fi rst hand
knowledge of the operations and meet and
welcome new staff members.
The Company has actively engaged in
discussions with the Cement Industry
Federation and National Lime Association
of Australia about the development of a pricing
scheme for greenhouse gases. The Federal
Government’s plans to revisit a carbon-pricing
scheme are still in their infancy, however,
Adelaide Brighton intends to contribute its
experience and knowledge to help guide
the process and ensure a successful
outcome for sustainability principles.
Environmental performance
Adelaide Brighton is committed to
conducting its business responsibly.
The Company recognises that the production
of cement and lime has a signifi cant impact
on our environment. Our production facilities
operate within a regulated framework. This
includes permits and licenses which allow
the Company’s subsidiaries to carry on their
production activities according to conditions
specifi ed. This provides certainty for the
Company, its customers, its suppliers
and the community.
The Company continually strives to improve
its impact on the environment. We value
engagement with the community through
liaison groups and consultation on the sites’
Environmental Improvement Plans. The Board
has approved signifi cant capital expenditure
for various production operations, which will
enhance environmental performance.
Governance
Risk management
The Board is committed to conducting
the Company’s business ethically and in
accordance with high standards of corporate
governance. To that end, it has established
a number of committees with responsibility
for particular areas. These committees meet
on a regular basis and each has a charter,
which is reviewed periodically.
Sustainability
Adelaide Brighton continues to develop
and report to all stakeholders its principal
measures of sustainability. These embrace
health and safety, effi ciency, emissions
intensity, fuel utilisation, raw material
substitution and resource management.
We have a strong culture of risk management
at Adelaide Brighton. The Company continues
to assess and manage its key business risks
and risk management processes, monitoring
compliance with the Group’s policies that
recognise business, environmental and
statutory responsibilities. The Audit Risk and
Compliance Committee reports the results
of its reviews of risk management
and compliance to the Board.
Our people
I acknowledge the signifi cant contribution
of all our people and thank our Managing
Director, Mark Chellew, for his dedicated and
strong leadership. I also acknowledge the
important contributions of my fellow Board
members. Finally, and importantly, I thank our
customers and all our shareholders for their
continuing loyalty and support.
Christopher Harris
Performance
I am pleased to report that the Company
posted its tenth consecutive record profi t in
2010 with earnings after tax of $151.5 million,
an increase of 23.1% over the previous year.
Earnings per share were 23.9 cents – an
increase of 17.2%. The generation of strong
free cash fl ow reduced year end net debt to
$148.4 million, and gearing to 15.9%.
Over the past fi ve years, Adelaide Brighton has
delivered a compound total shareholder return
of 14.7% per annum and average annual
growth in dividends paid to shareholders over
the same fi ve years of 23%.
Total fully franked dividends paid for the year
amounted to 21.5 cents per share, comprising
16.5 cents ordinary dividends (interim 7.5
cents per share and fi nal 9.0 cents per share)
and 5.0 cents special dividends (interim
2.5 cents per share and fi nal 2.5 cents per
share). The Board decided to declare the
special dividends after taking into account the
Company’s strong cash fl ows, future capital
expenditure plans, the availability of franking
credits and low gearing levels.
Strategy
Adelaide Brighton remains committed to its
successful long term objective of growing
shareholder returns. The Group continues
to focus on key strategies - expanding the
business by vertical integration, operational
improvement programs and development of
the lime business.
2
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Mark Chellew
2010 performance
Demand for construction materials in Australia recovered in 2010
following a cyclical downturn in 2009. Demand in Adelaide Brighton’s
major markets recovered particularly strongly - driven mainly by
infrastructure projects in South Australia and resources activity in
Western Australia. This helped Adelaide Brighton achieve record
sales and profi t for the year ended 31 December 2010.
Earnings before interest and tax (EBIT) increased 16.7% to $216.2
million, due to increased selling prices, the effective management of costs
and improved import margins supported by the strong Australian dollar.
Cost management programs delivered benefi ts of $10 million and helped
offset the $10 million increase in our energy costs for the year. Overall,
the Company’s EBIT margin increased to 20.2% (18.8% in 2009).
Net interest reduced by 16.2% to $14.0 million on lower levels of debt,
offset partially by increased interest rates. Profi t before tax increased
19.9% to $202.2 million. After tax profi t totalled $151.5 million an
increase of 23.1%.
Adelaide Brighton’s sales volumes outperformed the national cement
market, which was up about 4%. This is primarily because the Company
has signifi cant business in the higher growth states of South Australia,
Western Australia and Victoria.
Cement margins improved as price increases and the benefi ts from cost
management helped offset input cost pressures, particularly in energy.
The clinker kilns again ran at capacity in 2010. Our successful import
strategy saw sales volumes in excess of domestic production being
met through imports of both clinker and cement. The higher Australian
dollar improved import margins by about $13 million.
Lime sales volumes increased due to strong demand from the Western
Australian non-alumina sector. Lime margins improved as price increases
and effi ciency improvements more than covered input cost increases.
Continued growth in demand sustained full capacity production at the
major lime plants. In Western Australia, the threat of small-scale lime
imports remains, however we are cautiously confi dent that we can
maintain our competitive position because of our cost structure.
Strategy
Adelaide Brighton continues to grow shareholder returns through
its successful long term strategy of focused vertical integration,
operational improvement and development of the lime business.
The Board has approved $60 million of expenditure for the expansion
of cement milling at Birkenhead, in South Australia. This project will
bring operational improvements and add 750,000 tonnes per annum
to the plant’s capacity, reducing the Company’s reliance on imported
cement. The project budget includes expenditure for upgrading the
ship loading facilities at Birkenhead and this will bring environmental
benefi ts through improved dust collection.
Adelaide Brighton
reported a record
net profi t after tax
of $151.5 million, as
demand recovered in
key markets and price
increases and cost
management programs
improved margins.
c/share
Earnings per share
25
20
15
10
5
0
$m
160
140
120
100
80
60
40
20
0
06
07
08
09
10
Revenue and earnings
$m
1000
800
600
400
200
0
06
07
08
09
10
Net profi t after tax
Revenue
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
3
A contract to supply cement to a major customer in South Australia
and Western Australia has been agreed in principle. For the South
Australian component, supply has been secured for two years, from
1 January 2011, with a further one-year option exercisable by the
customer. The Western Australian part of the contract is for one
year, with a one year extension option exercisable by the customer.
Contract renegotiations with Independent Cement and Lime Pty
Ltd (ICL) have been agreed in principle subject to ICL unit-holder
approval. We are cautiously confi dent that the agreements which
expire at the end of 2011 will be renewed on not materially
different terms.
The Board has approved expenditure of $34 million for two
projects at the Munster kiln 6 in Western Australia. This will
increase lime production capacity by 100,000 tonnes per
annum and will bring environmental benefi ts.
In December 2010, Adelaide Brighton executed a Heads of
Agreement with a major alumina producer for the continued
supply of their lime requirements in Western Australia, subject to
fi nalisation of formal agreement and any appropriate approvals.
Once fi nalised, the new agreement will replace the current
agreement which expires on 30 June 2011. The Heads of
Agreement covers supply for periods ranging between fi ve
and ten years and will be effective from 1 July 2011.
Our strategy of focused vertical integration continues.
During 2010, the Company acquired the Masta-Mix Concrete
operations at Lithgow, in New South Wales. Masta-Mix will
buy aggregates internally thereby providing security for our
expanding Austen Quarry operations, west of Sydney.
In January 2011, Adelaide Brighton acquired the concrete
and aggregate business KMM based in the Kingaroy region of
Queensland. This business is well positioned to benefi t from
infrastructure and mining projects in the region. The South
Coast Equipment concrete business, based in the Wollongong
region of New South Wales, was acquired in March 2011.
Adelaide Brighton continues to evaluate acquisition
opportunities to advance its strategy of selected downstream
vertical integration. Growing our aggregates business will
continue to be a key element of this strategy.
Our people
The enthusiasm, fl exibility and skills of our employees have been
an essential part of the success of the Company. I would like to
recognise the contribution made by our employees in delivering
the 2010 result and the continued improvement in our safety record.
The dedication and application of our workforce as a whole, are
defi ning factors in the performance and growth of the Company.
Outlook
Adelaide Brighton anticipates Australian national demand
for cement in 2011 to be similar to 2010 levels.
Demand remains robust in South Australia due to infrastructure
projects and in Western Australia as a result of mining projects.
Due to the expected timing of projects, volumes are likely to be
higher in the second half of 2011 than the fi rst half. We expect to
lose some market share in Western Australia due to the loss of
a 200kt cement contract and to incur an additional $5 million
of major maintenance costs, mainly in the fi rst half of 2011.
The company is assessing the short term impact of the recent
earthquake and tsunami in Japan on our clinker supply chain.
At this stage we do not expect a material impact on 2011 earnings.
In 2011, lime sales volumes are expected to be approximately
the same as 2010 levels. The threat of small scale lime imports
in Western Australia remains.
Weakness in the concrete masonry market is expected to
continue in 2011 due to diffi cult conditions in the commercial
and the multi-residential segments.
Adelaide Brighton has long had a rigorous focus on cost
management across the Group, with particular emphasis on
energy effi ciency. The Company will continue to focus on
operating costs to maintain margins.
The strength of the Australian dollar is expected to have a
positive impact on margins of imported products. The strength
of the dollar does, however, create a risk of greater import
competition in cement and lime. At present we expect earnings
in 2011 to be similar to the record results achieved in 2010.
4
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
s
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Comparison of growth ABC share price plus dividends to the ASX Small Ords Accumulation Index and ASX200 Accumulation index
1100%
1000%
900%
800%
700%
600%
500%
400%
300%
200%
100%
01
02
03
04
05
06
07
08
09
10
ABC share price plus dividends Small Ords Accum ASX200 Accum
Sales and profi ts
Adelaide Brighton reported a record net profi t
after tax of $151.5 million, an increase of
23.1% on 2009. Revenue increased 8.7% to
$1,072.9 million, primarily due to stronger
demand for cement from projects in South
Australia and Western Australia.
Return on funds employed increased
to 20.0%, up from 17.3% in 2009. Since
2000, Adelaide Brighton has delivered an
average annual total shareholder return
of 27.4% per annum.
Cash fl ow
EBIT margin
EBIT margin increased to 20.2% (18.8% in
2009), due to increased volumes, improved
pricing, benefi ts from cost management
initiatives and improved import margins
supported by the strong Australian dollar.
Cost management programs delivered
benefi ts of $10 million and this helped offset
rising energy prices, which were $10 million
higher than in 2009. In the second half of
the year, EBIT of $3 million was realised
from the sale of land and the sale also
had a positive tax benefi t.
Shareholder returns
A 2010 fully franked fi nal dividend of
9.0 cents per share was declared, along with
a special dividend of 2.5 cents, fully franked.
In August 2010, an interim ordinary dividend
of 7.5 cents and an interim special dividend
of 2.5 cents (fully franked) were declared.
The total 2010 full year distribution was
therefore 21.5 cents, an increase of 59.3%
over the previous year. The dividend payout
ratio, including the special dividends of
90.1%, took into account strong cash fl ows,
growth capital plans, the availability of
franking credits and low gearing of 15.9%
(as at 31 December 2010).
Operating cash fl ows increased to
$188.5 million, facilitated by strong trading
and continued working capital management.
Trade receivables decreased $1.8 million to
$144.2 million, and debtor days decreased
2.6 days to 45 days. Inventory levels
increased $10.0 million to $117.8 million,
due to the timing of shipments. In total,
the level of working capital was consistent
with the previous year and, given the 8.7%
increase in sales, resulted in a reduction in
the working capital to sales ratio.
Capital expenditure totalled $51.7 million
for the year and this is in line with ‘stay
in business’ levels.
Borrowings
Due to strong free cash fl ows, net debt
decreased $27.0 million to $148.4 million.
As at 31 December 2010, gearing of 15.9%
was down from 19.6% at the same time in
2009.
Adelaide Brighton’s credit facilities with three
major Australian banks total $360 million.
They are comprised of $210 million maturing
on 30 June 2011, $80 million maturing on
1 July 2012, and $70 million maturing on
31 January 2014. The Company is in
advanced discussions with its lead bankers
with regard to the rollover of those facilities
maturing in June 2011.
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
A strong cash fl ow and balance sheet
position provides capacity for the Company
to fund future acquisitions and planned
organic growth opportunities.
Interest and taxation
2010 net fi nance costs of $14.0 million were
$2.7 million lower than in 2009, due mainly
to lower levels of debt partially offset by
higher interest rates. Interest cover increased
to 15.4 times, compared with 11.1 times in
2009.
Tax expense increased $5.4 million to
$50.8 million, due to increased profi ts.
However, the effective tax rate decreased
from 26.9% in 2009 to $25.1%, primarily
because of a one-off tax benefi t resulting
from the sale of land. This sale resulted
in a $4 million tax benefi t for the year.
Michael Kelly
Chief Financial Offi cer
$m
Total assets
1400
1300
1200
1100
1000
06
07
08
09
10
5
Adelaide Brighton’s
consistent strategy of
focused and relevant vertical
integration, development of
the lime business and cost
reduction and operational
improvement provides a
solid platform for future
development and has
supported the Company’s
sustained performance
achievement in 2010.
Tonnes ‘000
Australian cement production
10,000
9,500
9,000
8,500
8,000
7,500
7,000
6,500
6,000
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
Tom Douglas
Executive General Manager
Marketing and Sales
Sales by geographical
segmentation
Western Australia
Victoria
New South Wales
Queensland
South Australia
Northern Territory
Tasmania
Turnover segmentation
Cement
Lime
Concrete and aggregates
Concrete products
6
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Cement volumes and profi tability improved due to strong
demand in South Australia, Western Australia and Victoria.
The Cement and Lime Division continues to be the
main earnings driver for Adelaide Brighton. Margins
improved due to increased volumes, improved
pricing, the benefi ts of cost management programs
and improved import margins. Clinker and cement
sales are supported by the Sunstate Cement joint
venture in Queensland and Independent Cement
and Lime in Victoria.
The Division plans to increase the cement milling
capacity at Birkenhead, in South Australia, by
750,000 tonnes. This $60 million project will
improve operating effi ciency and reduce the Group’s
reliance on imported cement. It will also include
an upgrade of the ship loading facilities. Improved
dust collection will bring environmental benefi ts.
Martin Brydon
Executive General Manager
Cement and Lime
Tonnes
‘000
Adelaide Brighton cement ground
(including imported clinker)
3,000
2,500
2,000
1,500
1,000
500
0
06
07
08
09
10
In 2010, the Division continued to focus on cost
management initiatives and this helped offset the
impact of increased energy prices. Energy costs
were actively managed through electricity demand
management, the use of alternative fuels and, from
September 2010, through direct participation in
the gas Short Term Trading Market.
The timing and cost of shutdown maintenance
was in line with 2009. However, non-shutdown
maintenance was $5m higher, particularly in
the second half of the year.
Sales of cement were up signifi cantly as a result of
increased demand from infrastructure and mining
projects in South Australia, the resources industry in
Western Australia and the continued strength
of construction activity in Victoria.
Clinker plants continued to operate at full capacity.
Increased market demand was addressed through
imports of clinker and cement and once again
proved the success of the Company’s import
strategy. Import margins improved, assisted
by the stronger Australian dollar.
Lime volumes increased due to strong demand
from the Western Australian non-alumina sector.
Margins improved as price increases and effi ciency
improvements more than covered input cost
increases. Continued growth in lime demand
sustained production at full capacity in the key
operations of Munster (Western Australia), Angaston
(South Australia) and Mataranka (Northern Territory).
The smaller Dongara (Western Australia) plant
provides fl exibility to supply peak market
demand as required.
During 2011 and 2012, $34 million will be
invested in two projects at the Munster (Western
Australia) kiln 6. The result will be environmental
benefi ts and an increase of 100,000 tonnes per
annum in lime production capacity. The planned
expenditure includes $24 million to replace the
electrostatic precipator with a heat exchanger
and bag fi lter, and $10 million for a new
cooler bag house.
7
The Concrete and Aggregates
Division, under the Hy-Tec
brand, delivered an improvement
in earnings. This was achieved
through cost management,
effi ciency improvements,
improved pricing and growth
in the quarry operations.
Mark Finney
Executive General Manager
Concrete and Aggregates
Demand for concrete on the east coast of Australia was 2% higher in 2010 than 2009. Stronger volumes in
New South Wales and Victoria offset weaker demand in South East Queensland. Concrete margins increased due to
improved volumes, increased prices and the control of production costs. Cost management initiatives saw continued
progress in the use of alternative raw materials, the management of mix designs and in mixer truck utilisation.
During the year, Adelaide Brighton acquired the Masta-Mix Concrete operations at Lithgow, west of Sydney.
Masta-Mix will buy aggregates internally and this will provide security for Hy-Tec’s expanding Austen Quarry
operations, in the Blue Mountains west of Sydney. In January 2011, Adelaide Brighton acquired the concrete and
aggregate business KMM, based in the Kingaroy region of Queensland. This business is well positioned to benefi t
from infrastructure and mining projects in the region. The South Coast Equipment concrete business, based
in the Wollongong region of New South Wales, was acquired in March 2011.
Profi tability of the aggregates operations improved due to increased volumes, improvement in the prices of quarry
products and increased plant throughput. The Austen and Hurd quarries increased sales of road base materials,
which complemented sales of aggregates and manufactured sand to the internal concrete operations.
The result was improved production balance.
The 2010 results included the fi rst full 12 months of operation of the Tinda Park (New South Wales) sand operation,
acquired in December 2009. The operation exceeded forecast volumes and profi tability. The Division continues
to evaluate future raw material reserves. Management of accounts receivable, saw a reduction in debtors days
outstanding and helped Hy-Tec avoid any major account failures during the year.
‘000 m3
Australian concrete production by State
‘000 m3
Australian concrete production
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
Qld
NSW
Vic
WA
SA
ACT
Tas
NT
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
8
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Steve Rogers
Executive General Manager
Concrete Products
The continuing adoption of common
business systems throughout the
Division improved the quality of
information, capabilities across
all business functions and data
processing effi ciency. This, together
with the rationalisation of the
product range, sees the Division well
placed to take advantage of market
recovery.
Concrete Products Division
profi tability declined due to
diffi cult market conditions.
The Concrete Products Division,
under the Adbri Masonry brand
which supplies blocks and bricks,
pavers and retaining wall systems,
has consolidated its number one
market share position in Australia.
The Division operates in fi ve key
markets - Queensland, New South
Wales, Victoria, South Australia
and Tasmania.
2010 saw a continuation of
demanding market conditions of
the previous year. The east coast
masonry market was down again,
although this was partly due to
signifi cant weather events in
the last quarter.
Pricing increases and Operational
Improvement Programs offset cost
increases in an extremely competitive
market. Queensland and New South
Wales continued to offer soft market
conditions and there is no sign of
real improvement in the near future,
particularly in Queensland. The
end of the Federal Government’s
‘Building the Education Revolution’
economic stimulus plan is expected
to put further pressure on volumes
during 2011.
Signifi cant progress was made on
the optimisation of product mix, with
an increasing lightweight offer being
put to the market. This product is
expected to reach its full potential
in 2011.
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
9
Joint Venture operations provide an important contribution
to Adelaide Brighton’s earnings and cash fl ows.
Sunstate Cement
Mawson Group
Burrell Mining Services
Burrell Mining Services is an
unincorporated joint venture
between Adelaide Brighton and
Burrell Mining Products. With
operations in New South Wales
and Queensland, Burrell Mining
Services manufactures a range
of concrete products exclusively
for the coal mining industry.
Burrell Mining Services reported
improved earnings in 2010 as a
result of strong demand from the
coal mining sector in New South
Wales and Queensland.
Mawson Group (Mawsons) is a joint
venture between Adelaide Brighton
and BA Mawson Pty Ltd. Mawsons
is the largest premixed concrete and
quarry operator in northern regional
Victoria. Mawsons also operate in
southern regional New South Wales
and holds leading market positions
in markets served.
The Mawsons concrete and
aggregates joint venture in northern
Victoria and southern regional
New South Wales again had a
strong year with on-going demand
from the mining sector and water
infrastructure projects.
Batesford Quarry
Batesford Quarry is an
unincorporated joint venture
between Adelaide Brighton,
E&P Partners and Geelong Lime
Pty Ltd. Batesford Quarry, situated
at Fyansford Quarry near Geelong
in Victoria, undertakes quarrying
and manufacturing, marketing and
distribution of various limestone
and quarry products.
Batesford Quarry performed in
line with expectations supplying
customer demand for mining lime
and cement mineral additions.
Sunstate Cement Limited, a joint
venture between Adelaide Brighton
and Boral Cement, is a cement
milling, storage and distribution
facility at Fisherman Islands, Port
Brisbane. Sunstate Cement is
supplied with seaborne supply of
clinker from the Adelaide Brighton
Birkenhead plant and imports
from Asia. Sunstate Cement is a
leading supplier to Queensland’s
construction industry.
Sunstate Cement reported increased
earnings despite weakness in the
South East Queensland market in
2010 with lower volumes for the
year offset by a decrease in clinker
transfer (input) prices. Pricing
pressures remain evident in south
east Queensland due to the impact
of a new market entrant.
Independent Cement
and Lime Pty Ltd (ICL)
Independent Cement and Lime Pty
Ltd (ICL), a joint venture between
Adelaide Brighton and Barro Group
Pty Ltd, is a specialist supplier of
cement, cement blended products,
and agricultural lime to a wide variety
of industries, major retail outlets,
and agricultural markets throughout
Victoria and New South Wales.
Independent Cement and Lime
reported improved earnings driven
by an increase in demand from
major projects. Margins improved
as a result of increased pricing
and cost control.
10
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
A
Adelaide Brighton Cement
Cement, drymix, fl y ash
Adbri Masonry
Concrete products
Adelaide Brighton Cement
Cement, lime
Adelaide Brighton Cement
Gypsum
Independent Cement and Lime
(50% owned)
Cement, lime, drymix, slag
Adbri Masonry
Concrete products
Hy-Tec Vic
Premixed concrete
Batesford Quarry
Limestone, sand
Mawsons (50% owned)
Premixed concrete, aggregates
Austen Quarry
Aggregates
B
C
D
E
F
G
H
I
J
K
L
M
N
O
Morgan Cement / Vales Pt
Cement, fl y ash
Adbri Masonry
Concrete products
Hy-Tec NSW
Premixed concrete
Independent Cement and Lime
(50% owned)
Cement, lime, drymix, fl y ash
Hurd Haulage
Aggregates, sands,
Premixed concrete
Adbri Masonry
Concrete products
Sunstate Cement
(50% owned)
Cement, drymix
Hy-Tec Qld
Premixed concrete
Adbri Masonry
Concrete products
P
Q
R
S
T
U
V
Adbri Masonry
Concrete products
Mataranka Lime
Lime
Northern Cement
Cement
Exmouth
Limestone
Dongara Lime
Lime
Cockburn Cement
Lime, cement, drymix
Rawlinna Quarry
Limestone
W
Adbri Masonry
Concrete products
X
Y
Z
Hy-Tec NSW
Sand
Burrell Mining Services
Concrete products
Hy-Tec Qld
Aggregates, sand
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
11
Adelaide Brighton is a leading producer of
Adelaide Brighton is a leading producer of
sustainable construction materials and lime and
sustainable construction materials and lime and
is committed to reducing the dependence of its
is committed to reducing the dependence of its
operations on natural resources, manufacturing
operations on natural resources, manufacturing
safely and responsibly, and fi nding viable ways
to tailor products to meet its customers’ needs.
to tailor products to meet its customers’ needs.
For fi ve years Adelaide Brighton has had in place a
sustainability framework based on the World Business
Council for Sustainable Development’s Cement Sustainability
Initiative (WBCSD CSI). The framework outlines the
strategies, actions and measures the Company is applying
to reduce energy consumption and emissions, conserve
resources, achieve cleaner production, produce increasingly
sustainable products, engage with the community on
environmental issues and, importantly, ensure the health
and safety of its own people and the wider community.
All parts of the business adhere to this framework
and report against it. Having it in place
is essential to the Company
maintaining its position of industry
leadership in sustainable
business practices.
12
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Recycling industry materials
Iron blast furnace slag
Alumina smelting pots
Power generation coal ashes
Petroleum refi ning catalyst
Cast metal sand
Steel rolling mill scale
Lead and zinc refi ning slags
Metal processing residue
Wine bottling wash water
Used lubricants greases and oil
Construction and demolition waste
Chemical Industries (e.g. solvents,
and residues)
L I M E
Uses
Iron and steel production
Aluminium refi ning
Drinking water treatment
and air fi ltration
Soda ash for glass making
Soil conditioning (agriculture)
Construction materials
Stabilising landfi ll
Paper production
Mine water neutralisation
The interaction of cement,
concrete and lime operations
with other industries, the
environment and the community
Alternative resources
Clinker substitution
Alternative fuels
Water recycling on site/
alternative supply
Raw materials
Traditional inputs
Fuel (natural gas and coal)
Water
Raw materials (limestone,
clay, ironstone, gypsum)
Power
C E M E N T A N D L I M E P R O D U C T I O N
T
N
E
M
E
C
Emmissions
GHG Emissions
Noise and dust
Stack emissions
Kiln dust
Traditional inputs
Fuel (diesel, natural gas)
Water and cement
Materials (sand, aggregates)
Power
Alternative resources
Cement substitution
Water recycling on site/alternative supply
Aggregate substitution
C O N C R E T E P R O D U C T S A N D P R E M I X
Recycling industry
materials
Glass waste
Power generation coal ashes
Concrete waste
Iron blast furnace slag
Waste water
Quarry screenings
Mining fi nes
Uses
Concrete products
(paving, blocks, walls)
Premixed concrete for
infrastructure
Commercial and
residential buildings
Road construction
Soil stabilisation
Mine backfi ll
Emmissions
GHG Emissions
Noise and dust
Waste water and concrete
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
13
Cement and Lime manufacturing
Energy, water and raw materials - the key elements used to produce cement
and lime - need to be conserved. Adelaide Brighton respects the need for
sustainability - and it respects the communities in which it operates. The Company
is seeking cleaner, greener ways to conduct its business and manufacture its
products. All plants are required to conform with state and federal environmental
legislation, and each site is individually licensed. Larger sites have established
local community liaison groups and meet regularly on issues of performance,
progress on environmental improvement plans, and licence conditions.
Energy
The operations in the Cement and Lime Division collectively use more than 98%
of all energy consumed by the Company. Choosing the right technologies, energy
sources and efficient operational procedures is vital to ensuring that our products
remain competitive.
Technology
Adelaide Brighton continually strives to produce cement and lime in the most
efficient and sustainable ways. In the production of high volume products, for
example, it employs world-class technology that reuses heat created in the
process. Technology and equipment in all plants is regularly assessed and updated
to maintain high levels of efficiency. New plant replaces old, external research
is used to find new technical practices, and our skilled people are continually
identifying ways to improve operations. Each cement and lime site has an energy
efficiency program. Angaston, Birkenhead, Munster and Dongara are required to
participate in the Federal Government’s Energy Efficiency Opportunities program,
which requires energy intensive sites to identify, evaluate and report publicly on cost
effective energy savings opportunities. Over a five-year period, across these four
sites, Adelaide Brighton estimates it will reduce energy consumption by about 5%.
Cement manufacturing performance
Kiln fuel efficiency
Alternative fuels substitution
Clinker/cement ratio
Greenhouse gas efficiency (GHG)
Electricity efficiency
WBCSD1
Baseline
Adelaide Brighton
Cement data
GJ/t
%
%
t GHG/t cement
kWh/t cement
4.2
3
79
0.800
111
5.4
7
77
0.787
115
1 Measures, technologies and programs have been referenced from Cement Technology Road Map 2009, WBCSD and IEA
Best practice technology and programs
WBCSD1 technology and programs
Use of preheater/calciner kiln technology
Using alternative fuels program
Using alternative raw materials program
% kiln product
% kiln product
% kiln product
Clinker substitution program using supplementary cementitious materials (SCM)
% substitution rate
Clinker substitution program using mineral addition (MAC)
% substitution rate
1 Measures, technologies and programs have been referenced from Cement Technology Road Map 2009, WBCSD and IEA
2 Calculated for high volume (GP) clinkers
% Adelaide Brighton
production (cement)
% Adelaide Brighton
production (lime)
72%2
72%
100%
21%2
4%
86%
15%
0%
n/a
n/a
14
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Management systems
Strict procedures at each site ensure staff maintain and operate plant to manufacturers’ specifi cations and in optimum production conditions.
Sophisticated programming and monitoring ensures that faults are quickly diagnosed and maintenance is thorough. Similarly, across the
Company plants are controlled by skilled operators who use computers to monitor each part of the process. Consistent operations give us
good environmental performance and quality products. Angaston has trialled “dash board control’s”, which gives real-time measures
of process effi ciency. This technology will be rolled out across the Cement and Lime Division.
%
Alternative fuels
100
80
60
40
20
0
08
09
10
Construction and
demolition waste
Carbon power
Waste oil
Alternative fuels
In cement and lime manufacturing, kiln fuel accounts for 91% of the total energy used and is the source of 35% of greenhouse gas emissions.
In its Cement Sustainability Initiative, the World Business Council for Sustainable Development (WBCSD - CSI) identifi es as best practice sourcing
kiln fuels from waste and by-product materials, rather than fossil fuels. Adelaide Brighton has had alternative fuels programs in place at all cement
and lime manufacturing sites since 2003 and through them currently substitutes more than 6% of their collective fuel needs. From a wider community
perspective, the use of waste and by-product materials improves the viability of waste recovery streams and helps to use thousands of tonnes of
substances that would otherwise go to landfi ll, or simply be disposed.
The implementation of these new practices has required a signifi cant change in approach, not only by the Company, but also by regulators and
local communities. Suitable alternative fuels are fi rst carefully selected for quality, quantity, cost and consistency of supply. A testing program is
implemented at each site to prove environmental emissions calculations. Assessment reports from each trial are reviewed by state authorities and
the results are discussed with the community before any new fuel is approved for regular use. The refi nement of fuels and processes is ongoing,
to maximise energy effi ciency.
The current programs focus on three particular fuels:
> Waste oil used at Angaston, Dongara and Mataranka
conserves natural gas and provides a recycling opportunity
in each region. Munster is investigating the use of waste oil.
> The use of biomass fuel sourced from construction and
demolition waste began at Birkenhead in 2003. It is a
substitute for 14% of the natural gas used to heat the plant.
> Birkenhead also uses carbon powder from treated and
fi ne-crushed spent aluminium smelting pots.
Alternative raw materials
Cement and lime production also requires large amounts of natural raw materials. The Cement and Lime Division’s alternative raw materials
program uses waste and by-products recycled from other industries, reducing the amount that would normally go to landfi ll, and conserving
natural resources. The Company is continually searching and trialling materials that enhance our products and can be successfully used in
production. Before a alternative raw material is approved for use, it is rigorously trialled and proved.
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
15
%
Alternative raw materials
100
80
60
40
20
0
08
09
10
Mill scale
Alox
Foundary sand
Spent catalyst
>
>
>
>
>
In 2010, the Cement and Lime Division consumed 34,000 tonnes of alternative raw materials, including:
Air-cooled blast furnace slag was fi rst trialled in Angaston’s clinker production in 2007 and substituted
4,000 tonnes of greenhouse gas emissions that year. However, at the time the program was not viable.
Trials are under way again at Birkenhead and it is hoped a viable process can be implemented at both plants.
Angaston trialled the use of foundry sand as an alternative to soapstone, a natural resource, in the cement
manufacturing process. The trial was successful and extended to Birkenhead. In 2010 the sites collectively
used 9,000 tonnes of foundry sand and the quantity is expected to increase as the process is refi ned.
Alox, a by-product from aluminium recycling, successfully substituted for clay at Birkenhead and
plans are being drafted for a permanent alox handling facility at the plant.
Black sand, a by-product of metal smelting, and mill scale from steel rolling, being used as a substitute
for iron ore in kiln feed at Birkenhead.
Munster use of kaolin from coal mining and spent catalysts from petroleum refi ning as an alternative
to shale with alumina and iron contributions.
‘000
Clinker substitution
700
600
500
400
300
200
100
0
08
09
10
Binders
Supplementary cementitious materials
Mineral additions
Clinker substitution in cement
Clinker is the most energy and greenhouse gas-intensive component of cement, comprising 95% of the
composition of high volume traditional Ordinary Portland Cement (OPC). OPC is the most common used
around the world. Reducing the clinker/cement ratio in cementitious products is recognised by the WBCSD -
CSI as a key sustainability opportunity and has become a key performance indicator for the industry.
>
>
>
Changing the ratio has been achieved through:
The introduction of blended cements with higher levels of supplementary cementitious materials (SCM).
The design of cementitious binders for non-structural applications.
A change in the Australian Standard for cements, in 2010, that permits a higher and wider range
of mineral additions to displace clinker content.
16
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Water
The manufacture of cement and lime
uses water both directly in the process,
and indirectly for dust suppression and
truck washing. Activities to reduce water
consumption are registered with state
authorities’ water effi ciency programs
and recorded in site environmental
improvement plans.
Adelaide Brighton’s investment in dry
process technologies has reduced water
demand by 450 litres per tonne of product.
Additional water effi ciency initiatives
adopted across the Division include:
The planting of indigenous gardens.
Harvesting and storing water for low
grade uses such as dust suppression.
Monitoring water consumption in real
time to fi nd opportunities for effi ciency.
Educating the workforce about
water conservation.
>
>
>
>
Alternative water sources are also sought.
Since 2006, Angaston has been using waste
wash-water from a neighbouring bottling
company. This practice provides a solution
for the waste - and saved 35,000 ML of
mains water in 2010. This project earned
the Company a place in the fi nals of the
prestigious National Banksia environmental
awards in 2007.
Air quality, noise
and emissions
Greenhouse gas and stack emissions from
cement and lime production are monitored
through compliance with government
environmental licences and reported to
the National Pollutant Inventory (NPi) and
National Greenhouse & Energy Reporting
(NGER). Kwinana, Dongara, Munster,
Birkenhead, Angaston, Mataranka, Klein
Point and Blanchetown quarries all report
annually to the NPi, and every Adelaide
Brighton site reports to NGER.
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
During 2010, a site visit to Dongara by
the Western Australian Department for
Environment and Conservation resulted
in no major issues of NPi reporting.
The Company’s greenhouse gas and
energy data collection process was
reviewed to ‘reasonable assurance‘ level by
PricewaterhouseCoopers, and submitted to
government for approval and listing on the
Emissions-Intensive Trade-Exposed Industry
Register. This data forms the basis of our
NGER mandatory reporting.
Minimising dust, noise and emissions is
a universal goal in all site Environment
Improvement Plans and these items are on the
agenda at community consultation meetings:
To combat noise and dust issues outside
its site boundaries, Adelaide Brighton
takes four key actions:
Levels are measured regularly.
Barriers minimise the effects at the source.
Site activities are managed to minimise
the impact.
Selecting equipment with performance
specifi cations.
>
>
>
>
Dust emissions from kiln stacks are
continuously monitored to optimise the fi ltering
and combustion process to comply with
environmental licence conditions. Stack testing
contractors routinely expertly test emissions.
When there is a process change the effect at
ground level is modelled and checked against
acceptable regulated environmental standards.
Over the past 5 years, Angaston has reduced
stack emissions by 90% by striving for steady
kiln operations (a reduction in stops and
restarts). Munster’s continuous improvement
plan for kiln 6 includes the installation of a
baghouse fi lter.
Munster’s 5 kiln operation is using an extensive
environmental emissions analysis tool along
with a real time monitoring system. This helps
to identify and assess factors related to raised
levels of stack emissions.
Greenhouse gases
More than 99% of on-site greenhouse gas
(GHG) emissions are released from cement
and lime production through the kiln stack.
These emissions are from process materials
that emit CO2 as they are heated in the kiln,
and from the fuels used to heat the kiln.
Changing the concentration of GHG requires
a change in fuels and burning technologies.
The upgrade of kiln burners has achieved
improvements in burning effi ciencies and
provided the opportunity for using alternative
fuels with lower GHG footprints. The new
burner technology is being extended across
the Cement and Lime Division.
Mains water
Cement and Lime
06
07
08
09
10
Process waste to landfi ll
Cement and Lime
ML
600
500
400
Tonnes
160,000
140,000
120,000
100,000
06
07
08
09
10
Total energy
Energy
Cement and Lime
19,000
18,800
18,600
18,400
18,200
18,000
17,800
06
07
08
09
10
Total energy (TJ)
Lime production (GJ/t)
Clinker production (GJ/t)
Cementitious material
production (GJ/t)
GJ/t
9.0
8.0
7.0
6.0
5.0
4.0
3.0
GHGt/t product
GHG emissions*
Cement and Lime
Total GHG/kt
1.4
1.2
1.0
0.8
0.6
0.4
3,280
3,260
3,240
3,220
3,200
3,180
3,160
06
07
08
09
10
Total GHG emissions
Lime GHG emissions (GHG/t)
Clinker emissions (GHG/t)
Cementitious emissions (GHG/t)
*Process, fuel and power
% substitution
Alternative resources
Cement and Lime
Total tonnes
20
16
12
8
4
0
06
07
08
09
10
Total alternative materials
% Fuel substitution
% SCM substitution
600,00
500,000
400,000
300,000
200,000
100,000
0
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Cleaner production
Waste is being reduced at cement and lime
sites through the implementation of cleaner
production methods and fi nding alternative
uses. Employees are encouraged to see
the creation of waste as ineffi cient, and
to recognise that segregation creates
opportunities for recycling. Waste from
plant processes is managed by:
Knowing where wastage occurs, and
addressing the issue at the source.
Knowing what on-site waste can be
reused in products, e.g. kiln dust.
Seeking off-site recycling opportunities
for waste oil and lubricants, scrap
metal and paper.
Changing the composition of waste-
stream items to make them recyclable
(e.g. replacing paper sacks with
unbleached ‘kraft’ paper).
The correct disposal of suitable
treatment materials such as batteries,
mobile phones and fl uorescent tubes.
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Customer focus
Customers who handle and use Adelaide
Brighton products need easy access to
information about product safety and
application. Our products should perform
to design expectations every time. The
Company runs product training programs,
and produces user guides, material safety
data and information sheets and believes
its responsibility includes sustainable
distribution methods and packaging.
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The following examples show how
our products and practices have been
modifi ed to improve sustainability:
Packaging waste and manual handling
issues have been addressed by: changing
the paper and plastic content in bags;
moving to more environmentally friendly
paper; and limiting bag size to 20kg. Bulk
bags have been redesigned to include
baffl es, which give greater stability, reduce
spillage and breakages, and enable
the bags to be stacked safely in storage.
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The number of depots has been increased
in regional areas to allow direct consolidated
deliveries to growth markets for wider
distribution.
A signifi cant portion of the Company’s
cement and lime product is distributed by
ship or rail from the works.
Key distribution centres aim to offer a wide
range of products for customer convenience.
Monitoring and measuring customer
satisfaction through the ‘Perfect Order’
management process.
Providing a product range that meets
customer expectations for lower greenhouse
gas and energy footprints and high use
of recycled materials.
Rehabilitation programs
Cement and lime manufacturing and mining sites provide a range
of opportunities for land care projects. Adelaide Brighton’s native
vegetation rehabilitation programs have been implemented to:
Encourage biodiversity.
Provide green zones to screen our operations.
Improve degraded land.
Engage with the community.
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Programs at individual sites work to improve the amenity of the
local area.
Production sites
A program called Earth Care, started at the Angaston plant, has
restored the old quarry to its natural state. Indigenous plants
have been reintroduced to provide habitat for birds and animals,
stabilise the soil, control weeds and deter destructive pests
like rabbits. Sheep graze the area during summer as part
of a bushfi re prevention program.
18
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Schroder Park at Birkenhead was created in 1997 to complete
the greenbelt screen separating the site from the local community.
The use of locally propagated seed harvested from indigenous
plants attracts fauna, provides an attractive buffer, manages
the plant’s run-off water and engages the local community. The
park is part of the ‘Our Patch’ and ‘Water Watch’ community
environmental projects.
Munster has developed a wetland system to manage water run-
off from the site and reuse it in wet process kilns, reducing the
consumption of mains and bore water. The wetlands also support
community programs, including ‘Air Watch’ and school land care
projects.
Extraction sites
Topsoil and overburden from the Klein Point quarry is being used
to re-establish farmland, for roadside greening projects, and to
help stabilise coastal areas along Gulf St Vincent.
For 15 years, Cockburn Sound dredging operations have been
supporting a seagrass planting research and development project
that has culminated in world-fi rst achievements in deep water
‘meadow’ cultivation.
Premix and concrete masonry product manufacturing
Hy-Tec and Adbri Masonry have 46 sites near
metropolitan and regional centres, servicing
the commercial, manufacturing and residential
construction industries with high volume premix
concrete and a wide range of concrete pavers and
blocks. These sites provide employment for local
people and site management focuses on ‘good
neighbor’ principles. The sites handle traditional
inputs to concrete - aggregates and sand extracted
from local quarries, water, cement, power and diesel,
and, in the case of concrete masonry products, gas
used by curing ovens. Concrete manufacturing at
Hy-Tec and Adbri Masonry is the second stage in the
production chain of construction materials. Adelaide
Brighton’s sustainability framework is also used to
guide this part of the Company’s business.
Alternative resources
In the production of concrete products, alternative materials
conserve natural resources, lower greenhouse gas and
energy footprints and increase the use of waste materials.
The result is more sustainable products for the market.
The viability of alternative resources depends on the location,
quality and quantity of supply. Both Hy-Tec and Adbri
Masonry are sourcing and testing alternative resources.
Water substitutes
Both Hy-Tec and Adbri Masonry are reducing their
use of mains water. Activities include:
On-site metering to identify effi ciencies.
Installing tanks to harvest site run-off.
Recycling process water.
Finding suitable alternative sources, such
as bore water and other industry wastewater.
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Wastewater is often used in concrete mixes. Adbri Masonry
Stapleton has installed a system to collect the condensation
from its block curing ovens for reuse in the process. Hy-Tec
Queensland has a target to eliminate the use of mains water
and has implemented Water Effi ciency Management Plans
(WEMPs) at all sites and is rolling out automated water
recycling systems.
Energy effi ciency
Both Hy-tec and Adbri Masonry plants have energy
reduction programs. Successes and experiences are
shared within their divisions to keep operations competitive.
In the production of concrete masonry, energy is used
in stationary plant-forming and fi nishing blocks. In the
production of premix, most energy is used in transport
and materials handling.
Hy-Tec is completing the roll-out of a new truck fl eet,
replacing its standard six-wheel trucks with ten-wheelers,
so that more concrete can be carried in each load,
reducing the number of trips cuts fuel consumption and
exhaust pollution. Fewer trucks on the road means less
traffi c, and fewer mobile equipment movements on site
reduces risk and creates a safer work environment.
Higher standards of automation at sites has reduced the
‘dry running time’ of plant, led to the better coordination
of operations, and cut power use in some areas by 40%.
Mobile handling equipment, such as loaders and trucks,
have been replaced with stationary machinery, improving
energy effi ciency and safety.
Aggregate quarry operations use energy to power
equipment such as crushers, and vehicles for mining
and hauling material. Hartley Quarry has saved signifi cant
amounts of energy through smart plant design.
Cooperative changes to work practices have seen
the reorganisation of energy demand, and
reduced generator use by 40%.
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
19
Partnerships
The Adbri Masonry Nowra plant established
a recovery initiative with its local shire council.
The waste from concrete block production is
reused as road base in the council area and
wooden pallets are chipped for garden mulch.
Adbri Masonry’s Queensland plants also
partner with local sugar refineries, which use
broken pallets for biomass fuel in their power
plants.
Product design
Being a sustainable industry means providing
customers with sustainable product options.
Hy-Tec and Adbri Masonry look further than
improving the sustainability of the production
process.
Adbri Masonry has used design features to
address environmental issues. For example,
its Permeable Paving system for roads or
paths has interlocking pavers with openings
that are filled with gravel to create drainage
voids. The water can either drain naturally
into the soil, or be caught and retained
for a specific use.
To meet customer demands for quality
and safety, Hy-Tec:
Is upgrading the software used in its
batching process to improve product
quality and consistency.
Has produced a driver health and safety
handbook promoting safe work practices.
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Good customer communication and the
provision of technical support are vital to
Hy-tec and Adbri Masonry maintaining
competitive advantage and developing
product ranges.
Cement substitutes
At Hy-Tec and Adbri Masonry, the increased
use of Supplementary Cementitious Materials
(SCM), including granulated blast furnace
slags, fly ash, and blended cements has
displaced the use of OPC in concrete. OPC
is the most greenhouse gas and energy
intensive component of the mix. Hy-Tec
sells Eco-crete in Victoria with a high OPC
substitution rate to meet a clear market need.
Conserving natural aggregates
Supplementary Aggregate Materials (SAM)
such as manufactured sand and basalt fines
from screening processes, reconstituted
concrete from demolition waste, and furnace
bottom ash from coal fired power generation,
are becoming a significant part of concrete
production. Trials and the development of
mix designs are resulting in the wider
use of these resources.
To meet market demand, Adbri Masonry
NSW has developed mix designs that
incorporate higher levels of recycled materials.
For example, its Grey Block product now
includes 78% recycled materials.
Hy-Tec is focused on the use of manufactured
sands and recycled aggregates, optimising
concrete mixes that will provide more
sustainable products.
Manufactured sand
Manufactured sand is a by-product of
the Hartley Quarry operations. Trialing an
additional separation process will create
two products, each more effective for
its specific applications.
Emissions reductions
Noise and dust emissions are environmental
issues for Hy-Tec and Adbri Masonry. Both
businesses have introduced management
standards that include dust suppressant
agents, changes to operating procedures
and investment in site improvements.
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Adbri Masonry:
Uses road sweepers to control dust.
Seals roadways with seconds product.
Uses catchment water to suppress site dust.
Places low-demand products on residential
boundaries to provide a noise barrier and
reduce site activity in those areas.
To control dust, Hy-Tec is using more
effective and efficient water sprays to wet
raw materials being poured into agitator trucks.
The installation of vacuum dust collectors
on loading bays reduces fugitive dust and
recycles it back to the process. Suppliers
deliver raw materials in a damp state, and
this reduces dust when tipping.
A dust management study has been
implemented at Hy-Tec’s North Melbourne
site to provide a safer and cleaner work
environment for drivers. The findings will
add to the business’s knowledge base
and lead to improvements in its site
performance standards.
Cleaner production
Reducing the amount of waste to landfill is
an important feature of Hy-Tec’s and Adbri
Masonry’s resource recovery initiatives.
They aim to: reduce waste from the process;
reuse any waste in production; and find
partners who can use the waste, thus
preventing it from going to landfill. Recycling
opportunities often depend on which other
industries operate in a given region.
Technology
In premix plants, wastewater is recovered
on-site and reused in fresh batches of
concrete. Returned concrete is used for
site improvements, or concrete cubes for
community projects. The residual sludge in
water treatment ponds is sent off-site for
recycling. Hy-Tec NSW is about to test a
more effective way to recycle washwater
sludge. It involves a concrete reclaiming
machine that splits the waste into coarse
grain, fine grain and slurry water, allowing
optimum reuse of each of the fractions
to improve cementitious and aggregate
substitution.
20
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
The health and safety of our people - and those who come onto our sites -
is of paramount importance to Adelaide Brighton. It’s also a key performance
indicator for all Divisions. All business Divisions operate safety committees and
there is a company-wide exchange of information and incident reporting. Using
a risk-based approach, each Division develops a strategic plan. Performance
against the plan is tracked, and issues are acted on and successes shared.
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In 2010 our safety performance continued to improve with the recording
of improvement in the lost time and severity injury rate in all Divisions. The
focus on safety was intensifi ed with a number of specifi c initiatives including:
Refreshing the customised training in confi ned spaces and exclusion zones.
The rollout of a new standard of high visibility clothing at all production
sites, increasing the awareness of foot traffi c in and around mobile
equipment and vehicles.
A remote web based contractor induction program. The web based
program allows contractors to undertake induction for a specifi c site prior
to attending thereby delivering effi ciencies for the Company and contractor.
A renewed management program across all divisions to assist with the
management of return to work of injured employees.
Encouraging diversity
Adelaide Brighton is committed to being an inclusive workplace that
values and promotes diversity - not only gender but also race, ethnicity,
age, physical abilities, religious beliefs etc.
Our approach to improving diversity within the Company is based on
the following diversity objectives:
Facilitating and promoting a culture of diversity and removing
barriers to achieving a diverse workforce.
Reviewing and developing our recruitment and selection process
always ensuring that decisions are based on merit alone.
Providing talent management programs and opportunities for development.
Rewarding and remunerating fairly.
Ensuring we have fl exible work practices which recognise that employees
may have different domestic responsibilities throughout their career.
Developing a skills base
For many years, Adelaide Brighton has provided university graduates from
within different faculties with career opportunities through the Graduate
Program. The two year program provides participants with a broad base
of experience at different plant operations and locations. Adelaide Brighton
benefi ts by exposure to talented new employees and skills and
knowledge transfer from longer serving employees.
A summer vacation program over several months is available to engineering
students. Participants are assigned a dedicated project, with supervision
and are required to present a report at the conclusion of their assignment.
Enticing engineers, particularly women, into the cement industry
continues to be challenging. Adelaide Brighton has partnered with the
University of Wollongong to introduce a concrete technologies program
aimed at third year engineering students. The aim is to change students’
perception of the industry as a career path or destination.
Employees by Division
Cement and Lime
Concrete Products
Concrete and Aggregates
Corporate
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Employees by location
ACT
New South Wales
Northern Territory
Queensland
South Australia
Tasmania
Victoria
Western Australia
Sam Toppenberg
Executive General Manager
Human Resources
Incidents
Lost time injuries
12
10
8
6
4
2
0
06
07
08
09
10
Cement and lime
Concrete and aggregates
Concrete products
Frequency
Lost time injury frquency rate
10
8
6
4
2
0
06
07
08
09
10
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Examples of support provided during
2010 include:
Variety the Children’s Charity - benefi ting
sick, disabled and disadvantaged children.
Construction materials for Reed
Charity House which provides family
accommodation supporting patients at
Nambour Hospital in Queensland.
Construction of a regional community
aquatic and fi tness centre in the
Barossa Valley in South Australia.
Research into sea grass meadow
restoration through University of Western
Australia, Botanic Gardens and Parks
Authority and James Cook University.
EW Schroder Scholarship supporting a
University of Adelaide Chemical Engineering
post graduate student developing algae as
a renewable fuel and greenhouse gas sink.
Partnership between Northern Cement and
the indigenous community at Elsey Station to
develop a skills education program in mobile
equipment operation and quarry management.
Adelaide Brighton strives to be a responsible corporate
Adelaide Brighton strives to be a responsible corporate
member of the local communities in which we operate.
member of the local communities in which we operate.
We are committed to engaging with the community and
We are committed to engaging with the community and
support a broad range of organisations with donations,
support a broad range of organisations with donations,
public tours, community information, work experience
public tours, community information, work experience
public tours, community information, work experience
programs and newsletters.
programs and newsletters.
Felicity Lloyd, Projects Engineer,
SA/NSW Major Projects
Chemical engineering graduate (2003)
The Graduate Program was a
kick-start for my career at Adelaide
Brighton. It has provided a wide
range of experience and exposure
to more than just the engineering
aspects of the business.
Michael Jones, Manager,
Alternative Fuels and Materials,
Cement & Lime Division
Chemical engineering graduate
(Cadet 1980)
In my 30 year career since I started at
Adelaide Brighton as a Graduate, I’ve
had the opportunity to travel overseas,
live and work in the UK and have gained
a huge range of skills and experience.
As a professional person, you want
to be continually challenged - that’s
the reason I’ve stayed.
Simon Hains, Marketing Associate, Adbri Masonry
Marketing graduate (2008)
During my time on the graduate program, I worked on some very
interesting marketing related projects and had the opportunity
to work with some extraordinary and leading people. I learnt
a great deal about how each business operates, the markets
they compete in, and how each division of Adelaide Brighton is
inter-related. The program gave me the opportunity to travel and
be taken out of my comfort zone, with six month stints working
at the Birkenhead plant in Adelaide, Adbri Masonry in Stapylton,
Queensland, and Hy-Tec in Sydney. After 18 months, I was
fortunate to be offered a position in Adbri Masonry as a Marketing
Associate. I’m still there - and am enjoying every moment of it.
22
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
The Board is committed to conducting the Company’s business ethically and in accordance with high
standards of corporate governance. To this end, the Board (together with the Company’s management)
regularly reviews the Company’s policies, practices and other arrangements governing and guiding the conduct
of the Company and those acting on its behalf. This statement provides an outline of the main corporate
governance practices that the Company had in place during the past financial year. The Board believes that
the Company’s policies and practices are consistent in all substantial respects with corporate governance best
practice in Australia, including the ASX Corporate Governance Council Principles and Recommendations.
1 The Board lays solid foundations for management and oversight
1.1 Role of the Board
The role of the Board of Directors is to protect and optimise the performance of the Group
and, accordingly, the Board takes accountability for setting strategic direction, establishing
policy, overseeing the financial position and monitoring the business and affairs of the Group
on behalf of shareholders. Details of the skills, experience and expertise of each Director
and their period of office are set out on page 30 and 31 of this report.
The Board operates in accordance with the general principles set out in its charter, which is
available from the corporate governance section of the Company’s website at www.adbri.com.au
In accordance with the provisions of the Company’s constitution, the Board has delegated a
number of powers to Board committees (see section 2 following) and responsibility for the
day-to-day management of the Company to the Managing Director and senior management.
The respective roles and responsibilities of the Board and management are outlined
further in the Board charter.
The Board has also reserved for itself the following specific responsibilities:
Marcus Clayton
General Counsel and
Company Secretary
Strategy and monitoring
Input into and final approval of
management’s development of
corporate strategy, including
setting performance objectives
and approving operating
budgets
Monitoring corporate performance
and implementation of strategy
and policy
Monitoring the business and
affairs/relations with management
Risk management, compliance
and internal controls
Selecting, appointing and evaluating
from time to time the performance
of, determining the remuneration of,
and planning for the successor of,
the Group Managing Director
Reviewing procedures for appointment
of senior management, monitoring
performance and reviewing executive
development activities. This includes
ratifying the appointment and the
removal of the Chief Financial Officer
and the Company Secretary
Approving major capital expenditure,
acquisitions and divestitures, cessation
of any significant business activity and
monitoring capital management
Reviewing and guiding systems
of risk management and internal
control and ethical and legal
compliance
Monitoring and reviewing
processes aimed at ensuring
integrity of financial and other
reporting
Monitoring and reviewing policies
and processes in place relating
to occupational health and safety,
compliance with laws, and the
maintenance of high ethical
standards
Formulating the Company’s policy
in relation to, and monitoring
implementation of, sustainable
resource use and the impact of
the Company’s operations on
the environment, community
and stakeholders.
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
23
Board keeps informed of
regulatory and industry
developments to challenge
status quo and strengthen
knowledge base (see 1.2.4):
> Directors expected to
participate in ongoing education
> Board program developed having
regard to business and industry
developments and matters identifi ed
during annual performance evaluations
1.2 The Board is structured
to add value
The Board ensures that its
members have the time and
commitment to devote to the role:
> Prior to appointment, Directors
provide details of other commitments
and acknowledge that they will have
adequate time to meet expectations
> Directors to consult with the Chairman
before accepting outside appointments
> Letter of appointment sets out
Director’s term of appointment, powers,
expectations and rights and obligations
The Board is structured to add value
and Board decision-making is enhanced
through education and support:
> Broad range of skills and experience
refl ecting the character of the Group’s business
to best guide, review and challenge management
> Independent Chairman leads the Board,
facilitates constructive decision-making, and
manages Board / management relationship
> To maintain independent oversight, roles of
Chairman and Managing Director are
undertaken by different individuals.
Board and Director performance
is regularly evaluated to facilitate
continuous improvement
(see 1.2.3):
> Board, Committee and individual
Director performance reviewed annually
> Directors to undergo a performance
appraisal before standing for re-election
> One third of the non-executive
Directors retire (and are eligible for
re-election) at each AGM
Board members have access to
management and independent
advice to assist in discharge
of their duties:
> Access to senior executives and
to any further information required
to make informed decisions
> Right to seek independent
professional advice at the Company’s
expense to assist in effective
discharge of duties
The Board is committed to a
majority of independent views
being brought to bear in
decision-making (see 1.2.1):
> Directors expected to bring
independent views and judgment
to discussions
> Four of the six Board members
are independent
> Board has adopted Financial
Services Council Blue Book defi nition
Confl icts are managed
(see 1.2.2):
> Actual and perceived confl icts
considered and managed on
an ongoing basis
> Protocols around disclosure,
and procedures around
management, of potential
confl icts have been adopted
Comprehensive induction
processes equip directors
to perform in their role:
> Comprehensive induction
process upon appointment
> Obligation on new Directors to
familiarise themselves with Company’s
practices through induction process
or by making enquiries of the
Chairman, the Company Secretary
or management
1.2.1 Directors’ independence
In general, Directors are considered
independent where they are free of
any interest and any business or other
relationship which could, or could reasonably
be perceived, to materially interfere with the
Director’s ability to act in the best interests of
the Company. An assessment will be made
on a case-by-case basis of whether the
Director’s ability to act in the best interests of
the Company has been materially impaired.
In ensuring that the Board comprises
Directors with a broad range of skills and
experience refl ecting the character of the
Group’s business, the Board may from
time to time appoint Directors who are not
considered to be independent. It is, however,
the Board’s policy that it should comprise a
majority of independent Directors to ensure
that independent oversight is maintained.
In the context of his executive position
with the Company, Mr M Chellew is not
considered to be independent. Having regard
to the guidelines of independence adopted,
the Directors are of the view that Mr R D
Barro is the only non-executive Director who
is not considered “independent” by virtue
of his position as the Managing Director
and a shareholder of Barro Group Pty Ltd,
which controls 50% of the Company’s joint
venture, Independent Cement & Lime Pty
Ltd (ICL), and is a signifi cant shareholder in
the Company. ICL has an ongoing trading
relationship with the Barro Group
of companies.
1.2.2 Confl icts of interest
Directors are expected to avoid any action,
position or interest which confl icts (or may
be perceived to confl ict) with their position
as a Director of the Company. In particular,
the Board is cognisant of Mr Barro’s
interest in Barro Group Pty Ltd, a signifi cant
shareholder in the Company and 50% joint
venture partner in ICL.
During the year, in order to avoid actual and/
or perceived confl icts of interest in Board
decision-making, Board procedures were
followed such that where the possibility of a
material confl ict arose, the Board considered
the nature and extent of the potential confl ict
and whether it would be appropriate for
the relevant Director to participate in Board
discussion and decision-making in relation to
the issue. Where there was a real potential
for a confl ict of interest, information was not
provided to the Director, and, in accordance
with the Corporations Act 2001, the Director
did not participate in, or vote at, the meeting
where the matter was considered.
24
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
1.2.3 Performance evaluation
For the 2010 financial year, a performance
evaluation was led by the Chairman to
assess the performance of individual
Directors, the Board as a whole, various
aspects of the Board committees such as
their performance, membership, roles and
charters, and the Board’s and Directors’
interaction with management.
As part of this comprehensive review of
the Board’s performance, processes and
operations, the Chairman facilitates individual
discussions with each Director which also
reviews their individual performance.
As part of the review, the Chairman of
the Corporate Governance Committee
reviews the Board Chairman’s performance
individually with Directors. The Chairman
of the Corporate Governance Committee
discusses the outcome of this review with
the Chairman.
The Chairman and the Chairman of the
Corporate Governance Committee then
report the findings of these reviews to the
Board. As a result of recommendations
arising from the internal Board review,
initiatives are introduced to ensure the
continued effectiveness of the Board’s
performance and enable its sustained
focus on key issues for the Company.
The implementation of these initiatives
is overseen by the Chairman.
Executives and managers are also subject
to an annual performance review in which
performance is measured against agreed
business objectives. The performance of
the Managing Director is assessed by the
Board against objectives related to the
Company’s strategy and business plans.
For the 2010 financial year, the performance
of the Managing Director was reviewed
by the Chairman, the Nomination and
Remuneration Committee and the Board
against the financial performance of the
business, and the Managing Director’s
achievement of the agreed objectives.
The performance of the Company’s senior
executives during 2010 was reviewed by the
Managing Director, and by the Nomination
and Remuneration Committee, led by
the Managing Director and the Executive
General Manager, Human Resources.
1.2.4 Ongoing education
During the year, the Board’s ongoing
education calendar incorporated a number
of site visits to the Company’s operational
facilities and presentations by management
on a number of topics regarding
developments impacting, or likely to
impact, its business. The Board is informed
by leading expertise from within the
Company on matters such as management
of energy requirements, carbon emissions
and product development.
2 Committees of the Board
To assist the Board in fulfilling its
responsibilities, the Board has established
a number of committees with responsibility
for particular areas.
Each committee has a specific charter
or constitution. The charters for the Audit,
Risk and Compliance Committee and the
Nomination and Remuneration Committee
are available on the corporate governance
section of the Company’s website at
www.adbri.com.au. The Board periodically
reviews each Board committee’s charter,
role and responsibilities.
Generally, minutes of committee meetings
are tabled at the immediately subsequent
Board meeting. Additional requirements
for specific reporting by the committees
are addressed in the charter of the
individual committees.
2.1 Key standing committees
Audit, Risk and Compliance Committee
Nomination and Remuneration Committee
Members
G F Pettigrew (Chairman)
C L Harris
L V Hosking
L V Hosking (Chairman)
C L Harris
G F Pettigrew
Details of these Directors’ qualifications are
set out on pages 30 and 31 of this report.
M A Kinnaird was a member of the Committee until
his retirement from the Board effective 19 May 2010.
Details of these Directors’ qualifications are
set out on page 30 and 31 of this report.
M A Kinnaird was a member of the Committee until
his retirement from the Board effective 19 May 2010.
Composition
Consist of a minimum of 3 members, all of whom
are independent non-executive Directors.
Consist of a minimum of 3 members, all of whom
are independent non-executive Directors.
Key functions
An independent chair, who is not Chairman of the Board.
To review, assess and approve the annual financial
reports, the half-year financial report and the results
of external audit or review including assessing all
external reporting for its adequacy for shareholder needs;
and all other financial information published
by the Company or released to the market;
To review the appropriateness of accounting principles
adopted by management in the composition and
presentation of financial reports and to approve
any change in the accounting principles applied in
preparing the Company and Group reports;
To evaluate the independence of both the non-
executive Directors and external auditors and to
monitor the implementation of the Board’s policy
in relation to the provision of non-audit services
by the Company’s auditor;
To review (and recommend to the Board) the fees
paid to non-executive Directors, within the limits
approved by shareholders;
To review (and recommend to the Board) the
compensation arrangements for the Managing Director,
including short term and long term incentives;
To review performance targets, and approve
recommendations from the Managing Director on
total levels of remuneration, for senior executives;
To oversee the implementation of the Company’s
short term and long term incentive arrangements,
including assessing the extent to which performance
conditions are satisfied and making relevant awards;
To assess the appropriate mix of skills, experience and
expertise required on the Board and assess the extent to
which these required skills are represented on the Board;
(continued next page)
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
25
Audit, Risk and Compliance Committee
Nomination and Remuneration Committee
Key functions
(continued)
To recommend to the Board the appointment,
removal and remuneration of the external auditors,
to review the terms of their engagement, the scope
and quality of the audit and to assess performance;
To determine the scope of the internal audit function
and ensure that it has adequate resources to fulfil its
role, to assess its performance including independence
and to advise on the appointment and dismissal of
the head of internal audit;
To determine whether new policies or training should
be implemented to safeguard against possible risks
or non-compliance with applicable laws, regulations
or Company policies;
To monitor compliance with the Company’s policies and
procedures that recognise the Company’s business,
environmental and statutory responsibilities; and
To report the results of the Committee’s review of risk
management and internal compliance and control
systems to the Board.
To establish processes for the identification of suitable
candidates for appointment to the Board, engage
appropriate search firms to assist in identifying suitable
candidates and make a recommendation regarding
the most appropriate candidates to the Board which
ultimately will appoint the new Directors;
To oversee or design induction and ongoing training
and education programs for the Board to ensure that
non-executive Directors are provided with adequate
information regarding the operations of the business,
the industry and their legal responsibilities and duties;
To monitor the tenure of Board members, considering
succession planning and identifying the likely order of
retirement by rotation of non-executive Directors; and
To establish processes for the review of the
performance of individual non-executive Directors,
the Board as a whole and the operation of Board
committees.
Key activities
during 2010
G F Pettigrew replaced L V Hosking
as Chairman of the Committee;
L V Hosking replaced C L Harris as
Chairman of the Committee;
Ongoing review and consideration of financial
and non-financial risks and the Company’s system
of identifying and managing risks;
Establishing criteria, selecting and assessing
candidates and arranging appointment of new
independent non-executive Directors;
Monitoring and overseeing of the Company’s
implementation of the SAP enterprise resource
planning system;
Monitoring the performance, outcomes and
actions of the Company’s internal audit program;
Receiving the external auditors’ reports, monitoring
issues reported and actions taken;
Reviewing and overseeing of the Company’s 2010
Half Year and Full Year Financial Reporting
and associated audit;
Establishing the internal audit plan for 2011
and reviewing and approving the internal
and external auditors’ fees;
Monitoring the Group’s insurance renewal
programme; and
Reviewing the Group’s accounting policies
and treatment of particular issues.
Responding to request by Barro Group Pty Ltd
for additional representation on the Company’s
Board and requisition of EGM;
Granting long term incentive awards to the Managing
Director and senior management in accordance with
shareholder approval at the 2010 AGM;
Reviewing and recommending to the Board
the compensation arrangements for the
senior executive team; and
Reviewing and recommending to the Board fees
payable to non-executive Directors for 2011, including
seeking shareholder approval at the 2010 AGM for
an increase to the limit approved by shareholders to
provide further flexibility with respect to future non-
executive Director remuneration, including providing
the capacity to appoint further Directors to the Board.
Attendance
Details of attendance at Audit, Risk and
Compliance Committee meetings are set out
on page 36 of this report.
Details of attendance at Nomination and
Remuneration Committee meetings are set out
on page 36 of this report.
26
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Consultation
Audit, Risk and Compliance Committee
Nomination and Remuneration Committee
Members of management may attend meetings
of the Committee at the invitation of the Committee
Chairman. It is the practice of the Committee that
the Managing Director, the Chief Financial Officer
and the Company Secretary attend all Audit, Risk
and Compliance Committee meetings. The Group
Risk Manager generally attends meetings of the
Committee when non-financial risk management
matters are considered.
In fulfilling its responsibilities, the Committee has
rights of access to management and to auditors
(external and internal) without management present
and may seek explanations and additional information.
The Committee has met with the Company’s auditors
without any member of management present.
It has been the practice of the Nomination and
Remuneration Committee on occasions to invite
other Directors to attend Committee meetings.
Members of management, particularly the Executive
General Manager, Human Resources or the Managing
Director, may also attend meetings of the Committee
at the invitation of the Committee Chairman, whenever
particular matters arise that require management
participation, such as reviewing senior executive
performance.
The Committee and the Chairman of the Committee
directly without the involvement of the Company’s
executive management instruct expert professional
advisors and obtain their advice concerning matters
of executive remuneration and the selection of
suitable candidates for appointment as independent
non-executive Director.
During 2010 the Committee completed
changes to the Company’s charters
and policies following the 2009 review.
The Board established a charter for the
Corporate Governance Committee and
implemented changes to charter of the
Nomination and Remuneration Committee
in light of the recommendations of the
Productivity Commission. The Company’s
Share Trading Policy was reviewed in
the context of recent changes to the
requirements under the ASX Listing Rules.
2.2.3 Independent Directors’ Committee
The role of the Independent Directors’
Committee is to investigate and consider
corporate proposals made to the Company.
The Committee comprises Directors who do
not have any conflict of interest concerning
the matters considered by the Committee.
The present members of the Committee
are C L Harris (Chairman), L V Hosking,
G F Pettigrew, K B Scott-Mackenzie
and M P Chellew (Managing Director).
M A Kinnaird AC was a member of the
Committee until his retirement as a
Director effective 19 May 2010.
Details of members’ attendance at each
of these Committee meetings in 2010
are set out on page 36.
2.2 Other Board committees
2.2.1 Safety Health and
Environment Committee
The members of the Safety, Health and
Environment Committee (SH&E Committee)
are G F Pettigrew (Chairman), R D Barro
and M P Chellew (Managing Director).
M A Kinnaird AC was a member of the
Committee until his retirement as a
Director effective 19 May 2010.
The Committee has a broad role in reviewing
specific occupational health and safety and
environmental matters across the Group.
Committee meetings are also attended by
the Company’s Executive General Manager,
HR & SH&E, Chief Financial Officer and its
General Counsel.
Generally when the SH&E Committee
meeting is held prior to a Board meeting, the
SH&E Committee Chairman subsequently
reports to the Board about the Committee’s
proceedings.
2.2.2 Corporate Governance Committee
The Corporate Governance Committee,
which comprises L V Hosking (Chairman)
and C L Harris, is responsible for overseeing
the Company’s implementation and
compliance with best practice in corporate
governance applicable to the circumstances
of the Company. Committee meetings
are also attended by the Company’s
Managing Director, the Company Secretary
and General Counsel and the Chief
Financial Officer, and are generally held in
conjunction with Board meetings, so that
all of the Company’s Directors are present.
M A Kinnaird AC was a member of the
Committee until his retirement as a
Director effective 19 May 2010.
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
27
3 The Board recognises and
manages risk and safeguards the
integrity of fi nancial reporting
3.1 Framework
The Board has approved the
following framework within which
the Company discharges its risk
management function:
Internal controls framework
> A robust control environment is fundamental to the
effectiveness of the Company’s risk management
framework. Delegations of authority and Board and
management accountability are clearly demarcated.
> All Directors, executives and employees are required to
adhere to the Code of Conduct (described below) and the
Board actively promotes a culture of quality and integrity.
> Accounting, fi nancial reporting and internal control policies
and procedures designed to manage business risks
(both fi nancial and non-fi nancial) have been established
at the Board and executive management levels. These are
designed to safeguard the assets and interests of the
Company, and ensure the integrity of fi nancial reporting.
> The Board acknowledges that it is responsible for the
overall internal control framework, but recognises that
no cost effective internal control system will prevent
all errors and irregularities. To assist in discharging this
responsibility, the Board has instigated an internal control
framework that can be described as follows:
Financial reporting
> Comprehensive budgeting system with an
annual budget reviewed and approved by the Board
> Monthly actual results are reported against
budget and revised forecasts for the year are
prepared regularly
> Procedures to ensure that price sensitive
information is reported to the ASX in a timely
manner (see section 5 below)
Investment appraisal
> Clearly defi ned guidelines for capital expenditure,
> E.g. annual budgets, detailed appraisal and
review procedures, levels of delegated authority
and due diligence requirements where
businesses are being acquired or divested
Leading a culture of compliance and ensuring that risk
management practices are appropriate and effective in
the context of the Company’s business objectives
> Oversight: The Board, through the Audit, Risk and Compliance
Committee, is responsible for implementing and overseeing the
Company’s risk management policies and compliance and control
systems. These policies and systems provide for management to
identify and manage both fi nancial and non-fi nancial risks to the
Company’s businesses. The Board, through the Committee,
regularly reviews the effectiveness of the Company’s risk
management system and management of identifi ed business risks.
> Purpose: The Company’s risk management framework is
designed to ensure strategic, operational, legal, reputation and
fi nancial risks are identifi ed, assessed, effectively and effi ciently
managed and monitored to enable achievement of the
Company’s business objectives.
Operating unit controls
> Financial controls and
procedures including
information systems controls
are in operation throughout
the consolidated entity
> Operating units confi rm
compliance with these
procedures to the Board
annually
Financial risk
The Managing Director and Chief Financial Offi cer
have made the following certifi cations to the Board:
> That the Company’s fi nancial reports present a true and
fair view, in all material respects, of the fi nancial condition
and performance of the Company and the consolidated entity
and are in accordance with relevant accounting standards;
> That the Company has adopted an appropriate system of
risk management and internal compliance and control
which implements the policies adopted by the Board and
forms the basis for the statement given above; and
> That the Company’s risk management and internal
compliance and control system to the extent it relates
to fi nancial reporting is operating effi ciently and
effectively in all material respects.
Non-fi nancial risk
Management has also reported to the Board on strategic and
operational issues, including an assessment of the material
business risks facing the Company and the effectiveness of
the systems and policies in place to manage those risks.
Functional
Speciality reporting
The Group has identifi ed a
number of key areas which
are subject to regular
reporting to the Board, such
as safety and environment,
risk management, taxation,
fi nance and administration
Delegated authorities
and restrictions
Comprehensive procedure
which provides a framework
that enables employees to
operate and act within clearly
defi ned and communicated
parameters
Internal audit
> Assists the Board in ensuring
compliance with internal controls.
> The Audit, Risk and Compliance Committee
reviews and approves the selection and
engagement of internal auditors, the internal audit
programme to be conducted, and the scope of
the work to be performed at each location
> Internal auditors provide the Committee with
comments and recommendations about the
identifi cation of areas perceived to be of a greater
level of risk than others, and any areas
requiring particular scrutiny
> The Committee receives and reviews the
reports of the internal auditors
28
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Employees are encouraged to attend
training or seminars presented by the
Company, or external service providers,
to ensure that they remain up-to-date
with relevant industry and regulatory
developments.
The Code requires all officers, employees,
contractors, agents or people associated
with the Company to report any potential
breaches to the Company Secretary
under the whistleblower program.
This may be done anonymously.
4.2 Shareholdings of
Directors and employees
The Board has a policy that Directors
and employees may not buy or sell
Adelaide Brighton Ltd shares except within
the period of one month following the
annual and half year results announcements
and the period from the release of the
Company’s annual report until one month
after the annual general meeting. The policy
was reviewed to ensure compliance with
the recent amendments to the ASX Listing
Rules, and the periods in which the trading
of shares is strictly prohibited, being from
financial period end to the announcement
of results (referred to as “Blackout Periods)
was clarified for this purpose. A copy of
the revised policy (which complies with
the requirements of the ASX Listing Rules)
was lodged with the ASX. The policy also
supplements the Corporations Act 2001
provisions that preclude Directors and
employees from trading in securities
when they are in possession of “inside
information”.
The Board has also adopted a policy
that prohibits executives from hedging
(or otherwise locking in a profit over)
unvested securities issued under the
Company’s Share Plans.
The Company’s Share Trading Policy
and the Award/Share Hedging Policy
are available on the Company’s
website at www.adbri.com.au
5 The Board is committed to timely
and balanced disclosure and respects
the rights of shareholders
5.1 Continuous disclosure
The Company is committed to providing
relevant and timely information to its
shareholders and to the broader market,
in accordance with its obligations under
the Corporations Act 2001 and the
ASX continuous disclosure regime.
The Company’s Continuous Disclosure
Policy is available on the Company’s
website and sets out guidelines and
processes to be followed in order to
ensure that the Company’s continuous
disclosure obligations are met. Material
information must not be selectively
disclosed prior to being announced to
the ASX. These policies and procedures
are supplemented by the Shareholder
Communications Policy (also published
on the Company’s website) which includes
arrangements the Company has in
place to promote communication with
shareholders and encourage effective
participation at general meetings.
The Company Secretary has been
nominated as the person responsible
for communicating with the ASX. This
role includes responsibility for ensuring
compliance with the continuous disclosure
requirements and overseeing and
coordinating (with the Group Corporate
Affairs Adviser) information disclosure to
the ASX, analysts, brokers, shareholders,
the media and the public.
5.2 Communication with shareholders
The Company’s website contains copies
of annual reports, financial accounts,
presentations, media releases and other
investor relations publications. All relevant
announcements made to the market,
and any related information, are also
posted on the Company’s website as soon
as they have been released to the ASX.
The Board encourages full participation
of shareholders at the Annual General
Meeting in order to promote a high level
of accountability and discussion of the
Company and the Groups strategy
and goals.
The external auditor will attend the
Annual General Meeting and be available
to answer shareholder questions about
the conduct of the audit and the preparation
and content of the auditors’ report.
3.2 Audit Services
The Company and Audit, Risk and
Compliance Committee policy is to appoint
external auditors who clearly demonstrate
quality and independence. The performance
of the external auditor is reviewed annually
and consideration is given to inviting
applications for tender of external audit
services, taking into account the assessment
of performance, existing value and tender
costs. PricewaterhouseCoopers remains
the external auditor of the Company for the
Group’s financial report for the year ended
31 December 2010.
The Board has adopted a policy in relation
to the provision of non-audit services by
the Company’s external auditor. It is based
on the principle that work that may detract
from the external auditor’s independence
and impartiality (or that may be perceived
as doing so) should not be carried out by
the external auditor. Details and the break
down of fees for non-audit services and an
analysis of fees paid or payable to external
auditors are provided in Note 31 to the
Financial Statements.
4 The Board is committed to
promoting ethical and responsible
decision-making
4.1 Code of conduct and
whistleblower program
The Company is committed to upholding
the highest ethical standards of corporate
behaviour. A Code of Conduct has been
adopted, which requires that all Directors,
senior management and employees act
with the utmost integrity and honesty.
It aims to further strengthen the Company’s
ethical climate by promoting practices that
foster the Company’s key values of:
Acting with fairness, honesty and integrity;
Being aware of and abiding by laws
and regulations;
Individually and collectively contributing to
the wellbeing of shareholders, customers,
the economy and the community;
Maintaining the highest standards of
professional behaviour;
Avoiding or managing conflicts of
interest; and
Striving to be a good corporate citizen,
and to achieve community respect.
>
>
>
>
>
>
The Code of Conduct is publicly
available on the Company’s website at
www.adbri.com.au
The Company has also adopted policies
requiring compliance with (among
others) occupational health and safety,
environmental, privacy, equal employment
opportunity and competition and
consumer law. The Company monitors
the effectiveness of these policies.
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
29
Christopher Harris
BEc, FCPA, FAICD
Les Hosking
Graeme Pettigrew
FPNA, FAIM, FAICD
Age 64
Age 66
Age 62
Independent non-executive
Director since March 1995.
An economics graduate and
qualifi ed accountant with more
than 21 years public company
experience as an executive
and non-executive Director.
Former Managing Director of
FH Faulding & Co Ltd, Chairman
of Evogenix Ltd and Deputy
Chairman of Adelaide Bank Ltd.
Chairman, Argo Investments
Ltd and Director, DMP Asset
Management Ltd.
Previous Director of Australian
Vintage Ltd (appointed 28 June
2002 and resigned 24 June
2009) and Arana Therapeutics
Limited (appointed 28 August
2007 and resigned 1 July 2009).
Appointed Chairman
19 May 2010.
Member, Nomination and
Remuneration Committee.
Member, Audit, Risk and
Compliance Committee.
Member, Corporate
Governance Committee.
Member, Independent
Directors’ Committee.
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S
Independent non-executive
Director since June 2003.
Extensive knowledge of
commercial and fi nancial matters
with 16 years experience as
Chief Executive of the Sydney
Futures Exchange and former
Chief Executive Offi cer of
Axiss Australia and Managing
Director of National Electricity
Market Management Company
(NEMMCO).
Director, AGL Energy Limited
and Australian Energy Market
Operator Limited and Carbon
Market Institute Limited
and Member, Innovation
Australia.
Independent non-executive
Director since August 2004.
Extensive knowledge of
building materials industry as
former Chief Executive Offi cer
of CSR Building Products and
broad management experience
gained in South East Asia and
the United Kingdom through
former positions as Managing
Director of Chubb Australia
Limited and Wormald Security
Australia Pty Ltd.
Director, Lafarge Plasterboard
Pty Ltd, Bisalloy Steel Group
Ltd and Capral Ltd.
Chairman, Corporate
Governance Committee.
Chairman, Nomination and
Remuneration Committee.
Member, Audit, Risk and
Compliance Committee.
Member, Independent
Directors’ Committee.
Chairman, SH&E Committee.
Chairman, Audit, Risk and
Compliance Committee.
Member, Independent
Directors’ Committee.
Member, Nomination and
Remuneration Committee.
30
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Mark Chellew
BSc, ME, Grad Diploma Mgt
Raymond Barro
BBus, CPA, ASIS
Ken Scott Mackenzie
BE (Mine), Dip Law
Age 54
Age 49
Age 60
Executive Director and Managing
Director since September 2001.
Mechanical Engineer with over
29 years experience in the heavy
building materials and related
industries gained in Australia
and the United Kingdom.
Previously held the position
of Managing Director of Blue
Circle Cement in the United
Kingdom and senior
management positions within
the CSR group of companies
in Australia and the United
Kingdom.
Non-executive Director
since August 2008.
Over 21 years experience in
the premixed concrete and
construction materials industry.
Managing Director of Barro
Group Pty Ltd.
Independent non-executive
Director since July 2010.
Mining Engineer with over
35 years experience in
infrastructure, construction
and mining services gained in
Australia and South Africa, as
well as extensive knowledge of
fi nancial, legal and commercial
aspects of projects.
Director, Macmahon Holdings
Limited and External Member,
Critical Skills Investment Fund
Advisory Board.
Member, Independent
Directors’ Committee.
Member, SH&E Committee.
Member, SH&E Committee.
Member, Independent
Directors’ Committee.
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
31
Shareholder information
Combining multiple shareholdings
If you have multiple shareholding
accounts that you want to
consolidate into a single account,
please advise the share registry,
Computershare Investor Services
Pty Limited, in writing.
Change of address
Shareholders who are Issuer
Sponsored should notify any change
of address to the share registry,
Computershare Investor Services Pty
Limited, by telephone or in writing
quoting your security holder reference
number, previous address and new
address. Broker Sponsored
(CHESS) holders should advise their
sponsoring broker of the change.
Registered office
Level 1, 157 Grenfell Street
Adelaide SA 5000
Telephone (08) 8223 8000
Facsimile (08) 8215 0030
Stock exchange listing
Adelaide Brighton Ltd is listed on
the Australian Securities Exchange
and trades under the symbol “ABC”.
Adelaide is Adelaide Brighton Ltd’s
home exchange.
Communications
Our internet site www.adbri.
com.au offers access to our ASX
announcements and news releases
as well as information about our
operations.
Substantial shareholders
> Barro Properties Pty Ltd, by a
notice of change of interests of
substantial shareholder dated 4 May
2009, informed the Company that
it or an associate had a relevant
interest in 145,039,812 ordinary
shares or 23.7% of the Company’s
issued share capital.
> AMP Limited, by a notice of
change of interests of substantial
shareholder dated 31 March 2011,
informed the Company that it or an
associate had a relevant interest in
45,392,999 ordinary shares or
7.15% of the Company’s issued
share capital.
> Perpetual Limited, by a notice of
initial substantial shareholder dated
15 March 2011, informed the
Company that it and its subsidiaries
had a relevant interest in 32,520,439
ordinary shares or 5.12% of the
Company’s issued share capital.
On market buy back
At 1 April 2011 there is no on-market buy back
of the Company’s shares being undertaken.
Top twenty largest shareholders as at 1 April 2011
Shareholder
No. of ordinary % of issued
shares held capital
Barro Properties Pty Ltd
National Nominees Limited
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Barro Group Pty Ltd
Citicorp Nominees Pty Limited
Cogent Nominees Pty Limited
AMP Life Limited
RBC Dexia Investor Services Australia Nominees
Pty Limited
JP Morgan Nominees Australia Limited
Cogent Nominees Pty Limited
116,276,429
83,509,461
80,083,597
55,264,489
30,199,353
26,024,154
18,651,297
17,252,297
14,742,874
13,975,874
10,565,111
UBS Wealth Management Australia Nominees Pty Ltd
4,699,156
Argo Investments Ltd
Barro Properties Pty Ltd
UBS Nominees Pty Ltd
UCA Growth Fund Limited
Citicorp Nominees Pty Limited
HSBS Custody Nominees (Australia) Limited A/C 2
RBC Dexia Investor Services Australia Nominees
Pty Limited A/C
Milton Corporation Limited
Total top 20 shareholders
Total remaining holders balance
3,932,062
3,680,078
2,782,679
2,000,000
1,886,217
1,679,503
1,645,332
1,613,440
490,462,385
144,670,425
18.31
13.15
12.61
8.70
4.75
4.10
2.94
2.72
2.32
2.20
1.66
0.74
0.62
0.58
0.44
0.31
0.30
0.26
0.26
0.25
77.22
22.78
Voting rights
All shares at 1 April 2011 were of one class with equal voting rights
being one vote for each shareholder and, on a poll, one vote for each
fully paid ordinary share.
Shares held at
1 April 2011
1 -
1,000
1,001 -
5,000
5,001 -
10,000
10,001 -
100,000
100,001 -
over
Total shareholders
Less than a marketable parcel of
No. of
shareholders
% of issued
capital
3,136
6,028
2,822
2,802
161
14,949
153
0.23
2.71
3.33
10.30
83.43
100.00
731
Unquoted securities
5,315,000 issued to the Managing Director and other members of the senior
executive team under the Adelaide Brighton Ltd Executive Performance Share
Plan as part of the Company’s long term incentive program. The Awards are
not quoted and do not participate in the distribution of dividends and do not
have voting rights. The total number of participants in the Adelaide Brighton Ltd
Executive Performance Share Plan and eligible to receive the Awards is 14.
Enquiries about your shareholding
Enquiries or notifications by shareholders
regarding their shareholdings or
dividends should be directed to
Adelaide Brighton’s share registry:
Computershare Investor Services
Pty Limited
Level 5, 115 Grenfell Street
Adelaide SA 5000
Telephone 1800 339 522
International +61 3 9415 4031
Facsimile 1300 534 987
International +61 8 8236 2305
When communicating with the share
registry, shareholders should quote
their current address together with their
Security Reference Number (SRN) or
Holder Identification Number (HIN) as
it appears on their Issuer Sponsored/
CHESS statement.
Online services
Shareholders can access information
and update information about their
shareholding in Adelaide Brighton
Limited via the internet by visiting
Computershare Investor Services
Pty Ltd website:
www.investorcentre.com
Some of the services available online
include: check current holding balances,
choose your preferred annual report
option, update address details, update
bank details, confirm whether you have
lodged your TFN, ABN or exemption,
view your transaction and dividend
history or download a variety of forms.
Enquiries about
Adelaide Brighton Ltd
Enquiries about Adelaide Brighton Ltd
should be directed to:
Group Corporate Affairs Adviser
Adelaide Brighton Ltd
GPO Box 2155
Adelaide SA 5001
Telephone (08) 8223 8000
Facsimile (08) 8215 0030
adelaidebrighton@adbri.com.au
Annual general meeting
The annual general meeting of
shareholders will be held at the
InterContinental, North Terrace,
Adelaide, South Australia on
Wednesday 18 May 2011
at 11.00 am.
Direct credit of dividends
Dividends can be paid directly into
a bank or other financial institution.
Payments are electronically credited
on the dividend payment day and
subsequently confirmed by mailed
payment advice. Application forms
are available from our share registry,
Computershare Investor Services
Pty Ltd or visit the website at:
www.computershare.com.au/
easyupdate/abc
to update your banking details.
32
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
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Directors’ report ..................................................................................................................... 34
Remuneration report .............................................................................................................. 38
Income statement .................................................................................................................. 48
Statement of comprehensive income................................................................................... 49
Balance sheet ......................................................................................................................... 50
Statement of changes in equity ............................................................................................ 51
Statement of cash fl ows ........................................................................................................ 52
Notes
1
Summary of signifi cant accounting policies ........................................................................ 53
2 Critical accounting estimates and assumptions .................................................................. 61
3 Revenue and other income ................................................................................................ 62
Expenses ........................................................................................................................... 62
4
5
Income tax ......................................................................................................................... 63
6 Current assets - cash and cash equivalents ....................................................................... 64
7 Current assets - trade and other receivables ...................................................................... 64
8 Current assets - inventories................................................................................................ 65
9 Current assets - assets classifi ed as held for sale ............................................................... 65
10 Non-current assets - receivables ........................................................................................ 65
11 Non-current assets - investments accounted for using the equity method .......................... 65
12 Non-current assets - property, plant and equipment .......................................................... 67
13 Non-current assets - deferred tax assets ........................................................................... 68
14 Non-current assets - intangible assets ............................................................................... 68
15 Current liabilities - trade and other payables ....................................................................... 69
16 Current liabilities - borrowings ............................................................................................ 69
17 Current liabilities - provisions .............................................................................................. 70
18 Current liabilities - other liabilites......................................................................................... 70
19 Non-current liabilities - borrowings ..................................................................................... 70
20 Non-current liabilities - deferred tax liabilities ...................................................................... 71
21 Non-current liabilities - provisions ....................................................................................... 71
22 Non-current liabilities - retirement benefi t obligations .......................................................... 71
23 Contributed equity ............................................................................................................. 74
24 Reserves and retained earnings ......................................................................................... 75
25 Dividends ........................................................................................................................... 76
26 Financial risk management ................................................................................................. 77
27 Contingencies .................................................................................................................... 80
28 Commitments for expenditure ............................................................................................ 81
29 Share-based payment plans .............................................................................................. 82
30 Key management personnel disclosures ............................................................................ 83
31 Remuneration of auditors ................................................................................................... 86
32 Related parties ................................................................................................................... 86
33
Investments in controlled entities ........................................................................................ 88
34 Deed of cross guarantee .................................................................................................... 89
35 Reconciliation of profi t after income tax to net cash infl ow from operating activities ............ 90
36 Earnings per share ............................................................................................................. 91
37 Events occurring after the balance sheet date .................................................................... 91
38 Segment reporting ............................................................................................................. 91
39 Parent entity fi nancial information ....................................................................................... 93
Directors’ declaration ............................................................................................................ 94
Auditor’s independence declaration ..................................................................................... 94
Independent audit report ....................................................................................................... 95
Financial history ..................................................................................................................... 96
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
33
Directors’ report
The Directors present their report on the
consolidated entity (the Group) consisting of
Adelaide Brighton Ltd (the Company) and
the entities it controlled at the end of, or
during, the year ended 31 December 2010.
Directors
The Directors of the Company, at any time
during or since the end of the financial year
and up to the date of this report, are:
M A Kinnaird AC (retired 19 May 2010)
C L Harris
R D Barro
L V Hosking
G F Pettigrew
K B Scott-Mackenzie (appointed 26 July 2010)
M P Chellew
Principal activities
During the year the principal activities of the
Group consisted of the manufacture and
distribution of cement, and cementitious
products, lime, premixed concrete,
aggregates, sand and concrete products.
Review of operations
A summary of the financial results for the
year ended 31 December 2010 is set out
below:
(A$ million)
Revenue
Depreciation and Amortisation
Earnings before interest and tax (“EBIT”)
Net interest
Profit before tax
Income tax expense
Net profit after tax
Attributable to:
Members of Adelaide Brighton Ltd
Non-controlling interests
Basic earnings per share (cents)
Ordinary dividend per share (cents)
Special dividend per share (cents)
Franking (%) – all dividends
Net debt
Net debt/equity (%)
Adelaide Brighton reported record sales and
profit for the year ended 31 December 2010.
Net profit after tax attributable to members
increased to $151.5 million, up 23.1% over
the previous corresponding period. Revenue
of $1,072.9 million increased by 8.7%
primarily due to stronger demand for cement
from projects in South Australia and Western
Australia.
Earnings before interest and tax (EBIT)
increased by 16.7% to $216.2 million.
Margins improved due to increased selling
prices, effective management of costs
despite increased energy prices and
improved import margins as a result of the
strong Australian dollar. Cost management
programs delivered benefits of $10 million,
which helped to offset rising energy prices
which had an adverse impact of about $10
million in 2010.
Profit before tax increased 19.9% to $202.2
million. Net interest reduced by 16.2% to
$14.0 million on lower levels of debt, offset
partially by increased interest rates.
The strong 2010 performance has resulted
in a 17.2% increase in earnings per share
from 20.4 cents to 23.9 cents.
Cement
Sales of cement were significantly ahead of
2009 levels as a result of increased demand
from infrastructure and mining projects in
South Australia, the resources industry in
Western Australia and continued strength of
construction activity in Victoria.
2010
2009
1,072.9
987.2
(52.8)
(56.8)
216.2
(14.0)
202.2
(50.8)
185.3
(16.7)
168.6
(45.4)
151.4
123.2
151.5
(0.1)
23.9
16.5
5.0
100%
148.4
123.1
0.1
20.4
13.5
-
100%
175.4
15.9%
19.6%
The increase in sales volume was greater
than the estimated 4% increase in the
national cement market.
Cement net selling prices increased
marginally higher than CPI.
Cement margins improved as price
increases and the benefits from cost
management helped offset cost pressures.
Clinker kiln capacity was fully utilised during
the year.
Adelaide Brighton’s successful import
strategy saw sales volumes in excess of
domestic production being met through
imports of clinker and cement, addressing
increased market demand and achieving
optimal asset utilisation. The Australian
dollar was stronger against the US dollar
and Japanese yen throughout 2010
compared with the previous year and as a
result import margins improved, particularly
in the first half.
Lime
Lime volumes increased due to strong
demand from the Western Australian non-
alumina sector. Margins improved as price
increases and efficiency improvements more
than covered input cost increases.
The Munster (Western Australia), Angaston
(South Australia) and Mataranka (Northern
Territory) lime kilns continued to operate at
full capacity, while the Dongara (Western
Australia) plant operated efficiently supplying
peak market demand when required.
34
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
Concrete and Aggregates
Premixed concrete volumes improved
generally in line with the east coast market.
Sales of aggregate increased in northern
New South Wales with supply to the Pacific
Highway upgrade. Austen Quarry (west of
Sydney) volumes continued to improve.
2010 included the first full 12 months of
operations for the Tinda Park (New South
Wales) sand operation, which was acquired
in December 2009. This operation exceeded
forecast volumes and profitability. Concrete
pricing advanced marginally in 2010 and
increases in prices of aggregate products
were achieved.
Concrete gross margins improved marginally
in 2010. In the aggregates operations,
improvements in plant throughput were
achieved during the year, contributing to an
improvement in profitability.
Concrete Products
Market conditions remain weak and
extremely competitive in all masonry
markets. Adbri Masonry total product
volume was down by 3% compared with the
previous year. This decrease was due mainly
to continued weakness in the Queensland
market, exasperated by very wet weather
along the east coast of Australia in the
second half of the year.
Over the past two years, output volumes
have been adjusted to meet market demand
nationally. Cost management programs
have helped offset the decline in volumes,
maintaining gross margins in the face of
increased competition.
Joint Ventures
Independent Cement and Lime reported
improved earnings due to increased
construction activity in Victoria driven by
major projects. Margins improved as a result
of increased pricing and cost control.
Sunstate Cement reported increased
earnings despite weakness in the south east
Queensland market in 2010. Lower volumes
for the year were offset by a decrease in
clinker transfer (input) prices.
The Mawsons concrete and aggregates
joint venture which operates in northern
Victoria and southern regional New South
Wales, had a strong year with on-going
demand from the mining sector and water
infrastructure projects.
Operational results
Strong trading and continued working capital
management facilitated a lift in operating
cash flow to $188.5 million during 2010.
Trade receivables decreased by $1.8 million
to $144.2 million and debtor days improved
from the prior year, decreasing by 2.6 days.
This result was further complemented by a
reduction in 2010 bad debt expense with no
material customer failures occurring during
the year.
Inventory levels increased by $10 million
to $117.8 million due to the timing of
shipments. Capital expenditure amounted
to $51.7 million for the year, an increase
from the prior year and in line with “stay
in business” levels. Net debt decreased
by $27.0 million to $148.4 million due to
strong free cash flows. As a result, year
end gearing fell to 15.9% versus 19.6%
at the end of 2009. The Company’s cash
flow and balance sheet position is strong
and provides capacity for Adelaide Brighton
to fund modest acquisitions and planned
organic growth opportunities.
Dividends paid or declared by the
Company
During the 2010 financial year, the following
dividends were paid:
• A final dividend in respect of the year ended
31 December 2009 of 8.0 cents per share
(fully franked) was paid on 12 April 2010.
This dividend totalled $50,731,598.
• An interim dividend in respect of the year
ended 31 December 2010 of 7.5 cents per
share (fully franked) was paid on 11 October
2010. This dividend totalled $47,634,961.
• An interim special dividend in respect of the
year ended 31 December 2010 of 2.5 cents
per share (fully franked) was paid on
11 October 2010. This special dividend
totalled $15,878,320.
Since the end of the financial year the
Directors have approved the payment of a
final dividend of 9.0 cents per share (fully
franked) to be paid on 11 April 2011. In
addition, a special dividend of 2.5 cents per
share (fully franked) was declared payable
coincident with the final dividend on
11 April 2011.
State of affairs
No significant changes occurred in the state
of affairs of the Group during the financial
year.
Events subsequent to the end of the
financial year
As at the date of this report, no other
matter or circumstance has arisen since
31 December 2010 that has significantly
affected, or may significantly affect the
Group’s operations, the results of those
operations, or the Group’s state of affairs in
future financial years.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
35
Likely developments and expected
results of operations
Likely developments in the operations of the
Group, known at the date of this report, and
the expected results of those operations,
have been covered generally within the
financial report.
Further information on likely developments
in the operations of the Group and the
expected results of operations in the future
financial years have not been included in this
report because the Directors believe it would
be likely to result in unreasonable prejudice
to the Group.
• The NPI review was conducted by
the Western Australian Department of
Environment and Conservation at the
Company’s Dongara plant.
• The EEO verification was conducted at
the Company’s Birkenhead plant by the
Department of Resources Energy and
Tourism. The government EEO report is
pending.
• A reasonable assurance engagement was
conducted by PricewaterhouseCoopers
over the Group’s Emission Intensive Trade
Exposed (EITE) data submission for the
period 1 July 2004 to 31 December 2008.
EITE assistance was recognised for Adelaide
Brighton’s clinker and lime production.
Directors profiles
Information relating to Directors’
qualifications, experience and special
responsibilities are set out on page 30 and
31 of the Annual Report.
Directors’ meetings
The number of Directors’ meetings and
meetings of committees of Directors held
during the financial year and the number of
meetings attended by each Director is as
follows:
Environmental performance
The Group is subject to various
Commonwealth, State and Territory laws
concerning the environmental performance
of Adelaide Brighton’s operations.
Management ensures that any regulations,
licences or permits required for the Group’s
operations are obtained and observed.
All operations have access to safety and
environmental legislation summaries specific
to their activities and a Group Safety,
Health and Environmental management
system is in place for monitoring, reporting
and addressing matters raised. Two sites,
Birkenhead and Angaston, are certified to
the environmental management system
standard ISO 14001.
The Group monitors environmental
performance by site and business division,
and information about the Group’s
performance is reported and reviewed by
the Group’s senior management, the Safety,
Health & Environment Committee of the
Board and the Board.
All Adelaide Brighton facilities complied
with Commonwealth and State
environmental requirements and during
2010 no environmental prosecutions were
commenced.
Three reviews were conducted in 2010
which verify the quality of mandatory
government reporting for National
Pollutant Inventory (NPI), Energy Efficiency
Opportunities (EEO) and National
Greenhouse and Energy Reporting (NGER)
as follows:
Director
Board
Meetings
A
H
M A Kinnaird1
C L Harris
R D Barro
L V Hosking
G F Pettigrew
M P Chellew
K B Scott-
Mackenzie2
4
9
9
9
9
9
3
4
9
9
9
9
9
4
Audit, Risk Nomination
and
and
SH&E
Compliance Remuneration Governance Directors’
Committee
Committee Committee Committee Committee Commettee
Independent
Corporate
A
2
4
4
4
H
2
4
4
4
A
3
6
6
6
H
3
6
6
6
A
1
2
2
H
1
2
2
A
1
2
2
2
H
1
2
2
2
A
0
0
0
0
0
0
H
0
0
0
0
0
0
A Number of meetings attended
H Number of meetings held during period of office
1 M A Kinnaird retired on 19 May 2010
2 K B Scott-Mackenzie appointed on 26 July 2010
Throughout 2010, the general business of
the Corporate Governance Committee was
dealt with at the Company’s Board Meetings
and no separate committee meetings were
held.
Particulars of the Company’s corporate
governance practices, including the roles of
each Board Committee, are set out on page
23 to 29 of this report.
Directors’ interests
The relevant interest of each Director in the
share capital of the Company at the date of
this report is as follows:
C L Harris
L V Hosking
G F Pettigrew
M P Chellew
R D Barro
K B Scott-Mackenzie
Ordinary shares
70,479
4,739
7,739
448,366
148,329,642
-
Full details of the interests in share capital of
Directors of the Company are disclosed in
Note 30 to the Financial Statements on
page 85 of this report. Full details of the
interests in Awards of Directors of the
Company are set out in the Remuneration
Report on pages 38 to 47 of this report.
Director and executive remuneration
Details of the Company’s remuneration
policies and the nature and amount of
the remuneration of the Directors and
certain senior executives are set out in the
Remuneration Report on pages 38 to 47 of
this report.
36
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
The Company was not liable during 2010
under such indemnities.
Rule 9.5 of the constitution provides that
the Company may purchase and maintain
insurance or pay or agree to pay a premium
for insurance for “officers” (as defined in
the constitution) against liabilities incurred
by the officer in his or her capacity as an
officer of the Company or of a related body
corporate, including liability for negligence or
for reasonable costs and expenses incurred
in defending proceedings, whether civil or
criminal and whatever their outcome.
During the year the Company paid the
premiums in respect of Directors’ and
Officers’ Liability Insurance to cover the
Directors and Secretaries of the Company
and its subsidiaries, and the General
Managers of each of the divisions of the
Group, for the period 1 May 2010 to
30 April 2011. Due to confidentiality
obligations under that policy, the premium
payable and further details in respect of
the nature of the liabilities insured against
cannot be disclosed.
Proceedings on behalf of the Company
No person has applied for leave of the
Court to bring proceedings on behalf of the
Company or to intervene in any proceedings
to which the Company is a party for the
purpose of taking responsibility on behalf
of the Company for all or any part of those
proceedings. The Company was not a party
to any such proceedings during the year.
Non-audit services
The Company may decide to employ the
auditor on assignments additional to their
statutory audit duties where the auditor’s
experience and expertise with the Company
and the Group are important.
Details of the amounts paid or payable
to PricewaterhouseCoopers for audit and
non-audit services provided during the
year are set out in Note 31 to the Financial
Statements on page 86 of this report.
The Board of Directors has considered
the position and, in accordance with the
advice received from the Audit, Risk and
Compliance 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’s independence
requirements of the Corporations Act 2001
for the following reasons:
• All non-audit services have been reviewed by
the Audit, Risk and Compliance Committee
to ensure they do not impact the impartiality
and objectivity of the auditor; and
• None of the services undermine the general
principles relating to auditor independence
as set out in Professional Statement F1,
including reviewing or auditing the auditor’s
own work, acting in a management or a
decision making capacity for the Company,
acting as advocate for the Company or
jointly sharing economic risk and rewards.
A copy of the auditors’ independence
declaration as required under section 307C
of the Corporations Act 2001 is set out on
page 94.
Rounding off
The Company is of a kind referred to in
ASIC Class Order 98/0100 dated 10 July
1998 and, in accordance with that Class
Order, amounts in the financial report and
Directors’ report have been rounded off to
the nearest one hundred thousand dollars,
unless otherwise stated.
Dated 3 March 2011
Signed in accordance with a resolution of
the Directors
M Chellew
Managing Director
Company Secretaries
The Company’s principal Company Secretary
is Marcus Clayton, who has been employed
by the Company in the two separate offices
of General Counsel and Company Secretary
since 24 February 2003. He is a legal
practitioner admitted in South Australia with
24 years experience.
Two other employees of the Company also
hold the office of Company Secretary to
assist with secretarial duties should the
principal Company Secretary be absent: the
Company’s Chief Financial Officer, Michael
Kelly, a Certified Practising Accountant who
has been a Company Secretary since
23 November 2010 and the Group’s
Corporate Affairs Adviser, Luba Alexander,
who has been a Company Secretary since
22 March 2001.
Indemnification and insurance of
officers
Rule 9 of the Company’s constitution
provides that the Company indemnifies
each person who is or who has been an
“officer” of the Company on a full indemnity
basis and to the full extent permitted by law,
against liabilities incurred by that person in
their capacity as an officer of the Company
or of a related body corporate.
Rule 9.1 of the constitution defines “officers”
to mean:
• Each person who is or has been a Director,
alternate Director or executive officer of the
Company or of a related body corporate of
the Company who in that capacity is or was
a nominee of the Company; and
• Such other officers or former officers of the
Company or of its related bodies corporate
as the Directors in each case determine.
Additionally the Company has entered into
Deeds of Access, Indemnity and Insurance
with all Directors of the Company, its wholly
owned subsidiaries, and nominee Directors
on the Board of Independent Cement &
Lime Pty Ltd. These deeds provide for
indemnification on a full indemnity basis and
to the full extent permitted by law against
all losses or liabilities incurred by the person
as an officer of the relevant Company. The
indemnity is a continuing obligation and is
enforceable by an officer even if he or she
has ceased to be an officer of the relevant
Company or its related bodies corporate.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
37
Remuneration report
The Directors of the Company present
the Remuneration Report prepared in
accordance with section 300A of the
Corporations Act 2001 for the Company and
the Group for the year ended 31 December
2010. This Remuneration Report, which has
been audited by PricewaterhouseCoopers,
forms part of the Directors’ Report.
Section 1 – Policy and Structure
1.1 Overview of elements of
remuneration
Table 1 - Overview of elements of remuneration
Elements of
remuneration Non-Executive
Directors
Fixed
remuneration
Fees
Salary
At-risk
remuneration
Short term
incentive
An overview of the elements of remuneration
is set out in Table 1. A more detailed
discussion of each element is contained in
this Remuneration Report.
Post-
employment
Long term
incentive
Superannuation
Notice periods &
termination
payments
Senior
Executives
Discussion in
Remuneration
Report
pages 46, 47
page 41
pages 41, 42
pages 43 - 45
pages 46, 47
page 45
Executive
1.2 Board policy on executive
remuneration
The Nomination and Remuneration
Committee has recommended, and the
Board has adopted, a policy that executive
remuneration will:
• Be competitive in the markets in which the
Group operates in order to attract, motivate
and retain high calibre employees;
• Reinforce the short and long term objectives
of the Group as set out in the strategic
business plans endorsed by the Board; and
• Provide a common interest between
employees and shareholders by linking the
rewards that accrue to management to
the creation of value for shareholders, and
ensuring that remuneration policy has regard
to market practice and conditions.
The policy seeks to support the Group’s
objective to be perceived as “an employer of
choice” by:
• Offering remuneration levels which are
competitive relative to those offered by
comparable employers; and
• Providing strong, transparent linkages
between individual and Group performance
and rewards.
The Board, based on the recommendations
of the Nomination and Remuneration
Committee, establishes the remuneration
of the Managing Director. Following a
comprehensive review undertaken in 2009
by the Nomination and Remuneration
Committee taking into account advice from
two independent consultants instructed
directly by the Chairman of the Nomination
and Remuneration Committee, and in the
context of the global financial crisis and
the challenging market conditions, the
Committee recommended, and the Board
approved a ‘freeze’ on the Managing
Director’s fixed remuneration for 2010 and
2011. That review also considered the short
term and long term incentive components of
the Managing Director’s total remuneration
package.
The Nomination and Remuneration
Committee, based on the recommendations
of the Managing Director, approves the
remuneration of senior executives reporting
to the Managing Director, including their
participation in both short term and long
term incentive schemes.
38
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
The Board aims to achieve a balance between fixed and performance related components of remuneration that reflect market conditions at each job
and seniority level.
Be competitive in Adelaide Brighton’s
markets
Reinforce Group short and long term
incentives
Link to creation of shareholder
value
Fixed remuneration
Performance-based remuneration
Performance-based remuneration
Between 40 - 60% of total target
remuneration
Between 40 - 60% of total target
Between 40 - 60% of total target remuneration
Determined in line with median market
rate for comparable role.
Executive can take in form agreed with
the Company (in general, this is in the
form of cash, car and superannuation and
includes the cost of fringe benefits tax).
STI
Targets comprise:
• ‘Financial Target’ (80% of STI opportunity)
relating to Group performance against
budget; and
• ‘Functional Targets’ (20% of STI opportunity)
relating to personal performance.
LTI
Targets based on earnings per share
and total shareholder return to link
executive reward with key performance
drivers which underpin sustainable growth
in shareholder value.
Section 2 - Group performance 2010
2.1 Shareholders’ wealth
The Company’s long term incentive
arrangements for senior executives
(described in section 3.3 below) are judged
against two performance measures – total
shareholder return (TSR) and earnings per
share (EPS), which the Board believes
are indicators of the long term creation of
shareholder wealth.
As set out in section 3.3 below, the
long term incentive rewards sustained
performance in relation to growth in
these measures (TSR when compared to
performance against the chosen indices
and EPS based on percentage growth) over
2, 3 and 4 year periods. In this way, the
Board strives to link executive rewards to
shareholder value creation over the longer
term, through which executives focus on
medium to longer term strategic decision
making as opposed to taking decisions
which result in short term gains alone.
TSR measures the change in shareholder
wealth over time – being the dividends paid
by the Company, changes in share price
and any return of capital over the relevant
period. EPS divides earnings by the number
of shares on issue (which includes the effect
of capital raisings).
The Company’s 5 year TSR and EPS
performance is set out in Table 2 below,
together with details of dividends paid,
the closing price of Adelaide Brighton shares
on 31 December in each year and details of
operating cash flow.
Table 2 - Shareholders’ wealth improvement from 2006 to 2010
Year ended Year ended Year ended Year ended Year ended
31 Dec 06
31 Dec 08
31 Dec 10
31 Dec 07
31 Dec 09
Share price (A$)1
3.30
2.75
2.10
3.48
2.81
Total dividends paid (cents)
21.5
13.5
15.0
18.5
18.5
Franked dividends
100%
100%
100%
100%
100%
Operating cash flow
$188.5m
$188.1m
$150.1m
$140.4m
$144.3m
EPS (Ac)
TSR (%)
23.9
20.4
22.2
21.0
18.4
27.8%
37.4%
(35.3%)
30.4%
42.6%
Compound Annual Growth
Rate since 2004
16.6%
15.6%
12.5%
32.4%
34.9%
1 The amount disclosed is the closing price of the Company’s shares on the ASX on 31 December of the relevant year.
As can be seen from these results, over the
past 5 years, the Company has:
• Increased operating cash flow through tight
controls over working capital, and
• Delivered compound annual growth in TSR of
• Generated an average annual increase in EPS
16.6%;
of 9.5%
• Maintained a strong dividend payout ratio to
profit earned;
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
39
2.2 Earnings
The Group’s record result in 2010, posting
a 23.1% increase in net profit after tax of
$151.5 million, and a 8.7% improvement in
revenue to $1,072.9 million, resulted from
the growth in cement sales and improved
prices, together with cost management
initiatives and improved operating efficiency.
Table 3 sets out the Group’s sales revenue,
earnings before interest and tax (EBIT), profit
before tax (PBT) and net profit after tax
(NPAT) over the past 5 financial years.
Table 3 - Earnings improvement from 2006 to 2010
($ Million)
Revenue
EBIT
Year ending Year ending Year ending Year ending Year ending
31 Dec 06
31 Dec 08
31 Dec 10
31 Dec 09
31 Dec 07
1,072.9
987.2
1,022.4
888.4
216.2
185.3
189.1
171.3
794.7
148.8
EBIT margin %
20.2%
18.8%
18.5%
19.3%
18.7%
Profit before tax (PBT)
202.2
168.6
155.3
149.6
Net profit after tax (NPAT)
151.5
123.1
120.8
113.9
133.6
102.1
Comparison of growth ABC share price plus dividends to the ASX Small Ords
Accumulation Index and ASX200 Accumulation Index
1150%
1050%
950%
850%
750%
650%
550%
450%
350%
250%
150%
50%
-50%
1
0
n
a
J
1
1
0
n
u
J
0
3
1
0
c
e
D
1
3
2
0
n
u
J
0
3
2
0
c
e
D
1
3
3
0
n
u
J
0
3
3
0
c
e
D
1
3
4
0
n
u
J
0
3
4
0
c
e
D
1
3
5
0
n
u
J
0
3
5
0
c
e
D
1
3
6
0
n
u
J
0
3
6
0
c
e
D
1
3
7
0
n
u
J
0
3
7
0
c
e
D
1
3
8
0
n
u
J
0
3
8
0
c
e
D
1
3
9
0
n
u
J
0
3
9
0
c
e
D
1
3
0
1
n
u
J
0
3
0
1
c
e
D
1
3
ABC Share
Price plus
Dividends
Small Ords
Accum
ASX200
Accum
PBT is the key component of the Group’s
short term incentive arrangements for senior
executives (set out in section 3.2 below).
As PBT for the 2010 year increased to
$202.2 million, management exceeded
110% of budgeted profit before tax and
earned all of the Financial Target applicable
to the short term incentive.
The Group’s committed executive team, who
have overseen a consistent strategy over the
5 year period shown in Table 3, have seen
underlying EBIT increase from $148.8 million
in 2006 to $216.2 million in 2010 (a 45.3%
increase) and PBT increase from
$133.6 million in 2006 to $202.2 million in
2010 (a 51.3% increase).
The graph below depicts the performance
of Adelaide Brighton’s share price plus
dividends, versus the ASX Small Ords
Accumulation Index (AS38) and the ASX 200
Materials Accumulation Index (ASX51MATL)
from 1 January 2001 to 31 December 2010.
The Adelaide Brighton share price has
outperformed both indices, reflecting the
strength of its core markets in the resources
and construction materials sectors and the
success of Adelaide Brighton’s strategy.
40
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
Section 3 - Managing Director and
senior executive remuneration
The following disclosures in relation to the
remuneration of the Managing Director, Mr
Mark Chellew, and members of the executive
team, are provided on the basis that these
executives (“senior executives”) had the
authority and responsibility for planning,
directing and controlling the activities of the
Company and the Group during the financial
year. This includes the Managing Director
and the five most highly remunerated senior
executives of the Company and the Group
during the financial year as required under
section 300A of the Corporations Act 2001.
Executives
Position
Managing Director
M P Chellew
Senior executives
M Kelly
M R D Clayton
M Brydon
M A Finney
S B Rogers
S J Toppenberg
Managing Director and CEO
Chief Financial Officer and Executive General Manager, Strategy and
Business Development
General Counsel and Company Secretary
Executive General Manager, Cement and Lime
Executive General Manager, Concrete and Aggregates
Executive General Manager, Concrete Products
Executive General Manager, Human Resources
3.1 Fixed remuneration
The terms of employment for all senior
executives contain a fixed remuneration
component. This is expressed as a dollar
amount that the executive may take in a
form agreed with the Company.
This amount of remuneration is determined
in line with the median market rate for
a comparable role within comparable
companies. Executive remuneration levels
were reviewed during 2009 as part of the
extensive review conducted, separately,
by two independent consultants instructed
directly by the Chairman of the Nomination
and Remuneration Committee, which
provided independent expert advice directly
to the Committee for its consideration.
As part of the comprehensive review
undertaken by the Nomination and
Remuneration Committee, and considering
the independent expert advice provided
by two separate firms of consultants, the
Managing Director’s fixed remuneration
was reviewed in 2009 for the 2010 year,
and set at $1.5 million per annum in order
to bring it in line with the Group’s policy of
setting fixed remuneration in line with the
median market rate. As noted above, in the
context of the global financial crisis and the
challenging market conditions, in 2009 the
Board determined to ‘freeze’ the Managing
Director’s fixed remuneration for 2010 and
2011. His fixed remuneration will not be
reviewed again until November 2011, for the
2012 year.
3.2 At-risk remuneration -
Short Term Incentive (STI)
3.2.1 2010 Actual Performance
For 2010, the Group’s actual PBT, as defined
in section 3.2.2 below, was $202.2 million.
The Managing Director and senior executives
satisfied the Financial Component of the
performance conditions applicable to the
2010 STI as the Group achieved in excess
of 110% of budgeted PBT after exceptional,
abnormal and extraordinary items. Tier 4
(Stretch) of the STI was reached, resulting
in a maximum STI opportunity equal to
80% for senior executives and 100% for the
Managing Director of fixed remuneration.
In accordance with the 2010 STI scheme
detailed below, 80% of the maximum STI
opportunities was payable based on a
Financial Target in relation to the Group’s
performance against budget in the 2010
financial year. The proportion of the
remaining 20% Functional Targets which was
determined to be payable was dependent
on each individual’s success in achieving
personal targets. The achievement of these
personal targets by the individuals varied
between 62% and 98% of the Functional
Targets.
Specific information relating to the
percentage of the 2010 and 2009 STI
which was paid and the percentage that
was forfeited for the Managing Director
and senior executives of the Company and
Group is set out in Table 5.
3.2.2 Summary of STI program
What is the STI and who participates?
The STI program involves linking specific
annual performance targets (predominantly
financial) with the opportunity to earn cash
incentives based on a percentage of fixed
remuneration.
Participation in the STI is generally offered to
the Managing Director and senior executives
who are able to influence the generation of
shareholder wealth, and thus have a direct
impact on the Group’s performance against
the relevant performance hurdles.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
41
What is the maximum amount that executives can earn?
If the relevant performance measures are met:
Table 4 - Maximum STI opportunity
% of fixed remuneration
2010 Group performance against budget
Managing Director
Senior executives
Initial Target (Tier 1)
90% - 99%
Target (Tier 2)
100%
12%
60%
10%
50%
Partial Stretch (Tier 3)
101% - 109%
64% - 96%
53% - 77%
Stretch (Tier 4)
110% or greater
100%
80%
The Board also considers the Managing
Director’s performance against the agreed
functional targets, and those of the senior
executives based on the recommendation of
the Managing Director.
When is performance against criteria
determined and the cash award paid?
Assessment of performance against the
performance hurdles for the relevant year
is determined at the first Board meeting
subsequent to the balance date, in
conjunction with finalisation of the Group’s
full year results (generally in February), and is
normally paid to the executive by March.
What happens to the STI award on
cessation of employment?
In general, where an executive’s employment
is terminated by the Company (other than for
cause) during the course of a performance
year, the executive is entitled to a pro-rata
STI for that proportion of the current financial
year elapsed on the termination date. In
general, where an executive’s employment
ceases by reason of resignation, any STI
opportunity lapses.
How is performance against the
performance conditions assessed?
In assessing the extent to which these
performance conditions were satisfied, the
Board reviews the budgeted targets for the
year, focusing on PBT financial measure, and
assesses the degree to which the Group met
these targets. Where applicable, abnormal,
extraordinary or unanticipated factors, which
may have affected the Group’s performance
during the year, are considered and where
necessary, the Group’s performance is
adjusted.
Table 5 - STI for the 2010 and 2009 financial years
Managing
Director
& senior
executives
STI opportunity
as % of fixed
remuneration1
Year
Actual STI
as a % of STI
opportunity1
M Brydon
A D Poulter4
M P Chellew
M R D Clayton
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
S J Toppenberg 2009
2010
2009
2010
S B Rogers
M A Finney
M Kelly
%
100.0
100.0
80.0
-
80.0
80.0
80.0
80.0
80.0
80.0
80.0
80.0
80.0
80.0
80.0
80.0
%
99.6
98.8
96.1
-
97.4
99.6
99.4
99.4
93.6
94.0
95.4
93.5
98.4
97.8
93.4
92.4
% of STI
opportunity1
payment not
achieved2
%
0.4
1.2
3.9
-
2.6
0.4
0.6
0.6
6.4
6.0
4.6
6.5
1.6
2.2
6.6
7.6
Actual STI
payment3
$
1,346,952
1,482,000
389,647
-
299,836
322,704
503,362
556,640
328,424
338,400
313,523
437,696
270,167
273,840
271,981
310,464
1 STI opportunity for 2010 is based on stretch STI Tier 4 (2009 stretch STI Tier 4).
2 Where the actual STI payment is less than maximum potential, the difference is forfeited and does not become payable in
subsequent years.
3 2010 STI constitutes a cash bonus granted during 2010; determined in conjunction with the finalisation of 2010 results and
paid by March 2011.
2009 STI constitutes a cash bonus granted during 2009; determined in conjunction with the finalisation of 2009 results and
paid by March 2010.
4 A D Poulter ceased employment effective 1 May 2010.
How are performance criteria set?
The performance criteria are set by the
Board and agreed with the executive, in
general, by the end of February in each year.
What were the performance conditions
applicable under the 2010 STI program?
In 2010, the amount payable to the
Managing Director and eligible senior
executives is based on two separate
performance measures:
(1) 80% is tested on the Group’s
performance against budget (Financial
Target); and
(2) 20% is tested on both the Group’s
performance against its budget and the
senior executive/Managing Director meeting
personal targets agreed with the Managing
Director/Board (Functional Targets).
The cash bonus is, therefore, dependent
on both the Group’s performance and the
individual’s performance.
Why were these performance conditions
chosen?
The key financial measure used is Profit
Before Tax, which the Board believes is
an appropriate annual performance target,
aligned to Group budget.
Profit Before Tax is defined for STI purposes
as net profit after interest but before income
tax expense, exceptional, abnormal,
extraordinary items and the effect of any
acquisitions made during the financial
period. A percentage of the executive’s 2010
STI is also subject to additional personal
functional performance hurdles appropriate
to each executive’s role.
42
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
In accordance with the requirements of the
ASX Listing Rules, the Awards granted to
the Managing Director have been approved
by shareholders.
Awards have been issued under the Plan
called the “2007 Award” and the “2010
Award”.
What are the performance conditions and
why were they chosen?
Both the 2007 Awards and the 2010 Awards
are measured against a TSR performance
condition (as to 50% of each Award) and an
EPS performance condition (as to the other
50%).
The Board considers these performance
conditions to be appropriate because they
ensure that a proportion of each executive’s
remuneration is linked to the generation of
profits (expressed on a per share basis), and
shareholder value and ensure that executives
only receive a benefit where there is a
corresponding direct benefit to shareholders.
In particular, the use of a TSR based hurdle:
• Ensures alignment between comparative
shareholder return and reward for the
executive; and
• Provides a relative, external market
performance measure, having regard to
those companies with which the Group
competes for capital, customers and talent;
While an EPS based hurdle:
• Is a fundamental indicator of financial
performance, both internally and externally;
and
• Links directly to the Group’s long-term
objectives of maintaining and improving
earnings.
The use of dual performance measures
combines a strong external market-
based focus through share price growth
and dividends (TSR), and a non-market
based measure aimed at driving improved
Company results and the creation of
shareholder wealth (EPS).
Is re-testing permitted
No. No re-testing of either of the
performance conditions applicable to a
Tranche of Awards is permitted.
3.3 At-risk remuneration - Long Term
Incentive (LTI)
3.3.1 Actual Performance – Tranche 2 of
2007 Awards
Tranche 2 of the 2007 Awards became
exercisable on 1 May 2010. As detailed
below, the relevant performance conditions
for the 2007 Awards are tied to TSR and
EPS.
The Company’s TSR growth over the
relevant period (1 January 2007 to
31 December 2009) was independently
assessed and determined to have exceeded
the growth in all three of the relevant indices
by more than the required premiums.
Accordingly, the 50% of Tranche 2 that
was subject to the TSR condition became
exercisable.
The average annual growth in EPS of the
Company over the relevant period was
8.12%, which exceeded the threshold level
of 7% but did not reach the stretch level of
11%. Accordingly, applying the applicable
pro rata rate scale to the 50% of Tranche
2 that was subject to the EPS condition,
56.8% of the part of Tranche 2 subject to
the EPS condition was exercisable.
As a result, 78.4% of Tranche 2 of the 2007
Awards became exercisable. The 21.6% of
Tranche 2 of the 2007 Awards which was
not exercisable lapsed immediately.
A detailed discussion of the Group’s
performance, set specifically against the
Group’s earnings and the consequences of
the Group’s performance on shareholder
wealth, both in the current financial year and
the previous four years, is set out on pages
39 to 40 of this Report.
3.3.2 Summary of Adelaide Brighton Ltd
Executive Performance Share Plan (“the
Plan”)
What is the Plan and who participates?
The Group’s LTI arrangements are designed
to link executive reward with sustainable
growth in shareholder value.
The Plan provides for grants of Awards to
eligible executives, each Award being an
entitlement to a fully paid ordinary share
in Adelaide Brighton Ltd, subject to the
satisfaction of performance conditions, on
terms and conditions determined by the
Board.
Participation in the Plan is generally offered
to the Managing Director and executives
who are able to influence the generation of
shareholder wealth and thus have a direct
impact on the Group’s performance against
the relevant performance hurdles.
What happens to Awards that are not yet
exercisable on cessation of employment?
If an executive resigns or is terminated for
cause, the Awards in respect of any tranche
that is not exercisable will generally be
forfeited.
The Plan Rules provide that in other
circumstances that a pro rata number of
Awards, reflecting the part of the LTI earned
or accrued up to termination, may become
exercisable either at the time of termination
of employment or at the end of the original
performance period applicable to a tranche.
What other conditions apply to the Awards?
An executive’s entitlement to shares under
an Award may also be adjusted to take
account of capital reconstructions and
bonus issues. In the event of a takeover
bid (or other transaction likely to result in
a change in control of the Company), an
executive will only be allowed to exercise his
or her Awards to the extent determined by
the Board as provided in the Plan Rules.
The Awards will lapse if the Board considers
that the executive has acted fraudulently,
dishonestly or in breach of their obligations
to the Company.
The Plan Rules contain a restriction
on removing the ‘at risk’ aspect of the
instruments granted to executives. Plan
Participants may not enter into any
transaction designed to remove the ‘at risk’
aspect of an instrument before it becomes
exercisable (eg hedging the Awards).
Any shares allocated to the executive
following exercise of an Award may only
be dealt with in accordance with the
Company’s Share Trading Policy and subject
to the generally applicable insider trading
prohibitions.
Tranche 3 of 2007 Awards
When does the final tranche of the 2007
Awards vest?
Tranche 3 of the 2007 Awards are
exercisable (subject to satisfaction of relevant
performance conditions) on
1 May 2011.
Shares are delivered to the executive on
exercise of the Award. Awards are granted
at no cost to the executive
and no amount is payable by the executive
on exercise of the Award.
Any unexercised Awards expire on
30 September 2011.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
43
How is the TSR performance condition for
Tranche 3 of the 2007 Awards measured?
The Company’s TSR performance is
compared with the TSR performance of
other companies in a comparator group.
The TSR hurdle for Tranche 3 of the 2007
Awards is that the TSR growth of the
Company over the period 1 January 2007 to
31 December 2010 must equal or exceed
the growth in the returns of at least two
of the three indices below (expressed as
a percentage) over the same period plus
the percentage premium applicable to the
respective indices:
• S&P / ASX Small Ordinaries Accumulation
Index (XSO Al) plus 2% premium.
• S&P / ASX 200 Materials Accumulation
Index (XMJ Al) plus 2% premium.
• S&P / ASX 200 Accumulation Index (XJO Al)
plus 3% premium.
In assessing whether the TSR performance
hurdle has been met, the Company
receives independent data, which provides
both the Company’s TSR growth over the
relevant performance period and that of the
comparator group.
How is the EPS performance condition for
Tranche 3 of the 2007 Awards measured?
The EPS performance hurdle applicable
to Tranche 3 of the 2007 Award measures
the average annual growth in EPS of the
Company from 1 January 2007 until 31
December 2010.
As a threshold before any part of the relevant
tranche of the Awards subject to the EPS
hurdle will become exercisable, the average
annual growth in EPS of the Company (as
disclosed in the audited accounts of the
Company and before any write downs and
capital management initiatives) must equal
or exceed 7% per annum growth measured
against the EPS for the Company’s financial
year ended 31 December 2006 (before
abnormal or exceptional items, such as
(without limitation) capitalised interest and
taxation benefits).
Once the 7% threshold is reached, the
relevant tranche of Awards subject to the
EPS hurdle vests in accordance with the
following scale:
Table 6 - EPS hurdle vesting schedule - 2007 Award
Average Annual Compound Growth in EPS
below
7%
7%
7% to
9%
9%
9% to
11%
11%
Percentage of Awards subject to
EPS hurdle which become exercisable
Nil
40% Pro-rata 70% Pro-rata 100%
2010 Awards
The terms of the 2010 Awards were
considered by shareholders at the
Company’s 2010 Annual General Meeting.
Date of grant of 2010 Awards
To coincide with the start of the performance
period, the effective grant date of the 2010
Awards is 1 January 2010.
Any unexercised 2010 Awards will expire on
30 September 2014.
Performance period and vesting
The 2010 Awards are divided into 3 tranches
as follows:
• Tranche 1: 30% of Award – earliest exercise
date is 1 May 2012
• Tranche 2: 30% of Award – earliest exercise
date is 1 May 2013
• Tranche 3: 40% of Award – earliest exercise
date is 1 May 2014
Each tranche is to be tested against the
performance conditions.
Any 2010 Awards which do not vest at the
end of the applicable performance period
will lapse.
Performance hurdles
The 2010 Awards are subject to two
performance hurdles, which are independent
and will be tested separately.
Total Shareholder Return (TSR) hurdle
This hurdle requires the Company’s total
shareholder return between 1 January 2010
and 31 December of the year preceding the
earliest exercise date to equal or exceed
the growth in the median company of the
S&P/ASX 200 Accumulation Index (excluding
all GICS Financial companies and selected
resources companies) over the same period.
This comparator group differs from that
applicable to the 2007 Awards to better
reflect changes in the Company’s market
capitalisation since the 2007 Awards were
made.
No 2010 Awards will vest if the Company’s
TSR performance over the relevant
performance period is less than the 50th
percentile. If performance is in the 50th
percentile, then 50% of 2010 Awards will
vest. Full vesting will occur at the 75th
percentile, with pro rata vesting on a straight
line basis between these points.
Earnings Per Share (EPS) hurdle
The EPS hurdle requires growth in the
Company’s earnings per share (as disclosed
in the audited accounts) from 1 January
2010 to the end of the financial year
immediately preceding the earliest exercise
date for the relevant tranche, to equal or
exceed an external benchmark measure
(being the Consumer Price Index (CPI) (All
Cities) plus a percentage premium). The
Board may adjust the EPS to exclude the
effects of material business acquisitions or
divestments and for certain one-off costs.
The target growth rate over the applicable
performance period for 50% vesting is CPI
+ 2.5% per annum growth, with full vesting
occurring where the growth rate equals or
exceeds CPI + 5% per annum. Again, the
Awards will vest on a straight line basis
between these points.
Trading restrictions
Following vesting of an Award, the 2010
Awards can be exercised at any time prior to
30 September 2014. The shares allocated
on exercise of an Award may only be
disposed of pursuant to an approval under
the terms of the Company’s share trading
policy.
Price payable on grant or exercise of Awards
No amount is payable either on grant of the
Awards or on exercise of any tranche of
Awards.
44
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
Table 7 sets out details of the movement in Awards held by the Managing Director and senior executives during the reporting period.
Table 7 - Movement in Awards during the year
Managing
Director
& senior
executives
M P Chellew
A D Poulter5
M R D Clayton
M Brydon
M A Finney
M Kelly
S J Toppenberg
S B Rogers
Balance at
31 Dec 2009
Granted
2010
Award1
Exercised/
vested2
2007
Award
Number of
options lapsed/
forfeited
during
the year
Balance at
31 Dec 2010
Value of
Awards at
grant date
Value per
share at the
date of
exercise3
Value at
lapse date4
$
$
$
870,000
200,000
200,000
200,000
200,000
200,000
200,000
200,000
1,800,000
-
300,000
600,000
325,000
500,000
200,000
325,000
341,040
78,400
78,400
78,400
78,400
78,400
78,400
78,400
93,960
121,600
21,600
21,600
21,600
21,600
21,600
21,600
2,235,000
-
400,000
700,000
425,000
600,000
300,000
425,000
2,362,500
-
393,750
787,500
426,564
656,250
262,500
426,564
2.9120
2.9200
2.9120
2.8077
2.7730
2.8077
2.9120
3.1537
159,732
180,720
36,720
42,768
36,720
36,720
36,720
50,544
Total
2,270,000
4,050,000
889,840
345,160
5,085,000
5,315,628
-
580,644
1 The grants made to the Managing Director and the senior executives constituted 97.5% of the grants available for the year. As the Awards only vest on satisfaction of performance conditions which
are to be tested in future financial periods, none of the Awards set out above vested or were forfeited during the year.
2 All 889,840 Awards which were exercisable were exercised in 2010. The number of Awards vested during the period and exercisable at 31 December 2010 is nil. The number of Awards vested but
not yet exercisable at 31 December 2010 is nil.
3 The value per share shown at the date of exercise is the Volume Weighted Average Price (VWAP) calculated by the Australian Securities Exchange Limited on the exercise date.
The aggregate value of Awards that vested during the year is $2,583,556 based on the VWAP values per share.
4 The value at lapse date of options that were granted as part of remuneration and that lapsed during the year because a vesting condition was not satisfied. The value is determined
at the time of lapsing, but assuming the condition was satisfied.
5 A D Poulter ceased employment effective 1 May 2010.
3.4 Service agreements
The remuneration and other terms of
employment for the Managing Director
and senior executives are set out in formal
Service Agreements. Key details of the
Service Agreements are summarised in the
discussion below.
All Service Agreements are for an unlimited
duration. The agreement may be terminated
by the executive giving three months notice
of termination or by the Company on five
weeks notice (except in cases of termination
for cause where termination is immediate).
In the case of resignation, no separation
payment is made to the executive (only
amounts due and payable up to the date of
ceasing employment including accrued leave
entitlements and unpaid salary).
Where the Company terminates employment
by giving notice or where the executive is
able to terminate the agreement following
a “Fundamental Change”, each of the
executives reported on in this report is
entitled to a separation payment which is
equivalent to 12 months total remuneration
on termination and, if applicable, any
amounts payable pursuant to the Company’s
redundancy policy. A Fundamental
Change includes circumstances where
there has been a substantial diminution of
responsibility, a material reduction in status
or a relocation of the relevant position.
On termination of employment for any
reason, the Managing Director and other
senior executives are prohibited from
engaging in any activity that would compete
with the Group for a period of up to 6
months in order to protect the Group’s
business interests. During the period of the
restraint the executive will be paid a monthly
amount equivalent to the executive’s monthly
fixed remuneration at the time of termination.
Under an arrangement entered into some
time ago, M Brydon is also entitled to
an ex-gratia payment of $10,000 upon
termination, as well as payment of accrued
sick leave.
Each of the Service Agreements of current
key management personnel other than
M Kelly was entered into prior to the
amendments to the Corporations Act
2001 regarding the payment of benefits on
termination coming into effect on
24 November 2009. In accordance with the
Government’s intentions, entitlements under
the pre-existing contracts are not subject
to the new limits on termination payments
under those amendments.
M Kelly was appointed Chief Financial Officer
on 8 February 2010 following the resignation
of A D Poulter. M Kelly’s Service Agreement
for the internal promotion to this position
was entered into during 2010 and while it
provides for notice periods in accordance
with those which apply for the other
executives, noting that the new termination
payment provisions of the Corporations Act
apply to M Kelly, the separation payment
to be made to him will not exceed 1 x
Base Salary (as that term is defined in the
Corporations Act). In the event M Kelly
resigns, the Company may also prohibit
him from engaging in any activity that would
compete with the Group for a period of up
to 6 months in order to protect the Group’s
business interests. During the period of the
restraint the executive will be paid a monthly
amount equivalent to the executive’s monthly
fixed remuneration at the time of termination.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
45
3.5 Remuneration paid
Details of the remuneration paid to the Managing Director and key management personnel of the Company and the Group, which includes the five
senior executives who received the highest remuneration during the 2010 and 2009 financial years are set out in Table 8 below.
Table 8 – Remuneration for the 2010 and 2009 financial years
Short-term benefits
Fixed
salary
$
1,337,897
1,485,170
492,722
181,846
370,697
390,170
618,897
685,170
407,893
424,800
381,340
520,417
316,531
325,000
336,473
395,000
4,262,450
4,407,573
STI
$
1,346,592
1,482,000
389,647
-
299,836
322,704
503,362
556,640
328,424
338,400
313,523
437,696
270,167
273,840
271,981
310,464
3,723,532
3,721,744
Post-
employment
benefits
Super-
annuation
contributions
Share
based
payments1
Total
Termination
benefits
Long term
incentive
$
$
$
$
%2
14,103
14,830
14,103
4,820
14,103
14,830
14,103
14,830
30,707
25,200
29,460
25,000
26,669
25,000
27,527
25,000
170,775
149,510
-
-
-
146,5064
-
-
-
-
-
-
-
-
-
-
-
-
-
146,506
265,455
445,275
49,943
(72,131 )
49,943
70,650
63,834
123,366
49,943
74,237
49,943
99,344
49,943
56,303
83,423
138,741
662,427
935,785
9
13
5
(28 )
7
9
5
9
6
9
6
9
8
8
12
16
2,964,047
3,427,275
946,415
261,041
734,579
798,354
1,200,196
1,380,006
816,967
862,637
774,266
1,082,457
663,310
680,143
719,404
869,205
8,819,184
9,361,118
M P Chellew
A D Poulter3
M R D Clayton
M Brydon
M A Finney
M Kelly
S J Toppenberg
S B Rogers
Total for the
Company and Group
Year
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
1 In accordance with the requirements of the Accounting Standards, remuneration includes a proportion of the notional value of equity compensation granted or outstanding during the year.
The notional value of equity instruments which do not vest during the reporting period is determined as at the grant date and is progressively allocated over the vesting period. The amount included
as remuneration is not related to or indicative of the benefit (if any) that individual executives may ultimately realise should the equity instruments vest.
The notional value of Awards as at the date of their grant has been determined in accordance with the accounting policy note 1(v)(iv).
2 % of remuneration for the financial year which consists of Awards issued under the Adelaide Brighton Limited Executive Performance Share Plan.
3 A D Poulter ceased employment effective 1 May 2010.
4 Termination benefits paid to A D Poulter consisted of annual and long service leave entitlements which had not been taken.
Section 4 - Non-executive Directors’
remuneration
4.1 Board policy on remuneration
The remuneration of non-executive
Directors is determined by the Board on
the recommendation of its Nomination
and Remuneration Committee within the
maximum aggregate amount approved by
shareholders. The remuneration of the non-
executive Directors consists of Directors’
fees, committee fees and superannuation
contributions. This remuneration is not linked
to the performance of the Group in order to
maintain the independence and impartiality
of the non-executive Directors.
In setting fee levels, the Nomination and
Remuneration Committee, which makes
recommendations to the Board, takes into
account:
• Independent professional advice;
• Fees paid by comparable companies;
• The general time commitment and
responsibilities involved;
• The risks associated with discharging the
duties attached to the role of Director; and
• The level of remuneration necessary to
attract and retain Directors of a suitable
calibre.
Table 9 - Non-executive Directors’ fees
Fee applicable for 20101
Board
Audit, Risk and Compliance Committee
Nomination and Remuneration Committee
Safety, Health and Environment Committee
Corporate Governance Committee
A maximum aggregate amount of
$1,100,000 per annum was approved at the
2010 Annual General Meeting.
Details of the membership of the Nomination
and Remuneration Committee and its
responsibilities are set out on pages 25 – 27
of the Corporate Governance Statement.
Fees payable to non-executive Directors are
set out in Table 9.
Chairman
$
320,000 2
22,500
22,500
10,000
7,500
Member
$
95,000
12,500
10,000
7,500
5,000
• The Group’s existing remuneration policies;
1 At present, there are no fees payable for the Independent Directors’ Committee.
2 The Chairman receives no additional fees for Committee work.
46
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
Non-executive Directors’ fees are inclusive
of contributions to superannuation. No
superannuation contributions were made for
M A Kinnaird. Consistent with best practice,
the Group does not pay non-executive
Director retirement benefits other than
superannuation contributions.
In accordance with rule 7.3(f) of the
Company’s constitution, Directors are also
permitted to be paid additional fees for
special duties or exertions. Such fees may
or may not be included in the aggregate
amount approved by shareholders, as
determined by the Directors. No such fees
were paid during the year.
Directors are also entitled to be reimbursed
for all business related expenses, including
travel, as may be incurred in the discharge
of their duties.
4.2 Remuneration
Details of non-executive Directors’
remuneration for the years ended
31 December 2010 and 31 December 2009
are set out in Table 10. All values are in A$
unless otherwise stated.
Table 10 - Non-executive Directors’ remuneration for the 2010 and 2009 financial years
Fees and allowances
Post-employment
benefits
Year
Directors’
fees
Committee
fees
Superannuation
contributions1
M A Kinnaird2
C L Harris (Chairman)
L V Hosking
G F Pettigrew
R D Barro
K B Scott-
Mackenzie3
Total
$
309,000
123,175
84,439
228,571
84,439
86,450
84,439
86,450
84,439
86,537
-
37,966
646,756
649,149
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
$
-
-
37,379
-
34,016
38,117
24,652
34,654
6,111
7,500
-
-
102,158
80,271
$
-
-
12,182
22,273
11,845
12,457
10,909
11,069
8,150
8,463
-
3,420
43,086
57,682
Total
$
309,000
123,175
134,000
250,844
130,300
137,024
120,000
132,173
98,700
102,500
-
41,386
792,000
787,102
1 Superannuation contributions are made on behalf of non-executive Directors to satisfy the Group’s obligations under applicable
Superannuation Guarantee Charge legislation.
2 M A Kinnaird retired on 19 May 2010.
3 K B Scott-Mackenzie appointed as a Director effective 26 July 2010.
Former Non-executive Director
J D McNerney1
2009
27,671
3,090
-
30,761
1 J D McNerney resigned as a Director effective 21 May 2009, therefore remuneration details are shown for comparative
purposes only.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
47
Income statement
For the year ended 31 December 2010
($ Million)
Revenue from continuing operations
Cost of sales
Freight and distribution costs
Gross profit
Other income
Marketing costs
Administration costs
Finance costs
Share of net profits of joint ventures accounted for using the equity method
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to:
Owners of the Company
Non-controlling interests
Earnings per share for profit from continuing operations attributable to the
ordinary equity holders of the Company:
Basic earnings per share
Diluted earnings per share
Notes
3
3
4
11(c)
5(a)
36
36
Consolidated
2010
1,072.9
(667.4)
(143.7)
261.8
8.5
(25.4)
(58.5)
(16.3)
32.1
202.2
(50.8)
151.4
151.5
(0.1)
151.4
Cents
23.9
23.7
2009
987.2
(635.0)
(136.9)
215.3
24.1
(25.1)
(55.0)
(18.3)
27.6
168.6
(45.4)
123.2
123.1
0.1
123.2
Cents
20.4
20.3
48
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
THE INCOME STATEMENT SHOULD BE READ IN CONJUNCTION WITH THE NOTES TO THE FINANCIAL STATEMENTS SET OUT ON PAGES 53 TO 93.
Statement of comprehensive income
For the year ended 31 December 2010
($ Million)
Profit for the year
Other comprehensive income
Actuarial (losses)/gains on retirement benefit obligation
Exchange differences on translation of foreign operations
Income tax relating to components of other comprehensive income
Other comprehensive income for year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income for the year
Notes
22(d)
5(c)
Consolidated
2010
151.4
(2.7)
-
0.8
(1.9)
2009
123.2
5.8
(0.1)
(1.8)
3.9
149.5
127.1
149.6
(0.1)
149.5
127.0
0.1
127.1
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
THE ABOVE STATEMENT OF COMPREHENSIVE INCOME SHOULD BE READ IN CONJUNCTION WITH THE NOTES TO THE FINANCIAL STATEMENTS SET OUT ON PAGES 53 TO 93.
49
Balance sheet
As at 31 December 2010
($ Million)
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets classified as held for sale
Total current assets
Non-current assets
Receivables
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Retirement benefit obligations
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Capital and reserves attributable to owners of the Company
Non-controlling interests
Total equity
Consolidated
Notes
2010
2009
6
7
8
9
10
11
12
14
15
16
17
18
19
20
21
22(b)
23
24
24(c)
2.8
153.3
117.8
273.9
0.2
274.1
30.4
87.7
760.6
179.1
25.5
162.8
107.8
296.1
12.7
308.8
30.4
72.5
774.3
169.0
1,057.8
1,331.9
1,046.2
1,355.0
105.4
1.0
27.1
21.6
3.9
159.0
150.2
51.5
32.6
4.2
0.1
238.6
397.6
934.3
692.7
2.6
236.0
931.3
3.0
934.3
106.1
0.4
16.7
24.4
14.3
161.9
200.5
59.8
29.9
5.8
0.1
296.1
458.0
897.0
690.4
2.9
200.6
893.9
3.1
897.0
50
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
THE ABOVE BALANCE SHEET SHOULD BE READ IN CONJUNCTION WITH THE NOTES TO THE FINANCIAL STATEMENTS SET OUT ON PAGES 53 TO 93.
Statement of changes in equity
As at 31 December 2010
Attributable to owners of Adelaide Brighton Ltd
Consolidated
($ Million)
Contributed
equity
Reserves
Retained
earnings
Non-controlling
interests
Total
Balance at 1 January 2010
690.4
2.9
200.6
893.9
3.1
Total
equity
897.0
-
149.6
149.6
(0.1 )
149.5
Total comprehensive income
for the year
Transactions with owners in their
capacity as owners:
Dividends provided for or paid
Executive performance share plan
Balance at 31 December 2010
Balance at 1 January 2009
Total comprehensive income
for the year
Transactions with owners
in their capacity as owners:
Contributions of equity,
net of transaction costs
Dividends provided for or paid
Dividend reinvestment plan
Executive performance share plan
Balance at 31 December 2009
-
-
2.3
2.3
692.7
540.4
-
(0.3 )
(0.3 )
2.6
3.5
(114.2 )
-
(114.2 )
236.0
155.0
(114.2 )
2.0
(112.2 )
931.3
698.9
-
(0.1 )
127.1
127.0
111.0
-
35.9
3.1
150.0
690.4
-
-
-
(0.5 )
(0.5 )
2.9
-
(81.5 )
-
-
(81.5 )
200.6
111.0
(81.5 )
35.9
2.6
68.0
893.9
-
-
-
3.0
3.0
0.1
-
-
-
-
-
3.1
(114.2 )
2.0
(112.2 )
934.3
701.9
127.1
111.0
(81.5 )
35.9
2.6
68.0
897.0
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
THE ABOVE STATEMENT OF CHANGES IN EQUITY SHOULD BE READ IN CONJUNCTION WITH THE NOTES TO THE FINANCIAL STATEMENTS SET OUT ON PAGES 53 TO 93.
51
Statement of cash flows
For the year ended 31 December 2010
($ Million)
Consolidated
Notes
2010
2009
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Distributions received
Interest received
Other income
Interest paid
Income taxes paid
1,187.7
(964.4)
16.9
2.2
7.0
(13.4)
(47.5)
1,074.0
(877.3)
22.7
1.6
13.8
(15.8)
(30.9)
Net cash inflow from operating activities
35
188.5
188.1
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Loans to joint venture entities
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Repayment of borrowings
Dividends paid to Company’s shareholders
Net cash (outflow) from financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of year
(51.7)
4.5
(0.1)
(47.3)
-
-
(50.5)
(114.2)
(164.7)
(23.5)
25.5
2.0
(43.1)
4.1
(2.1)
(41.1)
113.5
(2.5)
(210.0)
(45.6)
(144.6)
2.4
23.1
25.5
25
6
6
52
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
THE STATEMENT OF CASH FLOWS SHOULD BE READ IN CONJUNCTION WITH THE NOTES TO THE FINANCIAL STATEMENTS SET OUT ON PAGES 53 TO 93.
Notes to the financial statements
1 Summary of significant accounting
(b) Principles of consolidation
(ii) Employee Share Trust
policies
Adelaide Brighton Ltd (the Company) is a
Company limited by shares, incorporated
and domiciled in Australia whose shares are
publicly traded on the Australian Securities
Exchange.
The financial report was authorised for issue
by the Directors on 3 March 2011.
The principal accounting policies adopted
in the preparation of these consolidated
financial statements are set out below.
These policies have been consistently
applied to all the years presented, unless
otherwise stated. The financial statements
are for the consolidated entity consisting of
Adelaide Brighton Ltd and its subsidiaries.
(a) Basis of preparation
This general purpose financial report has
been prepared in accordance with Australian
Accounting Standards, 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, except for the circumstances
when fair value method has been applied as
detailed in the accounting policies below.
Compliance with IFRS
The consolidated financial statements of
Adelaide Brighton Limited also comply with
International Financial Reporting Standards
(IFRS) as issued by the International
Accounting Standards Board (IASB).
(i) Subsidiaries
The consolidated financial statements
incorporate the assets and liabilities of all
entities controlled by Adelaide Brighton Ltd
as at 31 December 2010 and the results of
all controlled entities for the year then ended.
The Company and its controlled entities
together are referred to in this financial report
as “the Group”.
The Group has formed a trust to
administer the Group’s employee share
scheme. The company that acts as the
Trustee is consolidated as the company
is controlled by the Group. The Adelaide
Brighton employee share plan trust is not
consolidated as it is not controlled by the
Group.
(iii) Joint venture entities
The interest in joint ventures is accounted
for in the consolidated financial statements
using the equity method and is carried at
cost by the parent entity. Under the equity
method, the share of the profits or losses of
the joint venture is recognised in the income
statement, and the share of post-acquisition
movements in reserves is recognised in
other comprehensive income. Profits or
losses on transactions establishing the joint
ventures and transactions with the joint
venture are eliminated to the extent of the
Group’s ownership interest until such time
as they are realised by the joint ventures on
consumption or sale, unless they relate to an
unrealised loss that provides evidence of the
impairment of an asset transferred.
(iv) Non-controlling interests
Non-controlling interests in the results and
equity of subsidiaries are shown separately
in the consolidated income statement and
balance sheet respectively. The Group
applies a policy of treating transactions with
non-controlling interests as transactions with
equity owners of the Group. For purchases
from non-controlling interests, the difference
between any consideration paid and the
relevant share acquired of the carrying value
of net assets of the subsidiary is deducted
from equity. The Group treats transactions
with non-controlling interests that do not
result in a loss of control as transactions with
equity owners of the Group.
Subsidiaries are all those entities over which
the Group has the power to govern the
financial and operating policies, generally
accompanying a shareholding of more than
one-half of the voting rights. The existence
and effect of potential voting rights that
are currently exercisable or convertible are
considered when assessing whether the
Group controls another entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the
Group. They are de-consolidated from the
date that control ceases. The acquisition
method of accounting is used to account for
business combinations by the Group (refer
to note 1(h)).
Intercompany transactions, balances
and unrealised gains on transactions
between Group 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
Group.
Investments in subsidiaries are accounted
for at cost in the individual financial
statements of Adelaide Brighton Ltd. Such
investments include both investments in
shares issued by the subsidiary and other
parent entity interests that in substance
form part of the parent entity’s investment
in the subsidiary. These include investments
in the form of interest-free loans which
have no fixed repayment terms and which
have been provided to subsidiaries as an
additional source of long term capital. Trade
amounts receivable from subsidiaries in
the normal course of business and other
amounts advanced on commercial terms
and conditions are included in receivables.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
53
(c) Segment reporting
(iii) Group companies
(ii) Deferred income
Operating segments are reported in a
manner consistent with the internal reporting
provided to the chief operating decision
maker. The chief operating decision maker,
who is responsible for allocating resources
and assessing performance of the operating
segments, has been identified as the
Managing Director.
Change in accounting policy
The Group has adopted AASB 8 Operating
Segments from 1 January 2009. AASB 8
replaces AASB 114 Segment Reporting.
The new standard requires a ‘management
approach’, under which segment information
is presented on the same basis as that
used for internal reporting purposes. This
has resulted in a change to the reportable
segments presented. In addition, the
segments are reported in a manner that
is consistent with the internal reporting
provided to the chief operating decision
maker. There has been no other impact on
the measurement of the Company’s assets
and liabilities.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of
each of the Group’s entities 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 Adelaide Brighton
Ltd’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.
The results and financial position of all
the Group entities 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 are translated at the closing rate
at the date of that balance sheet;
• Income and expenses for each income
statement and statement of comprehensive
income are translated at 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 in other comprehensive income.
On consolidation, exchange differences
arising from the translation of any net
investment in foreign entities, and of
borrowings and other financial instruments
designated as hedges of such investments,
are recognised in other comprehensive
income. When a foreign operation is sold
or any borrowings forming part of the net
investment are repaid, a proportionate share
of such exchange differences is reclassified
to profit or loss, as part of the gain or loss
on sale where applicable.
(e) Revenue recognition
Revenue is measured at the fair value
of consideration received or receivable.
Amounts disclosed as revenue are net of
returns, trade allowances and duties and
taxes paid. Revenue is recognised for the
major business activities as follows:
(i) Sales revenue
Revenue from the sale of goods is measured
at the fair value of the consideration
received or receivable, net of returns, trade
discounts and volume rebates. Revenue
is recognised when the significant risks
and rewards of ownership have been
transferred to the buyer, recovery of the
consideration is considered probable, the
associated costs and possible return of
goods can be estimated reliably, there is no
continuing management involvement with
the goods and the amount of revenue can
be measured reliably. Sales of services are
recognised in the accounting period in which
the services are rendered.
Income received in advance in relation to
contracts is deferred in the balance sheet
and recognised as income on a straight-line
basis over the period of the contract.
(iii) Interest income
Interest income is recognised using the
effective interest rate method.
(iv) Dividends
Dividends are recognised as revenue when
the right to receive payment is established.
(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 applicable 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. An exception is made for certain
temporary differences arising from the initial
recognition of an asset or a liability. No
deferred tax asset or liability is recognised
in relation to these temporary differences
if they arose in a transaction, other than a
business combination, that at the time of the
transaction did not affect either accounting
profit or taxable profit or loss.
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. 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.
54
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to
offset current tax assets and liabilities and
when the deferred tax balances relate to the
same taxation authority. Current tax assets
and tax liabilities are offset where the entity
has a legally enforceable right to offset and
intends either to settle on a net basis, or
to realise the asset and settle the liability
simultaneously.
Current and deferred tax is recognised in
profit and loss, except to the extent it relates
to items recognised in other comprehensive
income or directly in equity. In this
case, the tax is also recognised in other
comprehensive income or directly in equity,
respectively.
Tax consolidations
Adelaide Brighton Ltd and its wholly owned
Australian subsidiaries implemented the tax
consolidation legislation as of 1 January 2004.
Adelaide Brighton Ltd, as the head entity
in the tax consolidated group, recognises
current tax liabilities and tax losses (subject
to meeting the “probable test”) relating to all
transactions, events and balances of the tax
consolidated group as if those transactions,
events and balances were its own.
The entities in the tax consolidated group are
part of 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 default by the head entity,
Adelaide Brighton Ltd. Amounts receivable
or payable under an accounting tax sharing
agreement with the tax consolidated entities
are recognised separately as tax-related
amounts receivable or payable. Expenses
and revenues arising under the tax sharing
agreement are recognised as a component
of income tax expense.
The wholly-owned entities fully compensate
Adelaide Brighton Ltd for any current tax
payable assumed and are compensated by
Adelaide Brighton Ltd for any current tax
receivable and deferred tax assets relating
to unused tax losses or unused tax credits
that are transferred to Adelaide Brighton
Ltd under the tax consolidation legislation.
The funding amounts are determined by
reference to the amounts recognised in the
wholly-owned entities’ financial statements.
Individual tax consolidated entities recognise
tax expenses and revenues and current and
deferred tax balances in relation to their own
taxable income, temporary differences and
tax losses using the separate taxpayer within
the group method. Entities calculate their
current and deferred tax balances on the
basis that they are subject to tax as part of
the tax consolidated group.
Deferred tax balances relating to assets that
had their tax values reset on joining the tax
consolidated group have been remeasured
based on the carrying amount of those
assets in the tax consolidated group and
their reset tax values. The adjustment to
these deferred tax balances is recognised in
the consolidated financial statements against
income tax expense.
(g) Leases
Leases of property, plant and equipment
where the Group, as lessee, has substantially
all the risks and rewards of ownership are
classified as finance leases. Finance leases
are capitalised at the lease’s inception at the
lower of the fair value of the leased property
and the present value of the minimum
lease payments. The corresponding rental
obligations, net of finance charges, are
included in borrowings. Each lease payment
is allocated between the liability and finance
charges so as to achieve a constant rate
on the finance balance outstanding. The
property, plant and equipment acquired
under finance leases is depreciated over the
asset’s useful life or over the shorter of the
asset’s useful life and the lease term if there
is no reasonable certainty that the Group
will obtain ownership at the end of the lease
term.
The interest element of the finance cost is
charged to the income statement over the
lease period so as to produce a constant
periodic rate of interest on the remaining
balance of the liability for each period.
Leases in which a significant portion of the
risks and rewards of ownership are retained
by the lessor 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 straightline basis over the
period of the lease.
(h) Business combinations
The acquisition method of accounting
is used to account for all business
combinations, including business
combinations involving equities or
businesses under common control,
regardless of whether equity instruments or
other assets are acquired. The consideration
transferred for the acquisition of a subsidiary
comprises the fair values of the assets
transferred, the liabilities incurred and the
equity interests issued by the Group. The
consideration transferred also includes the
fair value of any contingent consideration
arrangement and the fair value of any pre-
existing equity interest in the subsidiary.
Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed
in a business combination are, with limited
exceptions, measured initially at their
fair values at the acquisition date. On an
acquisition-by-acquisition basis, the Group
recognises any non-controlling interest in the
acquiree either at fair value or at the non-
controlling interest’s proportionate share of
the acquiree’s net identifiable assets.
The excess of the consideration transferred,
the amount of any non-controlling interest
in the acquiree and the acquisition-date fair
value of any previous equity interest in the
acquiree over the fair value of the Group’s
share of the net identifiable assets acquired
is recorded as goodwill. If those amounts
are less than the fair value of the net
identifiable assets of the subsidiary acquired
and the measurement of all amounts has
been reviewed, the difference is recognised
directly in profit or loss as a bargain
purchase.
Where settlement of any part of cash
consideration is deferred, the amounts
payable in the future are discounted to their
present value as at the date of exchange.
The discount rate used is the entity’s
incremental borrowing rate, being the rate at
which a similar borrowing could be obtained
from an independent financier under
comparable terms and conditions.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
55
(i) Impairment of assets
Goodwill and intangible assets 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. Other assets are tested
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 which
are largely independent of the cash flows
from other assets or groups of assets (cash
generating units). Non-financial assets other
than goodwill that suffered an impairment
are reviewed for possible reversal of the
impairment at each reporting date.
(j) Cash and cash equivalents
For the purpose of presentation in the
statements of cash flows, cash 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 receivables
Trade receivables are recognised initially at
fair value and subsequently measured at
amortised cost, less provision for doubtful
receivables. Trade receivables are due for
settlement no more than 30 to 45 days from
the end of the month of invoice.
The collectibility of trade receivables
is reviewed regularly. Debts which are
known to be uncollectible are written off
by reducing the carrying amount directly.
A provision for doubtful receivables is
established when there is objective evidence
that the Group will not be able to collect
all amounts due according to the original
terms of receivables. Significant financial
difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial
reorganisation, and default or delinquency
in payments are considered indicators
that the trade receivable is impaired. The
amount of the provision is the difference
between the asset’s carrying amount and
the present value of estimated future cash
flows, discounted at the effective interest
rate. Cash flows relating to short term
receivables are not discounted if the effect of
discounting is immaterial.
The amount of the provision is recognised
in the income statement. When a trade
receivable for which a provision for doubtful
receivables has been recognised becomes
uncollectible in a subsequent period, it is
written off against the provision account.
Subsequent recoveries of amounts
previously written off are credited against
expenses in the income statement.
(m) Financial assets
The Group classifies its financial assets in the
following categories: loans and receivables,
and financial assets at fair value through
profit or loss. The classification depends on
the purpose for which the financial assets
were acquired. Management determines the
classification of its financial assets at initial
recognition.
(i) Loans and receivables
Loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active
market. They are included in current assets,
except for those with maturities greater than
12 months after the balance sheet date,
which are classified as non-current assets.
Loans and receivables are included in trade
and other receivables in the balance sheet.
(ii) Financial assets at fair value through profit or
loss
Financial assets at fair value through profit or
loss are financial assets held for trading. A
financial asset is classified in this category if
acquired principally for the purpose of selling
in the short term. Derivatives are classified as
held for trading unless they are designated
as hedges. Assets in this category are
classified as current assets.
(l) Inventories
(n) Derivatives
Raw 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 basis of weighted
average costs.
Net realisable value is the estimated selling
price in the ordinary course of business less
the estimated costs of completion and the
estimated costs necessary to make the sale.
Derivatives are initially recognised at fair
value on the date a derivative contract
is entered into and are subsequently
remeasured to their fair value at each
reporting date. Derivative instruments
entered into by the Group 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 and are
included in other income or finance expense.
56
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009
(o) Non-current assets (or disposal groups)
(i) Mineral reserves
held for sale
Non-current assets (or disposal groups) are
classified as held for sale and stated at the
lower of their carrying amount and fair value
less costs to sell if their carrying amount
will be recovered principally through a sale
transaction rather than through continuing
use and a sale is considered highly probable.
An impairment loss is recognised for any
initial or subsequent write down of the asset
(or disposal group) to fair value less costs to
sell. A gain is recognised for any subsequent
increases in fair value less costs to sell of an
asset (or disposal group), but not in excess
of any cumulative impairment loss previously
recognised. A gain or loss not previously
recognised by the date of the sale of the
non-current asset (or disposal group) is
recognised at the date of de-recognition.
Non-current assets (including those that are
part of a disposal group) are not depreciated
or amortised while they are classified as
held for sale. Interest and other expenses
attributable to the liabilities of a disposal
group classified as held for sale continue to
be recognised.
Non-current assets classified as held for sale
and the assets of a disposal group classified
as held for sale are presented separately
from the other assets in the balance sheet.
The liabilities of a disposal group classified
as held for sale are presented separately
from other liabilities in the balance sheet.
(p) Property, plant and equipment
Property, plant and equipment are shown at
historical cost less accumulated depreciation
and accumulated impairment losses.
Cost includes expenditure that is directly
attributable to the acquisition of the assets.
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
Group and the cost of the item can be
measured reliably. The carrying amount of
any component accounted for as a separate
asset is derecognised when replaced. All
other repairs and maintenance are charged
to profit or loss during the reporting period in
which they are incurred.
Mineral reserves are amortised based on
annual extraction rates over the estimated
life of the reserves. The remaining useful
life of each asset is reassessed at regular
intervals. Where there is a change during
the period to the useful life of the mineral
reserve, amortisation rates are adjusted
prospectively from the beginning of the
reporting period.
(ii) Complex assets
The costs of replacing major components
of complex assets are depreciated over the
estimated useful life, generally being the
period until next scheduled replacement.
(iii) Leasehold property
The cost of improvements to or on leasehold
properties is amortised over the unexpired
period of the lease or the estimated useful
life, whichever is the shorter. Amortisation is
over 5 – 30 years.
(iv) Other fixed assets
Freehold land is not depreciated.
Depreciation on other assets is calculated
using the straight line method to allocate
their cost or deemed cost amounts, over
their estimated useful lives, as follows:
• Buildings
• Plant and equipment
• Leased plant and equipment
20 – 40 years
3 – 40 years
6 – 10 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.
(q) Intangible assets
(i) Goodwill
Goodwill represents the excess of the cost
of an acquisition over the fair value of the
Group’s share of the net identifiable assets
of the acquired subsidiary/joint venture at the
date of acquisition. Goodwill on acquisitions
of subsidiaries is included in intangible
assets. Goodwill on acquisitions of joint
ventures is included in investments in joint
ventures.
Goodwill 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 are consistent with the
Group’s reporting segments.
(ii) Lease rights
Lease rights acquired have a finite useful life.
Amortisation is calculated using the straight-
line method to allocate the cost over their
estimated useful lives, which varies from
2 to 5 years.
(iii) IT development and software
Costs incurred in developing products or
systems and costs incurred in acquiring
software and licences that will contribute
to future period financial benefits through
revenue generation and/or cost reduction are
capitalised to software and systems. Costs
capitalised include external direct costs
of materials and service and direct payroll
and payroll related costs of employees’
time spent on the project. Amortisation
is calculated on a straight-line basis over
periods generally ranging from 5 to 10 years.
IT development costs include only those
costs directly attributable to the development
phase and are only recognised following
completion of technical feasibility and where
the Group has an intention and ability to use
the asset.
(r) Borrowings
Borrowings are initially recognised at fair
value, net of transaction costs incurred.
Borrowings are subsequently measured at
amortised cost. Any difference between
the proceeds (net of transaction costs) and
the redemption amount is recognised in
the income statement over the period of
the borrowings using the effective interest
method. Borrowings are classified as
current liabilities unless the Group has an
unconditional right to defer settlement of
the liability for at least 12 months after the
reporting date.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
57
(s) Borrowing costs
(iii) Restructuring 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.
(t) Trade and other payables
These amounts represent liabilities for goods
and services provided to the Group prior to
the end of financial year which are unpaid.
The amounts are unsecured and are usually
paid within 30 - 60 days of recognition.
(u) Provisions
Provisions are recognised if, as a result of a
past event, the Group has a present legal or
constructive obligation that can be estimated
reliably, and it is probable that an outflow of
economic benefits will be required to settle
the obligation.
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 reporting date. Provisions
are determined by discounting the expected
future cash flows at a pre-tax rate that
reflects current market assessments of the
time value of money and the risks specific
to the liability. The increase in the provision
due to the passage of time is recognised as
interest expense.
(i) Dividends
Provision is made for the amount of any
dividend declared, being appropriately
authorised and no longer at the discretion of
the entity, on or before the end of the period
but not distributed at balance date.
(ii) Workers’ compensation
Certain entities within the Group are self
insured for workers compensation purposes.
For self-insured entities, provision is made
that covers accidents that have occurred
and have been reported together with an
allowance for incurred but not reported
claims. The provision is based on an
actuarial assessment.
Liabilities arising directly from undertaking a
restructuring program, not in connection with
the acquisition of an entity, are recognised
when a detailed plan has been developed,
implementation has commenced, by
entering into binding sales agreement and
making detailed public announcements such
that the affected parties are in no doubt that
the restructuring program will proceed. The
cost of a restructuring program provided
for is the estimated future cash flows from
implementation of the plan.
(iv) Provisions for close down and restoration
costs
Close down and restoration costs
include the dismantling and demolition of
infrastructure and the removal of residual
materials and remediation of disturbed
areas. Provisions for close down and
restoration costs do not include any
additional obligations, which are expected to
arise from future disturbance. The costs are
estimated on the basis of a closure plan. The
cost estimates are reviewed annually during
the life of the operation, based on the net
present value of estimated future costs.
Estimate changes resulting from new
disturbance, updated cost estimates,
changes to the lives of operations and
revisions to discount rates are capitalised
within property, plant and equipment. These
costs are then depreciated over the lives of
the assets to which they relate.
The amortisation or ‘unwinding’ of the
discount applied in establishing the net
present value of provisions is charged to
the income statement in each accounting
period. The amortisation of the discount is
shown in finance costs.
(v) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including
non-monetary benefits, annual leave and
accumulating sick leave expected to be
settled within 12 months after the end of
the period in which the employees render
the related service are recognised in respect
of employees’ services up to the end of
the reporting period and are measured at
the amounts expected to be paid when
the liabilities are settled. The liability for
annual leave and accumulating sick leave
is recognised in the provision for employee
benefits. All other short-term employee
benefit obligations are presented as
payables.
58
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
(ii) Other long-term employee benefit obligations
The liability for long service leave and annual
leave which is not expected to be settled
within 12 months after the end of the period
in which the employees render the related
service is recognised in the provision for
employee benefits and measured as the
present value of expected future payments
to be made in respect of services provided
by employees up to the end of the reporting
period 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 end of
the reporting period on national government
bonds with terms to maturity and currency
that match, as closely as possible, the
estimated future cash outflows.
(iii) Retirement benefit obligations
All employees of the Group are entitled to
benefits from the Group’s superannuation
plan on retirement, disability or death.
The Group has a defined benefit section
and defined contribution section within its
plan. The defined benefit section provides
defined lump sum benefits on retirement,
death, disablement and withdrawal, based
on years of service and final average salary.
The defined benefit plan section is closed
to new members. The defined contribution
section receives fixed contributions from
Group companies and the Group’s legal or
constructive obligation is limited to these
contributions.
A liability or asset in respect of defined
benefit superannuation plans is recognised
in the balance sheet, and is measured as
the present value of the defined benefit
obligation at the reporting date less the fair
value of the superannuation fund’s assets at
that date and any unrecognised past service
cost.
The present value of the defined benefit
obligation is based on expected future
payments, which arise from membership of
the fund to the reporting date, calculated
annually by independent actuaries 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.
Actuarial gains and losses arising from
experience adjustments and changes in
actuarial assumptions are recognised in
the period in which they occur, outside
profit or loss directly in the statement of
comprehensive income.
Past service costs are recognised
immediately in profit or loss, unless the
changes to the superannuation fund are
conditional on the employees remaining in
service for a specified period of time (the
vesting period). In this case, the past service
costs are amortised on a straightline basis
over the vesting period.
Contributions to the defined contribution
fund are recognised as an expense as they
become payable. Prepaid contributions are
recognised as an asset to the extent that
a cash refund or a reduction in the future
payments is available.
(iv) Share-based payments
Share-based compensation benefits are
provided to executives via the Adelaide
Brighton Ltd Executive Performance Share
Plan.
The fair value of Awards granted under the
Plan is recognised as an employee benefit
expense with a corresponding increase
in equity. The fair value is measured at
grant date and recognised over the period
during which the employees become
unconditionally entitled to the Awards.
The fair value at grant date is independently
determined using a Black-Scholes option
pricing model that takes into account the
exercise price, the term of the Award, the
vesting and performance criteria, the impact
of dilution, the non-tradeable nature of the
Award, the share price at grant date and
expected price volatility of the underlying
share, the expected dividend yield and the
risk-free interest rate for the term of the
Award.
The fair value of the Awards granted
excludes the impact of any non-market
vesting conditions (e.g. earnings per share).
Non-market vesting conditions are included
in assumptions about the number of Awards
that are expected to become exercisable. At
each balance sheet date, the entity revises
its estimate of the number of Awards that
are expected to become exercisable. The
employee benefit expense recognised each
period takes into account the most recent
estimate. The impact of the revision to
original estimates, if any, is recognised in
the income statement with a corresponding
entry to equity.
The Adelaide Brighton Ltd Executive
Performance Share Plan is administered by
the Adelaide Brighton employee share plan
trust; see note 1(b)(ii).
(x) 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 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.
(v) Short-term incentives
(y) Rounding of amounts
The Group recognises a liability and an
expense for short-term incentives available
to certain employees on a formula that takes
into consideration agreed performance
targets. The Group recognises a provision
where contractually obliged or where
there is a past practice that has created a
constructive obligation.
(vi) Termination benefits
The Company is of a kind referred to in
Class Order 98/100, 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 one
hundred thousand dollar, unless otherwise
stated.
Termination benefits are payable when
employment is terminated before the normal
retirement date, or when an employee
accepts voluntary redundancy in exchange
for these benefits. The Group recognises
termination benefits when it is demonstrably
committed to either terminating the
employment of current employees according
to a detailed formal plan without possibility of
withdrawal or providing termination benefits
as a result of an offer made to encourage
voluntary redundancy. Benefits falling due
more than 12 months after balance sheet
date are discounted to present value.
(w) Contributed equity
Ordinary 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, for the purpose of acquisition of
a business, are not included in the cost
of the acquisition as part of the purchase
consideration.
(z) Goods and Services Tax (GST)
Revenues, expenses and assets are
recognised net of the amount of associated
GST, unless the GST incurred is not
recoverable from the taxation authority. In
this case it is recognised as part of the cost
of acquisition of the asset or as part of the
expense.
Receivables and payables are stated
inclusive of the amount of GST receivable or
payable. The net amount of GST recoverable
from, or payable to, the taxation authority is
included with other receivables or payables
in the balance sheet.
Cash flows are presented on a gross basis.
The GST components of cash flows arising
from investing or financing activities which
are recoverable from, or payable to the
taxation authority, are presented as operating
cash flow.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
59
(aa) Financial guarantee contracts
Financial guarantee contracts are recognised
as a financial liability at the time the
guarantee is issued. The liability is initially
measured at fair value and subsequently
at the higher of the amount determined
in accordance with AASB 137 Provisions,
Contingent Liabilities and Contingent Assets
and the amount initially recognised less
cumulative amortisation, where appropriate.
(ab) Parent entity financial information
The financial information for the parent entity,
Adelaide Brighton Limited, disclosed in note
39 has been prepared on the same basis as
the consolidated financial statements, except
as set out below.
(i) Investments in subsidiaries, associates and
joint venture entities
Investments in subsidiaries, associates and
joint venture entities are accounted for at
cost in the financial statements of Adelaide
Brighton Limited. Dividends received from
associates are recognised in the parent
entity’s profit or loss, rather than being
deducted from the carrying amount of these
investments.
(ii) Tax consolidation legislation
Adelaide Brighton Limited and its wholly-
owned Australian controlled entities
have implemented the tax consolidation
legislation.
The head entity, Adelaide Brighton Limited,
and the controlled entities in the tax
consolidated group account for their own
current and deferred tax amounts. These tax
amounts are measured as if each entity in
the tax consolidated group continues to be a
stand alone taxpayer in its own right.
In addition to its own current and deferred
tax amounts, Adelaide Brighton Limited
also recognises the current tax liabilities (or
assets) and the deferred assets arising from
unused tax losses and unused tax credits
assumed from controlled entities in the tax
consolidated group.
The entities have also entered into a tax
funding agreement under which the wholly-
owned entities fully compensate Adelaide
Brighton Limited for any current tax payable
assumed and are compensated by Adelaide
Brighton Limited for any current tax
receivable and deferred tax assets relating to
unused tax losses or unused tax credits that
are transferred to Adelaide Brighton 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.
Assets or liabilities arising under tax funding
agreements with the tax consolidated
entities are recognised as current amounts
receivable from or payable to other entities in
the group.
Any difference between the amounts
assumed and amounts receivable or
payable under the tax funding agreement
are recognised as a contribution to (or
distribution from) wholly-owned tax
consolidated entities.
(iii) Financial guarantees
Where the parent entity has provided
financial guarantees in relation to
loans and payables of subsidiaries for
no compensation, the fair values of
these guarantees are accounted for as
contributions and recognised as part of the
cost of the investment.
(ac) New accounting standards and UIG
interpretations
In the current year, the Group has adopted
all of the new and revised accounting
standards and interpretations issued by
the Australian Accounting Standards Board
(AASB) that are relevant to its operations
and effective for the current annual reporting
period.
Certain new accounting standards and UIG
interpretations have been published but
are not mandatory for 31 December 2010
reporting periods and have not yet been
adopted by the Group. The Group’s and the
parent entity’s assessment of the impact of
these new standards and interpretations is
set out below.
• AASB 9 Financial Instruments and AASB
2009-11 Amendments to Australian
Accounting Standards arising from
AASB 9 (effective from 1 January 2013).
AASB 9 Financial Instruments addresses the
classification and measurement of financial
assets. The standard is not applicable until
1 January 2013 but is available for early
adoption. The group has decided not to
early adopt AASB 9. The Group is yet to
assess its full impact.
• Revised AASB 124 Related Party Disclosures
and AASB 2009-12 Amendments to
Australian Accounting Standards (effective
from 1 January 2011). In December 2009
the AASB issued a revised AASB 124
Related Party Disclosures. It is effective
for accounting periods beginning on or
after 1 January 2011 and must be applied
retrospectively. The amendment removes the
requirement for government-related entities
to disclose details of all transactions with the
government and other government-related
entities and clarifies and simplifies the definition
of a related party. The group will apply the
amended standard from 1 January 2011.
It is not expected to have any effect on the
Group’s related party disclosures.
60
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
• AASB 2009-10 Amendments to Australian
Accounting Standards – Classification of
Rights Issues [AASB 132] (effective from
1 January 2011). In October 2009 the
AASB issued an amendment to AASB 132
Financial Instruments: Presentation which
addresses the accounting for rights issues
that are denominated in a currency other
than the functional currency of the issuer.
Provided certain conditions are met, such
rights issues are now classified as equity
regardless of the currency in which the
exercise price is denominated. Previously,
these issues had to be accounted for as
derivative liabilities. The amendment must be
applied retrospectively in accordance with
AASB 108 Accounting Policies, Changes in
Accounting Estimates and Errors. The Group
will apply the amended standard from
1 January 2011. As the Group has not made
any such rights issues, the amendment will
not have any effect on the Group’s or parent
entity’s financial statements.
• AASB 2009-14 Amendments to Australian
Interpretation – Prepayments of a Minimum
Funding Requirement (effective from
1 January 2011). In December 2009, the
AASB made an amendment to Interpretation
14 The Limit on a Defined Benefit
Asset, Minimum Funding Requirements
and their Interaction. The amendment
removes an unintended consequence
of the interpretation related to voluntary
prepayments when there is a minimum
funding requirement in regard to the entity’s
defined benefit scheme. It permits entities
to recognise an asset for a prepayment
of contributions made to cover minimum
funding requirements. The Group will apply
the amended standard from 1 January
2011. As the Group does not make such
prepayments, the amendment will not have
any effect on the Group’s or parent entity’s
financial statements.
• AASB 1053 Application of Tiers of Australian
Accounting Standards and AASB 2010-2
Amendments to Australian Accounting
Standards arising from Reduced Disclosure
Requirements (effective from 1 January
2013). On 30 June 2010 the AASB
officially introduced a revised differential
reporting framework in Australia. Under this
framework, a two-tier differential reporting
regime applies to all entities that prepare
general purpose financial statements.
Adelaide Brighton Ltd is listed on the ASX
and is therefore not eligible to adopt the
new Australian Accounting Standards –
Reduced Disclosure Requirements. As a
consequence, the two standards will have
no impact on the financial statements of the
entity.
• AASB 2010-3 Amendments to Australian
Accounting Standards arising from the
Annual Improvements Project and AASB
2010-4 Further Amendments to Australian
Accounting Standards arising from the
Annual Improvements Project (effective
from 1 January 2011). In June 2010, the
AASB made a number of amendments to
Australian Accounting Standards as a result
of the IASB’s annual improvements project.
The Group will apply the amendments from
1 January 2011. The Group does not expect
that any adjustments will be necessary as
the result of applying the revised rules.
• AASB 2010-6 Amendments to Australian
Accounting Standards – Disclosures on
Transfers of Financial Assets (effective
from 1 January 2012). In November 2010,
the AASB made amendments to AASB 7
Financial Instruments: Disclosures which
introduce additional disclosures in respect
of risk exposures arising from transferred
financial assets. The amendments will affect
particularly entities that sell, factor, securitise,
lend or otherwise transfer financial assets
to other parties. They are not expected to
have any significant impact on the Group’s
disclosures.
2 Critical accounting estimates and
assumptions
The Group makes estimates and
assumptions concerning the future. The
resulting accounting estimates will, by
definition, seldom equal the related actual
results. The estimates and assumptions that
are significant to the carrying amounts of
assets and liabilities in the next financial year
are discussed below.
(a) Provisions for close down and
restoration costs
Restoration provisions are based on
estimates of the cost to rehabilitate
currently disturbed areas based on current
costs and legislative requirements. The
Group progressively rehabilitates as part
of the mining process. Cost estimates are
continually evaluated and are based on
historical experience and other factors,
including expectations of future events that
are believed to be reasonable under the
circumstances. The detailed accounting
treatment is set out in note 1(u)(iv).
(b) Impairment of assets
The Group tests annually whether goodwill
and other non-current assets have suffered
any impairment, in accordance with the
accounting policies stated in notes 1(i) and
1(q). The recoverable amounts of cash
generating units have been determined
based on value-in-use calculations. These
calculations require the use of assumptions.
For detailed assumptions refer to note 14.
Estimates and judgements are continually
evaluated and are based on historical
experience and other factors, including
expectations of future events that may have
a financial impact on the entity and that
are believed to be reasonable under the
circumstances.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
61
($ Million)
3 Revenue and other income
Revenue from continuing operations
Sales of goods
Interest from joint ventures
Interest from other parties
Royalties
Other income
Net gain on disposal of property, plant and equipment
Insurance recovery relating to the Accolade incident
Other income
Consolidated
2010
2009
1,069.4
1.0
1.3
1.2
1,072.9
2.6
0.9
5.0
8.5
985.0
0.7
0.9
0.6
987.2
1.4
13.4
9.3
24.1
Revenue and other income (excluding share of net profits of joint ventures accounted for using
the equity method)
1,081.4
1,011.3
4 Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Buildings
Plant and equipment
Mineral reserves
Total depreciation
Amortisation of intangibles
Other charges
Employee benefits expense
Operating lease rental charge
Bad and doubtful debts – trade debtors
Finance costs
Interest and finance charges paid / payable
Unwinding of the discount on restoration provisions and retirement benefit obligation
Total finance costs
3.1
46.9
2.0
52.0
0.8
140.9
3.0
0.8
13.4
2.9
16.3
3.1
52.4
1.3
56.8
-
127.5
2.9
1.1
15.7
2.6
18.3
62
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
($ Million)
5 Income Tax
(a) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
Tax at the Australian tax rate of 30% (2009: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non allowable expenses
Non assessable capital profits
Share of net profits of joint ventures
Rebateable dividends
Investment allowance
Sundry items
Under provided in prior years
Aggregate income tax expense
Aggregate income tax expense comprises:
Current taxation provision
Net deferred tax (note 13 & 20)
Under provided in prior year
(b) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised in net profit
or loss but directly (credited) debited to equity
Current tax
Net deferred tax
Consolidated
2010
2009
202.2
60.7
168.6
50.6
0.3
(4.8 )
-
(5.7 )
(0.2 )
(0.5 )
1.0
50.8
58.0
(8.2 )
1.0
50.8
(0.5 )
(1.3 )
(1.8 )
0.2
(1.1 )
0.1
(4.7 )
(0.3 )
0.5
0.1
45.4
47.0
(1.7 )
0.1
45.4
0.5
1.8
2.3
(c) Tax (income) expense relating to items of other comprehensive income
Actuarial (losses) gains on retirement benefit obligation (note 22 (d))
(0.8 )
1.8
(d) Tax losses
Unused tax losses for which no deferred tax asset has been recognised:
Capital losses
This benefit for tax losses will only be obtained if:
17.8
21.7
(i) the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be
realised,
(ii) the Group continues to comply with the conditions for deductibility imposed by tax legislation, and
(iii) no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses.
The accounting policy in relation to tax consolidation legislation is set out in note 1(f).
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
63
($ Million)
6 Current assets – cash and cash equivalents
Cash at bank and in hand
Deposits at call
Cash and cash equivalents
(a) Reconciliation to cash at the end of the year
The above figures are reconciled to cash at the end of the financial year as shown in the
statement of cash flows as follows:
Balances as above
Bank overdrafts (note 16)
Balances per statement of cash flows
7 Current assets – trade and other receivables
Trade receivables
Provision for doubtful receivables
Amounts due by joint ventures
Prepayments
Other receivables
(a) Past due but not impaired
Consolidated
2010
2009
-
2.8
2.8
2.8
(0.8 )
2.0
127.3
(2.1 )
125.2
16.9
5.6
5.6
153.3
23.1
2.4
25.5
25.5
-
25.5
130.3
(2.0 )
128.3
15.7
7.0
11.8
162.8
Included in the Group’s trade receivables balance are debtors with a carrying value of $4.5 million (2009: $5.2 million) which are past due but not
impaired. The Group has not provided for these amounts as there has not been a significant change in credit quality or for debtors which there is no
recent history of default. The Group believes these amounts are still recoverable. The ageing analysis is as follows: 60 days $4.5 million (2009: 60 days
$3.4 million, 90 days $1.8 million).
(b) Impaired trade receivables
As at 31 December 2010 current trade receivables of the Group with a nominal value of $2.4 million (2009 - $2.5 million) were impaired. The amount of
the provision was $2.1 million (2009 - $2.0 million). The individually impaired receivables mainly relate to customers which are in unexpectedly difficult
economic situations. It was assessed that a portion of the receivables is expected to be recovered.
The ageing of these receivables is as follows:
($ Million)
1 to 3 months
3 to 6 months
Over 6 months
Movement in provision for doubtful receivables
Opening balance at 1 January
Amounts written off during the year
Provision for doubtful receivables recognised during the year
Closing balance at 31 December
(c) Fair value and credit, interest and foreign exchange risk
Consolidated
2010
2009
0.1
-
2.3
2.4
2.0
(0.7 )
0.8
2.1
0.1
0.1
2.3
2.5
4.6
(3.7 )
1.1
2.0
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value. All receivables are denominated in
Australian dollars. Information concerning the fair value and risk management of both current and non-current receivables is set out in note 26.
64
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
($ Million)
8 Current assets – inventories
Engineering spare parts stores – at cost
Raw materials and work in progress – at cost
Finished goods – at cost
9 Current assets – assets classified as held for sale
Land
Plant & Equipment
10 Non-current assets - receivables
Loans to joint ventures
Other non-current receivables
Consolidated
2010
2009
27.7
40.8
49.3
117.8
-
0.2
0.2
28.7
1.7
30.4
27.0
35.2
45.6
107.8
12.7
-
12.7
28.3
2.1
30.4
Details of the fair values, effective interest rate and credit risk are set out in note 26.
(a) Impaired receivables and receivables past due
None of the non-current receivables are impaired or past due but not impaired.
11 Non-current assets – investments accounted for using the equity method
Interests in joint ventures are accounted for in the Group’s financial statements using the equity method and are carried at cost by the respective
parent entity.
(a) Carrying amounts
Name of company
Principal activity
Sunstate Cement Ltd
Independent Cement and Lime Pty Ltd
Alternative Fuel Company Pty Ltd
E.B. Mawson & Sons Pty Ltd and
Lake Boga Quarries Pty Ltd
Burrell Mining Services JV
Batesford Quarry
Cement manufacture
Cement distribution
Processing waste materials
Concrete and quarries
Mining industry products
Quarry products
Ownership interest
Consolidated
2010
%
50
50
50
50
50
50
2009
%
2010
$ Million
2009
$ Million
50
50
50
50
50
50
20.4
40.0
-
25.5
1.3
0.5
87.7
12.0
35.8
-
23.6
1.0
0.1
72.5
Each of the above Australian joint ventures is incorporated with the exception of Batesford Quarry and Burrell Mining Services JV
which are not incorporated. All the joint ventures, except Alternative Fuel Company Pty Ltd, have a balance sheet date of 30 June,
which is different to the balance sheet date of 31 December. Financial reports prepared as at 31 December are used for equity accounting purposes.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
65
($ Million)
11 Non-current assets - investments accounted for using the equity method (continued)
Consolidated
2010
2009
(b) Movements in carrying amounts
Carrying amount at 1 January
Share of net profits
Dividends received
Carrying amount at 31 December
(c) Share of joint ventures’ profits
Revenues
Expenses
Profit before income tax
Income tax expense
Profit after income tax
Share of net profit – equity accounted
Retained profits at 1 January
Dividends and distributions
Share of retained profits at 31 December
(d) Summarised financial information of joint ventures
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Group’s 50% share of joint ventures net assets
Adjustments arising from equity accounting:
Goodwill
Unrealised profit in inventory
Carrying value at 31 December
(e) Share of joint ventures’ expenditure commitments
Lease commitments
Capital commitments
66
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
72.5
32.1
(16.9 )
87.7
266.7
(228.1 )
38.6
(6.5 )
32.1
32.1
17.3
(16.9 )
32.5
150.0
188.9
338.9
(43.6 )
(138.3 )
(181.9 )
157.0
78.5
8.7
0.5
87.7
36.1
2.0
38.1
67.6
27.6
(22.7 )
72.5
263.2
(228.6 )
34.6
(7.0 )
27.6
27.6
12.4
(22.7 )
17.3
136.2
178.8
315.0
(121.9 )
(64.3 )
(186.2 )
128.8
64.4
8.7
(0.6 )
72.5
35.7
3.7
39.4
12 Non-current assets – property, plant and equipment
Consolidated at 31 December 2010
($ Million)
At cost
Accumulated depreciation
Net book amount
Reconciliations
Carrying amount at
1 January 2010
Additions
Disposals
Reclassification
Depreciation/
amortisation expense
Carrying amount at
31 December 2010
Freehold
land
113.4
-
113.4
Buildings
101.5
(40.0 )
Leasehold
property
Plant &
equipment
Leased
assets
Mineral
reserves
5.1
(1.3 )
1,076.4
(633.5 )
1.0
(0.1 )
120.3
(15.2 )
61.5
3.8
442.9
0.9
105.1
110.3
1.5
-
1.6
52.4
1.0
-
11.2
3.6
0.6
-
(0.1 )
453.3
16.8
(1.4 )
20.8
1.3
-
-
(0.3 )
104.9
0.7
-
1.2
Asset
retirement
cost
In course
of con-
struction
Total
5.2
(2.4 )
2.8
2.9
0.1
-
-
30.2
-
1,453.1
(692.5 )
30.2
760.6
45.6
29.7
-
(45.1 )
774.3
50.4
(1.4 )
(10.7 )
-
(3.1 )
(0.3 )
(46.6 )
(0.1 )
(1.7 )
(0.2 )
-
(52.0 )
113.4
61.5
3.8
442.9
0.9
105.1
2.8
30.2
760.6
Consolidated at 31 December 2009
Freehold
land
Buildings
Leasehold
property
Plant &
equipment
Leased
assets
Mineral
reserves
Asset
retirement
cost
In course
of con-
struction
($ Million)
At cost
Accumulated depreciation
Net book amount
Reconciliations
Carrying amount at
1 January 2009
Additions
Disposals
Reclassification
Depreciation/
amortisation expense
Carrying amount at
31 December 2009
110.3
-
110.3
123.4
-
(0.9 )
(12.2 )
89.5
(37.1 )
52.4
57.4
0.1
(1.0 )
(1.0 )
4.6
(1.0 )
1,058.5
(605.2 )
1.9
(0.6 )
118.3
(13.4 )
3.6
453.3
1.3
104.9
4.1
-
-
(0.3 )
450.2
9.7
(0.8 )
46.4
1.7
-
-
(0.3 )
105.8
-
-
0.1
5.1
(2.2 )
2.9
3.1
-
-
-
Total
1,433.8
(659.5 )
774.3
45.6
-
45.6
56.2
33.3
-
(43.9 )
801.9
43.1
(2.7 )
(11.2 )
-
(3.1 )
(0.2 )
(52.2 )
(0.1 )
(1.0 )
(0.2 )
-
(56.8 )
110.3
52.4
3.6
453.3
1.3
104.9
2.9
45.6
774.3
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
67
Consolidated
2010
2009
-
1.5
1.3
20.7
5.1
3.1
31.7
(31.7 )
-
26.7
3.2
1.3
0.8
(0.3 )
(31.7 )
-
Consolidated
Goodwill
Software
Other
intangibles
170.3
-
170.3
169.0
0.6
0.7
-
170.3
169.0
-
169.0
169.4
-
(0.4 )
169.0
7.8
(0.8 )
7.0
-
7.8
-
(0.8 )
7.0
-
-
-
-
-
-
-
1.8
-
1.8
-
1.8
-
-
1.8
-
-
-
-
-
-
-
(0.3 )
1.7
1.8
20.8
-
2.7
26.7
(26.7 )
-
29.0
0.1
(1.8 )
-
(0.6 )
(26.7 )
-
Total
179.9
(0.8 )
179.1
169.0
10.2
0.7
(0.8 )
179.1
169.0
-
169.0
169.4
-
(0.4 )
169.0
($ Million)
13 Non-current assets – deferred tax assets
The balance comprises temporary differences attributable to:
Property, plant and equipment
Share based payment reserve
Defined benefit obligations
Provisions
Other assets
Tax losses
Deferred tax assets
Offset deferred tax liability (note 20)
Net Deferred tax assets
Movements:
Opening balance at 1 January
Recognised in the income statement
Recognised in equity
Acquired in business combinations
(Under) provision in prior year
Offset deferred tax liability (note 20)
Closing balance at 31 December
($ Million)
14 Non-current assets – intangible assets
31 December 2010
Cost
Accumulated amortisation
Carrying amount at 31 December 2010
Opening balance at 1 January 2010
Additions in current year
Finalisation of prior year acquisitions
Amortisation charge
Closing balance at 31 December 2010
31 December 2009
Cost
Accumulated amortisation
Carrying amount at 31 December 2009
Opening balance at 1 January 2009
Acquisitions in current year
Finalisation of prior year acquisitions
Closing balance at 31 December 2009
68
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
14 Non-current assets – intangible assets (continued)
(a) Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to business segments. A segment level summary of the goodwill
allocation is presented below.
Consolidated
($ Million)
Cement, Lime and Concrete
Concrete Products
2010
161.5
8.8
170.3
2009
160.2
8.8
169.0
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on 2010
actual results and 2011 financial budgets approved by management. The growth rate does not exceed the long-term average growth rate for the
business in which the CGU operates.
(b) Key assumptions used for value-in-use calculations
Cement, Lime and Concrete
Concrete Products
Gross margin1
Growth rate2
Discount rate3
2010
%
38.6
27.5
2009
%
41.8
29.7
2010
%
2.5
2.5
2009
%
2.5
2.5
2010
%
10.0
10.0
2009
%
10.0
10.0
1 Budgeted gross margin (excluding fixed production costs)
2 Weighted average growth rate used to extrapolate cash flows beyond the budget period
3 Pre-tax discount rate applied to cash flow projections
The assumptions have been used for the analysis of each CGU within the business segment. Management determined budgeted gross margin based
on the past performance and its expectations for the future. The discount rates used are pre-tax and reflect specific risks relating to relevant segments.
Considering the current uncertainties surrounding the Government proposed emissions trading scheme, the entity has not made any adjustments to
their future estimated cash outflows for any possible impact from the introduction of such a scheme.
($ Million)
15 Current liabilities - trade and other payables
Trade payables and accruals
Loans from joint ventures
(a) Risk exposure
Information about the Group’s exposure to foreign exchange risk is provided in note 26.
16 Current liabilities – borrowings
Secured
Lease liabilities (note 28)
Unsecured
Bank overdraft
Details of the Group’s exposure to interest rate changes and fair value of borrowings are set out in note 26.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
Consolidated
2010
2009
102.9
2.5
105.4
103.3
2.8
106.1
0.2
0.8
1.0
0.4
-
0.4
69
($ Million)
17 Current liabilities – provisions
Employee benefits
Workers’ compensation (note 1 (u)(ii))
Restoration provisions (note 1 (u)(iv))
Other provisions
Movements in each class of provision during the financial year, other than employee benefits, is set out below.
Consolidated
2010
2009
17.4
1.1
1.5
1.6
21.6
17.9
0.9
3.9
1.7
24.4
($ Million)
Opening balance at 1 January 2010
Adjustments to income statement
Provisions reclassified
Payments
Closing balance at 31 December 2010
($ Million)
18 Current liabilities – other liabilities
Limited recourse loan
Other
Workers’
compensation
Restoration
provisions
Other
provisions
0.9
0.2
-
-
1.1
3.9
-
(1.6 )
(0.8 )
1.5
1.7
2.0
(0.6 )
(1.5 )
1.6
Consolidated
2010
2009
-
3.9
3.9
12.3
2.0
14.3
A limited recourse loan of $12.3 million was owing to Rugby Holdings Ltd at 31 December 2009 by Cockburn Cement Ltd, a subsidiary of Adelaide
Brighton Ltd, and this loan was repaid in 2010. The loan was in respect of real property belonging to Rugby Holdings Ltd on loan to Cockburn
Cement Ltd and the loan was non-interest bearing. Rugby Holdings Ltd was the direct parent Company of Adelaide Brighton Ltd in the period from
July 1999 to December 2003.
($ Million)
19 Non-current liabilities – borrowings
Secured
Lease liabilities (note 28)
Unsecured
Bank loans
Consolidated
2010
2009
0.7
149.5
150.2
0.9
199.6
200.5
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of
default. The carrying amount of plant & equipment under finance lease is $0.9 million (2009 - $1.3 million). Details of the Group’s exposure to interest
rate changes and fair values of borrowings is set out in note 26.
70
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
($ Million)
20 Non-current liabilities – deferred tax liabilities
The balance comprises temporary differences attributable to:
Property, plant and equipment
Inventories
Other
Deferred tax liabilities
Offset deferred tax assets (note 13)
Net deferred tax liabilities
Movements:
Opening balance at 1 January
Recognised in the income statement
Acquired in business combinations
Under provision in prior year
Closing balance at 31 December
21 Non-current liabilities – provisions
Employee benefits
Restoration provisions (note 1(u)(iv))
Movement in each class of provision during the financial year, other than employee benefits, are set out below.
($ Million)
Opening balance at 1 January 2010
Discount unwinding to finance costs
Adjustments to income statement
Provisions reclassified from current
Closing balance at 31 December 2010
22 Non-current liabilities – retirement benefit obligations
(a) Superannuation plan
Consolidated
2010
2009
72.0
7.9
3.3
83.2
(31.7 )
51.5
86.5
(5.0)
0.5
1.2
83.2
2.9
29.7
32.6
72.7
8.5
5.3
86.5
(26.7 )
59.8
86.4
(1.6 )
-
1.7
86.5
2.8
27.1
29.9
Restoration
provisions
27.1
0.3
0.1
2.2
29.7
The majority of Adelaide Brighton Ltd employees are members of the consolidated superannuation entity being the Adelaide Brighton Group
Superannuation Plan (“the Plan”), a sub-plan of the Mercer Super Trust (“MST”). The MST is a superannuation master trust arrangement governed by
an independent trustee, Mercer Investment Nominees Ltd. The Plan commenced in the MST on 1 August 2001.
Membership is in either the Defined Benefit or Accumulation categories of the Plan. The defined contribution section receives fixed contributions from
Group companies and the Group’s legal or constructive obligation is limited to these contributions. The following sets out details in respect of the
defined benefit section only.
Defined benefit members receive lump sum benefits on retirement, death, disablement and withdrawal. The defined benefit section of the Plan is
closed to new members. All new members receive accumulation only benefits. During the 12 months to 31 December 2010, all new employees, who
are members of this fund, have become members of the accumulation category of the Plan. The limited number of employees who are not members
of the Plan are in complying superannuation funds as specified by the Enterprise Bargaining Agreements (WA and Victoria Award covered employees)
that cover their employment.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
71
($ Million)
22 Non-current liabilities – retirement benefit obligations (continued)
(b) Balance sheet amounts
Present value of the defined benefit obligation
Fair value of defined benefit plan assets
Net liability in the balance sheet
Consolidated
2010
2009
55.4
(51.2 )
4.2
52.1
(46.3 )
5.8
The Group has a legal obligation to make quarterly contributions of $554,000 to finance the deficit with a view to return the Plan to a satisfactory
financial position by 31 March 2012, assuming 7.0% pa future investment returns.
(c) Reconciliations
Reconciliation of the present value of defined benefit obligation, which is wholly funded:
Opening balance at 1 January
Current service costs
Interest costs
Actuarial losses (gains)
Contributions by plan participants
Benefits, expenses and insurance premium paid
Transfers in
Closing balance at 31 December
Reconciliation of the fair value of plan assets
Opening balance at 1 January
Expected return on plan assets
Actuarial (losses) gains
Employer contributions
Contributions by plan participants
Benefits, expenses and insurance premium paid
Transfers in
Closing balance at 31 December
(d) Amounts recognised in income statement and statement of comprehensive income
The amounts recognised in the income statement are as follows:
Current service costs
Interest costs
Expected return on plan assets
Total included in employee benefits expense
Actual return on plan assets
The amounts recognised in the statement of comprehensive income are as follows:
Actuarial loss/(gain) recognised in the year
Cumulative actuarial losses recognised in statement of comprehensive income
72
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
52.1
2.0
2.6
1.2
1.3
(3.9 )
0.1
55.4
46.3
3.1
(1.5 )
5.8
1.3
(3.9 )
0.1
51.2
2.0
2.6
(3.1 )
1.5
1.6
2.7
10.7
54.9
2.3
2.2
(1.6 )
1.5
(7.3 )
0.1
52.1
42.3
2.8
4.2
2.7
1.5
(7.3 )
0.1
46.3
2.3
2.2
(2.8 )
1.7
7.0
(5.8 )
8.0
($ Million)
22 Non-current liabilities – retirement benefit obligations (continued)
(e) Categories of plan assets
The major categories of plan assets are as follows:
Australian Equity
International Equity
Fixed income
Property
Cash
Other
(%)
(f) Principal actuarial assumptions
The principal actuarial assumptions used were as follows:
Discount rate
Expected return on plan assets
Future salary increases
Consolidated
2010
2009
14.3
13.8
7.2
5.1
5.1
5.7
51.2
15.3
13.0
4.6
4.2
6.0
3.2
46.3
Consolidated
2010
2009
4.9
7.0
4.0
5.1
7.0
4.0
The expected rate of return on assets is based on historical and future expectations of returns for each of the major categories of asset classes
(equities, property, fixed interest and cash) as well as the expected actual allocation of plan assets to these major categories. This resulted in the
selection of a 7.0% rate of return net of tax and expenses. The discount rate used to value the defined benefit obligation is based on the 10 year
government bond rate.
(g) Employer contributions
Employer contributions to the defined benefit section of the plan are based on recommendations by the plan’s actuary. Actuarial assessments are
made at no more than three yearly intervals, and the last assessment was made as at 1 July 2010.
Total employer contributions expected to be paid by Group companies for the year ended 31 December 2011 are $4.2 million which includes
$2.2 million of quarterly top up contributions made to finance the deficit.
(h) Historic summary
($ Million)
Defined benefit obligation
Plan assets
(Deficit) surplus
Experience adjustments arising on plan liabilities
Experience adjustments arising on plan assets
2010
(55.4 )
51.2
(4.2 )
1.5
0.7
2009
(52.1 )
46.3
(5.8 )
(4.2 )
1.3
2008
(54.9 )
42.3
(12.6 )
18.8
(6.4 )
2007
(57.9 )
60.6
2.7
(2.2 )
2.1
2006
(55.9 )
56.0
0.1
(2.4 )
3.2
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
73
($ Million)
23 Contributed equity
(a) Share capital
Issued and paid up capital
635,132,810 (2009: 634,144,970) ordinary shares, fully paid
(b) Movements in ordinary share capital
Opening balance at 1 January
987,840 shares issued under Executive Performance Share Plan (2009: 1,130,000) (i)
Nil shares issued under Final Dividend Reinvestment Plan (2009: 10,068,621)
Nil shares issued under Interim Dividend Reinvestment Plan (2009: 6,673,768)
Nil shares issued under institutional equity raising (2009: 47,752,809)
Nil shares issued under Share Purchase Plan (2009: 16,031,235)
Equity raising transaction costs
Closing balance at 31 December
(i) Ordinary shares issued under the Adelaide Brighton Ltd Executive Performance Share Plan (refer note 29).
(c) Ordinary shares
Consolidated
2010
2009
692.7
690.4
690.4
2.3
-
-
-
-
-
692.7
540.4
3.1
17.9
18.0
85.0
28.5
(2.5 )
690.4
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up the Company in proportion to the number of and
amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote and, on a poll, each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(d) Dividend reinvestment plan
In February 2010 the Company suspended the dividend reinvestment plan with immediate effect until further notice.
(e) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue shares as well as the
issue of new debt or the redemption of existing debt. The Group monitors capital on the basis of the gearing ratio.
The Company has an implied BBB+ credit rating and chooses not to apply for an official credit rating. The gearing ratios at 31 December were as
follows:
($ Million)
Total borrowings
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Consolidated
2010
151.2
(2.8 )
148.4
934.3
2009
200.9
(25.5 )
175.4
897.0
1,082.7
1,072.4
15.9 %
19.6 %
74
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
($ Million)
24 Reserves and retained earnings
(a) Reserves
Foreign currency translation reserve
Share-based payment reserve
Foreign currency translation reserve
Opening balance at 1 January
Currency translation differences arising during the year
Closing balance at 31 December
Share-based payment reserve
Opening balance at 1 January
Awards expense
Deferred tax
Issue of shares to employees
Closing balance at 31 December
(b) Retained earnings
Opening balance at 1 January
Net profit for the year
Actuarial (loss)/gain on defined benefit obligation (net of tax)
Dividends
Closing balance at 31 December
(c) Nature and purpose of reserves
(i) Foreign currency translation reserve
Consolidated
2010
2009
-
2.6
2.6
-
-
-
2.9
1.1
(0.1 )
(1.3 )
2.6
200.6
151.5
(1.9 )
(114.2 )
236.0
-
2.9
2.9
0.1
(0.1 )
-
3.4
0.8
0.4
(1.7 )
2.9
155.0
123.1
4.0
(81.5 )
200.6
Exchange differences arising on translation of the foreign controlled entities (Adelaide Brighton Cement Inc., Fuel and Combustion Technology
International Inc., and Fuel and Combustion Technology International Ltd) are taken to the foreign currency translation reserve, as described in
note 1(d)(iii).
(ii) Share-based payment reserve
The share-based payment reserve is used to recognise the fair value of Awards issued but not exercised.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
75
($ Million)
25 Dividends
Dividends paid during the year
2009 final dividend of 8.0 cents (2008 – 8.5 cents) per fully paid ordinary share, franked at 100%
(2008 – 100%) paid on 12 April 2010
2010 interim dividend of 7.5 cents (2009 – 5.5 cents) per fully paid ordinary share, franked at 100%
(2009 – 100%) paid on 11 October 2010
2010 special dividend of 2.5 cents per fully paid ordinary share, franked at 100% paid on 11 October 2010
Total dividends
Paid in cash
Satisfied by issue of shares under the Dividend Reinvestment Plan
Dividends not recognised at year end
Since the end of the year the Directors have recommended the payment of a final dividend of 9.0 cents
(2009 – 8.0 cents) per fully paid share, franked at 100% (2009 – 100%). The aggregate amount of the
proposed final dividend to be paid on 11 April 2011, not recognised as a liability at the end of the
reporting period, is
In addition a special dividend of 2.5 cents (2009 – nil) franked at 100% was declared payable coincident
with the final dividend. The aggregate amount of the proposed special dividend expected to be paid on
11 April 2011, not recognised as a liability at the end of the reporting period, is
Franked dividends
The franked portions of the dividends proposed as at 31 December 2010 will be franked out of existing
franking credits or out of franking credits arising from the payment of income tax in the year ending
31 December 2011.
Franking credits available for subsequent financial years based on a tax rate of 30% (2009 – 30%)
The Company
2010
2009
50.7
47.6
15.9
114.2
114.2
-
47.0
34.5
-
81.5
45.6
35.9
57.2
50.7
15.9
-
53.4
53.1
The above amounts represent 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 any current tax liability
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The impact on the franking account of the dividend recommended by the Directors since year end, but not recognised as a liability at year end, will be
a reduction in the franking account of $31.3 million (2009: $21.7 million).
76
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
flow interest rate risk. Due to the historically
low levels of gearing, Group policy is to
take on senior debt facilities on a one to five
year term with fixed bank lending margins
associated with each term. Cash advances
to meet short and medium term borrowing
requirements are drawn down against the
senior debt lending facilities on a 30, 60
or 90 day basis, at a variable lending rate
comprising the fixed bank margin applied to
the daily bank bill swap rate effective at the
date of each bank bill. During both 2010 and
2009, the Group’s borrowings at variable
rate were denominated in Australian Dollars.
The Group analyses its interest rate
exposure on a dynamic basis. Periodically,
various scenarios are simulated taking
into consideration refinancing, renewal of
existing positions, alternative financing and
hedging. Based on these scenarios, the
Group calculates the impact on forecast
profit and loss of a defined interest rate
shift. The scenarios are run only for liabilities
that represent the major interest-bearing
positions. Based on the latest calculations
performed, the impact on profit and equity
of a 100 basis-point movement would
be a maximum increase/decrease of
$1.5 million (2009: $2.0 million). A 100
basis-point sensitivity has been selected
as this is considered reasonable given the
current level of both short term and long
term Australian dollar interest rates.
26 Financial risk management
(a) Market risk
(i) Foreign exchange risk
The Group’s activities through its overseas
cement, clinker and equipment purchases
expose it to foreign exchange risk arising
from various currency exposures, primarily
with respect to the US Dollar and the
Japanese Yen.
Foreign exchange risk arises from future
commercial transactions and recognised
assets and liabilities that are denominated in
a currency that is not the entity’s functional
currency. The risk is measured using
sensitivity analysis and cash flow forecasting.
The Group enters into foreign exchange
forward contracts to hedge its foreign
exchange risk on these overseas trading
activities against movements in the
Australian dollar.
The Group Treasury’s risk management
policy is to hedge commitments for
purchases for up to six months forward.
Longer hedge positions are deemed too
expensive versus the value at risk due to the
respective currencies’ interest rate spread.
Derivative instruments entered into by the
Group do not qualify for hedge accounting.
(ii) Cash flow interest rate risk
The Group’s main interest rate risk arises
from bank borrowings. Borrowings issued
at variable rates expose the Group to cash
The Group’s activities expose it to a variety
of financial risks: market risk (including
currency risk and interest rate risk), credit
risk and liquidity risk. The Group’s overall
risk management program focuses on the
unpredictability of financial markets and
seeks to minimise potential adverse effects
on the financial performance of the Group.
The Board approves written principles
for overall risk management, as well as
policies covering specific areas, such
as foreign exchange risk, interest rate
risk, credit risk, use of derivative and
non-derivative financial instruments and
investment of excess liquidity. The Group
does not enter into or trade financial
instruments, including derivative financial
instruments, for speculative purposes.
The Group uses different methods to
measure different types of risk to which it is
exposed. These methods include sensitivity
analysis in the case of interest rate, foreign
exchange and other price risks, and ageing
analysis for credit risk. The Group uses
derivative financial instruments in the form
of foreign exchange contracts to hedge
certain currency risk exposures.
Derivatives are initially recognised at fair
value at the date a derivative contract
is entered into and are subsequently
remeasured at their fair value at each
reporting date. The Company does not
utilise hedge accounting as permitted
under AIFRS.
The Group’s Corporate Treasury Function
provides services to the business,
co-ordinates access to domestic financial
markets and monitors and manages the
financial risks relating to the operations of
the Group. The Group Corporate Treasury
Function reports to the Board on a monthly
basis an analysis of exposures by degree
and magnitude of risk.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
77
26 Financial risk management (continued)
(a) Market risk (continued)
(iii) Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk and foreign exchange risk.
2010 ($ Million)
Financial assets
Cash
Receivables
Financial liabilities
Borrowings
Payables
Total increase/(decrease)
2009 ($ Million)
Financial assets
Cash
Receivables
Financial liabilities
Borrowings
Payables
Limited recourse loan
Total increase/(decrease)
Notes
6
7 & 10
16 & 19
15
Notes
6
7 & 10
16 & 19
15
18
Interest rate risk
Foreign exchange
risk
-1.0%
+1.0%
-10%
+10%
Consolidated
Carrying Value
Consolidated
Profit & Equity
Consolidated
Profit & Equity
2.8
183.7
186.5
151.2
105.4
256.6
-
(0.3 )
(0.3 )
1.5
-
1.5
1.2
-
0.3
0.3
(1.5 )
-
(1.5 )
(1.2 )
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Interest rate risk
Foreign exchange
risk
-1.0%
+1.0%
-10%
+10%
Consolidated
Carrying Value
Consolidated
Profit & Equity
Consolidated
Profit & Equity
25.5
193.2
218.7
200.9
106.1
12.3
319.3
(0.3 )
(0.3 )
(0.6 )
2.0
-
-
2.0
1.4
0.3
0.3
0.6
(2.0 )
-
-
(2.0 )
(1.4 )
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
26 Financial risk management (continued)
(b) Credit risk
Credit risk is managed on a group basis using delegated regional authority limits. Credit risk arises from cash and cash equivalents, derivative financial
instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and
committed transactions.
For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. For trading credit risk wholesale
customers are rated using external independent agency ratings and if there is no independent rating, Credit Control assesses the credit quality of
the customer, taking into account its financial position, past experience, external credit agency reports and credit references. Individual risk limits are
set based on internal or external ratings in accordance with delegated authority limits set by the Board. The compliance with credit limits by credit
approved customers is regularly monitored by line credit management. Sales to retail customers are settled either in cash or using major credit cards,
mitigating credit risk.
Credit risk further arises in relation to financial guarantees given to certain parties. Such guarantees are only provided in exceptional circumstances
and are subject to appropriate approval.
The Group has no significant concentration of credit risk. The Group has policies and procedures in place to ensure that sales are made to customers
with an appropriate credit history. With a small number of customers, with uncertain credit history, the Group has taken out personal guarantees
in order to cover credit exposures. As at 31 December 2010, the Group held no collateral over outstanding debts. Consequently, the maximum
exposure to credit risk represents the carrying value of receivables and derivatives. Derivative counterparties and cash transactions are limited to high
credit quality institutions.
(c) Liquidity risk
The ultimate responsibility for liquidity risk management rests with the Board which has established an appropriate risk management framework for
the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group’s Corporate Treasury
Function manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included below is a statement of undrawn facilities
that the Group and Company has at its disposal to further reduce liquidity risk.
($ Million)
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Credit standby arrangements
Total facilities
Bank overdrafts
Bank facilities – external parties
Lease liabilities
Used at balance date
Bank overdrafts
Bank facilities – external parties
Lease liabilities
Unused at balance date
Bank overdrafts
Bank facilities – external parties
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
Consolidated
2010
2009
4.0
360.0
0.9
364.9
0.8
149.5
0.9
151.2
3.2
210.5
213.7
4.0
520.0
1.3
525.3
-
199.6
1.3
200.9
4.0
320.4
324.4
79
26 Financial risk management (continued)
The table below analyses the Group’s financial liabilities that will be settled on a gross basis. The amounts disclosed are the contractual undiscounted
cash flows. The interest rate used is 7% (2009: 6%) based on current bank borrowing rates and current expectations.
($ Million)
Ageing of financial liabilities into relevant maturity groups:
Less than 1 year
Lease liabilities (note 16)
Bank overdraft (note 16)
Between 1 and 2 years
Bank borrowings – external parties (note 19)
Lease liabilities (note 19)
Consolidated
2010
2009
0.2
0.8
1.0
160.0
0.7
160.7
0.4
-
0.4
211.6
0.9
212.5
(d) Fair value measurements
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 carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term
nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market
interest rate that is available to the Group for similar financial instruments.
The carrying amounts of financial assets and liabilities of the Group and the Company at balance date equate fair values. Fair value is exclusive of
costs which would be incurred on realisation of an asset, and inclusive of costs which would be incurred on settlement of a liability.
27 Contingencies
Details and estimates of maximum amounts of contingent liabilities are as follows:
($ Million)
(a) Guarantees
Bank guarantees
(b) Litigation
Consolidated
2010
2009
15.3
12.3
At the time of preparing this financial report some companies included in the Group are parties to pending legal proceedings, the outcome of which is
not known. The entities are defending, or prosecuting, these proceedings. The Directors have assessed the impact on the Group from the individual
actions. No material losses are anticipated in respect of any of the above contingent liabilities.
80
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
($ Million)
28 Commitments for expenditure
(a) Capital commitments – Property, plant & equipment
Consolidated
2010
2009
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Within one year
15.4
11.3
(b) Lease commitments
(i) Finance leases
Commitments in relation to finance leases are payable as follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
Less: Future finance charges
Recognised as a liability
Representing lease liabilities:
Current (note 16)
Non-current (note 19)
(ii) Operating leases
Commitments in relation to operating leases contracted for at the reporting date, but not recognised
as liabilities, are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Commitments for operating lease payments relate mainly to rental leases on property.
(iii) Other purchase commitments
Commitments in relation to other purchases contracted for at the reporting date, but not recognised
as liabilities, are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Commitments for other purchases relate mainly to energy purchases.
0.2
0.7
0.9
-
0.9
0.2
0.7
0.9
2.5
5.3
26.2
34.0
0.4
0.9
1.3
-
1.3
0.4
0.9
1.3
2.6
5.5
16.4
24.5
48.4
176.0
34.1
258.5
34.9
198.6
60.0
293.5
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
81
29 Share-based payment plans
(a) Employee Share Plan
The establishment of the Adelaide Brighton Ltd Employee Share Plan was approved by special resolution at the Annual General Meeting of the
Company held on 19 November 1997. All full time employees of the Company and its controlled entities who have been continuously employed by
the Company or a controlled entity for a period of one year are eligible to participate in the Plan. Casual employees and contractors are not eligible to
participate in the Plan.
No shares were issued under the Employee Share Plan during the year (2009 – nil). In subsequent years, the Board will decide whether, considering
the profitability of the Company and the demands of the business, further invitations to take up grants of shares should be made.
(b) Executive Performance Share Plan
The Adelaide Brighton Ltd Executive Performance Share Plan (“the Plan”) provides for grants of Awards to the Managing Director and eligible
executives. This plan was approved by shareholders at the Annual General Meeting held on 19 November 1997. In accordance with the requirements
of the ASX Listing Rules, the Awards since granted to the Managing Director have been approved by shareholders.
Under the Plan, eligible executives are granted Awards (each being an entitlement to a fully paid ordinary share of Adelaide Brighton Ltd, subject to
the satisfaction of performance conditions) on terms and conditions determined by the Board.
2007 Award
Under the Plan, Participants were invited to apply to take up an Award up to a maximum number of shares, divided into three equal tranches
exercisable no earlier than 1 May 2009, 1 May 2010 and 1 May 2011 respectively. The total number of Awards granted under the 2007 Award was
3,650,000 with 1,002,840 exercised during the period (2009 – 1,115,000). During the period 60,000 Awards were granted. The grant date of the
2007 Awards is set out on page 83.
The total number of Awards that lapsed during the period was 372,160 (2009 – Nil).
2010 Award
Under the Plan, Participants were invited to apply to take up an Award up to a maximum number of shares, divided into three tranches exercisable no
earlier than 1 May 2012, 1 May 2013 and 1 May 2014 respectively. The total number of awards granted under the 2010 Award was 4,155,000 with
none exercised by 31 December 2010. During the period 4,155,000 Awards were granted. The grant date of the 2010 Awards is set out on page 84.
Performance conditions
Detailed discussion of 2007 Award and 2010 Award performance conditions is set out in the Remuneration Report on pages 43 to 44.
During 2010, 987,840 shares were issued under the Plan on the exercise of Tranche 2 under the 2007 Award, following the Board’s determination
that:
• Earnings per share exercise condition applicable to 50% of exercisable Awards had been partially satisfied for Tranche 2; and
• Total Shareholder Return exercise condition applicable to 50% of exercisable Awards had been satisfied for Tranche 2.
The value per share at the date of exercise is the Volume Weighted Average Price (VWAP) calculated by the Australian Securities Exchange Limited on
the exercise date. The aggregate value of Awards exercised during the year is $2,917,624 based on the VWAP on the date of exercise.
Balance of Awards
As at 31 December 2010, if the exercise conditions are satisfied and the remaining balance of all currently approved Awards are exercised, the
Company would be obliged to transfer:
• 1,160,000 shares to the Participants, under the 2007 Award (2009 – 2,460,000 shares)
• 4,155,000 shares to the Participants, under the 2010 Award (2009 – Nil shares)
The Plan does not entitle the Participants to participate in any other share issues of the Company and the unexercised Awards do not attract dividend
or voting rights. The Plan is accounted for by the Company in accordance with note 1(v)(iv), with $1,117,656 (2009 - $803,442) recognised as an
expense during the year.
82
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
($ Million)
30 Key management personnel disclosures
(a) Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
Termination benefits
Consolidated
2010
2009
8.9
0.2
0.9
0.1
10.1
8.8
0.2
0.7
-
9.7
The Company has applied the exemption under Amendment to Australian Accounting Standard - Key Management Personnel Disclosures by
Disclosing Entities which exempts disclosing companies from the application of AASB 124 paragraphs AUS 25.2 to AUS 25.6 and AUS 25.7.1 and
AUS 25.7.2 as the requirements are now incorporated into the Corporations Act and are provided in the section titled Remuneration Report included
in the Directors Report designated as audited on pages 38 to 47.
(b) Awards holdings of key management personnel
The number of Awards granted as compensation and details of Awards vested, exercised or lapsed during the year are disclosed in the Remuneration
Report on page 45.
For the purposes of pricing model inputs, the exercise price of awards is based on the closing published share price at grant date. The assessed fair
value at grant date of Awards granted to the individuals is allocated equally over the period from grant date to vesting date. Fair values at the grant
date are independently determined using Black Scholes option pricing model that takes into account the exercise price, the term of the Awards, the
lack of marketability, the impact of TSR vesting condition (applicable to 50% of Awards), the expected future dividends and the risk free interest rate
for the term of the Award.
2007 Awards grant - pricing model inputs
Number of
awards
Grant
date
Exercise
price
Value per
award at
grant date
Expected
annual
dividends
Risk-free
interest
rate
Lack of
marketability
discount
TSR
condition
discount
$
$
$
%
2.81
2.81
2.81
435,000
435,000
435,000
31/12/06
31/12/06
31/12/06
M P Chellew
Tranche 1
Tranche 2
Tranche 3
M Brydon
Tranche 1
Tranche 2
Tranche 3
A D Poulter, M R D Clayton, M A Finney, M Kelly and S J Toppenberg
Tranche 1
Tranche 2
Tranche 3
S B Rogers
Tranche 2
Tranche 3
31/12/06
31/12/06
31/12/06
01/03/07
01/03/07
01/03/07
100,000
100,000
100,000
100,000
100,000
100,000
03/03/08
03/03/08
100,000
100,000
2.81
2.81
2.81
3.31
3.31
3.31
3.37
3.37
1.495
1.275
1.080
1.745
1.485
1.260
1.495
1.275
1.080
1.755
1.480
0.125
0.125
0.125
0.145
0.145
0.145
0.125
0.125
0.125
0.165
0.165
6.10
6.10
6.10
5.92
5.92
5.92
6.10
6.10
6.10
6.14
6.14
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
%
3.0
6.0
9.0
3.0
6.0
9.0
3.0
6.0
9.0
6.6
9.6
%
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
83
30 Key management personnel disclosures (continued)
(b) Awards holdings of key management personnel (continued)
2010 Awards grant - pricing model inputs
Number of
awards
Grant
date
Exercise
price
Value per
award at
grant date
Expected
annual
dividends
Risk-free
interest
rate
Lack of
marketability
discount
TSR
condition
discount
180,000
180,000
240,000
540,000
540,000
720,000
M P Chellew
Tranche 1
Tranche 2
Tranche 3
M Brydon
Tranche 1
Tranche 2
Tranche 3
M Kelly
Tranche 1
Tranche 2
Tranche 3
M A Finney and S B Rogers
Tranche 1
Tranche 2
Tranche 3
M R D Clayton
Tranche 1
Tranche 2
Tranche 3
S J Toppenberg
Tranche 1
Tranche 2
Tranche 3
150,000
150,000
200,000
97,500
97,500
130,000
90,000
90,000
120,000
60,000
60,000
80,000
$
$
$
%
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
04/06/2010
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
2.81
1.585
1.330
1.095
1.585
1.330
1.095
1.585
1.330
1.095
1.585
1.330
1.095
1.585
1.330
1.095
1.585
1.330
1.095
0.17
0.18
0.19
0.17
0.18
0.19
0.17
0.18
0.19
0.17
0.18
0.19
0.17
0.18
0.19
0.17
0.18
0.19
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
4.79
%
3.0
6.0
9.0
3.0
6.0
9.0
3.0
6.0
9.0
3.0
6.0
9.0
3.0
6.0
9.0
3.0
6.0
9.0
%
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
84
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
30 Key management personnel disclosures (continued)
(c) Shareholdings of key management personnel
The movement during the reporting period in the number of ordinary shares in Adelaide Brighton Ltd held directly, indirectly or beneficially, by each
key management person, including their related parties, is as follows:
Number of shares held in Adelaide Brighton Limited at 31 December 2010
Non-executive Directors
M A Kinnaird1
C L Harris
L V Hosking
G F Pettigrew
R D Barro
K B Scott-Mackenzie2
Executive Director
M P Chellew
Senior executives
A D Poulter3
M R D Clayton
M Brydon
M A Finney
M Kelly
S J Toppenberg
S B Rogers
Balance at
start of year
98,764
70,479
4,739
7,739
29,258,979
-
448,366
122,600
23
7,739
244,688
44,615
-
-
Received on
exercise of EPSP
-
-
-
-
-
-
341,040
78,400
78,400
78,400
78,400
78,400
78,400
78,400
Other changes
(98,764 )
-
-
-
117,920,663
-
(341,040 )
(201,000 )
(78,350 )
(86,139 )
(244,688 )
(113,015 )
(78,400 )
(78,400 )
Balance at
end of year
-
70,479
4,739
7,739
147,179,642
-
448,366
-
73
-
78,400
10,000
-
-
Total
30,308,731
889,840
116,600,867
147,799,438
1 M A Kinnaird retired on 19 May 2010 therefore his equity holding has been reduced to nil at 31 December 2010 through ‘other changes’.
2 K B Scott-Mackenzie appointed 26 July 2010
3 A D Poulter ceased employment effective 1 May 2010 therefore his equity holding has been reduced to nil at 31 December 2010 through ‘other changes’.
Number of shares held in Adelaide Brighton Limited at 31 December 2009
Non-executive Directors
M A Kinnaird
C L Harris
J D McNerney1
L V Hosking
G F Pettigrew
R D Barro
Executive Director
M P Chellew
Senior executives
A D Poulter
M R D Clayton
M Brydon
M A Finney
M Kelly
S J Toppenberg
S B Rogers
Balance at
start of year
74,286
65,001
101,000
2,000
5,000
18,001,696
440,149
101,613
4,357
5,000
170,000
936
-
-
Received on
exercise of EPSP
Other changes
-
-
-
-
-
-
435,000
100,000
100,000
100,000
100,000
100,000
100,000
-
24,478
5,478
(101,000 )
2,739
2,739
11,257,283
(426,783 )
(79,013 )
(104,334 )
(97,261 )
(25,312 )
(56,321 )
(100,000 )
-
Balance at
end of year
98,764
70,479
-
4,739
7,739
29,258,979
448,366
122,600
23
7,739
244,688
44,615
-
-
Total
18,971,038
1,035,000
10,302,693
30,308,731
1 J D McNerney resigned on 21 May 2009 therefore his equity holding has been reduced to nil at 31 December 2009 through ‘other changes’.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
85
30 Key management personnel disclosures (continued)
(d) Other transactions with key management personnel
R D Barro a Director of Adelaide Brighton Ltd, is Managing Director of Barro Group Pty Ltd. Barro Group Pty Ltd and Adelaide Brighton Ltd, through
its 100% owned subsidiary, Adelaide Brighton Management Ltd, each control 50% of Independent Cement and Lime Pty Ltd, a distributor of cement
and lime in Victoria and New South Wales.
During the year, the Barro Group of Companies purchased goods and materials from and sold goods, materials and services to Independent Cement
and Lime Pty Ltd. The Barro Group of Companies also purchased goods and materials from Sunstate Cement Ltd, a Company in which the Group
has a 50% share.
M P Chellew, an executive Director of Adelaide Brighton Ltd and M Brydon, a senior executive of Adelaide Brighton Ltd, are Directors of Sunstate
Cement Ltd. M Brydon, a senior executive of Adelaide Brighton Ltd, is a Director of Independent Cement and Lime Pty Ltd. During the year, the
Group traded significantly with both Independent Cement and Lime Pty Ltd and Sunstate Cement Ltd.
All transactions involving the Barro Group Pty Ltd and Adelaide Brighton Ltd and its subsidiaries, Independent Cement and Lime Pty Ltd and its
subsidiaries and Sunstate Cement Ltd were conducted on standard commercial terms.
From time to time Directors of the Company or its controlled entities, or their related parties, may purchase goods from the Group. These purchases
are on the same terms and conditions as those entered into by other Group employees. These transactions are conducted on standard commercial
terms.
Consolidated
($)
Aggregate amounts of the above transactions with the Directors and their related parties:
Sales to Director related parties
Purchases from Director related parties
2010
2009
54,635,103
5,703,412
47,953,384
5,973,628
31 Remuneration of auditors
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:
(a) Audit services
PricewaterhouseCoopers Australian firm
Audit and review of financial statements
Total remuneration for audit services
(b) Non-audit services
PricewaterhouseCoopers Australian firm
Other assurance services
Total remuneration for non-audit services
32 Related parties
(a) Key management personnel
805,245
762,233
805,245
762,233
152,865
152,865
92,184
92,184
Disclosures relating to key management personnel are set out in note 30.
(b) Controlled entities
Details of interests in controlled entities are set out in note 33. The ultimate parent Company is Adelaide Brighton Ltd.
(c) Joint venture entities
Details of interests in joint venture entities are set out in note 11(a). Nature of transactions with joint venture entities:
Adelaide Brighton Cement Ltd and Morgan Cement International Ltd supplied finished products and raw materials to Sunstate Cement Ltd and
Independent Cement and Lime Pty Ltd. Hy-Tec Industries (Victoria) Pty Ltd, Hy-Tec Industries (Queensland) Pty Ltd, Adbri Masonry Group Pty Ltd
and Adelaide Brighton Cement Ltd purchased raw materials from Sunstate Cement Ltd and Independent Cement and Lime Pty Ltd. Alternative Fuel
Company Pty Ltd supplied waste fuel materials to Adelaide Brighton Cement Ltd.
All transactions are on normal commercial terms and conditions and transactions for the supply of raw materials and finished products are covered by
shareholder agreements.
86
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
32 Related parties (continued)
(d) Transactions with related parties
($’000)
The following transactions occurred with related parties:
Sales of goods
- Joint venture entities
Purchases of materials and goods
- Joint venture entities
Interest revenue
- Joint venture entities
- Other related parties
Dividend income
- Joint venture entities
Superannuation contributions
- Contributions to superannuation funds on behalf of employees
Loans advanced to/(from):
- Joint venture entities
- Other related parties
(e) Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables
- Joint venture entities (interest)
- Joint venture entities (trade)
Non-current receivables
- Joint venture entities (loans)
- Other related parties (loans)
Current payables
- Joint venture entities (trade)
Consolidated
2010
2009
183,758
137,093
32,863
29,550
985
105
697
205
16,910
22,695
442
421
(262 )
210
3,214
(287 )
507
16,357
28,655
1,473
288
15,375
28,234
1,735
2,497
2,824
Outstanding balances are unsecured and repayable in cash. No provisions for doubtful receivables have been raised in relation to any outstanding
balances.
(f) Loans to related parties
A loan to Adelaide Brighton Cement Ltd of $82,860,247 funds a capital reduction payment. The loan is subordinated and is only repayable after full
repayment of external borrowings. There was no interest charged on the outstanding balance during the reporting year. All other loans to and from
Group entities are repayable at call.
The Company has provided Adbri Masonry Group Pty Ltd with a loan of $42,718,929. There was no interest charged on the outstanding balance
during the reporting year.
A loan to Independent Cement and Lime Pty Ltd has interest charged at the ruling commercial rates on the outstanding balance. Interest revenue
brought to account by the Group during the reporting year on this loan was $985,000 (2009: $697,000).
A loan to Alternative Fuel Company Pty Ltd has no interest charged due to an interest waiver deed waiving the requirement of interest being paid until
28 February 2011.
The Company has provided MCB Wingfield Pty Ltd (MCBW), with a loan of $2.75 million to fund the construction of the waste processing plant at
the site owned by MCBW at Wingfield, South Australia. The site and the plant are leased to Alternative Fuel Company Pty Ltd and Resourceco.
MCBW’s obligations to the Company under the loan documents are secured by various securities including a deed of charge over all of the assets
and undertaking of MCBW and a real property mortgage over the entire parcel of land. Interest revenue brought to account by the Group during the
reporting year on this loan was $105,000 (2009: $205,000).
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
87
33 Investments in controlled entities
Name of entity
Place of
incorporation
Class of
shares
Equity holding
2010
%
2009
%
Adelaide Brighton Ltd
Adelaide Brighton Cement Ltd2
Adelaide Brighton Cement Inc
Adelaide Brighton Cement Investments Pty Ltd2
Adelaide Brighton Management Ltd2
Adelaide Brighton Cement International Pty Ltd1
Adelaide Brighton Intellectual Property Pty Ltd1
Cement Resources Consolidated Pty Ltd1
Cockburn Cement Ltd2
Hy-Tec Industries (Queensland) Pty Ltd2
Northern Cement Ltd2
Premier Resources Ltd2
Adbri Masonry Group Pty Ltd2
Adelaide Brighton Cement Ltd
Exmouth Limestone Pty Ltd1
Adelaide Brighton Cement Inc
Adelaide Brighton Cement (Florida) Inc
Adelaide Brighton Cement (Hawaii) Inc
Hileah (Florida) Management Inc
Adelaide Brighton Management Ltd
Accendo Pty Ltd1
Global Cement Australia Pty Ltd1
Hurd Haulage Pty Ltd1
K.C. Mawson Pty Ltd1
Adelaide Brighton Cement International Pty Ltd
Adelaide Brighton Cement Inc
Fuel & Combustion Technology International Ltd
Fuel & Combustion Technology International Ltd
Fuel & Combustion Technology International Inc
Northern Cement Ltd
Mataranka Lime Pty Ltd1
Cockburn Cement Ltd
Cockburn Waters Pty Ltd1
Hydrated Lime Pty Ltd1
Chemical Unit Trust1
Kalgoorlie Lime & Chemical Company Pty Ltd1
Premier Resources Ltd
Hy-Tec Industries Pty Ltd2
Hy-Tec Industries (Victoria) Pty Ltd2
Bonfoal Pty Ltd1
Aus-10 Rhyolite Pty Ltd1
Morgan Cement International Pty Ltd2
Hy-Tec Industries (Victoria) Pty Ltd
CRC2 Pty Ltd1
CRC3 Pty Ltd1
Hy-Tec Industries (Victoria) No 1 Pty Ltd1
Hy-Tec Industries (Victoria) No 2 Pty Ltd1
Sheltacrete Pty Ltd1
Adbri Masonry Group Pty Ltd
Adbri Masonry Pty Ltd2
Adbri Mining Products Pty Ltd2
C&M Masonry Products Pty Ltd2
Betta Brick Pty Ltd1
C&M Brick (Bendigo) Pty Ltd1
C&M Design/Construct Pty Ltd1
South Australia
Washington USA
South Australia
South Australia
South Australia
South Australia
South Australia
Western Australia
South Australia
Northern Territory
New South Wales
Victoria
Western Australia
Florida USA
Hawaii USA
Florida USA
South Australia
New South Wales
Victoria
New South Wales
Wash. State USA
United Kingdom
USA
South Australia
Western Australia
Western Australia
Western Australia
Western Australia
New South Wales
New South Wales
New South Wales
New South Wales
New South Wales
Victoria
Victoria
New South Wales
New South Wales
New South Wales
Queensland
Queensland
South Australia
Victoria
Victoria
Victoria
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Units
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
100
80
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
20
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
20
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1 Small proprietary Company as defined by the Corporations Act and is not required to be audited for statutory purposes.
2 These controlled entities have been granted relief from the necessity to prepare financial reports in accordance with Class Order 98/1418 issued by the Australian Securities & Investments
Commission. For further information see note 34.
88
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
34 Deed of cross guarantee
As at the date of this report, Adelaide Brighton Ltd, Adelaide Brighton Cement Ltd, Cockburn Cement Ltd, Adelaide Brighton Cement Investments
Pty Ltd, Adelaide Brighton Management Ltd, Northern Cement Ltd, Premier Resources Ltd, Hy-Tec Industries Pty Ltd, Hy-Tec Industries (Victoria) Pty
Ltd, Hy-Tec Industries (Queensland) Pty Ltd, Morgan Cement International Pty Ltd, Adbri Masonry Group Pty Ltd, C&M Masonry Products Pty Ltd
and Adbri Masonry Pty Ltd are parties to a Deed of Cross Guarantee (the Deed) under which each Company guarantees the debts of the others. By
entering into 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) issued by the Australian Securities &
Investments Commission. The above companies represent a “Closed Group” for the purposes of the Class Order, and as there are no other parties to
the Deed that are controlled by the Company, they also represent the “Extended Closed Group”.
Set out below is a consolidated balance sheet as at 31 December 2010 of the Closed Group.
($ Million)
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets classified as held for sale
Total current assets
Non-current assets
Receivables
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Retirement benefit obligations
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
2010
2009
-
230.0
109.4
339.4
0.2
339.6
30.4
83.7
10.2
673.2
178.4
975.9
21.0
245.3
99.8
366.1
12.7
378.8
30.5
68.5
10.2
683.2
169.0
961.4
1,315.5
1,340.2
163.8
2.3
26.0
21.4
3.9
217.4
150.2
39.9
32.6
4.2
0.1
227.0
444.4
871.1
692.7
2.6
175.8
871.1
164.9
0.4
16.1
24.2
14.3
219.9
200.5
48.2
29.9
5.8
0.1
284.5
504.4
835.8
690.4
2.9
142.5
835.8
89
($ Million)
34 Deed of cross guarantee (continued)
Set out below is a condensed consolidated income statement, a consolidated statement of comprehensive
income and a summary of movements in consolidated retained profits for the year ended 31 December 2010
of the Closed Group.
Profit before income tax
Income tax expense
Profit for the year
Retained earnings 1 January
Profit for the year
Transactions recognised directly in retained earnings
Dividends paid
Retained earnings 31 December
35 Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Doubtful debts
Depreciation and amortisation
Share based payments expense
Finance charges on remediation provision
(Gain) on sale of non-current assets
Share of profits of joint ventures
Non-cash retirement benefits expense
Other
Net cash provided by operating activities before changes in assets and liabilities
Changes in operating assets and liabilities, net of effects from purchase of controlled entity:
(Increase) decrease in inventories
Decrease (increase) in prepayments
Decrease (increase) in receivables
Increase in trade creditors
(Decrease) in provisions
Increase in taxes payable
(Decrease) increase in deferred taxes payable
(Decrease) in other operating liabilities
Consolidated
2010
2009
199.4
(50.0 )
149.4
142.5
149.4
(1.9 )
(114.2 )
175.8
151.5
0.2
52.8
1.1
0.3
(2.6 )
(15.2 )
1.5
(2.2 )
187.4
(10.0 )
1.4
8.0
1.3
(0.1 )
10.4
(8.3 )
(1.6 )
165.6
(44.6 )
121.0
99.0
121.0
4.0
(81.5 )
142.5
123.1
(2.6 )
56.8
0.8
0.4
(1.0 )
(4.8 )
1.7
3.9
178.3
8.3
(0.5 )
(10.7 )
8.1
(2.0 )
11.0
2.4
(6.8 )
Net cash inflow from operating activities
188.5
188.1
90
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
(Cents)
36 Earnings per share
Basic earnings per share
Diluted earnings per share
(Number)
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic earnings
per share
Adjustment for calculation of diluted earnings per share:
Awards
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
($ Million)
Reconciliation of earnings used in calculating earnings per share
Basic and diluted earnings per share
Profit after tax
Profit attributable to non-controlling interests
Profit attributable to ordinary equity holders of the Company used in calculating basic and diluted
earnings per share
37 Events occurring after the balance sheet date
Consolidated
2010
2009
23.9
23.7
20.4
20.3
Consolidated
2010
2009
634,851,343
603,750,770
5,315,000
2,460,000
640,166,343
606,210,770
Consolidated
2010
2009
151.4
0.1
123.2
(0.1 )
151.5
123.1
As at the date of this report, no other matter or circumstance has arisen since 31 December 2010 that has significantly affected, or may significantly
affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years.
38 Segment reporting
(a) Description of segments
Management has determined the operating segments based on the reports reviewed by the Managing Director. These reports are evaluated regularly
in deciding how to allocate resources and in assessing performance.
The two reportable segments have been identified as follows;
• Cement, Lime and Concrete
• Concrete Products
The operating segments, Cement, Lime and Concrete, all individually meet the quantitative thresholds required by AASB 8 as well as meeting the
aggregation criteria allowing them to be reported as one segment. Concrete Products meets the quantitative threshold therefore is reported as a
separate segment. The Cement, Lime and Concrete Products Joint Ventures form part of the above two reportable segments as they meet the
aggregation criteria.
The major end-use markets of Adelaide Brighton’s products include residential and non-residential construction, engineering construction, alumina
and steel production and mining.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
91
38 Segment reporting (continued)
(b) Segment information provided to the Managing Director
The segment information provided to the Managing Director for the reportable segments for the year ended 31 December 2010 is as follows:
2010
Notes
($ Million)
Total segment operating revenue
Inter-segment revenue
Revenue from external customers
Depreciation and amortisation
EBIT
2009
Notes
($ Million)
Total segment operating revenue
Inter-segment revenue
Revenue from external customers
Depreciation and amortisation
EBIT
Cement, Lime
and Concrete
Concrete
Products
All other
segments
1,084.4
(35.3 )
1,049.1
39.1
223.7
131.5
-
131.5
7.9
3.8
61.6
-
61.6
5.8
(11.3 )
Cement, Lime
and Concrete
Concrete
Products
All other
segments
1,007.2
(31.2 )
976.0
44.6
185.1
132.8
-
132.8
8.1
4.4
54.2
-
54.2
4.1
(4.2 )
Total
1,277.5
(35.3 )
1,242.2
52.8
216.2
Total
1,194.2
(31.2 )
1,163.0
56.8
185.3
The operating revenue assessed by the Managing Director includes revenue from external customers and the 50% share of revenue from the Joint
Ventures and excludes freight revenue, interest revenue and royalties. A reconciliation of segment operating revenue to revenue from continuing
operations is provided as follows:
($ Million)
Total segment operating revenue
Inter-segment revenue elimination
Freight revenue
Interest revenue
Royalties
Elimination of joint venture revenue
Revenue from continuing operations
Consolidated
2010
2009
1,277.5
(35.3 )
93.9
2.3
1.2
(266.7 )
1,072.9
1,194.2
(31.2 )
86.5
1.6
0.6
(264.5 )
987.2
The Managing Director assesses the performance of the operating segments based on a measure of EBIT. This measurement basis excludes the
effect of net interest. A reconciliation of the EBIT to operating profit before income tax is provided as follows:
($ Million)
EBIT
Net interest
Profit before income tax
Consolidated
2010
216.2
(14.0 )
202.2
2009
185.3
(16.7 )
168.6
92
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
($ Million)
39 Parent entity financial information
(a) Summary financial information
The individual financial statements for the Company show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Reserves
Share-based payments
Retained earnings
Total shareholders’ equity
Profit for the year
Total comprehensive income
(b) Guarantees entered into by the parent entity
Bank guarantees
(c) Contingent liabilities of the parent entity
The Company
2010
2009
552.0
1,087.2
250.6
401.5
685.7
685.6
2.6
(2.5 )
685.7
99.9
99.9
734.8
1,267.9
370.3
569.9
698.0
683.2
2.9
11.9
698.0
43.6
43.6
2.3
2.6
The parent entity did not have any contingent liabilities as at 31 December 2010 or 31 December 2009 other than the Bank guarantees detailed
above.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
93
Directors’ declaration
Auditor’s declaration
In the Directors’ opinion
Auditor’s Independence Declaration
As lead auditor for the audit of Adelaide
Brighton Ltd for the year ended
31 December 2010, I declare that to the
best of my knowledge and belief, there have
been:
a) no contraventions of the auditor
independence requirements of the
Corporations Act 2001 in relation to the
audit; and
b) no contraventions of any applicable code of
professional conduct in relation to the audit.
This declaration is in respect of
Adelaide Brighton Ltd and the entities
it controlled during the year.
A G Forman
Partner
PricewaterhouseCoopers
Adelaide
3 March 2011
Liability limited by a scheme approved under Professional
Standards Legislation
(a) the financial statements and notes set out
on pages 48 to 93 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
consolidated entity’s financial position as at
31 December 2010 and of its 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) at the date of this declaration, there are
reasonable ground to believe that the
members of the Extended Closed Group
identified in note 34 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 34.
Note 1(a) confirms that the financial
statements also comply with International
Financial Reporting Standards as issued
by the International Accounting Standards
Board.
The Directors have been given the
declarations by the Managing Director 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.
M Chellew
Managing Director
Dated 3 March 2011
94
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
Independent audit report
Report on the financial report
Auditor’s responsibility
We have audited the accompanying financial
report of Adelaide Brighton Limited (the
company), which comprises the balance
sheet as at 31 December 2010, and
the income statement, the statement of
comprehensive income, statement of
changes in equity and statement of cash
flows for the year ended on that date, a
summary of significant accounting policies,
other explanatory notes and the directors’
declaration for the Adelaide Brighton
Ltd group (the consolidated entity). The
consolidated entity comprises 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
report
The directors of the company are
responsible for the preparation of the
financial report that gives a true and fair view
in accordance with Australian Accountant
Standards and the Corporations Act 2001
and for such internal control as the directors
determine is necessary to enable the
preparation of the financial report that is free
from material misstatement, weather due
to fraud or error. In Note 1, the directors
also state, in accordance with Accounting
Standard AASB 101 Presentation of
Financial Statements, that the financial
statements comply with International
Financial Reporting Standards.
Our 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.
Our procedures include reading the
other information in the Annual Report to
determine whether it contains any material
inconsistencies with the financial report.
We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our audit opinions.
Independence
In conducting our audit, we have complied
with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of Adelaide Brighton
Limited is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the
consolidated entity’s financial position as at
31 December 2010 and of its performance
for the year ended on that date; and
(ii) complying with Australian Accounting
Standards (including the Australian
Accounting Interpretations) and the
Corporations Regulations 2001; and
(b) the financial report and notes also comply
with International Financial Reporting
Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the remuneration report
included in pages 38 to 47 of the directors’
report for the year ended 31 December
2010. 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 opinion
In our opinion, the remuneration report of
Adelaide Brighton Limited for the year ended
31 December 2010, complies with section
300A of the Corporations Act 2001.
PricewaterhouseCoopers
A G Forman
Partner
Adelaide
3 March 2011
Liability limited by a scheme approved under Professional
Standards Legislation.
PricewaterhouseCoopers
ABN 52 780 433 757
Level 14, 91 King William Street,
Adelaide SA 5000
GPO Box 418, Adelaide SA 5001
Telephone +61 8 8218 7000
Facsimile +61 8 8218 7999
www.pwc.com.au
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2010
95
Financial history
Year ended
($ Million unless stated)
Dec
2010
Dec
2009
Dec
2008
Dec
2007
Dec
2006
Dec
2005
Dec9
2004
Dec
2003
Dec
2002
Dec
2001
Dec7
2000
Statements of financial performance
Sales revenue
1,072.9
987.2 1,022.4
888.4
794.7
717.3
683.4
630.6
486.8
387.8
401.9
Depreciation and Amortisation
(52.8)
(56.8)
(56.8)
(52.4)
(51.8)
(47.0)
(51.4)
(52.3)
(45.1)
(41.0)
(43.2)
Earnings before interest and tax
216.2
185.3
189.1
171.3
148.8
134.1
119.6
97.0
80.0
46.9
48.6
Net interest earned (paid)
(14.0)
(16.7)
(33.8)
(21.7)
(15.2)
(14.0)
(14.7)
(12.6)
(13.1)
(16.3)
(19.5)
Profit before tax, abnormal and
extraordinary items
202.2
168.6
155.3
149.6
133.6
120.1
104.9
84.4
66.9
30.6
29.1
Tax expense1
(50.8)
(45.4)
(34.5)
(35.7)
(31.0)
(29.2)
(11.8)
(25.8)
(16.2)
-
0.1
-
(0.1)
-
-
-
-
-
(0.5)
-
-
1.3
-
(1.1)
(0.9)
-
-
-
-
-
-
-
-
Profit from discontinued operations
Non-controlling interests1
Net profit after tax and
non-controlling interests before
abnormal and extraordinary items1
Abnormal and extraordinary items after
tax and outside equity interest
Net profit (loss) after tax,
abnormal and extraordinary items
Group balance sheet
Current assets
151.5
123.1
120.8
113.9
102.1
90.9
93.3
57.7
50.7
30.6
29.1
-
-
-
-
-
-
-
-
-
-
-
151.5
123.1
120.8
113.9
102.1
90.9
93.3
57.7
50.7
30.6
29.1
274.1
308.8
290.8
233.1
224.7
211.0
196.2
173.3
143.3
119.0
136.4
Property, plant and equipment
760.6
774.3
801.9
742.5
694.2
665.6
613.5
620.1
561.3
510.7
509.1
Receivables
Investments
Intangibles
30.4
87.7
30.4
72.5
28.4
67.6
29.5
27.5
23.3
19.1
12.2
12.5
11.7
10.9
66.9
40.8
38.1
35.6
33.6
30.8
27.6
26.9
179.1
169.0
169.4
164.4
164.6
165.0
165.5
166.4
146.6
147.2
152.7
Other non-current assets
-
-
-
2.7
22.9
19.0
19.7
17.1
28.5
37.0
29.6
Total assets
1,331.9 1,355.0 1,358.1 1,239.1 1,174.7 1,122.0 1,049.6 1,022.7
923.0
853.2
865.6
Current borrowings and creditors
106.4
106.5
98.4
145.5
125.8
323.5
294.6
306.3
58.3
49.9
99.4
Current provisions
Non-current borrowings
Deferred income tax and other
non-current provisions
Total liabilities
Net assets
Share Capital
Reserves
Retained Profits
Shareholders’ equity attributable
to members of the company
52.6
55.4
44.5
49.5
54.1
58.2
48.1
42.3
54.8
43.8
52.2
150.2
200.5
410.5
281.9
210.7
1.0
1.1
1.5
200.8
228.5
204.9
88.4
95.6
102.8
94.3
109.1
105.3
116.8
97.0
83.3
77.0
66.9
397.6
458.0
656.2
571.2
499.7
488.0
460.6
447.1
397.2
399.2
423.4
934.3
897.0
701.9
667.9
675.0
634.0
589.0
575.6
525.8
454.0
442.2
692.7
690.4
540.4
514.0
513.3
513.3
512.8
512.8
512.1
462.4
462.2
2.6
2.9
3.5
14.5
13.3
14.0
12.8
30.4
30.6
30.9
30.8
236.0
200.6
155.0
136.4
139.8
98.4
54.1
22.4
(19.9)
(42.2)
(53.8)
931.3
893.9
698.9
664.9
666.4
625.7
579.7
565.6
522.8
451.0
439.2
Non-controlling interests
3.0
3.1
3.0
3.0
8.6
8.3
9.3
10.0
3.0
3.0
3.0
Total Shareholders funds
934.3
897.0
701.9
667.9
675.0
634.0
589.0
575.6
525.8
454.0
442.2
Share information
Asset Backing (A$/share)
1.19
1.15
0.97
0.93
0.94
0.87
0.78
0.76
0.70
0.65
0.61
Return on shareholders’ funds (%)
16.3%
13.8%
17.2%
17.1%
15.3%
14.5%
16.1%
10.2%
9.7%
6.8%
6.6%
Basic earnings per share (¢/share)
Diluted earnings (¢/share)
Total dividend (¢/share)
Interim dividend (¢/share)
Final dividend (¢/share)
Special dividend (¢/share)
Gearing
23.9
23.7
20.4
20.3
22.2
22.0
21.0
18.8
16.8
17.2
10.7
9.9
6.5
6.1
20.8
16.4
16.2
14.6
10.7
21.52
13.52
15.02
18.52
18.52
10.52
7.52
9.02
5.02
5.52
8.02
-
6.52
8.52
-
6.02
9.02
3.52
5.02
7.52
6.02
4.252
6.252
-
7.52
3.52
4.02
-
9.9
5.25
2.55
6.0
2.753
3.252,8
2.754
-
-
6.5
4.0
2.06
2.05
-
6.1
3.02
1.52
1.52
-
15.9%
19.6%
55.3%
48.4%
33.6%
35.8%
31.4%
37.7%
34.6%
45.6%
51.8%
11 Excluding extraordinary items
12 Fully franked
13 60% Franked
14 35% Franked
15 20% Franked
16 13% Franked
17 Proforma 12 month period
18 Dividend declared after year end as a result of Boral Ltd Takeover Offer of Adelaide Brighton Ltd
19 Restated for AIFRS
96
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2010
Adelaide Brighton Ltd is a leading, integrated construction
materials and lime producing group of companies focused
on the engineering, infrastructure and resource sectors.
The Group’s principal activities are the production and marketing
of clinker, cement and lime products, premixed concrete and
aggregates, and concrete products. Adelaide Brighton originated
in 1882 and is a S&P/ASX200 company with 1,600 employees
and operations in all Australian states and territories.
Cement and Lime
Adelaide Brighton is a market leader in cement and lime in South Australia, Western Australia,
and the Northern Territory through its Adelaide Brighton Cement, Cockburn Cement and
Northern Cement operations. It also has strategic operations in the eastern states through its
Morgan Cement grinding facility in New South Wales, and its 50% owned cement supply joint
ventures in Queensland (Sunstate Cement) and Victoria (Independent Cement and Lime).
Concrete and Aggregates
Adelaide Brighton has a modest position in the premixed concrete markets through
Hy-Tec in Victoria, New South Wales and south east Queensland, and a 50% joint
venture in northern Victoria and southern New South Wales with the Mawson Group.
The Company has an emerging position in aggregate supply, with strategic reserves
at Austen Quarry, west of Sydney, through the Mawson Group in northern Victoria
and southern New South Wales and Hurd Haulage in northern New South Wales.
Concrete Products
Under the brand of Adbri Masonry, Adelaide Brighton holds
the number one market position in Australia in the masonry
products market, with operations in Queensland, New South
Wales, Victoria, Tasmania and South Australia.
Customers and sustainability
The major end-use markets for Adelaide Brighton’s
products include residential and non-residential
construction, engineering construction, alumina,
and gold mining and production. The Company’s
commitment to sustainable development is
demonstrated through a range of actions
implemented across a balanced program of
business based initiatives. Adelaide Brighton
believes that setting and achieving sustainability
objectives throughout its organisation positions it
for long term competitive business performance.
Cover quotation: study by the
American Concrete Institute
1
2
3
5
6
7
8
9
10
11
12
23
30
32
34
38
48
94
95
96
2010 highlights
Chairman’s report
Managing Director’s report
Financial results
Review of operations
Cement and Lime
Concrete and Aggregates
Concrete Products
Joint ventures
Map of operations
Sustainability
Corporate governance
Directors
Shareholder information
Directors’ report
Remuneration report
Financial statements
Auditor’s independence declaration
Independent audit report
Financial history
The Adelaide Brighton logo, the MCI logo, the Cockburn Cement logo,
the Swan Cement logo, the Northern Cement logo, the Hy-Tec logo,
the Adbri Masonry logo, the Hurd Haulage logo and the Kancon logo
are trade marks of Adelaide Brighton Ltd or its related bodies corporate
Adelaide Brighton Ltd Annual Report 2010
Adelaide Brighton Ltd
ABN 15 007 596 018
Level 1
157 Grenfell Street
Adelaide
South Australia 5000
GPO Box 2155
Adelaide SA 5001
Telephone (08) 8223 8000
Facsimile (08) 8215 0030
Web www.adbri.com.au