Amerisourcebergen Annual Report 2017

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ADELAIDE BRIGHTON LTD ANNUAL REPORT 2017

PERFORMANCE SUMMARY

Revenue

NPAT
attributable to members

$1,560m

$182.0m

11.7%

2.3%

Underlying NPAT
ex-property
attributable to members

$189.3m

5.3%

Performance summary
Company profile and map of operations
Chairman’s report
Chief Executive Officer and Managing Director review
Finance report
Cement and Lime
Concrete and Aggregates
Concrete Products
Joint Ventures
Sustainability report
> Health and safety
> People and diversity
> Tax transparency report
Diversity report
Corporate governance overview
Directors
Information for shareholders
Financial statements
Directors’ report
Remuneration report
Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Statement of cash flows
Notes to the financial report
Directors’ declaration
Auditor’s independence declaration
Independent auditor’s report to the Members of Adelaide Brighton Ltd
Financial history

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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

Basic EPS

Final ordinary
dividend

Special
dividend

28.0c

2.4%

12.0c

4.3%

4.0c

Unchanged

c/share

Dividends

Return on
funds employed

Gearing: net
debt to equity

300

225

150

Cash flow from
operations

Times

Interest cover
EBITDA basis

13 14 15 16 17

Ordinary interim
Ordinary final
Special

Adelaide Brighton Ltd Annual Report 2017

COMPANY PROFILE AND MAP OF OPERATIONS

Adelaide Brighton is a leading integrated

In addition to domestic production, the

Concrete Products

construction materials and lime producer

Company is the largest importer of cement,

which supplies a range of products into

clinker and slag into Australia with an

building, construction, infrastructure and

unmatched supply network that enables

mineral processing markets throughout

efficient access to every mainland capital

Australia.

Adelaide Brighton origins go back to 1882

and today it is an S&P/ASX100 company

with 1,500 employees and operations in all

Australian states and territories.

The Company’s principal activities include

the production, importation, distribution and

marketing of clinker, cement, industrial lime,

premixed concrete, construction aggregates

and concrete products.

Cement

Adelaide Brighton is the second largest

city market. This network includes significant

distribution joint ventures in Victoria, New

South Wales and Queensland.

Lime

Adelaide Brighton is the largest producer

of lime in Australia, with production assets

in Western Australia, South Australia and

the Northern Territory. Lime is an important

product for the mineral processing industry

in resource rich markets, particularly for the

production of alumina and gold, of which

Australia is a leading producer.

supplier of cement and clinker products in

Concrete and Aggregates

Adelaide Brighton holds the leading position

in the Australian concrete products market,

with operations in Queensland, New South

Wales, Victoria, Tasmania and South

Australia.

Joint ventures and associates

Adelaide Brighton has a number of

significant investments in joint ventures

and associates in construction materials

production and distribution. These include

major cement distribution joint ventures in

Queensland (Sunstate Cement), Victoria and

New South Wales (Independent Cement and

Lime); regional concrete and aggregates

positions in Victoria and New South Wales

(Mawsons); and a 30% investment in a

Malaysian white cement and clinker producer

(Aalborg Portland Malaysia), which supplies

Adelaide Brighton has a growing presence

to the south east Asian market in addition

in the premixed concrete and aggregates

to Australia.

industry in South Australia, Victoria, New

South Wales, south east and northern

Sustainability

Queensland and the Northern Territory. It has

strategic aggregate reserves west of Sydney,

mid northern coast of New South Wales,

south east Queensland, South Australia,

Victoria and the Northern Territory through its

wholly owned and joint venture operations.

Adelaide Brighton’s commitment to

sustainable development is demonstrated

through a range of actions implemented

across a balanced program of initiatives.

Adelaide Brighton believes that setting

and achieving sustainability objectives

throughout the organisation assists long

term competitive business performance.

Australia with major production facilities and

market leading positions in the resource

rich states of South Australia and Western

Australia. It is also market leader in the

Northern Territory.

Cement
Lime
Concrete and aggregates
Concrete products

Adelaide Brighton Ltd Annual Report 2017CHAIRMAN’S REPORT

Adelaide Brighton reported record sales

Board

in 2017 of $1,560 million but due to a

number of one-offs, net profit after tax

(NPAT) declined 2.3% to $182.0 million.

This represented basic earnings per share

of 28.0 cents. Excluding the one-offs, NPAT

increased 5.4% and earnings before interest

and tax (EBIT) increased 7.8%, reflecting a

positive underlying earnings performance.

The Board recognises the importance of

maintaining an appropriate mix of skills and

experience that align with our corporate

strategy. As part of our ongoing renewal

program the Board appointed Vanessa

Guthrie as an independent non-executive

director in 2018. Geoff Tarrant, nominated

by our major shareholder Barro Properties

In 2017 we progressed our strategy of

Pty Ltd, was also appointed as a non-

growing our concrete and aggregates

executive director.

business through three attractive concrete

and aggregates acquisitions in Victoria,

South Australia and the Northern Territory.

Adelaide Brighton also continued to invest in

organic growth initiatives and worked hard

The majority of the Board remains

independent, which is consistent with the

Principles and Recommendations of the

ASX Corporate Governance Council.

on operational improvement, both important

This is my final report as Chairman

aspects of our long term strategy.

of Adelaide Brighton following the

I am pleased to report to shareholders the

Board declared and paid an increased final

ordinary dividend of 12.0 cents per share

and a final special dividend of 4.0 cents

per share. Dividend payments for the 2017

financial year totaled 24.5 cents per share.

announcement in February 2018 that I will

retire as Chairman at the conclusion of the

Annual General Meeting, but will remain

a Director. The Board has named Zlatko

Todorcevski as Chairman Elect to take

over from me. Zlatko was appointed an

independent non-executive director in March

Adelaide Brighton maintains a strong balance

2017. He has more than 30 years of finance,

sheet with the flexibility to fund acquisitions

strategy and planning experience in the oil

or other growth initiatives that add value for

and gas, logistics and manufacturing sectors

shareholders. Should the Board determine

and had made a strong contribution to the

the Company has surplus capital we will, as

Board in his time at Adelaide Brighton.

a matter of policy, return it to shareholders.

I joined the Company as a Director in 2003

We have strong employment and

and was appointed Chairman in 2012.

safety practices and we work with local

During almost six years as Chairman,

communities, government and regulatory

Adelaide Brighton has delivered exceptional

bodies to earn our social license to operate

returns to shareholders while at the same

and ensure the business and its returns

time entering new markets and diversifying

are sustainable.

vertically.

Adelaide Brighton is committed to

It has been my privilege to serve as Adelaide

maintaining a safe, productive and

Brighton’s Chairman and I pass this honor

healthy work environment. In 2017 our

to my successor, Zlatko Todorcevski, with

safety performance was impacted by the

confidence.

recognition of injuries within the acquisitions

we made in the year. We have now

In conclusion

introduced our safety training and systems

to these business to bring them in line

with the Group.

On behalf of your Directors, I acknowledge

the hard work and commitment of the

executive management team led by

Martin Brydon and of all employees over

the last year. I also thank our customers,
shareholders and joint venture partners for

their continuing loyalty and support.

Leslie Hosking
Chairman

Adelaide Brighton Ltd Annual Report 2017
#1 LIME PRODUCER IN MINERALS PROCESSING INDUSTRY IN AUSTRALIA

#1 CONCRETE PRODUCTS PRODUCER IN AUSTRALIA

#1 CEMENT AND CLINKER IMPORTER WITH UNMATCHED MARKET CHANNELS

#2 CEMENT AND CLINKER SUPPLIER IN AUSTRALIAN CONSTRUCTION INDUSTRY

#4 CONCRETE AND AGGREGATES PRODUCER IN AUSTRALIA

Adelaide Brighton Ltd Annual Report 2017

CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR REVIEW

Adelaide Brighton’s strategy of operating a

geographically diverse, vertically integrated

construction materials company has

positioned the company to beneﬁ t from the

strong demand within the industry.

The business continued to perform well in

2017, with full year revenue growing 11.7%

to $1,560.0 million, a record for Adelaide

Brighton and a full 10% above the previous

record in 2015.

Revenue was driven by strong east coast

demand and the contribution of the concrete

and aggregates acquisitions completed in

2017 in Victoria, South Australia and the

Northern Territory, which will add further

to revenue in the current year. Excluding

the newly acquired businesses, 2017

revenue increased 5.9%, representing

encouraging growth.

Net proﬁ t after tax (NPAT) declined 2.3% to

$182.0 million and earnings before interest

and tax (EBIT) increased 0.2% from the prior

year to $266.5 million. NPAT and EBIT were

impacted by an unexpected $17.7 million

increase in doubtful debts provisions and

costs associated with underpayment for

products supplied by Adelaide Brighton.

The underpayments were detected by our

compliance and risk management systems

and processes. We have taken steps to

further strengthen these systems and

processes. While the ﬁ nancial impact of

these underpayments has been quantiﬁ ed,

investigations are ongoing, and Adelaide

Brighton will continue its efforts to

recover amounts due.

Excluding these provisions and other

signiﬁ cant items, underlying EBIT increased

7.8% in 2017 to $288.8 million, while

underlying NPAT increased 5.4% to

$197.7 million, reﬂ ecting the beneﬁ ts of

strong revenue growth.

East coast construction materials markets

were supported by robust residential

activity in Victoria, New South Wales and

Queensland, and increased non-residential

building and infrastructure activity. The
South Australian market was also lifted

by infrastructure demand.

Financial summary
$ Million

Revenue
Depreciation, amortisation and impairments

Earnings before interest and tax (“EBIT”)
Net ﬁ nance cost1

Proﬁ t before tax
Tax expense

Net proﬁ t after tax
Non-controlling interests

Net proﬁ t attributable to members (“NPAT”)
Basic earnings per share (“EPS”) (cents)
Dividends per share - fully franked (cents)2
Net debt3 ($ million)
Gearing4(%)
Return on funds employed5 - reported

2017

2016

1,560.0

1,396.2

(82.5
)

(78.1
)

266.5

(12.1
)

254.4

(72.3
)

182.1

0.1

266.1

(11.5
)

254.6

(68.4
)

186.2

0.1

182.0

186.3

28.0

24.5

371.6

29.8%

16.7%

28.7

28.0

288.5

23.6%

17.5%

1 Net ﬁ nance cost is the net of ﬁ nance costs shown gross in the Income Statement
with interest income included in revenue.
2 Includes special dividends of 4.0 cents per share for FY 2017 and 8.0 cents per share for FY 2016.
3 Net debt is calculated as total borrowings less cash and cash equivalents.
4 Net debt/equity.
5 Return on funds employed = EBIT/average monthly funds employed.

Total shareholder returns (share price + dividend reinvested)
and S&P/ASX200 Accumulation Index returns

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200

160

120

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ABC S&P/ASX200 Accum

Total assets

2400

1800

1200

600

Net proﬁ t
after tax

240

180

120

13 14 15 16 17

Adelaide Brighton Ltd Annual Report 2017

South east Queensland markets continue

Adelaide Brighton’s New South Wales quarry

We are also investing in organic growth

to improve, particularly the Gold Coast

operations are well positioned to meet this

projects which deliver attractive shareholder

and Sunshine Coast regions.

demand and benefit from strengthening

returns with low risk. In 2017 we invested

Western Australia demand stabilised in the

second half while demand declined further

prices driven by the higher transport costs

a further $29 million in organic projects,

faced by many suppliers.

giving a total investment over the past

across the Northern Territory, although

Concrete and Aggregate revenue, EBIT

regional infrastructure projects provided

and EBIT margins all improved significantly

some offset.

Cement and clinker sales volume increased

in FY2017 as a result of higher volumes,

stronger prices and control of costs.

a healthy 9% compared to 2016, assisted

Lower sales volumes and resulting lower

by a particularly strong second half. Strong

production efficiency in Concrete Products

volume growth continued in 2017 in

led to a revenue decline of 1.1% to

Queensland, Victoria and New South Wales.

$147.6 million, with EBIT of $10.2 million

down from $11.4 million in 2016. Sales

and earnings recovered in the second

While cement selling prices increased

ahead of inflation across almost all markets,

weighted average cement prices were

stable due to geographic mix changes, with

revenue lifted by higher volumes. Cement

margins declined due to higher energy

Our joint venture and associative operations

costs, a cement quality issue in the first half

(including joint operations) also benefited

and unplanned costs associated with the

from strong demand on the east coast

Company’s limestone carrying vessel in

with improvements in volumes, prices and

5 years of over $91 million.

Cost reduction and

continuous improvement

We realised $23 million in cost reductions

in 2017 from our operational improvement

program, which included the rationalisation

of speciality cement production at the

Angaston plant in South Australia, and

lower material costs.

for the supply of gas and electricity to our

South Australian operations giving certainty

of energy supply at competitive prices.

Growth of the lime business

half helping offset weakness in the multi-

Important progress was made in managing

residential sector and in the first half wet

energy costs in 2017, with new agreements

weather delayed projects.

the second half.

margins driving a 22.3% increase in joint

Adelaide Brighton’s Western Australian lime

Overall demand for lime moderated

slightly in both Western Australian and

the Northern Territory.

Sales volumes for concrete increased

by more than one-third in 2017 because

of strong demand in the eastern states,

strengthening infrastructure demand in

South Australia and the contribution

of acquisitions.

venture profits in 2017.

Strategy

Adelaide Brighton continues to execute

against its long-term growth strategy

by investing in:

Cost reduction and operational

improvement across the Company;

Growth of the lime business to supply

business is underpinned by low cost, long

term raw material reserves secured by State

Agreement and statutory approvals. At our

Munster plant near Perth we produce lime

for the globally competitive Australian mineral

processing industry. This is one of the largest

and lowest cost lime operations in the world

with capacity of 1.25 million tonnes per

annum, which is currently about 80% utilised.

the resources sector in Western Australia,

Costs and efficiency remain a key focus in

Aggregates volumes also were strong in

South Australia and the Northern Territory;

the lime business, with costs stabilising in

2017 due to acquisitions and supported

and

2017 after a significant reduction in energy

by a recovery in South Australian

Focused and relevant vertical integration

costs in 2016.

infrastructure demand.

into aggregates, concrete, logistics and

Sydney aggregates returns continue to

masonry businesses.

This business benefits from a unique cost

position, proximity to major customers, long

be supported by the increasing reliance

This strategy has successfully delivered

term environmental approvals and strong

on product from new operations further

growth in shareholder returns. We have

customer relationships.

from the market.

invested more than $240 million in the last

five years on acquisitions. Each have met

returns targets, diversified earnings and

provided integration benefits.

Revenue by
product group

Revenue by
market

Revenue by
state

Cement
Lime
Concrete and aggregates
Concrete products

Non- residential
Residential
Engineering
Mining operations

Western Australia
South Australia
Victoria
New South Wales
Queensland
Other

Adelaide Brighton Ltd Annual Report 2017

It is well placed to remain the leading lime

Outlook

supplier to the Australian resources sector,

manage emerging competitors in the import

market and has capacity to support further

significant growth in the industry over the

medium to long term.

Vertical integration

In 2018, Adelaide Brighton expects strong

demand for construction materials, improved

pricing and further efficiency improvements.

Sales volumes of cement and clinker are

anticipated to be higher, with stable demand

in Western Australia and the Northern

Territory and improving demand in South

Vertical integration has been an important

Australia and the east coast.

driver of growth in the last five years. It

has improved geographic and industry

diversification and supported the full

utilisation of existing Adelaide Brighton

assets.

Three aquisitions were completed in

2017 on attractive financial metrics:

Central Pre-Mix Concrete and Quarry, an

integrated concrete and aggregate operation

The improving demand profile is expected

to lift sales volumes of premixed concrete

and aggregates, supported by further sales

growth from the 2017 acquisitions.

Lime sales volumes are expected to be

slightly lower in the non-alumina sector,

although prices are anticipated to improve

under contractual arrangements.

with five concrete plants and a hard rock

Our joint venture operations in Australia

aggregate quarry serving the metropolitan

are anticipated to continue to benefit from

Melbourne market, the largest premixed

stronger demand and higher prices on the

concrete market in Australia;

east coast.

Davalan Concrete, an independent concrete

operator in the greater Adelaide market; and

The concrete and aggregate assets of

Holcim Northern Territory, consisting of four

concrete plants, two operating quarries

Our costs are expected to improve with

further savings from the Angaston plant

cement rationalisation and rolling operational

improvement program.

and access to further potential quarry sites

Import costs are likely to be $3 million higher

via mining leases.

These transactions added value to the

concrete and aggregates businesses by

providing access to strategically located

in 2018, with increased materials costs offset

by favourable foreign currency outcomes,

and energy costs are expected to rise

$6 million in 2018.

high quality assets, entry to the Melbourne

Estimated proceeds from the sale of land in

aggregates market and an increase in

the next 10 years could realise in excess of

the scale of Adelaide Brighton’s existing

$100 million, however due to project timing,

concrete and aggregates business.

no significant land sales are expected until

They are performing to expectations.

2019.

Land sales program

Adelaide Brighton aims to optimise

shareholder returns by maintaining an

Adelaide Brighton has been actively

efficient balance sheet, while retaining

engaged in selling and preparing for sale

the flexibility to fund long term growth

properties released by the rationalisation and

opportunities. Prudent capital management

improvement program. In many cases, this

will remain an important part of this

includes re-zoning to realise greater value

approach.

over time.

Since the beginning of 2013, cash proceeds

Our people

from the property program total $97 million.

Finally, I would like to thank all our employees

This includes transactions in 2017 that

for their hard work and dedication in 2017.

realised $13.9 million in cash proceeds and

Together we continue to deliver strong

$8.4 million NPAT.

returns to shareholders and a sustainable

future for Adelaide Brighton.

Estimated proceeds from the sale of

properties in the next 10 years could realise

in excess of $100 million with an expected

EBIT margin on these sales of circa 85% and

an effective tax rate of approximately 20%.

Martin Brydon
Chief Executive Officer
and Managing Director

Adelaide Brighton Ltd Annual Report 2017

FINANCE REPORT

In 2017 Adelaide Brighton delivered record

This was partially offset by a cement

Higher energy costs put pressure on cement

revenue of $1,560.0 million up 11.7% on

quality issue in South Australia; additional

margins, which were also affected by a

the previous year. Underlying net profit after

remediation related to the closure of our

number of one offs and lower volumes in the

tax (NPAT) was up 5.4% to $197.7 million.

North Melbourne concrete plant; unplanned

Western Australia and the Northern Territory

Underlying earnings before interest and tax

costs associated with the Company’s

markets. Our cement business receives

(EBIT) increased 7.8% to $288.8 million.

limestone carrying vessel; and higher

a lower price on the east coast where

Sales and profits

energy costs.

Property profits of $8.4 million after tax

Record revenues of $1,560.0 million were

increased slightly on the $7.9 million

growth is currently strongest, but some of

this comes back to us through the equity

accounted earnings of our joint ventures.

driven by acquisitions and improved demand

achieved in 2016. Excluding property profits

Concrete and Aggregates revenue, EBIT

for construction materials, notably in the

underlying EBIT growth was 7.0% in 2017

and EBIT margins all improved significantly

eastern states and from infrastructure

to $277.7 million.

projects in South Australia. When the

acquisitions completed in 2017 are

excluded, revenues were up a strong 5.9%.

Joint arrangements and associate

(including joint opeartions) earnings increased

from $30.9 million in 2016 to $37.8 million

Adelaide Brighton reported NPAT was

in 2017 reflecting improved demand and

down 2.3% to $182.0 million, impacted by

higher construction materials prices on the

a number of one-off items, which included

east coast of Australia.

a doubtful debt provision and associated

costs of $17.7 million. The Company has

now completed its analysis of the debt

and is actively seeking to recover the

underpayments.

Earnings before interest and tax (EBIT)

increased 0.2% from the prior year to

$266.5 million on an EBIT margin of 17.1%.

Underlying EBIT grew 7.8% to $288.8 million,

reflecting the strong growth in sales.

Net finance costs increased from $11.5

million to $12.1 million in 2017 as a result

of a slight increase in borrowing margins

and higher average net debt.

Tax expense of $72.3 million representing

a $3.9 million increase over 2016 and an

effective tax rate of 28.4% compared to

26.9% in 2016. The increased effective tax

rate in 2017 is due recognition of capital

losses in the prior year and the true-up

Underlying EBIT was supported by: higher

of prior year tax return.

construction materials volumes and pricing;

operational improvements and lower import

EBIT margins

in FY2017 despite the $3.3 million in

rehabilitation costs at North Melbourne site

in the first half. This improvement reflects

price and volume growth in all states and

a solid performance on costs. The 2017

acquisitions have contributed in line

with expectations.

Our import margins have also increased

due to savings in shipping, currency

and procurement.

In our lime business margins are down

slightly but remain healthy. We have long

term contracts in place with major

customers and a strong competitive position

as the primary supplier to the Western

Australian and Northern Territory mineral

processing sector.

Concrete Products margins have been

pressured by reduced sales to commercial

projects but the business is performing well.

costs; and acquisitions completed during

the year.

Revenue and net
profit after tax

250

200

150

100

$Bn

1700

1400

1100

800

500

Underlying EBIT margin declined from

Net profit from our joint venture operations

19.1% to 18.5% in 2017 impacted by

increased by 22.3% driven by volume

higher energy costs, a cement quality issue

increases and price rises, with the ICL

at the Birkenhead plant early in the year

joint venture performing strongly across

and higher site remediation costs associated

volumes, prices and costs control.

with the closure of our North Melbourne

concrete plant.

Payout ratio

c/share

Earnings
per share

100

13 14 15 16 17

NPAT
Revenue

Ordinary dividend
Special dividend

Adelaide Brighton Ltd Annual Report 2017

Our operational improvement program

TSR over the last 12 months was 24.6%,

continued with the rationalisation of

again reflecting an improved share price,

laboratory facilities and specialty cement

increased ordinary dividends and the

production at the Angaston facility resulting

payment of special dividends and an

in annualised EBIT savings of approximately

improvement in the underlying

$3.8 million, of which approximately

performance of the business.

$2.8 million was achieved in 2017. Adelaide

Brighton also signed new agreements for

Cash flow and debt

the supply of gas and electricity in South

Australia to give certainty of supply

at competitive prices.

Operating cash flow decreased 9.7%

from the prior year to $224.2 million, due

to lower cash conversion of revenues and

Adelaide Brighton incurred an additional

increased tax payments partially offset by

$17.1 million provision for doubtful debts

an increase in dividends from joint ventures.

plus $0.6 million costs in 2017 relating to

Nonetheless, underlying cash flow

transactions identified for which Adelaide

generation remains robust.

Brighton was underpaid.

Working capital increased $22.2 million

The Company has completed its analysis

as a result of acquisitions and the timing

of these transactions, with the help of

of receipts from customers and import

forensic accountants KPMG. While the

shipments at year end.

financial impact of the discrepancies

has been quantified, investigations

are continuing.

Capital expenditure of $169.3 million was

$82.8 million higher than the prior year,

largely due to $80.2 million in acquisitions.

The issues around underpayments were

Stay in business capital expenditure of

identified under Adelaide Brighton’s existing

$60.1 million represents 73% of depreciation

compliance and risk management systems

and amortisation. In addition, the Company

and processes. The Company has taken

invested $29.0 million on organic growth

steps to further strengthen these and

projects in 2017.

is continuing its efforts to recover

amounts owed.

Shareholder returns

Cash proceeds from the sale of assets of

$17.7 million includes $13.9 million from the

disposal of land, bringing sales in the last

five years to $97 million. The estimate of the

A final ordinary dividend of 12.0 cents

sales value of the remaining property pipeline

per share (fully franked) and a final special

over the next decade exceeds $100 million.

dividend of 4.0 cents per share (fully

Net debt increased $83.1 million, with net

franked) have been declared.

debt to equity gearing increasing to 29.8%

Total dividends declared with respect to

the 2017 financial year are 24.5 cents per

share, fully franked, compared to 28.0 cents

per share (fully franked) with respect to

2016.The Dividend Reinvestment Plan

from 23.6% over the year as a result of

acquisitions. However, due to healthy cash

flow gearing declined from 34.3% at 30 June

2017 and remains at the lower end of the

target range of 25% to 45%.

remains suspended given the Company’s

Dividends paid to shareholders decreased

strong cash flows and low gearing.

13% to $156.0 million due to lower special

While underlying EBIT margins declined

slightly in 2017, underlying EBIT return

on funds employed increased from 17.6%

to 18.1% in 2017, reflecting strong returns

on capital employed. This rate of return

remains significantly ahead of the

Company’s cost of capital.

Adelaide Brighton has achieved a Total

Shareholder Return over the last five

years of 166% and has outperformed the

ASX200 Accumulation Index. This is due

to a sustained year on year improvement
in share price and increased dividends.

dividend payments in 2017. The 4.0 cents

per share special dividend declared with

respect to the 2017 financial year reflects

Adelaide Brighton’s strong cash flows,

current capex plans and low balance sheet

gearing compared to the target range.

The special dividend is consistent with

Adelaide Brighton’s strategy to distribute

surplus capital to shareholders while

maintaining an efficient and resilient capital

structure with the flexibility to investment

for long term growth.

Michael Kelly
Chief Financial Officer

Adelaide Brighton Ltd Annual Report 2017

CEMENT AND LIME

Cement production, import and distribution

Adelaide Brighton imports 2.4Mt pa cementitious
materials and sells more than 4.0Mt pa of
cementitious materials

International imports
Domestic imports
Clinker production at Adelaide
Cement terminals at Port Headland,
Townsville and Melbourne
Cement milling at Darwin, Brisbane,
Port Kemba, Adelaide and Perth

EAST COAST MARKETS REMAINED STRONG IN 2017 SUPPORTED BY ROBUST

RESIDENTIAL ACTIVITY IN VICTORIA, NEW SOUTH WALES AND QUEENSLAND,

AND INCREASED NON-RESIDENTIAL BUILDING AND INFRASTRUCTURE ACTIVITY.

THE SOUTH AUSTRALIAN MARKET WAS ALSO LIFTED BY INFRASTRUCTURE DEMAND.

WESTERN AUSTRALIA CEMENT DEMAND STABILISED IN THE SECOND HALF.

Adelaide Brighton Ltd Annual Report 2017

Northern Territory demand declined further

The new supply agreements provide our

although regional infrastructure projects

South Australian operations continued

provided some offset. Overall demand for

certainty of energy supply at competitive

lime moderated slightly.

prices and underpin our leading position

Cement and clinker

in this important market.

In addition to energy supply agreements,

Cement and clinker sales volume increased

the rationalisation of oil well cement

9% compared to 2016, assisted by a

production at Angaston in South Australia

particularly robust second half. Strong

improved the energy efficiency of the South

volume growth continued in 2017 in

Australian cement operations in 2017.

Queensland, Victoria and New South Wales.

Alternative fuels have been a key focus

Volume in Western Australia and Northern

for reducing reliance on traditional energy

Territory declined in the first half but

sources and lowering costs over the

stabilised in the second half to be modestly

last decade.

lower for the year. Cement sales in South

Australia improved, supported by the ramp

Imports

up of major infrastructure projects in

the second half.

Adelaide Brighton is Australia’s largest

importer of cement clinker and other

While cement selling prices increased

cementitious materials with our imports

ahead of inflation across most markets,

increasing to approximately 2.4 million

weighted average cement prices were

tonnes in 2017. Our flexible import

stable due to geographic mix changes.

infrastructure network gives us significant

Overall cement margins declined due to

higher energy costs, a cement quality issue

capacity at competitive cost to meet further

demand growth with existing assets.

in the first half and costs associated with

Import profitability improved by $12 million

the Company’s limestone carrying vessel,

before tax compared to 2016 due to

although higher volumes lifted revenue.

reduced shipping and material procurements

We continued to drive operational

efficiencies in cement and lime in 2017,

including $2.8 million from the rationalisation

costs and the higher Australian dollar.

Lime

of Angaston oil well cement and laboratory

Lime sales volumes in 2017 were slightly

facilities. We expect further savings of

down on 2016 due to reduced sales to

$1 million from these projects in 2018.

the non-alumina sector due to competition

Energy

from importers.

Lime margins were slightly lower in 2017

Higher energy costs in 2017 were partly

due to lower average prices and marginally

mitigated through our energy management

higher operating costs which followed cost

strategies, such as the use of alternative

improvements in the prior year.

fuels, alternative cementitious products,

demand management and securing

competitive long term supply contracts.

Adelaide Brighton’s unique and highly cost

competitive operations place it in a strong

position to supply the Western Australian

During 2017 Adelaide Brighton strengthened

lime market in the long term.

its energy supply portfolio with new gas

and electricity supply contracts. The supply

agreements allow Adelaide Brighton to

continue its focus on energy efficient

and sustainable operations in South

Australia through a portfolio approach to

energy supply and procurement benefits;

consumption management and

operational efficiency.

‘000
tonnes

3200

2400

1600

800

Adelaide Brighton
cement milled
(inc. imported clinker)

‘000
tonnes

Adelaide Brighton
lime production

1200

900

600

300

13 14 15 16 17

Brad Lemmon
Executive General Manager
Cement and Lime

Munster plant, Western Australia, lime kiln and raw material storage

Adelaide Brighton Ltd Annual Report 2017CONCRETE AND AGGREGATES

SALES VOLUMES FOR CONCRETE INCREASED IN 2017 DUE TO ROBUST DEMAND

IN THE EASTERN STATES AND AQUISITIONS. EXCLUDING AQUISITIONS, CONCRETE

VOLUME INCREASED STRONGLY SUPPORTED BY BUOYANT DEMAND IN VICTORIA,

NEW SOUTH WALES AND QUEENSLAND, AND STRENGTHENING INFRASTRUCTURE

DEMAND IN SOUTH AUSTRALIA. LIKE FOR LIKE CONCRETE PRICES INCREASED BY 3%.

Adelaide Brighton Ltd Annual Report 2017

Aggregates volumes also were higher in

These three acquisitions are consistent

2017 due to acquisitions. A recovery in

with Adelaide Brighton’s long term vertical

South Australian infrastructure demand offset

integration strategy and are performing in

reduced project volumes in other markets.

line with expectations.

Aggregates prices increased by more than

5% reflecting price increases, stronger

demand for high quality product and a

reduction in sales of lower value products.

Over the last decade Adelaide Brighton has

built a concrete and aggregates business of

scale that offers strong regional positions and

strategic aggregates reserves that underpin

Sydney aggregates prices continue to be

returns to shareholders. The business is

supported by the increasing reliance by the

complementary to the cement operations

market on product from operations further

and provides attractive diversification

from the market, which incur higher transport

benefits as well as the ability to capture a

costs to market. Adelaide Brighton’s

greater share of the construction materials

New South Wales quarry operations

production and distribution value chain.

are competitively positioned to supply

demand growth in Sydney and benefit from

strengthening prices.

Over the last five years the Concrete and

Aggregates Division has more than doubled

in size and it now accounts for almost 40%

Concrete and Aggregates revenue, earnings

of Group revenue and a significant and

and margins all improved in 2017 as a result

growing share of profit.

of higher volumes and prices and control

of costs. Revenue and earnings were also

positively impacted by the three acquisitions

completed in 2017: Central Pre-Mix Concrete

and Quarry - an integrated concrete and

aggregate operation in Melbourne; Davalan

Concrete - an Adelaide based concrete

business; and the concrete and aggregates

assets of Holcim in the Northern Territory.

Concrete and aggregates footprint

Established operations
Aquisitions in 2017

George Agriogiannis
Executive General Manager
Concrete and Aggregates

Hy-Tec

Direct Mix Concrete
Southern Quarries

Davalan Concrete

Central

Top: Hy-Tec Alexandria concrete batch plant raw material delivery into underground storage
Water tanks holding 300,000 litres of rain water (see page 22 in Sustainability Report) Bottom:
Hy-Tec Alexandria batch plant control room Southern Quarries Sellicks Hill quarry operations

Adelaide Brighton Ltd Annual Report 2017CONCRETE PRODUCTS

REVENUE DECREASED MARGINALLY IN 2017 AS THE BUSINESS WAS AFFECTED BY WET

WEATHER AND DELAYED PRODUCTS IN THE FIRST HALF BUT RECOVERED MOST OF

THIS IN THE SECOND HALF. WHILE RETAIL SALES REMAINED POSITIVE THERE WAS A

WEAKNESS IN THE MULTI-RESIDENTIAL SECTOR RESULTING IN OVERALL LOWERS SALES

VOLUMES, REDUCED PRODUCTION EFFICIENCY AND DECLINE IN EARNINGS.

Adelaide Brighton Ltd Annual Report 2017

During 2017 Adelaide Brighton made

a $3 million investment in an automated

sleeper walling plant at our Stapylton

site in Queensland. This establishes

Adbri Masonry as a leading automated

sleeper wall manufacturer in Australia

and improves our capability of concrete

sleeper retaining walls to complement the

existing segmental retaining wall products.

Adbri Masonry is Australia’s largest

manufacturer of concrete masonry

products, servicing the eastern seaboard

and South Australia residential and

commercial markets.

Concrete Products is an important

and growing customer for the cement,

aggregates and sand business, which

offers vertical integration benefits to

Adelaide Brighton.

We remain optimistic about the outlook

for Concrete Products given the new

sleeper walling plant offers significant

operating efficiencies and sales growth

potential in new market segments and

there are opportunities for reductions in

transport costs and efficiencies from

toll manufacturing arrangements in

the medium term.

Andrew Dell
Executive General Manager
Concrete Products

Adbri Masonry concrete pavers, bricks and retaining walls
used in a variety of architectural and garden applications

Adelaide Brighton Ltd Annual Report 2017JOINT VENTURES

THE POSITIVE TRENDS IN JOINT VENTURES CONTINUED IN 2017. THESE

BUSINESSES OFFER VERTICAL INTEGRATION WITH OUR FULLY OWNED

OPERATIONS AND PROVIDE US WITH ACCESS TO IMPORTANT MARKETS

AND PRODUCTS. THE OUTLOOK FOR THE AUSTRALIAN JOINT VENTURE

OPERATIONS IS POSITIVE GIVEN STRONG DEMAND ON THE EAST COAST.

Adelaide Brighton Ltd Annual Report 2017

Independent Cement and Lime
Pty Ltd (ICL) (50%)

Sunstate Cement Limited
(Sunstate) (50%)

ICL, a joint venture between Adelaide

Sunstate is a joint venture between Adelaide

Brighton and Barro Group Pty Ltd, is a

Brighton and Boral Limited. A leading

specialist supplier of cement and cement

supplier to Queensland’s construction

blended products throughout Victoria and

industry, Sunstate has a cement milling,

New South Wales and is the exclusive

storage and distribution facility at Fisherman

distributor of cement for Adelaide Brighton

Islands, Port of Brisbane. Clinker is supplied

and any related body corporate in these

to Sunstate via seaborne shipments from

states.

the Adelaide Brighton Angaston plant and

Continued strength in construction activity

imports from Asia.

across the New South Wales and Victoria

Sunstate’s contribution to Group earnings

markets led to higher volumes, higher selling

increased as demand across south east

prices and increasing demand supported

Queensland remained healthy with residential

a 40% increase in profi t contribution. ICL

demand improving in the Gold Coast and

benefi ted late in the second half of 2017 from

Sunshine Coast regions. Volumes, prices

a price rise to recoup higher input costs.

and margins were all higher than the prior

Burrell Mining Services (50%)

Burrell Mining Services is an unincorporated

corresponding period.

Batesford Quarry

joint venture between Adelaide Brighton and

Batesford Quarry is an unincorporated

Burrell Mining Products. With operations in

joint venture between Adelaide Brighton,

New South Wales and Queensland, Burrell

E&P Partners and Geelong Lime Pty Ltd.

Mining Services manufactures a range of

Batesford Quarry, situated at Fyansford

concrete products exclusively for the coal

Quarry near Geelong in Victoria, undertakes

mining industry.

An improvement in the outlook for coal mines

during the year combined with expansion

quarrying and manufacturing, marketing

and distribution of limestone and quarry

products.

of the product range led to an improvement

Agricultural lime volumes are again strong,

in sales revenue and contribution to Group

supported by demand from other sectors.

earnings.

Mawson Group (Mawsons) (50%)

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, and

also operates in southern New South

Wales. Mawsons is a signifi cant aggregates

Cost control maintained margins, leading to

an improved contribution to Group earnings.

Aalborg Portland Malaysia Sdn. Bhd.
(APM) (30%)
APM manufactures and sells white cement

and clinker for the domestic Malaysian

market and exports to Australia and markets

throughout south east Asia.

producer in the region, generally holding the

Earnings from APM declined as result of

number one or number two position in the

higher costs from energy.

markets it serves.

Earnings improved signifi cantly as strong

demand to major projects lifted volumes and

margins with improved pricing for high value

aggregate products.

Michael Miller
Executive General Manager
Marketing and
International Trade

Top: Independent Cement and Lime facility at Port Melbourne Brightonlite® off-white cement
is used to create visually interesting aesthetic appeal on curved walkway Bottom: Sunstate
Cement facility at Fishermans Island in the Port of Brisbane Low heat cement (LH) used
in bridge structures to minimise risk of thermal cracking in mass concrete pours

Adelaide Brighton Ltd Annual Report 2017

SUSTAINABILITY REPORT

THIS SUSTAINABILITY REPORT SHOULD BE READ IN CONJUNCTION WITH OTHER

SECTIONS OF THIS REPORT AND ITS FINANCIAL STATEMENTS. THE DIRECTORS’

REPORT, CORPORATE GOVERNANCE OVERVIEW AND REPORTS ON REMUNERATION,

PEOPLE AND DIVERSITY AND HEALTH AND SAFETY ALL CONTAIN INFORMATION

RELEVANT TO THE SUSTAINABILITY PERFORMANCE OF THE GROUP.

2018

Adelaide Brighton Ltd Annual Report 2017

At Adelaide Brighton, sustainability is about managing our business to ensure success for the long term. Our

commitment to sustainability is built on a sound business strategy that supports continuous improvement in the social,

environmental, and economic performance of the Company. We do this by continually analysing our activities and

considering the needs of all stakeholders to identify key opportunities for improvement and sustainable development.

Environment

Eco-effi ciency

Impact management

Product life cycle

Emission reduction

Waste utilisation

Site rehabilitation

Process waste reduction

Mains water effi eciency

Local environmental effects

Greenhouse gas reduction

Energy effi ciency

Alternative fuels

Alternative raw materials

Supplementary cementitious materials

Sustainable
business

Social

Employee resources

Stakeholder relations

Community interaction

Diversity and inclusion

Economic

Economic viability

Assurance of supply

Shareholders

Government

Customers

Product development

Corporate citizenship

Developing a skills base

Safety

Governance

Integrity

Compliance

Risk management

Source of greenhouse gas emission in a cement plant

50% of greenhouse gas emission occur as the raw meal is heated and
carbon dioxide is driven off in order to form the necessary chemical conversion
of limestone to calcium oxide: CaC03>Ca0+C02. As long as cement making
relies on the calcination of limestone, these emissions will be impossible to avoid.
35% of greenhouse gas emissions occur as a result of burning fuels (coal, gas
and diesel) to create thermal energy.
15% is produced as a result of the indirect emissions resulting from the use
of electricity. Cement grinding is the largest single electricity user in the cement
plant. Raw meal grinding and moving material around the plant are other
signifi cant sources of electricity use.

Source: Cement Industry Federation

Birkenhead plant, South Australia, Schroder Park wetland Top: Phyllota Humifusa (see page 22
Sustainability Report - Concrete and Aggregates environmental innovation) Shell grit, a by-product of
dredging operations, is used as mulch in revegetation programs at the Munster site in Western Australia -
an innovative and cost-effective way to address waste while also assisting with dust suppression.
Prenzlau State School participated in the revegetation program at Coominya Quarry in Queensland

Adelaide Brighton Ltd Annual Report 2017

The Adelaide Brighton Group includes

Adelaide Brighton Limited and the entities

Key performance indicator
Alternative fuels and energy consumption

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 22

Discussion in Annual Report

it controls (the Group), as well as a number

Alternative raw materials

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 22

of joint ventures. This report excludes

Carbon emissions

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 21

information about the joint ventures as their

Employee turnover by age group

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 25

operations are not material to the Group’s

Employee turnover by gender

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 25

sustainability reporting.

Employee turnover by geography

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 26

While the Group’s financial year ends on

31 December, most government

sustainability related reporting requires

information to be provided for the year to

30 June. So that statistical and graphical

data provided in this Sustainability Report

can be compared with other publicly

available information, the information in

this sustainability report relates to the year

ended 30 June 2017, unless otherwise

indicated.

Employment by contract status

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 27

Employment by employment status

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 27

Employment by geography

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 26

Energy by source

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 22

Lost time injury frequency rate

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 25

Mains water usage

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 22

Participation of women in the Company

. . . . . . . . . . . . . . . . . . . . . .

Page 31 - Diversity Report

% of employees on EBAs vs staff

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 27

Restricted duties injury frequency rate

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 25

Other reports
Coverage of organisation defined benefit plan obligations

. . . . . . . . . .

Page 106 -109 - Note 26

In developing this report, the following

Direct economic value added (sales, costs, employee

resources have been considered:

compensation)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 70 - Income Statement

The Global Reporting Initiative

Page 79-80 - Note 5 and 6

G4 Sustainability Reporting Guidelines.

Monetary value of fines and total number of non-monetary

ESG Reporting Guide for Australian

sanctions for non-compliance with laws and regulations

. . . . . . . . .

Page 47 - Directors’ Report

Companies prepared by the Australian

Council of Superannuation Investors

Environment Performance

and the Financial Services Council.

Tax Transparency Report

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pages 28-29

The Cement Sustainability Initiative

of the World Business Council for

For further information about the sustainability report email

Sustainable Development.

Relevant industry practice.

Energy and greenhouse gas emissions

information complies with the definitions

and boundaries contained in the National

Greenhouse and Energy Reporting Act.

Tax Transparency Report

In 2017 Adelaide Brighton advised

the Australian Taxation Office that the

Company would sign up to the voluntary

Tax Transparency Code. This Sustainability

Report includes Adelaide Brighton’s initial

report under this Code.

adelaidebrighton@adbri.com.au or telephone 02 8248 9911.

Sustainable principles and practises, innovation and continuous
improvement in environmental performance are a natural part of
business at Adelaide Brighton and help to ensure the Company’s
long term success in a changing world. We are aware that our
operations are fuelled by natural resources from the environment
in which we live and we are always respectful of the local
communities we operate in close proximity to.

The CEO and Managing Director oversees

The business adheres to strict licensing and

These process emissions account for

and approves the Company’s sustainability

mandatory reporting conditions but, just as

approximately half of total carbon emission,

framework, the Group’s key performance

importantly, continually undertakes voluntary

with the balance generated directly through

indicators and the scope of this report.

measures to ensure the natural environment

the use of thermal fuels as well as indirectly

The key performance indicators listed below

and local communities we operate within are

through the use of electricity.

have been assessed to be material to the

not adversely affected by our activities.

Group’s sustainability performance.

Carbon emissions

Expanding the use of mineral additions

(limestone and shellsand) as a cement

clinker substitute is a key focus area within

Our manufacturing process is energy

the business. Mineral additions reduce the

intensive, requiring temperatures between

volume of clinker required therefore lowering

1000C and 1400C degrees for the

the greenhouse gas footprint without

calcination process to produce lime and

compromising product.

cement clinker (an intermediary product
in the process to manufacture cement).

Adelaide Brighton Ltd Annual Report 2017

Over a period of seven years Adelaide

Environmental Management Standards

Additionally the combustible waste no

Brighton has recorded reduced carbon

emissions as a result of delivered projects

that reduced greenhouse gases (scope

1 and 2). Following the completion of

these initiatives our carbon emissions

plateaued in 2017.

The Group Environmental Management

Standards (EMS) Project will align the

longer ends up in landfill, further abating

greenhouse gas emissions.

business with what has been determined

Adelaide Brighton continually refines the

as the most important requirements of the

process to increase the burning rate of the

Environments Standard ISO 14001:2016.

fuel and is seeking an amendment to the

The Project, launched in 2017, is designed

product specification to allow an increase

In addition, Adelaide Brighton will continue

to achieve the following goals:

in plastic content of the fuel which will

To enhance environmental performance.

increase the calorific factor of the fuel and

Provide confidence to stakeholders that we

at the same time removing additional non-

are an environmentally responsible business.

recyclable plastic from landfill.

is support changes to the Australian

Standard to allow for higher mineral

addition in cement manufacture to assist in

transitioning to lower emissions cement.

Total carbon
emissions

13 14 15 16 17

Process waste
to landfill

‘000
tonnes

3600

3200

2800

2400

2000

‘000
tonnes

200

150

100

Minimise the risk of environmental breaches.

Standardise our documentation to create

a consistent approach across the Group.

Drive measurable continual improvement.

Improve Adelaide Brighton’s culture of

commitment to achieving environmental

improvement and sustainability.

The key components of work include:

Integrating Environmental Standards with

the Health and Safety Standards.

Strengthening the connectivity between

the incident management procedure and

the risk management procedure.

Initial Environmental Review (IER) - The

Utilisation of recycled waste oil

Waste oil from the commercial, mining

and resources industries, once filtered

and prepared to specification, is a valuable

energy source - as a replacement for

natural gas - in a cement and lime kiln.

The rate of utilisation of waste oil can

be restricted by the availability of reliable

and economic supply to quality

specifications. Quality specification is

important to ensure the integrity and

maintenance of our equipment and limit

the impact on our products.

EMS Project has implemented the IER

Angaston plant in South Australia

for conducting environmental review of

consistently utilised waste oil, increasing

the aspects and impacts related to the

their usage in 2017 by 28% over the

Company’s activities, products and

previous year. We are targeting a further

services at operating sites. The aspects

15% increase in the use of waste oil at

and impacts at a site can then be evaluated

the Angaston plant in 2018, dependent

with the risk management process and to

on availability of a reliable source of

determine the effectiveness of our controls

waste oil that meets our specification.

to manage environmental impacts.

Dongara plant in Western Australia

13 14 15 16 17

Cement and lime
Concrete and aggregates
Concrete products

Cement and Lime

Process engineered fuel

The burning of waste derived fuel (recycled

construction and demolition waste) in the

clinker production process at the Birkenhead

plant in South Australia displaces natural

Environmental improvement

gas thereby reducing the site’s greenhouse

initiatives

gas emissions.

reintroduced the use of waste oil in their

lime kiln in 2017 following access to supply

from the mining and resources sector.

Mataranka plant in Northern Territory

continues to use waste oil as a kiln fuel

albeit usage was marginally down in

2017 as a result of reduced market

demand for lime.

Continuous improvement is embedded in

the culture at Adelaide Brighton. We strive

to continually improve our environmental

performance through innovative processes

to reduce our environmental footprint.

Our Divisions identify environmental aspects

impacting our sites and Environmental

Improvement Plans are formalised with

target outcomes and timelines. A range of

initiatives were undertaken throughout

the year.

Adelaide Brighton’s target is to increase
the utilisation of process engineered
fuel to 30% of the Birkenhead plant’s
kiln fuel requirement.

Adelaide Brighton Ltd Annual Report 2017

Energy efficiency

Reduced power system losses, increased

load availability using existing equipment

and a reduction in carbon emissions were

achieved following power factor correction

implementation at the Angaston plant.

Concrete and aggregates

Water efficiency

Water is a valuable resource, and essential to

the production of concrete and aggregates.

To improve water efficiency, the following

projects were undertaken during the year:

The new Hy-Tec concrete batch plant at

Larapinta in Brisbane has been designed to

capture all rainfall events on site and hold

this water for recycling through the plant for

premixed concrete production. In addition,

the wedge pits around the plant allow for

capture of fines generated at the site.

The underground water tanks hold 266,000

litres allowing for washing down of the plant

and premixed concrete production.

The Hy-Tec concrete batch plant at

Alexandria in metropolitan Sydney is unique

in that it is a purpose built concrete plant

retrofitted into a fully enclosed building. All

rainwater from the building roof is captured

and stored in 300,000 litre capacity tanks

and is used in the premixed concrete

production process.

Environmental innovation

Phyllota Humifusa - a vulnerable plant under

the Environmental Protection and Diversity

Conservation Act 1999 and a threatened

species under Section 2, The Threatened

Species Conservation Act 1995, was

identified with the approved extraction zone

of the Hy-Tec Penrose Quarry located in the

southern highlands of New South Wales.

Hy-Tec established an onsite Phyllota

Humifusa nursery and has succeeded in

transplanting the vulnerable shrub and

incorporating its re-establishment in the

quarry rehabilitation process.

Megalitres

Mains water
usage

800

600

400

200

13 14 15 16 17

Cement and lime
Concrete and aggregates
Concrete products

Terajoules

Alternative fuels
energy consumption

1600

1200

800

400

13 14 15 16 17

Demolition material
Industrial waste
Waste oil
% alternative fuels
of total energy

%
substitution

Alternative raw
materials

‘000t GHG
saving

900

750

600

450

300

13 14 15 16 17

GHG saving
% SCM substitution
(by-products of
industrial processes -
slag from the steel
manufacturing
industry and fly ash
from coal fired
power stations)

Noise abatement improvement program

Our Birkenhead plant is located in an

industrial zone but adjacent to a residential

area. A focus of the Birkenhead plant’s

Environmental Improvement Plan has been

the implementation of projects to reduce

noise emission. Our objective has been to

discuss and review with our Community

Liaison Group our priorities for noise impact,

and then take a range of actions to reduce

noise. In 2017, two new silencers were

installed on dust collectors.

To establish a baseline of noise level and

to assess the success following completion

of the noise abatement projects, regular

monitoring and noise mapping are

undertaken in and around the plant.

Dust mitigation measures

The Birkenhead manufacturing process

involves the movement of materials, leading

to the risk of fugitive dust emission. The

following initiatives were undertaken to

reduce the risk of dust emission outside

of the site:

Bitumen sealing of all heavy traffic

areas at the Birkenhead plant completed.

All traffic movements are now on sealed

surfaces thereby reducing fugitive

particulate emissions and allowing for

regular road sweeping.

A dedicated cart used to apply dust

suppressant and road sealing agents to

all external raw material stockpiles and

unsealed access roads whenever they are

being worked on regularly and reclaimed.

Installation of a new fully enclosed conveyor

system at the Birkenhead plant to allow

all internal site clinker movement to occur

without the use of trucks to reduce the

risk of fugitive particulate emissions

from the site.

Energy by source

Liquid fuels
Coal
Natural gas
Demonlition material
Industrial waste
Waste oil
Electrcity

Adelaide Brighton Ltd Annual Report 2017

Concrete products

Quarry vegetation program

Community

A range of improved initiatives were

undertaken across the Concrete

Products division.

Energy efficiency

Queensland - school based training

Our Calcium quarry near Townsville and

Coominya quarry near Toowoomba in

Queensland facilitated a program with

Adelaide Brighton is committed to being

a socially responsible member of the

communities in which we operate.

school children from local primary schools

Through our community support program

Replacement of mercury vapour lights

to educate them on geology, quarry activities,

we aim to make a valued and sustainable

across our plants in Queensland and

environment and products which forms

contribution to the communities in which we

New South Wales with energy efficient

part of their curriculum. The children were

operate by investing in primarily community

LED lighting.

involved in tree planting rehabilitated parts

based organisations and children services;

Design of the new concrete sleeper plant

at the quarry with trees native to the area.

supporting specialised higher education

at Stapylton in Queensland incorporated

Planting has been focussed on eucalyptus

programs and environmental education

increased use of natural lighting in

trees to provide a habitat and food

through local school’s participation in

operational areas and increased air flow

for koalas.

to facilitate ventilation of the space resulting

in reduced reliance on lighting and fans.

Power factor correction was implemented at

the Maroochydore plant resulting in reduced

power system losses, increased load

availability using existing equipment and

a reduction in carbon emissions.

Dust minimisation

Smoking seed trials at Munster

The Munster plant in Western Australia

have trailed and successfully revegetated a

significant node using smoking techniques

for seed which promotes quicker germination

of seedlings and produces healthier plants.

Scientists have found that chemicals in

smoke, rather than fire or heat, are the main

An upgrade of the raw material storage

catalyst in germinating hard to grow species

area at the Campbellfield site in Victoria to

of Australian natives. Over 1,000 seeds were

incorporate a covered raw material conveyor

treated with smoke and spread to previously

loading location to significantly reduce the

mulched areas on site with positive

risk of raw material dust being released

germination results.

vegetation programs and wetland education:

In 2017, Adelaide Brighton partnered

with the South Australian Little Athletics

Association, an organisation which promotes

happy, healthy communities and young

people, as well as assisting families and

children across the State.

We supported Variety the Children’s

Charity - benefitting sick, disabled and

disadvantaged children.

Our Cement and Lime Division in Western

Australian provided support to the

Indigenous Basketball Academy.

Investing in education

Our investment in education includes:

The South Australian Indigenous Law

Student Mentoring Program. This program

supports indigenous law students during

study and to facilitate transition as

graduates to legal practice.

Penrice quarry visual concealment

The Penrice Quarry in Angaston north

of Adelaide implemented a native species

vegetation project to ensure the natural

appearance of the quarry area is

maintained through the minimisation of

the visual starkness of the quarry excavation

St Peter’s College / Adelaide Brighton Ltd

area and of quarry product stockpiles.

Annual mandatory reporting

Adelaide Brighton continues to report

under the national environmental schemes

detailed below:

National Greenhouse Gas and Energy

Reporting Scheme - providing greenhouse

gas emissions, energy consumption and

energy production data.

National Pollutant Inventory.

Adelaide Brighton also provides annual

reports to the industry associations of

Cement Industry Federation and National

Lime Association as well as the Australian

Government Australian Bureau of Statistics.

Scholarship. An indigenous secondary

school scholarship to provide tuition and

boarding for an indigenous student.

Support for the STEM Program (Science,

Technology, Engineering and Math) for

Year 10 and 11 secondary school students

through the University of Wollongong.

Women in Engineering Scholarship at the

University of Wollongong which provides

both a financial benefit and work

placement opportunity.

University of Technology Sydney

Women in Engineering Scholarship.

University of Adelaide Engineering

Scholarship.

Participation in the Kwinana Industries

Council iWomen and iScience projects

and an inaugural Women in Industry

Open Day in Adelaide.

Vacation employment program in

Adelaide, Perth and Sydney.

Adelaide Brighton Ltd Annual Report 2017

off site.

Reduction of gas use for curing

Operational changes and modifications to

concrete products plants in Maroochydore,

Queensland, and Ottoway, South Australia,

have led to the reduction of natural gas

usage for curing of concrete products.

Landcare and rehabilitation

Geelong Quarry rehabilitation

Rehabilitation works are continuing at the

Geelong Quarry to prepare the site for future

usage post quarry activities. Stable slopes of

significant height and length to support future

urban development have been constructed.

Previously a significant liability, the site is

undergoing a significant transformation to

prepare the area for future development,

along with a lake and open public area

integrating the site into the Geelong

urban area.

Austen Quarry vegetation program

The Austen Quarry in the Blue Mountains

west of Sydney undertakes progressive

rehabilitation of quarried areas focusing

on vegetation native to the area. In 2017,

about 2,000 native trees were planted in

and around the quarry and the adjacent

Cox’s River area.

Adelaide Brighton Ltd Annual Report 2017

HEALTH AND SAFETY

Adelaide Brighton employs a diverse

The increase in the RDIFR is attributable

Employee well-being

workforce of more than 1500 people across

to our continued strong focus on early

approximately 130 locations throughout

intervention injury management. This practice

Australia. Our commitment to health and

ensures that even minor injuries receive

safety is an essential and integral part

medical attention as soon as is possible.

of the way we do business.

While the negative outcome of this can

Safety remains a key performance indicator

at the business and Group level. In 2017

year we recorded a Lost Time Injury

be an increase in short duration restricted

duty injuries, the positive outcomes are a

reduction in injury severity and duration.

Focused effort has been applied to

increase the awareness and take up of

the Employee Assistance Program (EAP),

offered to employees and their families

resulting in increased utilisation of the

service. The Program is a voluntary,

work based program that offers free and

confi dential assessments, short term

Frequency Rate (LTIFR) of 2.6 compared

Our continued focus on contractor

counselling, referrals and follow up services

to 1.7 at December 2016.

management and the utilisation of SitePass,

to employees and their families who have

One of the main contributing factors was

the three acquisitions made in the 2017 -

where the maturity level of safety processes

and systems in those businesses lagged

behind Adelaide Brighton. As part of our

the contractor management system

personal and/or work related problems.

implemented late in 2016, has provided

EAP counsellors also work in a consultative

focus in managing this area of critical risk.

role with managers and supervisors to

Drug and alcohol screening

challenges and needs.

address employee and business

post aquisition strategy, we quickly embed

Our Group drug and alcohol screening

In addition, Adelaide Brighton supports

our safety systems and processes into the

program resulted in nearly 7,000 tests

R U OK? Day dedicated to remind

aquired businesses.

of workers across 81 sites for drugs

our workers to ask family, friends and

Notwithstanding the rise in LTIFR in 2017,

the continuing low level of LTIs underlines

Adelaide Brighton’s determination to have

a safe workplace. Safety is not just about

processes and procedures, it is a culture.

and alcohol during 2017. Our screening

colleagues the question, R U OK? in

program extends to contractors on site

a meaningful way, because connecting

including during our major maintenance

regularly and meaningfully is one thing

programs. Results of our testing revealed

everyone can do to make a difference

positive drug results of 0.63% compared

to anyone who might be struggling.

to 3.4% of benchmark data. Alcohol

We recorded a Restricted Duty Injury

screening resulted in a 0.3% positive result.

Frequency Rate (RDIFR) of 19.0 at

These results confi rm that the design of

December 2017 compared to 12.3 the

the program is acting as a deterrent to

prior year.

prevent workers arriving for work at our

sites in an impaired state, improving the

safety of all stakeholders.

%
turnover

Employee turnover
by age group

% of
employees

Employee turnover
by gender

Frequency

Restricted duties
injury frequency rate

Frequency

Lost time
injury frequency rate

100

6.0

4.5

3.0

1.5

0
2
<

5
2
-
1
2

0
3
-
6
2

5
3
-
1
3

0
4
-
6
3

5
4
-
1
4

0
5
-
6
4

5
5
-
1
5

0
6
-
6
5

5
6
-
1
6

0
7
-
6
6

+
0
7

Female Male

Continuers
Turnover

13 14 15 16 17

Concrete and aggregates
Concrete products
Cement and lime
Total

Adelaide Brighton Cement Birkenhead public multi-purpose park Concrete testing in laboratory
and in fi eld Southern Quarries Sellicks Hill Quarry donated a 6 tonne marble rock to the Sellicks
Community for an ANZAC Memorial. After quarrying the marble rock, Southern Quarries arranged
for polishing of the rock and the plaque before presentation at the Anzac Day service Adelaide
Brighton Cement Birkenhead inaugural Women in Industry Open Day participants Students
from Prenzlau State School participating in the revegetation program at Coominya Quarry in
Queensland Adelaide Brighton Cement sponsors South Australian Little Athletics Association

Adelaide Brighton Ltd Annual Report 2017

PEOPLE AND DIVERSITY

Adelaide Brighton is committed to being

As employees of Adelaide Brighton,

an inclusive workplace that values and

we know it’s the abilities of our people,

Leadership talent priorities

promotes diversity of skills, experience and

applied every day that contributes to our

cultural background. We recognise that an

success. Our growth provides constant

inclusive culture enables us to attract and

opportunities for people to progress and

retain the best people with the appropriate

take on challenges and responsibilities,

skills to contribute to the continuing success

or the satisfaction of a job well done.

of our business. The core objectives which

form the foundation of our approach

to diversity and on which we measure

performance are:

Promotion of a culture of diversity

and inclusion.

We want more of our potential employees

employees.

to know what it is like to work at Adelaide

Brighton. To help spread this message we

have added two employment videos to

the Adelaide Brighton Careers page

Recruitment and selection processes

which seek out candidates from a diverse

Training

Inclusive leadership
Build understanding and accountability

for leaders to demonstrate inclusiveness,

adapting leadership style to obtain

maximum contribution from all our

Build a capability and retain

company knowledge
Continue to monitor and invest in

talent/growth plans for executive

successors and future leaders.

Provide opportunities for mentoring,

background and with selection decision

The executive team and 50 senior

secondments and cross Division

being based on merit.

leaders from within the business completed

collaboration.

Development of inclusive leaders.

inclusion training; what can we learn from

Building talent pipelines.

others, what needs to be different and

Rewarding and remunerating fairly.

what commitments will we make.

Inclusive leadership enables:

Diversity

Increased employee engagement

Greater collaboration, less silos

Engagement
Ensure appropriate strategies and

in place for Executive successors

and future leaders to maximise

development, engagement and

retention.

Continue to improve employee

Providing fl exible work practices.

Understanding the diversity of our workforce.

Adelaide Brighton’s target
of 30% female board
representation by the end
of 2018 is consistent with
the aim of the 30% club
for ASX200 Companies

Diversity and inclusion
Our goal is to establish a culture across

our business where diversity is the norm

and where women feel they can thrive and

actually do so - and the business sees the

winning results.

One of our initiatives to enable this is our

Careers page on our Adelaide Brighton

website to showcase “Women in Adelaide

Brighton”. The objective of the page is

to highlight to potential candidates the

opportunities that our organisation offers

women. We have profi led a selection of

women from across our business, including

those who have demonstrated internal

career progression, those who work in

non-traditional roles and high potential
employees.

Adelaide Brighton Ltd Annual Report 2017

Innovation - asking questions that initiate

engagement.

further exploration, problem solving,

value creation, adaptability

Increases customer engagement

Improvements to safety.

Talent review - succession planning

Leaders who deliver safe,

sustainable production
Ensure our leaders understand the

value of safety to our business and

model behaviours that communicate

their understanding of safety as a

Succession planning identifi es and develops

value to our people.

new leaders through a number of initiatives

Day to day communications and

including cross Divisional development

decisions reinforce safety is as

opportunities and increases the availability

important as production.

of experienced and capable employees.

Employment
by geography

Employee turnover
by geography

South Australia
New South Wales
Western Australia
Queensland
Victoria
Northern Territory
Tasmania
ACT

South Australia
New South Wales
Western Australia
Queensland
Victoria
Northern Territory
Tasmania

Frontline management training

Adelaide Brighton’s Mentoring Program

Our investment in frontline management

Formal mentoring programs are in place

builds the capability and effectiveness

across our business with mentors and

of our managers so they can bring

mentees participating in workshop training,

out the best in our employees.

webinars and individual coaching sessions.

CASE STUDY

Kerryn Girdler - Human Resources

Mathew McEwan - Mentee - Plant Manager,

Business Partner, Concrete Products

Euro and Wetcast, Concrete Products

“The frontline management training

“During the mentoring period, the role of

program is aimed at potential people

Manager for the Euro and Wetcast plants

leaders. We have found there is huge

became available at our Stapylton plant in

value for experienced leaders to expand

Queensland. Having Michael as a mentor

the number of tools that they use.

at the time and knowing I had his guidance

This has created an awareness that

sometimes there are alternatives to the

approach previously taken that will

deliver an improved result.”

Thomas Garrick - participant

and support gave me the confidence to

apply for and ultimately take on the new

and challenging position.

The relationship I built with Michael, the

advice and insights he has shared have

been enlightening and invaluable to my

(Promoted to Maintenance Manager

development and success in my new role.”

Stapylton, Concrete Products)

“I have learnt a great deal from the frontline

management program. During training I

Michael Dorrough - Mentor - National

Operations Manager, Concrete Products

realised I can be a direct person - this

“In 2017 the Concrete Products Division

can be positive and negative. I communicate

increased the focus on identifying, supporting

with quite diverse groups of people each

and developing talent within the business to

day. I now approach them differently.

strengthen our succession planning profile.

I was recently appointed to a Manager

In addition to Mathew’s success, another

position. Applying what I have learnt in

success story came to light during the sleeper

the frontline management training sessions

walling project at Stapylton in Queensland. An

has allowed me to efficiently transition

onsite mechanical fitter allocated to the project

out of being ‘one of the boys’ to being a

continually exhibited excellent leadership,

Manager. Learning the difference between

communication and project management skills.

leadership vs management has highlighted

strategies and techniques to being a

more effective leader.

His actions highlighted his abilities, indicating

an exceptional talent within the business.

With our current people development

I have learnt a lot about myself and there

programs, this is another example of how

are plenty of opportunities for me to work

we are strengthening our frontline

on and I now realise that my personal

management capabilities and promotion

development will be ever evolving.”

potential within the organisation.”

% employees
on EBA vs staff

Employment by
employment status

Employee by
contract status

EBA
Staff

Full time
Casual
Part time

Permanent
Fixed term

Dimity Smith
Executive General Manager
Human Resources and
Heath, Safety and
Environment

Adelaide Brighton Ltd Annual Report 2017TAX TRANSPARENCY REPORT

This Report is prepared in accordance with

The ETR is presented under three scenarios

Adelaide Brighton’s voluntary adoption of

below: accounting profit; accounting profit

the Tax Transparency Code and provides

excluding equity accounted earnings; and

information regarding Adelaide Brighton’s

accounting profit excluding equity accounted

tax contribution, its approach to tax strategy

earnings and income tax expense excluding

and governance, and its international

capital losses recognised. The reason for this

related party dealings during the year ended

is to provide maximum transparency.

31 December 2017. Adelaide Brighton

publishes this Report on a voluntary basis as

part of its commitment to tax transparency.

Effective company tax rate

In accordance with accounting standards,

the share of after tax profits generated

by Adelaide Brighton’s joint ventures and

associates is recognised by the Group in

the income statement. Adelaide Brighton

The Australian company tax rate is currently

also maintains a balance of capital losses

30% of taxable income. Taxable income

that may be recouped to offset capital

represents gross income minus amounts

gains incurred for tax purposes. During

that are treated as deductible or exempt

the year ended 31 December 2017,

Adelaide Brighton Ltd
2017 effective tax rate

ETR

ETR
excluding
equity
accounted
earnings

ETR
excluding
equity
accounted
earnings
and losses
recognised

Australian operations
Global operations
Australian corporate tax rate

under the tax law.

The Effective Tax Rate (“ETR”), being tax

expense divided by profit before tax, for

Adelaide Brighton’s Australian operations

is 27.7% for the year ended 31 December

2017.

The ETR differs to the company tax rate

due to non-temporary differences, which

represent amounts that are recognised as

assessable or deductible for accounting

purposes or tax purposes, but not both.

Income tax expense is an accounting

concept that is different to income tax

payable. Income tax expense reflects the

amount of income that is assessable for

$1.1 million of capital losses were

recognised to offset capital gains.

The inclusion of equity accounted earnings

Adjusting for equity accounted earnings

in accounting profit, and the inclusion of

and capital losses not previously recognised,

capital losses recognised in income tax

Adelaide Brighton has an effective tax rate

expense, may distort the ETR and removing

of 29.9% percent for the year ended

these items from the ETR provides a more

31 December 2017.

transparent representation.

The global ETR recognises the accounting

profit attributable to Adelaide Brighton’s

minority interest in our Malaysian based

associate. Additional information in relation

to Adelaide Brighton’s international related

party dealings is provided later this Report.

tax purposes regardless of the timing of

Effective tax rate

the assessability. In contrast, income tax

payable reflects the amount of income

that is assessable in the current year.

Australian operations

Australian operations - excluding equity accounted earnings

27.7

29.8

Australian operations - excluding equity accounted earnings and capital losses recognised 29.9

Global operations

Global operations - excluding equity accounted earnings

27.5

29.8

Global operations - excluding equity accounted earnings and capital losses recognised

29.9

Adelaide Brighton Ltd Annual Report 2017

Reconciliation of accounting profit to income tax expense

As Adelaide Brighton holds a minority interest

and income tax payable

The reconciliation of accounting profit to income tax expense and income tax payable contained

in this Report is published in a summarised form in Note 7 in the 2017 Financial Statements.

$ million

Accounting profit before tax

Prima facie tax payable (at 30 percent)

Tax effect of non-temporary differences:

Non-allowable expenses

Non-assessable income

Rebateable dividends

Other deductions

Previously unrecognised capital losses

Income tax expense before prior year true up

Tax effect of temporary differences:

Higher accounting depreciation compared to tax depreciation

Timing of deduction for consumables

Timing of deduction for provisions

Recognised tax losses deductible against taxable income

Deduction for accruals on payment

Timing of deduction of prepayments

Other timing differences

Income tax payable

in APM, it does not have effective control

of APM nor is it involved in the day to day

management of the company. In addition,

the Shareholders’ Agreement specifically

requires that any related party agreements,

arrangements or dealings must be on

arm’s length terms as if conducted by two

independent parties. As a result of these

measures, Adelaide Brighton’s dealings with

APM, which are limited to the purchase of

clinker, are conducted on a commercial

arm’s length basis.

Tax contribution summary

Adelaide Brighton paid/will pay in excess

of $85 million in Commonwealth, state and

territory taxes in respect of the 2017 year.

Taxes borne by Adelaide Brighton
$ million

Corporate income tax1
Fringe benefits tax 2
Payroll tax 3
Property tax

71.8

Total

2017

2016

71.8

70.8

1.2

8.8

3.6

1.3

8.2

3.7

85.4

84.0

254.2

76.3

2.6

(3.4

)

(4.6

)

(0.7

)

(0.3

)

69.9

1.2

(0.7

)

0.1

(0.3

)

0.6

(2.5

)

3.5

Identification of material temporary

Adelaide Brighton is committed to being a

and non-temporary differences

responsible corporate citizen and actively

Material adjustments for non-temporary

items that reduce income tax expense relate

primarily to differences in the accounting and

seeks to contribute to the well being of

shareholders, customers, the economy

and the community.

tax treatment of income derived from joint

Adelaide Brighton reflects these

ventures and associated entities as outlined

commitments in its approach to taxation

above. Non-assessable income in relation to

with a high focus on meeting its various tax

1 Corporate income tax paid is based on the year end
provision and will be finalised when the income tax
return for the year ended 31 December 2017 is
due for lodgement in mid-2018.

2 Fringe benefits tax paid in respect of the year ended

31 March 2017

3 Payroll tax paid in respect of the year ended 30 June 2017

Adelaide Brighton also collected

$61.4 million in net GST after input tax

credits on behalf of taxation authorities.

an accounting gain on a bargain purchase

obligations. Strong internal processes and

In this Report references to ‘Adelaide

was also recognised in respect of a

engagement of expert advisers ensures

Brighton’, ‘the Group’ and ‘our’ refer to

business acquisition.

Adelaide Brighton is fully compliant with

Adelaide Brighton Limited and its wholly

Adjustments for temporary differences

relate to differences in the timing between

an amount being derived/incurred for

accounting purposes and the amount

being assessable/deductible for tax

purposes. During the year, temporary

its taxation obligations. Adelaide Brighton

owned subsidiaries.

also seeks to maintain a professional and

transparent relationship with

taxation authorities.

International related party dealings

This Report has not been independently

audited, however, disclosures are consistent

with the audited financial statements.

differences primarily related to differences

Adelaide Brighton has limited international

in the timing of deductions for expenses

related party dealings. The Group holds

such as depreciation, provisions, accruals,

a 30% equity interest in Aalborg Portland

prepayments and consumables.

Malaysia Sdn. Bhd. (“APM”), a manufacturer

of white clinker and cement based in Ipoh,

Tax strategy and governance

Malaysia. The majority 70% owner of APM is

Adelaide Brighton is committed to the

highest standards of corporate governance

and its approach to taxation aligns with
its corporate governance strategy and

Code of Conduct.

Aalborg Portland A/S, a Danish subsidiary of

an Italian multinational cement and concrete

producer, Cementir SpA. Adelaide Brighton

is not related to Cementir SpA.

Adelaide Brighton Ltd Annual Report 2017

DIVERSITY REPORT

Adelaide Brighton is committed to being an

In 2017, we continued to embed our

The appointment of Dr Guthrie was also

inclusive workplace that values and promotes

performance delivery enabling our Diversity

in line with Adelaide Brighton’s goal of

diversity of skills, experience and cultural

and Inclusion Policy which outlines seven

improving diversity across all levels

background. We recognise that an inclusive

core objectives which form the foundations

of the Company.

culture enables us to attract and retain the

of our approach to diversity and upon

best people with the appropriate skills to

which we measure our performance in

contribute to the continuing success

this area.

of our business.

An overview of these objectives, and

our progress towards achieving these

objectives during the 2017 financial year,

As part of the board’s renewal program,

are set out below:

following an assessment of the Board’s skills

matrix, in February 2018 Dr Vanessa Guthrie

was appointed a non-executive Director.

Objectives Diversity measures to facilitate achievement of objectives Progress

To promote a culture of
diversity and inclusion

Continue to align our business activities with our Diversity
and Inclusion Policy to achieve the objectives approved by
the Board and Nomination, Remuneration and Governance
Committee of Adelaide Brighton.

The Board and the Nomination, Remuneration and Governance
Committee discussed the Company’s diversity measures and
reviewed progress towards achieving the objectives, to
continue to develop an inclusive workplace culture.

Proactively engage with industry to enhance inclusion and
increase diversity.

Company-wide training in workplace policies
(including diversity, anti-bullying and harassment,
Equal Employment Opportunity).

Recruitment sourcing strategies and practices deliver diverse
candidate pools, employment decisions are made without
regard to factors that are not applicable to the inherent
requirements of a position and unconscious gender bias
does not influence outcomes.

Promote Adelaide Brighton as a diverse employer with
an inclusive culture.

As a member of the Cement Concrete & Aggregates
Australia (CCAA) and their Diversity Working Group, have contributed
to the development of inclusive strategies to attract a diverse group
of people to work in heavy construction materials industry including:
Revised CCAA Diversity Statement for approval of the Extractive
Industries Committee and the CCAA National Council.

Launch of on-line management systems provide effective platforms
for employee and contractor inductions and training, complimenting
face to face workshops including content on Company policies
such as equal employment opportunity and anti-bullying.

Recruitment training continues across the business to support and
enable diverse candidate pools and to eliminate any unconscious
bias that may occur. 15% of all new hires in 2017 were female
with 31% of staff roles filled by female candidates.

Advertising templates for vacancies refreshed to ensure ads are
attractive to a diverse pool of job seekers with an increased offering
of on-the-job training. 66% of roles advertised in 2017 attracted
female applicants.

ABL mentoring program for high potential employees
facilitated across the divisions to continue to develop
inclusive leadership.

Mentoring program deployed across all divisions with 28 mentors
and mentees attending workshop training, webinars and
1:1 coaching sessions for a shared positive mentoring experience.

Executive and 50 senior leaders completed inclusion training; what
can we learn from others, what needs to be different and what
commitments will we make.

To ensure that
recruitment and
selection processes
seek out candidates
from a diverse
background, with
selection decisions
being based on merit

Develop inclusive
leaders who value
diversity of opinions
and challenge the
status quo

Build talent pipelines
through investment in
skills and capabilities

Ensure performance, development and succession
management processes support the career progression of
individuals regardless of factors that are not applicable to the
inherent requirements for the position.

Development programs are provided for individuals as part
of ‘Our Business My Potential’ program.

Talent and succession management process proactively
challenges and promotes gender representation.

4.3% of women and 2.3% of men were promoted internally in 2017.

Sponsor or encourage professional networking, coaching
programs and cross divisional projects to give employees
the opportunity to connect with other professionals.

Where identified, these programs continue to be supported
across the organisation.

(continued next page)

Adelaide Brighton Ltd Annual Report 2017

Objectives Diversity measures to facilitate achievement of objectives Progress

(continued)

In recognition of the low numbers of females entering
into engineering and manufacturing vocations and
to increase the diversity of our workforce:
> implement programs designed to engage graduate engineers;
> offer undergraduate scholarship opportunities and sponsor
vacation work programs to engage students who are entering
tertiary education to consider engineering as a career option;
> offer opportunities for high school students to become aware
of diverse career opportunities within our industry.

Continued sponsorship of the Women in Engineering program
at the University of Wollongong in 2017 that provides both a
financial benefit and a work placement opportunity.

Engineering scholarships in place at University of Adelaide
and University of Technology Sydney.

Sponsorship of STEM Program (Science, Technology, Engineering
and Math) for Year 10 and 11 high school students.

Vacation employment programs in place in Adelaide, Perth and
Sydney; Participation in Kwinana Industries Council iWomen
and iScience projects; and inaugural Women in Industry
Open Day in Adelaide.

Sponsorship of the SA Law Society Indigenous Law Student
Mentoring Program and established of a Scholarship for an
indigenous high school student at St Peter’s College in Adelaide.

To reward and
remunerate fairly

Adelaide Brighton has a policy to provide equal pay
for equal work.

Refresher training in the remuneration framework, Mercer International
Position Evaluation (IPE), was conducted and all staff positions were
re-evaluated to ensure the ABL framework is appropriate.

As part of the annual salary review process, Adelaide
Brighton undertakes a review of pay parity.

The gender pay parity review was completed in 2017 resulting
in an improvement due to the recalibration of the IPE.

Pay parity is also considered at the time of hiring new
employees, to eliminate potential gaps in pay arising
from hiring decisions.

To provide flexible
work practices

Adelaide Brighton seeks to provide suitable working
arrangements for employees returning from maternity leave.

Flexible working arrangements are available to all employees
under our flexible work policy, to recognise that employees may
have different domestic responsibilities throughout their career.

Adelaide Brighton offers 12 weeks’ paid parental leave for
the primary carer.

Formal review of all part time work arrangements to ensure
roles are appropriate to maintain career development.

Measure age, gender, and cultural identity of our workforce.

Understand the
diversity of our
workforce

As per previous years, 100% of the women who commenced
and finished maternity leave in 2017 have returned to work in
either a full or part time capacity.

7% of the workforce have a part time or casual work arrangement.

3% of employees have taken ‘Paternity Leave’ in 2017.

Results of employee survey of cultural identify plus diversity
data is collected from candidates during the recruitment process.
Having identified that we have an ageing workforce, succession
and workforce planning strategies have been implemented
to ensure business sustainability.

As a member of (CCAA) Diversity Working Group understand
diversity of workforce in our industry via the CCAA Benchmarking
(Gender Survey) project.

Adelaide Brighton is committed to the

The proportion of women across Adelaide

The following table shows the proportional

regular review of its objectives to ensure

Brighton’s workforce is reflective of the

representation of women employees at

that these continue to be appropriate and

generally low level of female representation in

various levels within the Adelaide Brighton

relevant. This commitment includes the

the building, manufacturing and construction

Group (as at 31 December 2017):

completion of the workplace profile report

materials industries in which we operate.

as required by the Workplace Gender

We recognise that the available pool of

Male Female

Equality Act 2012. A copy of the workplace

female candidates in manufacturing and

Board

14%(1)

profile report is available in the investor

engineering roles relevant to our business

relations section of our website at

operations is limited, and this impacts our

Senior executives

14%

www.adbri.com.au/

ability to increase the number of female new

Senior managers 20%

ourresponsibilities#reporting.

hires. In an effort to make our Company

(direct reports to senior executives)

The Board is committed to build upon the

(and industry) more attractive to women,

achievements to date and reinforce the

we have focused on measures designed to

Total workforce

12% 1,349 188

continued efforts in promoting and cultivating

increase the proportion of female candidates,

(1) Following the appointment of Dr Vanessa Guthrie and

a culture of diversity and inclusiveness.

graduates and to support the development

Mr Geoff Tarrant as a non-executive Directors in February
2018, the percentage of female Board members is 22%.

of female employees who are recognised as

having future potential. We believe that, over

A copy of Adelaide Brighton’s Diversity

time, our diversity objectives and measures

and Inclusion Policy is available in the

will achieve an improvement in the level of

corporate governance section of

female representation and inclusiveness

Adelaide Brighton’s website.

across the organisation.

Adelaide Brighton Ltd Annual Report 2017
CORPORATE GOVERNANCE OVERVIEW

The Adelaide Brighton Ltd Board is

Role of the Board

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.

The role of the Board of Directors is to

protect and optimise the performance of the

Company and its subsidiaries (Group). The

The Board is structured to add

value and Board decision making

is enhanced through education

and support

Board takes accountability for reviewing and

The Board ensures that its members

approving strategic direction, establishing

have the time and commitment to

policy, overseeing the fi nancial position and

devote to the role.

monitoring the business and affairs of the

The Board is committed to a majority

Group on behalf of shareholders.

of independent views being brought

Adelaide Brighton confi rms it has followed

Board Committees

the ASX Corporate Governance Council’s

Principles and Recommendation (3rd edition)

during the 2017 fi nancial year.

To assist the Board in fulfi lling its

responsibilities the Board has established

a number of committees with responsibility

Adelaide Brighton’s Corporate Governance

for particular areas. Each committee has a

Statement which provides detailed

specifi c charter, which are each available on

information about governance at Adelaide

the governance section of the Company’s

Brighton is available on Adelaide Brighton

website at www.adbri.com.au.

website at www.adbri.com.au

to bear in decision making.

Comprehensive induction processes

equip Directors to perform in their role.

Confl icts are managed - protocols around

disclosure, and procedures around

management of potential confl icts have

been adopted.

Board members have access to

management and independent advice

to assist in discharge of their duties.

Board and Director performance is

regularly evaluated to facilitate continuous

Adelaide Brighton’s
Governance framework

Shareholders

improvement.

The Board keeps informed of regulatory and

industry developments to challenge status

quo and strengthen knowledge base.

Adelaide Brighton Ltd Board

Audit, Risk and
Compliance Committee

Nomination, Remuneration
and Governance Committee

Safety, Health and
Environment Committee

Financial reporting, internal
and external audit
Risk management

Assists and advises the Board
on matters relating to Board
and Committee membership
Remuneration - Board, CEO
and Managing Director and
senior executives
Diversity objectives

Monitors and oversees
effectiveness of health, safety
and environmental practices
Corporate Social Responsibility
and Sustainability

Adelaide Brighton CEO
and Managing Director

Day-to-day management
of the Company
Development and
implementation of the
Company’s strategy

Adelaide Brighton
executive management

Adelaide Brighton Ltd Annual Report 2017

Continuous Disclosure

Shareholdings of Directors

Adelaide Brighton is committed to providing

and employees

relevant and timely information to its

Directors and Officers may not buy or sell

shareholders and to the broader market,

Adelaide Brighton shares except during

in accordance with its obligations under

specified periods (known as ‘Trading

the Corporations Act 2001 and the ASX

Windows’) provided that prior approval is

continuous disclosure regime.

obtained. Our Share Trading Policy also

The Board is committed

to promoting ethical and

defines certain periods where trading is not

permitted under any circumstances (known

as ‘Blackout Periods’). In all cases, Directors

responsible decision making

and Officers are prohibited from trading in

Adelaide Brighton’s Code of Conduct

requires that all Directors 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:

securities when they are in possession of

‘inside information’. The Share Trading Policy

is available on the Company’s website at

www.adbri.com.au

Board and CEO succession planning

Acting with fairness, honesty and integrity;

The Board regularly reviews the size

Providing a safe and healthy work

and composition of the Board to ensure

environment for all employees;

the appropriate skills, perspective and

Being aware of and abiding by laws

expertise are represented. The skills matrix

and regulations;

set out below demonstrates the skills,

Individually and collectively contributing to

experience and diversity of the non-

the wellbeing of shareholders, customers,

executive Directors in office as at the date

the economy and the community;

of this report. The Board is satisfied that its

Maintaining the highest standards of

present composition is appropriate for the

professional behavior;

circumstances of the Company.

Avoiding or managing conflicts of interest;

and

Diversity

Striving to be a good corporate citizen,

and to achieve community respect.

The Board, having adopted a Diversity and

Inclusion Policy, has established measurable

diversity objectives to enhance gender and

other diversity across the organisation.

Information about the Group’s diversity

objectives and progress is set out in the

Diversity Report on pages 30-31 of this

Annual Report.

Marcus Clayton
General Counsel and
Company Secretary

Skills, experience and diversity

Management and leadership

Experience in relevant industries

Strategy / Risk

Financial understanding and capability

Global experience

Governance, compliance and regulatory

Remuneration

Male

Female

Non-executive Directors

Adelaide Brighton Ltd Annual Report 2017

DIRECTORS

Les Hosking
Age 73

Graeme Pettigrew

FIPA, FAIM, FAICD
Age 69

Raymond Barro

BBus, CPA, FGIA, FCIS
Age 56

Ken Scott-Mackenzie

BE(Mining), Dip Law
Age 67

Experience

Independent non-executive
Director since June 2003.
Extensive experience in
commercial and financial
matters with 16 years’
experience as Chief Executive
of the Sydney Futures
Exchange and former Chief
Executive Officer of Axiss
Australia, and Managing
Director of National Electricity
Market Management
Company (NEMMCO).

Independent non-executive
Director since August 2004.
Extensive experience in the
building materials industry
and former Chief Executive
Officer 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

Non-executive Director
since August 2008.
Over 27 years’ experience
in the premixed concrete
and construction materials
industry.
Managing Director of
Barro Group Pty Ltd.

Special responsibilities

Member, Safety, Health and
Environment Committee.

Independent non-executive
Director since July 2010.
Mining Engineer with over
40 years’ experience in
infrastructure, construction
and mining services gained
in Australia and Africa, as
well as extensive experience
in financial, legal and
commercial aspects of
projects. Former Chief
Executive Officer of Abigroup
and then Bilfinger Berger

Director, AGL Energy Limited
(appointed November 2008).

Special responsibilities

Appointed Chairman
17 May 2012.
Member, Nomination,
Remuneration and
Governance Committee
(ceased 16 November 2017)
Member, Audit, Risk and
Compliance Committee
(ceased 16 November 2017).

and Wormald Security
Australia Pty Ltd.
Director, Capral Ltd
(appointed June 2010).

Special responsibilities

Chairman, Audit, Risk and
Compliance Committee
Member, Nomination,
Remuneration and
Governance Committee.
Member, Safety, Health and
Environment Committee.

Australia, the holding
company of Abigroup,
Baulderstone and Bilfinger
Berger Services.

Special responsibilities

Chairman, Safety, Health
and Environment Committee
Member, Nomination,
Remuneration and
Governance Committee.

Adelaide Brighton Ltd Annual Report 2017

Arlene Tansey

FAICD, MBA, JD, BBA
Age 60

Zlatko Todorcevski

Vanessa Guthrie

Geoff Tarrant

Martin Brydon

MBA, BCom, FCPA, FGIA
Age 49

Hon DSc, PhD, BSc (Hons)
Age 57

BBus
Age 49

Experience

Independent non-executive
Director since April 2011.
Extensive experience as a
senior executive in business
and the financial services
industry gained in Australia
and the United States with
a background in investment
banking and securities law.
Director, Primary Health Care
Limited (appointed August
2012) and Aristocrat Leisure
Limited (appointed July 2016).

Appointed Chairman Elect
from 19 February 2018.
Independent non-executive
Director since March 2017
Experienced global
executive with more than
30 years’ experience in the
oil and gas, logistics and
manufacturing sectors gained
in Australia and overseas
with a background in finance,
strategy and planning. Former
Chief Financial Officer of

Independent non-executive
Director from February 2018.
Extensive experience in
the mining and resources
industry. Previous CEO and
Managing Director of Toro
Energy Limited (ceased
December 2016) and Vice
President Sustainable
Development at Woodside
Energy.
Director of Santos Limited
(appointed July 2017)

Non-executive Director
from February 2018.
Finance executive with
over 25 years’ experience
gained in Australia, the
United Kingdom and Asia.
Currently engaged in a
corporate finance
consultancy role with
Deutsche Bank.

MBA, FAICD, FAIM, Dip Elect Eng,

Dip Elron Eng
Age 62

Experience

Managing Director since
November 2015.
More than 30 years’
experience in the construction
materials industry with training
in electrical and electronic
engineering. Experience in
manufacturing and general
management, marketing,
strategy and business
development in various roles
within the Adelaide Brighton
Group of companies.

and Vimy Resources
Limited (appointed
October 2017).

Appointed Chief Executive
Officer of Adelaide Brighton
Limited in May 2014.

Former Chairman of Future
Fibre Technologies Limited
(appointed March 2015 and
resigned in October 2016)
and Urbanise.com Limited
(appointed June 2014 and
resigned in October 2016).

Special responsibilities

Chairman, Nomination,
Remuneration and
Governance Committee
Member, Audit, Risk and
Compliance Committee.

Brambles, Oil search Limited
and BHP Billiton’s Energy
business.
Appointed a non-executive
Director of The Star
Entertainment Group in
October 2017, subject to
casino regulatory approvals
being obtained.

Special responsibilities

Member, Nomination,
Remuneration
and Governance
Committee (appointed
16 November 2017).
Member, Audit, Risk
and Compliance
Committee (appointed
16 November 2017).

Adelaide Brighton Ltd Annual Report 2017

INFORMATION FOR SHAREHOLDERS

Annual general meeting

Direct credit of dividends

The annual general meeting of
shareholders will be held at the
InterContinental, North Terrace,
Adelaide, South Australia on
Thursday 17 May 2018 at 10.00 am.

Securities exchange listing

Adelaide Brighton Ltd is quoted on
the official list of the Australian
Securities Exchange and trades
under the symbol “ABC”. Adelaide
is Adelaide Brighton Ltd’s home
exchange.

Registered office

Level 1, 157 Grenfell Street
Adelaide SA 5000
Telephone 08 8223 8000
Facsimile 08 8215 0030

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 613 9415 4031
Facsimile 1300 534 987
International 613 9473 2408

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.

Dividends can be paid directly
into an Australian 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.

Dividend Reinvestment
Plan (DRP)

Adelaide Brighton’s DRP is currently
suspended until further notice.
In future, if the DRP is reactivated,
it will be notified by way of an
ASX announcement.

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.

Investor information other than that
relating to a shareholding can be
obtained from:
Group Corporate Affairs Adviser
Adelaide Brighton Ltd
Level 9 Aurora Place
88 Phillip Street
Sydney NSW 2000
Telephone 02 8248 9911
Email adelaidebrighton@adbri.com.au

Substantial shareholders
Barro Properties Pty Ltd, by a notice
of change of interests of substantial
shareholder dated 15 March 2018,
informed the Company that it or an
associate had a relevant interest
in 266,521,124 ordinary shares or
41.0% of the Company’s issued
share capital.

Commonwealth Bank of Australia,
by a notice of chnage of interests
of substantial shareholder dated
18 July 2017, informed the
Company that it or an associate
had relevant interest in 39,308,939
ordinary shares or 6.05% of the
Company’s issued share capital.

Adelaide Brighton Ltd Annual Report 2017

9.65

9.63

8.26

5.63

2.51

1.89

1.18

1.00

0.64

0.60

0.51

0.45

0.27

0.26

0.19

0.18

0.15

Communications
Our internet site www.adbri.com.au offers access to our ASX announcements
and news releases as well as information about our operations.

On market buy back

At 3 April 2018 there is no on-market buy back of the
Company’s shares being undertaken.

Twenty largest shareholders shown in the Company’s
Register of Members as at 3 April 2018

Shareholder

Barro Properties Pty ltd

HSBC Custody Nominees (Australia) Limited

Barro Group Pty Ltd

JP Morgan Nominees Australia Limited

Citicorp Nominees Pty Ltd

No. of
ordinary
shares held

% of
issued
capital

202,096,059 31.08

62,734,726

62,652,619

53,682,442

36,608,447

Citicorp Nominees Pty Ltd

16,291,829

National Nominees Limited

Argo Investments Ltd

HSBC Custody Nominees (Australia) Limited – A./C2

12,260,993

7,681,385

6,484,959

BNP Paribas Nominees Pty Ltd

4,133,650

CS Third Nominees Pty Limited

BNP Paribas Nominees Pty Ltd

Milton Corporation Limited

3,873,059

3,292,997

2,947,554

IOOF Investment Management Limited

1,759,440

Sandhurst Trustees Ltd

Australian Foundation Investment Company Limited

RBM Nominees Pty Ltd

1,759,124

1,720,000

1,218,627

HSBC Custody Nominees (Australia) Limited - GSCO ECA

1,151,148

Diversified United Investment Limited

AMP Life Limited

Total top 20 shareholders

Total remaining shareholders balance

1,000,000

972,359

484,321,417 74.48

165,951,078 25.52

Voting rights

All shares at 3 April 2018 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 as at 3 April 2018

Number of shareholders % of issued capital

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 81 shares

Unquoted securities

4,452

10,046

4,281

3,309

141

22,229

698

0.33

4.31

4.87

11.50

78.99

100.00

2,767,452 Awards issued to the Chief Executive Office and 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 eight.

Adelaide Brighton Ltd Annual Report 2017

FINANCIAL STATEMENTS CONTENTS

Directors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Remuneration report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Statement of comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Statement of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Statement of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Notes to the financial report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

1 Summary of significant accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Financial performance overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

2 Segment reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

3 Critical accounting estimates and assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

4 Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

5 Revenue and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

8 Business combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

9 Note to statement of cashflows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Balance sheet items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

10 Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

12 Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

13 Assets classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Impairment tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

16 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Capital structure and risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

17 Borrowings and lease commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

18 Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

19 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

20 Reserves and retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

21 Financial risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Group structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

22 Joint arrangements and associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

23 Subsidiaries and transactions with non-controlling interests . . . . . . . . . . . . . . . . 103

24 Deed of cross guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

25 Parent entity financial information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

26 Retirement benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

27 Share-based payment plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

28 Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

29 Events occurring after the balance sheet date . . . . . . . . . . . . . . . . . . . . . . . . . . 113

30 Commitments for capital expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

31 Remuneration of auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

32 Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Directors’ declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

Auditor’s Independence Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

Independent auditor’s report to the members of Adelaide Brighton Ltd . . . . . 116

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017DIRECTORS’ REPORT

The Directors present their report on

Statutory results

the consolidated entity (the Group)

consisting of Adelaide Brighton Limited

Revenue

(the Company) and the entities it controlled

at the end of, or during, the year ended

31 December 2017 .

Depreciation, amortisation and impairments

Earnings before interest and tax (“EBIT”)

Directors

The Directors of the Company, at any time

during or since the end of the financial year

Net finance cost

Profit before tax

Income tax expense

Net profit after tax

and up to the date of this report, are:

Attributable to:

Consolidated

2017
$ million

2016
$ million

1,560.0

1,396 .2

(82.5)

266.5

(12.1)

254.4

(72.3)

182.1

(78 .1)

266 .1

(11 .5)

254 .6

(68 .4)

186 .2

LV Hosking

RD Barro

GF Pettigrew

KB Scott-Mackenzie

AM Tansey

Z Todorcevski (appointed 22 March 2017)

VA Guthrie (appointed 8 February 2018)

GR Tarrant (appointed 8 February 2018)

M Brydon

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 .

Members of Adelaide Brighton Ltd (“NPAT”)

182.0

186 .3

Non-controlling interests

Basic earnings per share (cents)

Ordinary dividend per share (cents)

Special dividend per share (cents)

Franking (%)

Net debt ($ million)

Net debt/equity (%)

0.1

28.0

20.5

4.0

100

371.6

29.8

(0 .1)

28 .7

20 .0

8 .0

100

288 .5

23 .6

The results were impacted by a number of significant items . The table below sets out the

underlying financial results for the year ended 31 December 2017 which have been adjusted for

the significant items . An explanation of the significant items and reconciliation to statutory results

is provided on page 44 .

Underlying results

Review of operations

Revenue

A summary of the financial results for the

year ended 31 December 2017 is set

Depreciation, amortisation and impairments

Earnings before interest and tax (“EBIT”)

out below:

Net finance cost

Profit before tax

Income tax expense

Net profit after tax

Attributable to:

Members of Adelaide Brighton Ltd (“NPAT”)

Non-controlling interests

Basic earnings per share (cents)

Consolidated

2017
$ million

2016
$ million

1,560.0

1,396 .2

(82.5)

288.8

(12.1)

276.7

(78.9)

197.8

(78 .1)

268 .0

(11 .5)

256 .5

(69 .0)

187 .5

197.7

187 .6

0.1

30.4

(0 .1)

28 .9

Net profit after tax

Revenue

Reported net profit after tax attributable

Revenue of $1,560 .0 million was 11 .7%

to members (NPAT) for the year ended

higher than in 2016, as a result of improved

31 December 2017 declined 2 .3% to

demand for construction materials in South

$182 .0 million due to the impact of doubtful
debts, acquisition costs and restructuring

Australia and the eastern states and the
contribution from acquisitions which added

expenses . Underlying NPAT of $197 .7 million

5 .8% to revenue .

was 5 .4% higher than 2016 . Property sales

contributed $8 .4 million to NPAT, compared

to $7 .9 million in 2016 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017

Earnings before interest and tax

Activity in New South Wales and Victoria

Electricity costs in the cement and clinker

Earnings before interest and tax (EBIT)

improved versus the prior year, with

operations increased by circa $4 million

increased 0 .2% from the prior year to

non-residential building and transport

compared to 2016 . The overall impact of

$266 .5 million on an EBIT margin of 17 .1% .

infrastructure projects adding to demand .

higher energy prices on Adelaide Brighton

On an underlying basis, EBIT grew 7 .8% to

$288 .8 million on an EBIT margin of 18 .5% .

Margins

South east Queensland markets continue

to improve, particularly the Gold Coast and

Sunshine Coast regions . Increasing South

Underlying EBIT margins excluding property

Australian demand was driven by several

has been significantly mitigated through

strategies such as alternative fuels, use of

alternative cementitious products, demand

management and long term contracts .

declined due to higher energy costs, the

infrastructure projects despite reduced

In April 2017, the Birkenhead plant

impact of quality issues at the Birkenhead

demand from mining operations .

experienced an issue with the quality of

site earlier in the year and higher site

remediation costs . Joint arrangements

and associate earnings increased from

$30 .9 million in 2016 to $37 .8 million in

2017 reflecting improved demand and

higher construction materials prices on

the east coast of Australia .

Operating cash flow and debt

Operating cash flow decreased 9 .7% from

the prior year to $224 .2 million, due to higher

tax payments and lower cash conversion .

Property sales contributed $13 .9 million

to cash flow, bringing sales in the last four

years to $97 million . The estimate of the

sales value of the remaining property pipeline

over the next decade exceeds $100 million .

Gearing of 29 .8% at year end remains at the

lower end of the target range .

Earnings per share

Earnings per share (EPS) of 28 .0 cents .

Dividends

A final ordinary fully franked dividend of

12 .0 cents per share and a fully franked

special dividend of 4 .0 cents per share were

declared, bringing total dividends for FY

2017 to 24 .5 cents fully franked . The record

date for the final 2017 dividend is 3 April

2018 with payment on 13 April 2018 .

The special dividend takes into consideration

Adelaide Brighton’s strong cash flow, low

gearing, current capital expenditure outlook

and availability of franking credits .

Demand overview

East coast markets remained strong

supported by robust residential activity

in Victoria, New South Wales and

Queensland, and increased non-residential
building and infrastructure1 activity . The
South Australian market was also lifted by

infrastructure demand .

Western Australia cement demand stabilised

in the second half compared to the previous

corresponding period, following a significant

decline over the last two years . Northern

Territory demand declined further across

the territory, although regional infrastructure

projects provided some offset .

Overall demand for lime moderated

slightly in both Western Australia and the

Northern Territory .

Cement and clinker

Sales - Significant volume growth despite

subdued WA and NT demand

Cement and clinker sales volume increased

9% compared to 2016, assisted by a

particularly strong second half . Strong

volume growth continued in 2017 in

Queensland, Victoria and New South Wales .

Volume in Western Australia and Northern

Territory declined in the first half but

stabilised in the second half to be modestly

lower for the year . Cement sales in South

Australia improved, supported by the ramp

up of major infrastructure projects in the

second half .

cement which resulted in rectification costs

of $3 .6 million during the first half . The quality

issue arose due to lower grade feed making

its way into the cement milling process .

Fixes to inventory management and quality

processes were made to address the issue

and production and quality returned to

normal shortly after the incident .

Unplanned costs of $3 million were incurred

in the second half of 2017 associated with

the Company’s limestone carrying vessel the

MV Accolade II .

Operational efficiencies in cement and

lime delivered $8 million in 2017, including

$2 .8 million with the rationalisation of

Angaston oil well cement and laboratory

facilities . Further savings of $1 million from

these projects are expected in 2018 .

Adelaide Brighton is Australia’s largest

importer of cement clinker and other

cementitious materials supplying

approximately 2 .4 million tonnes of imported

product in 2017 . Import profitability improved

by $12 million before tax compared

to 2016 due to reduced shipping and

material procurement costs and the higher

Australian dollar .

While cement selling prices increased ahead

of CPI across almost all markets, weighted

Lime

average cement prices were stable due to

geographic mix changes .

Operations - Operational

improvement continues

Sales - Volumes slightly lower

Lime sales volumes were slightly down

on 2016 due to reduced sales to the

non-alumina sector . Imports continue to

Cement margins declined due to higher

be a threat, but Adelaide Brighton’s highly

energy costs, a cement quality issue in the

cost competitive operations place it in a

first half and higher costs related to the

strong position to supply the market in the

Company’s limestone vessel in the second

long term .

half . Higher volumes on stable average

prices lifted revenue .

1 Non-residential building includes education, health,
office retail, hotels and factories, while infrastructure
includes roads, bridges and railways .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Average lime selling prices were lower

Operations - Acquisitions add scale

opportunities, a number of which have

because of the pricing mechanisms with

to operations

supported sales in recent years .

long term alumina customers that take into

Concrete and Aggregates revenue, EBIT

account input costs savings . Intensifying

and EBIT margins all improved significantly

competition from importers constrained

in 2017 as a result of higher volumes,

prices in the non-alumina sector in 2017 .

stronger prices and control of costs, partially

Operations - Costs stable in 2017

Lime margins declined slightly because of

the lower average prices, while operating

costs were marginally higher following

offset by $3 .3 million of costs relating to a

compulsory scope change in remediation

related to the closure of our North Melbourne

concrete plant .

significant improvements in the prior year .

Revenue and EBIT were further enhanced

Prices are subject to inflationary increases

in 2018 under long term contract

arrangements . In addition, rising energy

costs, mainly coal, anticipated in 2018 will be

reflected in contract price mechanisms over

subsequent periods .

Concrete and Aggregates

by the acquisition of three businesses

during 2017:

> Central Pre-Mix Concrete and Quarry, a

Melbourne based integrated concrete and

aggregate operation on 1 March 2017;

> Davalan Concrete, an Adelaide based

concrete business on 28 June 2017; and

> The concrete and aggregates assets

of Holcim in the Northern Territory on

Sales - Strong eastern state markets

28 July 2017 .

These three acquisitions are consistent

with Adelaide Brighton’s long term vertical

integration strategy and add scale to

the existing concrete and aggregates

operations, as well as adding synergies in

overhead, logistics and raw materials . The

acquired businesses are performing in line

with expectations .

Concrete Products

Sales - Weaker multi-residential

Revenue decreased 1 .1% to $147 .6 million .

Concrete Products EBIT decreased from

and acquisitions lift sales

Sales volumes for concrete increased by

more than one-third in 2017 because of

strong demand in the eastern states and

acquisitions . Excluding acquisitions, concrete

volume increased strongly supported by

buoyant demand in Victoria, New South

Wales and Queensland and strengthening

infrastructure demand in South Australia .

Like for like concrete prices increased 3% .

Aggregates volumes also were strong in

2017 due to acquisitions . A recovery in

South Australian infrastructure demand offset

reduced project volumes in other markets .

Aggregates price increased by more than 5%

reflecting price increases and strengthening

demand for high quality product and a

Sydney aggregate returns continue to

be supported by the expiry of traditional

reserves and increasing reliance on product

from new operations further from the market .

Adelaide Brighton’s New South Wales quarry

reduction in sales of lower value products .

Sales and earnings are traditionally weighted

$11 .4 million in 2016 to $10 .2 million in 2017

Sunstate Cement Limited (Sunstate) (50%)

due to lower sales volumes and resulting

Sunstate is a joint venture between Adelaide

lower production efficiency .

Brighton (50%) and Boral (50%) with a

cement milling, storage and distribution

facility at Fisherman Islands, Port Brisbane .

to the second half, but first half EBIT was

also impacted by wet weather and delayed

Sunstate’s contribution to Group earnings

projects which recovered in the second half

increased by 8 .1% from $11 .0 million to

helping to offset weakness in the multi-

$11 .9 million as demand across south east

residential sector .

operations are competitively positioned to

Operations - Production efficiency

supply demand growth in Sydney and benefit

After a long period of industry

from strengthening prices as these increase

underinvestment, innovation offers

over time to reflect the higher transport costs

efficiency benefits and exciting new revenue

faced by many suppliers .

Adelaide Brighton made a $3 million

investment during 2017 in an automated

sleeper walling plant located in Stapylton,

Queensland, which offers significant

operating efficiencies and sales growth

potential in new market segments .

The Concrete Products business is also a

growing customer for our cement, sand and

aggregates businesses and the Company

remains optimistic about the outlook given

the impact of the new sleeper walling plant

and opportunities for business improvement

in the medium term .

Joint arrangements and associates

Independent Cement and Lime Pty Ltd

(ICL) (50%)

ICL is a specialist supplier of cementitious

products throughout Victoria and New

South Wales .

Continued strength in construction activity

across the New South Wales and Victoria

markets led to higher volumes . Higher

selling prices, strong demand and an

easing of input cost pressures supported

a 40% increase in profit contribution from

$10 .5 million to $14 .7 million after tax .

The second half 2017 contribution was

22% higher than second half 2016 . ICL

benefited late in second half from a price rise

to recoup higher input costs .

Queensland remained healthy . Volumes,

prices and margins were all higher than the

prior corresponding period . The second half

2017 contribution was up 10% on the prior

comparative period .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Mawson Group (Mawsons) (50%)

The lime business continues to benefit

> Increased use of alternative cementitious

Mawsons is the largest premixed concrete

from a strong focus on costs and efficiency,

materials;

and quarry operator in northern regional

although after several years of significant

> Short term consumption management

Victoria, and also operates in southern New

cost improvements, costs stabilised in

through operational adjustments;

South Wales . Mawsons is an important

2017 . Competing importers remain active in

> A proactive approach to cost recovery in

aggregates producer in the region, generally

major markets .

holding the number one or number two

position in the markets it serves . Earnings

again improved significantly as strong

demand to major projects lifted volumes

and margins .

With its unique cost position, proximity to

major customers, long term environmental

approvals and strong customer relationships,

the business is well positioned to remain

the marketplace, supported by vertical

integration, and through partnership

contracts with long term customers; and

> Hedging and other financial strategies,

where it adds value for shareholders .

the leading lime supplier to the Australian

The Company has in recent years

Aalborg Portland Malaysia Sdn. Bhd.

Resources sector and has the capacity

foreshadowed the tightening of the South

(APM) (30%)

to support further significant growth in the

Australian gas market and the prospect of

APM manufactures and sells white cement

industry over the medium to long term .

increasing gas prices . The tightening of

and clinker for the domestic Malaysian

market and exports to Australia and markets

throughout south east Asia . Earnings from

APM declined as result of higher costs

from energy, principally petcoke prices

in Malaysia .

Strategic Developments

Adelaide Brighton continues a successful

long term strategy to grow shareholder

returns through investment in three

key areas:

1 Cost reduction and operational improvement

across the Company;

2 Growth of the lime business to supply the

resources sector in Western Australia, South

Australia and the Northern Territory; and

3 Focused and relevant vertical integration into

downstream aggregates, concrete, logistics

and masonry businesses .

Cost reduction continued in 2017 with

the rationalisation of speciality cement

production at the Angaston, South

Australia operation .

Managing energy costs across the Adelaide

Brighton operations remains an important

focus and a significant opportunity for

shareholder value creation . Important

progress was made in a number of areas

in 2017 to improve energy efficiency

and security .

Vertical integration has been part of the

Group’s strategy for over 10 years, driving

growth, sales and earnings in the last five

the market contrasted sharp declines in

many international and some interstate gas

markets, such as Western Australia .

years and benefitting from the improvement

Adelaide Brighton has sought to maintain

in the construction market on the east coast .

diversity and flexibility in energy supply

It has improved geographic and industry

arrangements to take advantage of

diversification and supported the utilisation

the evolving landscape and emerging

of existing Adelaide Brighton assets . Three

opportunities to improve energy costs .

transactions were completed in 2017 on

attractive financial metric of 6 .8 times

EBITDA, and are performing to expectations

to deliver accretive returns in year one

(excluding transaction costs) .

In December 2017, Adelaide Brighton further

strengthened its energy supply portfolio

with the signing of new gas and electricity

contracts in South Australia . Adelaide

Brighton has entered into an agreement with

1 Cost reduction and operational

Beach Energy Limited for the supply of gas

improvement

Energy efficiency

to its South Australian operations .

Adelaide Brighton has also entered into an

Energy remains a key area of strategic

agreement with Infigen Energy Limited for

focus given significant opportunity to

the supply of its electricity requirements

improve the security and competitiveness

to the Birkenhead and Angaston cement

of the operations coupled with security of

manufacturing plants and Klein Point Quarry

supply . Adelaide Brighton’s proactive energy

on the Yorke Peninsula in South Australia .

strategy is designed to manage energy

costs and operating risks through measures

that include:

> A portfolio approach to energy supply and

procurement benefits;

> Reduced medium term energy consumption

through operational improvement, such as

The new agreements with Beach and Infigen

provide our South Australian operations

with continued certainty of energy supply

at competitive prices and underpin

the Company’s leading position in this

important market .

the cement rationalisation at Angaston in

In addition to energy supply agreements, the

South Australia;

rationalisation of oil well cement production

> Increased use of alternative fuels to reduce

at Angaston in South Australia improved

reliance on traditional sources, with the aim

the energy efficiency of the South Australian

of substituting 30% of fuel supply in South

cement operations in 2017 .

Australia in the medium term;

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Alternative fuels have been a key focus

This allows Adelaide Brighton to deliver

Estimated proceeds from the sale of

for reducing reliance on traditional energy

competitively priced product into a range

properties in the next 10 years could realise

sources and lowering costs over the last

of markets where demand exceeds the

in excess of $100 million with an expected

decade . An expansion of alternative fuel

Company’s manufacturing capacity . It

EBIT margin on these sales of circa 85% and

capacity at Birkenhead is now complete

further enables Company owned domestic

an effective tax rate of approximately 20% .

and we are targeting substitution of greater

production assets to operate at full utilisation

than 30% of the South Australian energy

with the import operations responding to

2 Lime growth

requirement of 6 petajoules per annum .

changes in demand . This underpins the

Continuous improvement to underpin

In 2018, Adelaide Brighton expects energy

competitive position and shareholder returns .

long term returns

costs in its cement and lime business to

The import strategy is supported by long

Adelaide Brighton’s Munster, Western

increase by $6 million compared to 2017 .

term agreements with two Japanese

Australia, lime business is underpinned

In South Australia, savings are expected

suppliers for grey clinker, Aalborg for white

by low cost mineral resources secured

in electricity but higher gas costs are

clinker and a major Japanese trading house

by a State Agreement Act and long term

anticipated, while in Western Australia, coal

for supply of granulated blast furnace slag .

statutory approvals . Demand growth in lime

costs are also anticipated to increase .

Adelaide Brighton continues to invest

Operational improvement program

in import infrastructure to underpin

is driven by the globally competitive Western

Australian resources sector .

The rationalisation of laboratory facilities

its competitive position, to grow the

The Munster lime plant is a low cost

and speciality cement production at the

import business, and ensure it remains a

operation with two lime kilns, currently at

Angaston facility, leveraging the extensive

leading supplier into key markets . As the

80% operating capacity, which are among

importation network of the Group, will

construction industry moves to greater

the largest globally .

result in annualised EBIT savings of

reliance on imported cementitious materials

approximately $3 .8 million, of which

there may be competing investments in

approximately $2 .8 million was achieved in

import infrastructure to address some of this

2017 . Earnings were adversely impacted in

demand growth .

The Western Australian alumina sector

represents about 70% of Western Australian

lime demand . The industry remains among

the lowest cost alumina producers in the

2017 by one-off charges associated with

this initiative of $3 .3 million before tax . These

one-off costs are excluded from underlying

earnings measures .

Adelaide Brighton will maintain a measured

world, underpinning its long term growth . In

approach to growing and operating its

the medium term, lime demand is expected

import infrastructure . Industry leading scale,

to move in line with refinery capacity

efficient supply, established markets and

expansion as well as the expansion of the

Competitive import infrastructure

strong customer relationships mean Adelaide

broader Western Australian resources sector .

Rationalisation of Australian clinker

Brighton is well placed to enhance its

production in the face of steady demand

position as an importer and continue to grow

growth, has seen imported cementitious

long term shareholder value .

products grow to represent in excess of

30% of Australian supply . In the absence of

domestic clinker production growth, due to

cost advantages of large scale international

manufacture, imports are expected to

continue to grow in the long term .

importer of cementitious materials (cement,

clinker and blast furnace slag) utilising more

than 2 .4 million tonnes of imported product

in 2017 . This leading position enhances

supply chain efficiency in procurement,

transport, storage and distribution .

Adelaide Brighton remains Australia’s largest

over time .

In the last three years, Adelaide Brighton has

made operational improvements, expanded

capacity and achieved cost savings to the

lime business that have further improved

Land sales program

Adelaide Brighton has been actively

the competitiveness of the business and the

engaged in selling and preparing for sale

opportunity for long term growth .

properties released by the rationalisation and

improvement program . In many cases, this

includes re-zoning to realise greater value

After several years of cost reductions,

costs stabilised in 2017 . The lime business

has a continuous improvement program

that examines opportunities for: further

Since the beginning of 2013, cash proceeds

cost savings; improvements in resource

contributed from the property program

and operational security; and enhancing

total $97 million . This includes transactions

customer relationships .

in 2017 that realised $13 .9 million in cash

proceeds and $8 .4 million NPAT .

Competition continues from imported

lime for use in the non-alumina resources

One of these transactions, which was

sector . Adelaide Brighton’s scale and unique

previously anticipated for settlement in late

cost structure underpins its position in the

2017 or early 2018, closed in late December

industry over the long term . Nonetheless,

2017 and as a consequence no significant

import competition has the potential to

land transactions or profits are now

pressure sales to the non-alumina sector in

expected from the program before 2019 .

the absence of significant market growth,

particularly if the Australian dollar continues

to strengthen .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20173 Downstream integration

The acquired businesses also offer operating synergies with the existing Melbourne and

Further downstream acquisitions

Adelaide Brighton continues to pursue

its strategy of acquiring quality concrete

and aggregates businesses that enhance

its long term competitive position and

shareholder value .

A disciplined approach is undertaken

with acquisitions, with each assessed on

their merits, including fit with the existing

operations of Adelaide Brighton .

Over the last decade it has built a concrete

and aggregates business of scale that offers

strong regional positions and strategic

aggregates reserves that underpin returns

to shareholders .

The business is complementary to the

Adelaide operations and the prospect of further bolt on investments to enhance the overall

regional position .

Overall, the performance of the businesses is in line with expectations .

Operational results

Reconciliation of underlying profit

“Underlying” measures of profit exclude significant items of revenue and expenses in order

to highlight the underlying financial performance across reporting periods . Profits from the

Company’s long term land sales program are included in underlying profit despite the timing

being difficult to predict .

The following table reconciles underlying earnings measures to statutory results .

Full year ended
31 December
$ million

2017

2016

Profit

Income

Profit

Income

Profit

before tax

tax

after tax

before tax

tax

after tax

Statutory profit

254 .4

(72 .3)

182 .1

254 .6

(68 .4)

186 .2

cement and lime operations and provides

Rationalisation

attractive diversification benefits as well

as the ability to capture a greater share of

the construction materials production and

distribution value chain .

Continuing this strategy, during the year

Adelaide Brighton made three acquisitions:

> Central Pre-Mix Concrete and Quarry,

Other restructuring

Acquisition expenses

Fair value gain

Doubtful debts

3 .3

0 .8

5 .0

(4 .5)

17 .7

(1 .0)

(0 .3)

(5 .3)

2 .3

0 .5

5 .0

(4 .5)

12 .4

1 .9

(0 .6)

1 .3

Underlying profit

276.7

(78.9)

197.8

256.5

(69.0)

187.5

an integrated concrete and aggregates

Rationalisation of cement production

Cash flow

operation with five concrete plants and a

Cement production and laboratory facilities

Operating cash flow decreased by

hard rock aggregate quarry serving the

in South Australia were rationalised in 2017 .

$24 .2 million to $224 .2 million in 2017 .

metropolitan Melbourne market, the largest

As part of the rationalisation, employee

The decrease was attributable to lower

premixed concrete market in Australia;

redundancy costs of $3 .3 million were

cash conversion of revenues and increased

> Davalan Concrete, an independent concrete

recognised (2016: $nil) .

tax payments partially offset by an increase

operator in the greater Adelaide market; and

> Holcim’s Northern Territory concrete and

aggregates business, consisting of four

concrete plants, two operating quarries and

access to further potential quarry sites via

mining leases .

These three transactions completed

in 2017 are in line with the Company’s

strategy of focused value added vertical

integration in the concrete and aggregates

businesses . Total acquisition costs of the

three businesses of $85 .2 million, including

transaction costs of $5 million, represent a

year one EBITDA multiple of 6 .8 .

Other restructuring costs

in dividends from joint ventures .

Redundancies and one-off employment

Working capital increased $22 .2 million

costs were $0 .8 million (2016: $1 .9 million)

as a result of acquisitions and the timing

for the period . These costs result from staff

of receipts and import shipments at year

restructuring within the Group .

end . Doubtful debt provision increased

Acquisition expenses and fair value gain

Costs recognised as an expense in the

Administration cost line of the Income

by $18 .3 million, including the additional

provision for doubtful debts discussed on

page 45 and in note 10 .

Statement in 2017 were $5 .0 million

Capital expenditure of $169 .3 million,

(2016: $nil) . The costs associated with the

including $80 .2 million on acquisitions, was

three acquisitions completed, including

$82 .8 million higher than the prior year .

stamp duty, legal and other consulting

Stay in business capital of $60 .1 million

costs, fluctuate with transaction activity .

represents 73% of depreciation and

These acquisitions also resulted in a fair

amortisation . Development capital declined

These purchases provide access to

value gain on acquisition of $4 .5 million .

$7 .8 million to $29 .0 million as organic

strategically located and high quality assets,

entry to the Melbourne aggregates market

and an increase in the scale of Adelaide

Brighton’s concrete and quarry business .

Doubtful debts provision

The increased doubtful debts provision

described on page 45 and in note 10 is not

considered to be a part of normal trading

and therefore excluded from underlying profit .

projects started in the prior year were

finalised . Cash proceeds from the sale of

assets of $17 .7 million includes $13 .9 million

from the disposal of land .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017

Dividends paid to shareholders decreased

An actuarial gain of $1 .9 million

13% to $156 .0 million due to lower special

(2016: $1 .7 million) related to the defined

dividend payments in 2017 .

benefit superannuation plan was recognised

Net debt increased $83 .1 million, with net

debt to equity gearing increasing to 29 .8%

from 23 .6% over the year primarily as a

result of acquisitions . Gearing remains at the

lower end of the target range of 25% - 45% .

through other comprehensive income . The

gain was primarily due to the improvement

in value of investments held by the fund up

to the end of the year and assumed salary

growth rates over the forecast period used

to calculate the defined superannuation

To maximise shareholder returns, Adelaide

benefit liability .

Brighton seeks to ensure the balance

sheet is efficiently utilised while retaining

the flexibility to fund the long term growth

strategy as opportunities are identified .

Total debt facilities of $540 million have the

following maturity profile:

Facility expiry

January

date

2019

2021

Facility value

$210 million

$330 million

Income statement

Net finance costs increased from

$11 .5 million to $12 .1 million in 2017 as

a result of a slight increase in borrowing

margins and higher average net debt .

Tax expense of $72 .3 million increased from

$68 .4 million in 2016 and represents an

effective tax rate of 28 .4% (2016: 26 .9%) .

The increased effective tax rate is due to the

recognition of capital losses in the prior year

and the true-up of the prior year tax return .

The movement in the value of the Australian

Dollar against the Malaysian Ringgit during

Provision for doubtful debts

In late 2017 Adelaide Brighton became

aware of certain financial discrepancies

which relate to transactions whereby it has

been underpaid for products supplied . The

Company has now completed its analysis

with the assistance of forensic accountants

KPMG and as a result the 2017 EBIT

result includes $17 .1 million provision

for the impairment of amounts due and

$0 .6 million for legal, accounting and other

investigation costs .

While the financial impact of the

discrepancies has been quantified,

investigations are continuing . Adelaide

Brighton is also continuing its efforts to

recover amounts due .

The matter was identified under Adelaide

Brighton’s existing compliance and risk

management systems and processes . The

Company has taken steps to strengthen

these further in light of this issue .

the year resulted in a $0 .4 million gain being

Business Risks and Mitigation

recognised in other comprehensive income .

The gain reflects movements in the Australian

Dollar value of the Group’s investment in

Aalborg Portland Malaysia Sdn . Bhd .

Adelaide Brighton’s risk management

framework, as outlined in the Corporate

Governance Statement, incorporates

effective risk management into all facets of

The fair value of cash flow hedges used

the business . Planning processes, including

by Adelaide Brighton as part of its foreign

budgets and strategic plans, incorporate

currency risk management approach

a risk management component . These are

was recognised in other comprehensive

integrated into reports to the Board and

income of $nil (2016: $1 .3 million gain) .

respective Board Committees throughout

The unrealised gain or loss is the result of

the year . The key risks to the Adelaide

movement in the value of the Australian

Brighton Group and mitigation actions are

Dollar against foreign currencies, principally

outlined below . The risks are not set out in

the United States Dollar, at year end

any particular order and do not comprise

compared to the rates at the time the hedge

every risk we encounter in conducting

contracts were entered into .

our business . Rather, they are the most

significant risks that we believe we should

be monitoring and seeking to mitigate or

otherwise manage at this point in time .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Risk

Details

Mitigation

Macro-
economic
conditions

Regulatory
compliance

Adelaide Brighton supplies product to its Australian customers
from local production sites across all states and territories,
supplemented by imported product . Demand and supply
conditions are therefore dependent upon economic conditions .

Adelaide Brighton has diversified its business both geographically within
Australia and through vertical integration . This diversity has balanced
the exposure of the business to fluctuations across its customer base of
construction, infrastructure and mining sectors .

With production and distribution sites across all states and
territories of Australia, Adelaide Brighton is subject to significant
regulatory burden across areas such as environmental, labour,
occupational health and safety, and taxation laws .

Non-compliance with regulatory requirements could lead to
substantial penalties and impositions on operations .

The Group employs a range of initiatives to meet regulatory compliance
including:
Employment of specialists to support operational staff in areas
such as human resources, and health, safety and environment;
Regular training and competency testing of employees;
Inclusion of regulatory compliance within the internal audit scope; and
Policies and procedures designed to instil and foster a culture
going beyond mere compliance .

Movement to
a low carbon
economy
(climate
change)

The recognition of the impact of greenhouse gas emissions on
climate change and the potential impacts on the environment
have driven a movement toward a low carbon economy . A range
of actions are being undertaken by governments, the corporate
sector and individuals in recognition of climate change, including
imposing a price on carbon and changes in product specifications .

Production of clinker, an intermediary product in the production of
cement, and lime are carbon emissions intensive . The movement
to a low carbon economy could potentially increase the cost of
production and reduce demand .

Adelaide Brighton’s strategy of cost reduction and operational
improvement includes the focus on improved efficiency in the
manufacturing process for clinker and lime . The program has
delivered savings over a long time period, with further improvements
anticipated which will reduce the emissions intensity of production .

The Group is able to leverage its access to products from emissions
efficient suppliers as a result of the Company’s import strategy .

In addition, the use of alternate products with cementitious properties,
such as flyash and ground granulated slag, has increased .

Adelaide Brighton is also working with partners in the
development of alternate products to replace Portland cement .

Energy
pricing

Foreign
currency

Production of cement and lime are energy intensive and
consequently access to reliable, cost effective energy is required .
Price and reliability factors into the suitability of energy sources
for production .

The Group employs a portfolio approach to energy procurement,
looking to diversify the sourcing risk at competitive prices . This portfolio
approach has resulted in a mix of contracted arrangements for the
supply of energy and spot purchases on trading markets .

The Group imports a range of materials to supplement capacity
of local production facilities, with approximately 2 .4 million tonnes
of product imported in 2017 . As a result of these purchases
primarily being denominated in United States Dollars and Japanese
Yen, the Group is exposed to fluctuations in the strength in the
Australian Dollar against these currencies .

The Group manages exposure to foreign exchange risk through a
formalised hedging policy . Committed purchases that expose the Group
to foreign currency risk are hedged through agreed hedging products
up to a period of nine months . In addition, where practical, contractual
arrangements with suppliers may also include provisions to limit the
risk of foreign currency to Adelaide Brighton .

Competitive
landscape

Australia, with its relatively open access to global participants,
is a competitive market . Heightened competition combined
with fluctuations in the macro economic environment can
impact upon the performance of the Group .

Through a focus on cost control and improvement, the Group’s
production capabilities are efficient . These facilities are supported by
a distribution network throughout Australia, ensuring that Adelaide
Brighton can provide a competitive value offering to customers .

Key
equipment
failure

The production of cement and lime involves large scale
manufacturing sites in order to obtain economies of scale .
The failure of key equipment in the process can disrupt
production .

Production
quality

The Groups key products of cement, lime, concrete, aggregates
and concrete products are sold in accordance with relevant
quality standards . Materials used in production are natural
products and therefore normal variability of the characteristics
could result in fluctuations in quality of the end product .

Products that do not meet the relevant quality standard could
result in end use customers being financially disadvantaged .

Trade credit

Contractual arrangements with customers include the provision of
short term trade redit for product supplied . The Group is therefore
exposed to the credit risk for a portion of its sales .

Changes in macro economic conditions and customer specific
issues impacting cash flows available to settle purchases factor
into the level of risk associated with trade credit outstanding .

The Group undertakes a risk assessment of processes to identify key
equipment . Risk of equipment failure is assessed in conjunction with
repair or replacement alternatives as part of business continuity planning .

Alternate strategies are employed to mitigate the risk including
holding “insurance spares” of key equipment and contractual
arrangements to supplement production where required .

The Group has quality assurance processes across all products,
including the monitoring of inputs into the production process and
testing of final product to ensure compliance with relevant standards .
The skills of internal quality personnel are continually updated and
supplemented by the use of external experts
where required .

Trade credit risk is managed through assessment of individual
customer credit limits in accordance with delegated authority levels
approved by the Board, which is monitored along with ageing of
balances outstanding .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Dividends paid or declared by

Improved demand on the east coast and

Environmental performance

the Company

During the 2017 financial year, the following

dividends were paid:

> A final dividend in respect of the year ended

South Australia is anticipated to also lift

sales volumes of premixed concrete and

aggregates . The 2017 acquisitions will add

further sales in 2018 .

31 December 2016 of 15 .5 cents per share

Price increases have been announced

(fully franked) was paid on 12 April 2017 .

for the first half of 2018 in cement,

This dividend totalled $100,696,420; and

aggregates, concrete and concrete products .

> An interim dividend in respect of the year

Strengthening demand and utilisation are

ended 31 December 2017 of 8 .5 cents per

supportive of higher prices .

share (fully franked) was paid on 5 October

2017 . This dividend totalled $55,273,195 .

Concrete prices are expected to increase by

more than inflation, while aggregate prices

Since the end of the financial year the

are anticipated to increase significantly above

Directors have approved the payment of a

inflation, particularly as the industry moves to

final dividend of 16 .0 cents per share (fully

supply from further afield .

Lime sales volumes are expected to be

marginally lower in 2018 due to import

competition in the non-alumina sector,

although prices are anticipated to improve

Joint venture operations in Australia are

anticipated to continue to benefit from

stronger demand and higher prices on the

east coast .

Import costs are likely to be $3 million higher

in 2018 with increased materials costs offset

by favourable foreign currency outcomes .

Exchange rates for imports have been

franked), comprising an ordinary dividend of

12 .0 cents per share and a special dividend

of 4 .0 cents per share . The final dividend is

to be paid on 13 April 2018 .

State of affairs

Other than set out in the Review of

Operations, 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

31 December 2017 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 .

The Group’s operations are subject to

various Commonwealth, State and Territory

environmental regulation .

Environmental performance is monitored by

site and business division, and information

about the Group’s performance is reported

to and reviewed by the Group’s senior

management, the Board’s Safety, Health &

Environment Committee, and the Board .

The Group’s major operations have ongoing

dialogue with the relevant authorities

responsible for monitoring or regulating the

environmental impact of Group operations .

Group entities respond as required to

requests made by regulatory authorities,

including requests for information and site

inspections .

issued with regulatory notices issued by

government authorities responsible for

planning and environment matters . The

Group satisfactorily addressed all of these

regulatory matters .

Aus-10 Rhyolite Pty Ltd (Aus-10) received

three general penalty notices from the NSW

Department of Planning and Environment

(DPE), alleging breaches of development

consent conditions at Aus-10’s Tinda Creek

No matter or circumstance has arisen since

hedged to September 2018 .

Further savings from the Angaston cement

Quarry at Mellong, NSW, setting a fine of

rationalisation and the rolling operational

$15,000 for each notice . Aus-10 addressed

improvement program are expected to

each of the matters raised by the DPE .

improve costs in 2018 .

In 2016, the South Australian Environment

Energy costs are anticipated to increase by

Protection Authority (EPA SA) investigated

Likely developments and expected

$6 million in 2018, with higher gas and coal

Adelaide Brighton Cement Ltd (ABCL), in

results of operations

costs being partially offset by lower electricity

relation to an emission from the ship loading

costs . Contractual arrangements will mitigate

boom at ABCL’s Birkenhead plant in South

under contractual arrangements .

During 2017, Group entities were

In 2018, Adelaide Brighton expects

strong demand for construction materials,

a portion of these costs .

particularly on the east coast and South

Estimated proceeds from the sale of land in

Australia, improved pricing and further

the next 10 years could realise in excess of

efficiency improvements .

Sales volumes of cement and clinker are

anticipated to be higher in 2018 . Demand is

$100 million but, due to project timing, no

significant land sales under the program are

expected until 2019 .

expected to be stable in Western Australia

Capital expenditure of $100-110 million is

and the Northern Territory and improve in

anticipated in 2018, including $50-60 million

South Australia due to major infrastructure

of stay in business capex .

projects . Building and construction activity

is also expected to lift cement and clinker

demand along the east coast .

To maximise shareholder returns, Adelaide

Brighton seeks to ensure the balance

sheet is efficiently utilised while retaining

the flexibility to fund long term growth as

opportunities are identified . Prudent capital

management remains an important part of

this approach .

Australia in March 2016 . ABCL cooperated

with the EPA SA’s investigation . The internal

consideration by the EPA SA is ongoing .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Directors’ 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:

Director

Board

Audit,

Nomination,

Independent

Safety, Health

Meetings

Risk and

Remuneration

Compliance

& Governance

Committee

Directors’
Committee (1)

& Environment

Committee

6 (4)

LV Hosking (2)

R Barro

GF Pettigrew

KB Scott-

Mackenzie

AM Tansey

Z Todorcevski (3)

M Brydon

A Number of meetings attended .

H Number of meetings held during period of office .

(1) The Independent Directors’ Committee is no longer a standing Committee of the Board .

(2) Mr Hosking ceased as a member of the Audit, Risk and Compliance Committee and Nomination, Remuneration

and Governance Committee with effect from 16 November 2017 .

(3) With effect from 16 November 2017, Mr Todorcevski was appointed as a member of the Audit, Risk and
Compliance Committee and as a member of the Nomination, Remuneration and Governance Committee .

(4) Due to a commitment arranged prior to his appointment, Mr Todorcevski was unable to attend one

Board meeting during the year .

Directors’ interests

Company Secretaries

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 and its

wholly owned subsidiaries . 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 .

The Company was not liable during 2017

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

LV Hosking

RD Barro

GF Pettigrew

KB Scott-Mackenzie

AM Tansey

Z Todorcevski

VA Guthrie

GR Tarrant

M Brydon

Ordinary shares

9,851

246,484,345

16,739

5,000

10,000

20,000

78,906

Full details of the interests in share capital of

Directors of the Company are set out in the

Remuneration Report on pages 50 to 69

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 50 to 69

of this report .

The Company’s principal Company Secretary

the constitution) against liabilities incurred

is Marcus Clayton, who has been employed

by the officer in his or her capacity as an

by the Company in the two separate offices

officer of the Company or of a related body

of General Counsel and Company Secretary

corporate, including liability for negligence or

since 24 February 2003 . He is a legal

for reasonable costs and expenses incurred

practitioner admitted in South Australia with

in defending proceedings, whether civil or

30 years’ experience .

criminal .

Two other employees of the Company also

During the year the Company paid the

hold the office of Company Secretary to

premiums in respect of Directors’ and

assist with secretarial duties should the

Officers’ Liability Insurance to cover the

principal Company Secretary be absent: the

Directors and Secretaries of the Company

Company’s Chief Financial Officer, Michael

and its subsidiaries, and the General

Kelly, a Certified Practising Accountant

Managers of each of the divisions of the

who has been a Company Secretary

Group, for the period 1 May 2017 to 30 April

since 23 November 2010 and the Group’s

2018 . Due to confidentiality obligations under

Corporate Affairs Adviser, Luba Alexander,

that policy, the premium payable and further

who has been a Company Secretary since

details in respect of the nature of the liabilities

22 March 2001 .

insured against cannot be disclosed .

Indemnification and insurance

Proceedings on behalf of

of officers

the Company

Rule 9 of the Company’s constitution

No person has applied for leave of the

provides that the Company indemnifies each

Court to bring proceedings on behalf of the

person who is or who has been an “officer”

Company or to intervene in any proceedings

of the Company on a full indemnity basis and

to which the Company is a party for the

to the full extent permitted by law, against

purpose of taking responsibility on behalf

liabilities incurred by that person in their
capacity as an officer of the Company or

of a related body corporate .

of the Company for all or any part of those
proceedings . The Company was not a party

to any such proceedings during the year .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Non-audit services

Shares under option

The Company may decide to employ the

Unissued ordinary shares under option relate

auditor on assignments additional to their

to Awards associated with the Company’s

statutory audit duties where the auditor’s

Executive Performance Share Plan .

experience and expertise with the Company

Outstanding Awards at the date of this report

and the Group are important .

are as follows:

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 114 of this report .

Date Awards

Expiry date

Number of

granted

Awards

1 January 2014 30 September

676,219

2018

1 January 2015 30 September

795,761

The Board of Directors has considered

2019

the position and, in accordance with the

1 January 2016 30 September

701,889

advice received from the Audit, Risk and

2020

Compliance Committee, is satisfied that

1 January 2017 30 September

593,583

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 in Note 31, 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

2021

2,767,452

The exercise price for these Awards is nil .

Further details of Awards are set out in

Note 27 and the Remuneration Report .

Registered office

The registered office of the Company is

Level 1, 157 Grenfell Street, Adelaide,

South Australia 5000 .

Corporate governance statement

principles relating to auditor independence

The corporate governance statement is

as set out in APES 110 Code of Ethics for

available on the Adelaide Brighton Limited

Professional Accountants .

website and may be accessed via the

following URL:

http://adbri .com .au/

ourresponsibilities#governance-exp

Signed in accordance with a resolution

of the Directors

M Brydon

Director

Dated 16 March 2018

Auditor’s independence declaration

A copy of the auditor’s independence

declaration as required under section 307C

of the Corporations Act 2001 is set out on

page 115 .

Rounding off

The Company is of a kind referred to in

ASIC Corporations (Rounding in Financial/

Directors’ Reports) Instrument 2016/191

relating to the “rounding off” of amounts in

the Directors’ report . In accordance with that

instrument, amounts in the financial report

and Directors’ report have been rounded off

to the nearest one hundred thousand dollars,

unless otherwise stated .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017REMUNERATION REPORT

Adelaide Brighton Ltd

Dear Fellow Shareholders

On behalf of the Board and as Chair of the Nomination, Remuneration and Governance Committee, I am pleased to

present the Adelaide Brighton 2017 Remuneration Report .

Our remuneration framework incorporates robust performance measures linked to our strategic plans which provide

remuneration outcomes that reflect our business performance over the annual cycle and the longer term . The remuneration

policies of Adelaide Brighton continue to focus on attracting and retaining the best talent to deliver our strategic objectives

and align executive rewards with the creation and delivery of shareholder value .

2017 performance

Adelaide Brighton continues to pursue its long term growth strategy with ongoing investment in cost reduction and

operational improvement; growth of the lime business to supply the Australian resources sector and vertical integration

of its construction materials business .

In 2017 Adelaide Brighton delivered revenue of $1 .56 billion driven by strong east coast demand, and concrete

and aggregates acquisitions in Victoria, South Australia and the Northern Territory .

Underlying profit excluding property increased 5 .3% to $189 .3 million, with stronger volumes and prices, the benefits from the

operational improvement programs and lower import costs partially offset by higher energy costs and a number of one-offs .

Reported profit declined 2 .3% to $182 .0 million, including $17 .7 million of costs related to doubtful debts .

Adelaide Brighton’s long term strategy of product and geographic diversification has positioned the Company to benefit

from the strong markets on the east coast of Australia . This strategy includes vertical integration into premixed concrete

and concrete products and the development of an aggregates business to underpin sustainability of these operations .

Adelaide Brighton continues to generate strong cash flows allowing the Company to invest in growth projects, pay

increased dividends while retaining a strong balance sheet with gearing near the bottom of the Board’s target range .

We were pleased to reward shareholders by paying fully franked ordinary dividends for the 2017 year of 20 .5 cents per

share and special dividends of 4 .0 cents per share, bring total dividends for 2017 to 24 .5 cents per share fully franked .

Remuneration report

Following consideration of an independent benchmark report that revealed non-executive Director fees had fallen out of line with

market peers, in 2017 fees for non-executive Directors were increased to ensure fee levels remain competitive to attract and retain

appropriately qualified Directors . This has been a particular focus of the Board due to its ongoing commitment to Board renewal .

Accordingly, the base fee for the Chairman of the Board and the non-executive Directors was increased by approximately 12% and

18% respectively . Fees for a Committee Chairman and Committee Member increased by approximately 18% and 5% respectively .

The Board does not expect to increase non-executive Director fees in the near future .

The 2017 remuneration increases across the Executive Key Management Personnel team were 3% to 4% percent . This is in line

with the Company’s policy of setting remuneration levels based on the size and nature of an executive’s role (and impact of the role

on the business) and individual performance in roles . Fixed remuneration levels continue to remain conservative relative to peer

companies of a similar market capitalisation .

Short Term Incentive

Adelaide Brighton delivered strong underlying financial performance in 2017, with underlying net profit after tax excluding property

up 5 .3% . However, reported net profit after tax (excluding property) declined 2 .7% resulting in the Group financial measure for

the 2017 STI not being met . A contributing factor to this decline in reported net profit after tax was due to the doubtful debt

provision and associated costs relating to underpayment for product supplied that came to light in late 2017 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017The Board determined that, for the purpose of calculating the STI, no adjustment would be made for the one-off doubtful

debt costs of $17 .7 million .

Notwithstanding good performance against their non-financial targets under the STI Plan, the Board, decided to reduce the

non-financial component of the STI to zero, for the CEO and Managing Director and CFO .

For all other KMP’s, the overall result was short term incentives for KMP vesting in the range of 12 .8% to 31 .4% of their potential

maximum taking into account the Board’s assessment of non-financial objectives and achievement of divisional financial targets .

Finally, as foreshadowed last year, in 2017 the portion of the short term incentive award that was deferred was increased to 50%

(up from 25% in 2016) .

Long Term Incentive

Consistent with strong Company performance over the past four years, the Board is pleased to advise that the 2013 long term

incentive Award was tested during 2017 and vested at 82 .9% . The relative total shareholder return (TSR) performance condition

exceeded the 82nd percentile and vested at 100% and the compound annual growth in earnings per share (EPS) target achieved

65 .9% vesting based on EPS growth of 6 .6% over the performance period .

These LTI outcomes are consistent with delivery of long term value to shareholders with the Company achieving a TSR of

107 .4% over the measurement period .

Board renewal

During the year the Board continued to progress its renewal program taking into consideration the Board skills matrix and

matching those skills to our strategic plans and was pleased to announce the appointment of two new Directors in February 2018 .

Dr Vanessa Guthrie and Mr Geoff Tarrant were appointed non-executive Directors under the Board’s renewal program . The

Board also named Mr Zlatko Todorcevski as Chairman Elect to succeed Mr Leslie Hosking as Chairman at the conclusion of the

Company’s Annual General Meeting on 17 May 2018 .

Dr Guthrie has more than 30 years’ experience in the mining and resources industry and she is considered independent . Mr Tarrant

is a finance executive with over 25 years’ experience primarily in mergers and acquisitions and capital markets . Mr Tarrant was

nominated by the Company’s major shareholder, Barro Properties Pty Ltd, and is not considered independent . Consistent with the

ASX Corporate Governance Council’s Principles and Recommendations, a majority of the Board remains independent .

Conclusion

These remuneration outcomes reflect the level of performance achieved against our applicable targets during 2017 .

We have prepared the 2017 Remuneration Report in line with our objective of transparency in explaining our remuneration

framework and practices and the link between Company and individual performance and incentive remuneration outcomes .

We continue to seek feedback on our Remuneration Report and continually look at ways to improve and include this feedback

into our remuneration practices and this report . We look forward to welcoming you to the 2018 Annual General Meeting .

Arlene Tansey

Chairman of Nomination, Remuneration and Governance Committee

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017REMUNERATION REPORT CONTENTS

1 Executive remuneration policy and framework . . . . . . . . . . . . . . . . . . . . . . . . . . 53

1 .1

1 .2

1 .3

Remuneration policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Remuneration framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Remuneration governance - responsibility for setting remuneration . . . . . . . . . 56

2 Overview of Company performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

2 .1

2 .2

Financial performance in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Long term financial highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

3 Linking remuneration to Company performance . . . . . . . . . . . . . . . . . . . . . . . . . 58

3 .1

Short Term Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

3 .1 .1 Short Term Incentive - performance measures . . . . . . . . . . . . . . . . . . . . . . . . . 58

3 .1 .2 Short Term Incentive - financial outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

3 .2

Long Term Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

3 .2 .1 Long Term Incentive - outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

4 Executive remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

4 .1

4 .2

4 .3

Fixed annual remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

At-risk remuneration - Short Term Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

At-risk remuneration - Long Term Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

5 Executive Service Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

6 Non-executive Directors’ fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

6 .1

Policy and approach to setting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

7 Key Management Personnel disclosure tables . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

7 .1

7 .2

7 .3

Non-executive Directors’ statutory remuneration . . . . . . . . . . . . . . . . . . . . . . . 67

Executive statutory remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Equity holdings of Key Management Personnel . . . . . . . . . . . . . . . . . . . . . . . . 69

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017The Directors of Adelaide Brighton Limited

Table 1

(the Company) present the Remuneration

Report (Report) for the Company and

the Group for the financial year ended

31 December 2017 . The Report outlines the

Name

Executives
M Brydon

Role

CEO and Managing Director (CEO & MD)

remuneration arrangements in place for the

M Kelly

Chief Financial Officer (CFO)

Key Management Personnel (KMP) of the

Company and is prepared in accordance

with section 300A of the Corporations Act

2001 . This Report, which forms part of the

Directors’ Report, has been audited by

PricewaterhouseCoopers .

The KMP of Adelaide Brighton comprises

all Directors and those Executives who have

authority and responsibility for the planning,

directing and controlling of the activities of

the Group . In this Report, ‘Executives’ refers

to members of the Group executive team

identified as KMP .

The KMP detailed in this Report for the

2017 financial year are:

G Agriogiannis

Executive General Manager, Concrete and Aggregates

AL Dell

BD Lemmon

Directors (2)

LV Hosking

RD Barro

GF Pettigrew

Executive General Manager, Concrete Products

Executive General Manager, Cement and Lime

Non-executive Chairman

Non-executive Director

KB Scott-Mackenzie

Non-executive Director

AM Tansey

Z Todorcevski (1)

Non-executive Director

(1) Appointed a non-executive Director on 22 March 2017 .

(2) Since the end of the reporting period VA Guthrie and GR Tarrant were appointed Directors on 8 February 2018 .

1 Executive remuneration policy

The governance of remuneration outcomes

and framework

1.1

Remuneration policy

is a key focus of the Board and the

Nomination Remuneration and Governance

(NRG) Committee . Remuneration policies

The Board ensures remuneration policies

are regularly reviewed to ensure that

are clearly aligned with the Group strategy,

remuneration for executives continue to

which is focused on maintaining and growing

remain aligned with Company performance .

long term shareholder value . In determining

executive remuneration, the Board has

adopted a policy that aims to:

> Be competitive in the market place in which

the Group operates in order to attract,

reward, motivate and retain a highly capable

executive team;

> Reward individual performance, responsibility

and potential;

> Drive leadership performance and behaviours

that reinforce the Group’s short and long

term strategic and operational objectives;

> Provide a common interest between

executives and shareholders by linking the

rewards that accrue to executives to the

creation of long term value for shareholders;

> Have regard to market practice and market

conditions; and

> Provide transparency and clarity on what, to

whom and on what basis remuneration has

been paid .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20171.2

Remuneration framework

In order to meet the aims of our remuneration policy, our executive remuneration

framework consists of the following three components:

> Fixed annual remuneration

> An annual short term incentive

> A long term incentive

Adelaide Brighton’s mix of fi xed and at risk components for the Executives disclosed in this

Report, as a percentage of potential maximum total annual remuneration is shown below .

CEO and MD

2016

Fixed annual
remuneration

Short term
incentive

Long term
incentive

331/3%

25%

81/3%

331/3%

Cash 581/3%

Equity 412/3%

2017

Fixed annual
remuneration

Short term
incentive

Long term
incentive

331/3%

16 2/3%

331/3%

Cash 50%

Equity 50%

Key management personel

2016

Fixed annual
remuneration

46%

Short term
incentive

Long term
incentive

24%

22%

Cash 70%

Equity 30%

2017

Fixed annual
remuneration

Short term
incentive

Long term
incentive

46%

16%

22%

Cash 62%

Equity 38%

Adelaide Brighton Ltd and its controlled entities
for the year ended 31 December 2017

The table below provides a summary of our remuneration framework for the 2017 financial year, and illustrates the way in which each element of

remuneration has been structured to support our Group business objectives and to align with the generation of shareholder wealth .

Component

Performance measure

‘At risk’ weight

Strategic objective/performance link

Considerations

(NA)

Long term individual performance

Role, responsibility and potential

Benchmarked to competitive
market rate

Remuneration set at competitive levels
in the market to attract, retain and
engage key talent

Motivate to achieve outstanding
performance

Fixed Annual
Remuneration (FAR)
Salary and other benefits
(including statutory
superannuation)

Annual Short Term
Incentive (STI)

Cash

+
Deferred rights to receive
fully paid ordinary shares

Maximum:
60%- 80% of FAR
(100% of FAR for CEO)

Financial targets (80%) -
CEO and CFO - 80% relating
to Group NPAT
Other Executives - 60%
relating to Group NPAT and
20% relating to Divisional EBIT

Non-financial targets (20%)
Relating to personal performance
against individual objectives

Long Term Incentive (LTI)

Earnings Per Share (EPS) (50%)

Maximum:

Rights to receive fully paid
ordinary shares

and

Total Shareholder Return (TSR)
(50%)

Measured over a four year
performance period

CEO
100% of FAR

Other executives:
40%-70% of FAR

Alignment to Group budget through
NPAT and Divisional budget through
Divisional EBIT performance

Non-financial targets drive leadership
performance and behaviours consistent
with achieving the Group’s short and
long term objectives and commitments
including safety, strategic plans, individual
business targets and other specific personal
or non-financial performance objectives
which align the interest of Company
executives and shareholders

Ensure strong link with the creation of
long term shareholder value to encourage
the achievement of growth of the
Company’s business

EPS was chosen as a
performance hurdle as it:
- Links executive reward to a fundamental
indicator of financial performance; and
- Links directly to the Group’s long term
objectives of maintaining and improving
earnings

TSR was chosen because it:
- Ensures alignment between comparative
shareholder return and reward for the
executive; and
- Provides a relative, external market
performance measure having regard to
a peer group of companies (Comparator
Group) with which the Group competes
for capital, customers and talent

Total Remuneration

The total remuneration mix is designed to attract, retain and motivate a highly capable executive team, encourage
and drive leadership performance that reinforces the Group’s short and long term strategic objectives and provides
a common interest between executives and shareholders by linking the rewards that accrue to executives to the
creation of value for shareholders

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20171.3

Remuneration governance - responsibility for setting remuneration

2 Overview of Company performance

Our governance framework for determining executive remuneration is outlined below:

2.1

Financial performance in 2017

Consultation with shareholders
and other stakeholders

Board

The Board approves:

The overall remuneration policy

Non-executive Director remuneration
and senior executive remuneration; and

The remuneration of the CEO, including
his participation in the short term and
long term incentive schemes

Nomination, Remuneration and
Governance (NRG) committee

Remuneration consultants and
other external advisors

Provide independent advice, information
and recommendations relevant to
remuneration decisions

In performing its duties and making
recommendations to the Board, the
Chairman of the NRG Committee seeks
independent advice from external advisers
on various remuneration related matters

Any advice or recommendations provided
by external advisers are used to assist
the Board - they do not substitute for the
Board and NRG Committee process

The NRG Committee is delegated
responsibility by the Board to review
and make recommendations on:

The remuneration policies and
framework for the Group

Non-executive Director remuneration

Remuneration for senior executives and

Executive incentive arrangements

Management

Provides information relevant to
remuneration decisions and makes
recommendations to the NRG Committee

Obtains remuneration information from
external advisors to assist the NRG
Committee (i .e . factual information, legal
advice, accounting advice, tax advice)

The NRG Committee seeks advice from external remuneration consultants on an as required

basis . The NRG Committee did not obtain remuneration recommendations during 2017 .

The Directors are pleased to present

Adelaide Brighton Limited’s financial

performance for 2017 .

> Revenue of $1,560 million was up 11 .7%

reflecting strong demand across residential,

non-residential and infrastructure projects in

Victoria, New South Wales and Queensland,

increasing infrastructure demand in

South Australia, and contributions from

acquisitions .

> Underlying NPAT (excluding property)

increased 5 .3% to $189 .3 million due to:

- Higher construction materials volumes

and pricing;

- Operational improvements and lower

import costs; and

- Acquisitions completed during the year .

Partially offset by:

- $3 .6 million associated with a cement

quality issue in South Australia;

- Additional $3 .3 million relating to a

compulsory scope change in remediation

related to the closure of our North

Melbourne concrete plant;

- Costs associated with the Company’s

limestone carrying vessel; and

- Higher energy costs .

> Reported NPAT declined 2 .3% due to a

number of significant items including a

$17 .7 million doubtful debt provision and

associated costs relating to underpayment

for product supplied .

Adelaide Brighton’s diversified business

model and focus on operational improvement

supported the Group’s long term growth

strategy . Strategic initiatives which

contributed to the Company’s financial

performance in 2017 included:

> Strengthening of our energy supply portfolio

with a South Australian five year energy

supply agreement to secure certainty of

supply at competitive prices .

> Operations efficiencies in cement and

lime delivered $8 million in 2017, including

$2 .8 million with rationalisation of speciality

cement production at Angaston in South

Australia and centralisation of laboratory

testing facilities to the Birkenhead Plant .

> Import profitability improved by $12 million

before tax compared to 2016 due to reduced

shipping and material procurement costs and

the higher Australian dollar .

> Our land sales program has delivered

cash proceeds since 2013 of $97 million .

This includes transactions in 2017 that

realised $13 .9 million in cash proceeds and

$8 .4 million NPAT .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017 > The acquisition of three concrete and

Table 2

aggregates businesses in 2017 contributed

5 .8% to revenue and refl ects the realisation

of our long term vertical integration strategy

as a major contributor to shareholder returns .

On an underlying (excluding property) basis,

key profi t measures for 2017 versus 2016

show an improvement of between 5 .3%

and 7 .0% (depending on the metric), on a

revenue increase of 11 .7% (Refer Table 2) .

2.2

Long term fi nancial highlights

As can be seen in the graph below the

2017

2016

Variance

2017

2016

Variance

Reported (excluding property)

Underlying (excluding property)

1,560 .0

1,396 .2

337 .9

255 .4

173 .6

335 .7

257 .6

178 .4

11 .7

0 .7

(0 .9)

(2 .7)

1,560 .0

1,396 .2

11 .7

360 .2

277 .7

189 .3

337 .6

259 .5

179 .7

6 .7

7 .0

5 .3

Revenue

EBITDA

EBIT

NPAT

The table below provides an overall view of the Company’s fi nancial performance and operating

cash fl ow over the past fi ve fi nancial years to 31 December 2017 .

Table 3 - Financial performance and shareholders’ wealth improvement from 2013 to 2017

underlying NPAT (excluding property)

Financial year ended

2013

2014

2015

2016

has increased from $154 .8 million to

31 December

2017 CAGR (1)
%

$189 .3 million over the last fi ve years

representing compound annual growth rate

(CAGR) of 5 .2% .

This growth has been delivered as

a result of the Company’s long term

strategy of cost reduction and continuous

improvement; growth in the lime business

and vertical integration of the construction

materials business .

Sales

NPAT

1,228 .0 1,337 .8 1,413 .1

1,396 .2 1,560 .0

6 .2

Excluding

Reported

property $m

150 .2

172 .0

173 .0

178 .4

173 .6

3 .7

% change

(1 .8)

14 .5

0 .6

3 .1

(2 .7)

NPAT Underlying

Excluding

property $m

154 .8

159 .6

174 .2

179 .7

189 .3

5 .2

% change

Share price (2)

$/share

8 .9

3 .67

3 .1

9 .1

3 .2

5 .3

3 .52

4 .75

5 .43

6 .52

Cents/share

19 .5(3)

17 .0

27 .0(4)

28 .0(4)

24 .5(5)

15 .5

5 .9

Net profi t after tax
(reported excluding property)
vs net profi t after tax
(underlying excluding property)

Dividends

Franking

Operating

cash fl ow

100

227 .3

194 .0

229 .9

248 .4

224 .2

23 .7

23 .9

26 .9

0 .5

32 .0

42 .6

28 .7

20 .2

28 .0

24 .6

166 .0

Earnings per share Cents

TSR - 1 year

Total Shareholder

Return

(1) Compound Annual Growth Rate .

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NPAT (reported excluding property)
NPAT (underlying excluding property)

The TSR achieved over the last fi ve years

of 166% has outperformed the Comparator

Group* and the S&P/ASX200 Accumulation

Index . This is due to a sustained year on year

improvement in share price and increased

dividends . TSR over the last 12 months was

24 .6%, again refl ecting an improved share

price, increased ordinary dividends and

the payment of special dividends and an

improvement in the underlying performance

of the business .

* Comparator Group is the companies in the

S&P/ASX200 Accumulation Index, excluding
all GICS fi nancial companies and selected
resources companies .

(2) At 31 December, or last trading day of the year if not 31 December .

(3) Includes 3 .0 cents special dividend .

(4) Includes 8 .0 cents total special dividend .

(5) Includes 4 .0 cents special dividend .

As can be seen in the graph below, Adelaide Brighton’s TSR growth over the last fi ve years has

signifi cantly outperformed the S&P/ASX200 Accumulation Index .

200

160

120

Total shareholder returns (share price + dividend reinvested)
and S&P/ASX200 Accumulation Index returns

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ABC
S&P/ASX200 Accum

Adelaide Brighton Ltd and its controlled entities
for the year ended 31 December 2017

190

180

170

160

150

140

130

120

3 Linking remuneration to Company performance

This section explains how the Group’s performance has driven Short Term Incentive and Long Term Incentive outcomes for our Executives

during 2017 . Strong Company performance across key indicators is reflected in the remuneration outcomes during the year .

3.1

Short Term Incentive

3.1.1

Short Term Incentive - performance measures

Performance measures

Reason chosen

Financial performance

The “financial metrics” for the Group is NPAT and EBIT
for Divisions . Actual financial metrics are compared to
target . The Board has discretion to adjust NPAT for target
assessment .

The Board believes the financial measure aligns the interests of Executives with shareholders,
ensuring the KMP are rewarded on the Group’s annual business objectives, ensuring
Executives create sustainable value for shareholders . The comparison to budget allows for
recognition of the cyclical nature of the industry in which the Company operates and forward
looking factors that can be incorporated into a budget, while the stretch targets provide
incentives beyond budget to enhance shareholder returns .

Non-financial performance

The strategic initiatives focus on three interdependent
areas; operational excellence, market leadership and
vertical integration, with key foundation drivers being
growth in our core business and opportunities for
transformational deals .

A range of metrics focused on safety, engagement,
building capability, retaining company knowledge and
diversity with specific metrics for:
Proactive safety behaviours
Enhance environmental performance
Development of capability
Deepening succession pools
Increasing diversity of candidate pools .

Proactively responding to market developments and implementing strategies to drive
sustainable growth are critical to delivering the strategy and the creation of shareholder value .

Having the right people in management and senior leadership roles is critical to our long term
success . The CEO and Managing Director plays an important role in this process and he is
assessed on his ability to manage talent and succession risks at senior management levels .

Specific operational targets focused on productivity gains,
cost reduction, operational improvement and improved
asset management towards achieving improved return on
investment .

Specific measures and initiatives were identified to ensure the delivery of sustainable
operations and shareholder return .

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Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017
Performance assessment Result

Group result In its assessment of financial performance,
the Board excluded property profits and other significant items
(restructuring costs, transaction costs and fair value gain) .
However no adjustment was made for the one-off item of the
doubtful debt costs of $17 .7 million .

Despite strong underlying Company performance, Group
financial performance was assessed at less than 95% of target
resulting in the Group financial component not being met .

Divisional results Concrete and Aggregates Division financial
performance was greater than 100% of target, resulting in 93%
achievement of the Concrete and Aggregates financial component .

Cement and Lime and Concrete Products Divisions financial
performance was less than 95% of target, resulting in the
financial component for these Divisions not being achieved .

KMP other than the CEO and Managing Director and CFO
were assessed at 50-80% achievement of Strategic
non-financial objectives .

KMP other than the CEO and Managing Director and
CFO were assessed at 50-70% achievement of People
non-financial objectives .

Target included a financial stretch The 2017 target was set at 5 .8% above 2016 actual .
This was a challenging target given the market conditions in Western Australia and the
Northern Territory .

For KMP to achieve the maximum outcome under the Group financial performance measure,
2017 NPAT must have exceeded 2016 NPAT by 16%, highlighting the significant stretch
component of the incentive .

Strong underlying performance The Board’s view is that the underlying performance of
the Group continues to be strong with contribution from recent concrete and aggregate
acquisitions highlighting the benefits of the Company’s vertical integration strategy .

Acquisitions Position the Company to take advantage of potential “bolt-on” and
transformational acquisitions to ensure readiness when the opportunity becomes available .
The CEO and Managing Director and management team progressed acquisition opportunities
which culminated in the acquisition of Central Pre-Mix concrete and quarry, Davalan Concrete
and the Holcim concrete and aggregates business in the Northern Territory .

Product innovation Commissioning of automated sleeper walling plant to deliver significant
operating efficiencies, sales growth and potential new market segments .

Organic growth Development approvals and construction of three greenfield concrete plants
in Brisbane to capitalise on growth in this region . Commissioning of an innovative indoor
premixed concrete plant to service demand in the Sydney inner city area .

Proactive safety behaviours Proactive safety behaviours have improved evidenced by
increased reporting in 2017: safety hazard reports increased by 3% and near miss reports
increased by 31% . The CEO and Managing Director and management demonstrated their
visible and leadership through active participation in site safety committee meetings
throughout the Company’s Australia wide operations .

Enhance environmental performance Enhance environmental performance through
training and increased environmental resource capability .

Development of capability Embedded Mentoring Program to support personal and career
growth opportunities for high potential employees in addition to building capability across
the mentor group .

Deepening succession pools and identification of future executive talent
The CEO and Managing Director and management exceeded targets set in respect of
succession plans for key leadership roles, including the identification of future executive talent .

Increased diversity Targeted sourcing strategies increased the gender diversity of
candidate pools with 66% of roles advertised in 2017 attracting female applicants .

Operational improvement Significant operational improvement benefits of $11 million
from rationalisation of specialty cement production at the Angaston plant, centralisation of
laboratory facilities at the Birkenhead plant and energy savings .

KMP other than the CEO and Managing Director and CFO
were assessed at 60-80% achievement of Operational
Excellence non-financial objectives

Import strategy Significant savings of $12 million from transport, shipping and materials
purchasing . Conclusion of a long term cement and clinker import agreement to deliver significant
savings over a 10 year period in addition to the flexibility to handle a range of supply scenarios .

Investment in operational improvement Achieved targeted efficiencies in relation to the
cessation of oilwell production at the Angaston plant and centralisation of laboratory facilities
at the Birkenhead plant .

Land sales program Preparation and negotiation of sale of land at a price that exceeded
expectations during 2017, and ongoing progress on delivery of value from the long term
land sales program .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20173.1.2

Short Term Incentive - financial outcomes

Adelaide Brighton delivered a strong underlying financial performance in 2017, with underlying

NPAT (excluding property) up 5 .3% on the previous year .

Taking into consideration the impact of one-offs, specifically the $17 .7 million doubtful debt

costs, the Board exercised discretion and did not award an STI payment to the CEO and

Managing Director and CFO for the 2017 financial year .

For the other KMP’s, the overall result was short term incentives for KMP vesting in the range of

12 .8% to 31 .4% of their potential maximum taking into account the Board’s assessment of non-

financial objectives and partial achievement of the financial target in one division .

The Concrete and Aggregates Division financial performance was greater than 100% of

target, resulting in 93% achievement of the financial component for this Division . As financial

performance was less than 95% of target, the financial component was not achieved for the

Group, Cement and Lime Division and Concrete Products Division .

As you can see from the table below, in 2017 underlying (excluding property) EBIT and NPAT

increased over the previous year with an increased revenue of 11 .7% .

Table 4

Revenue

EBITDA

EBIT

NPAT

Underlying (excluding property)

2017

1,560 .0

360 .2

277 .7

189 .3

2016

1,396 .2

337 .6

259 .5

179 .7

Variance

11 .7

6 .7

7 .0

5 .3

The short term incentive payments shown in the table below reflect the performance achieved and amounts payable to Executives for the 2017

financial year .

Table 5

For the year ended

Maximum

Actual STI

STI actual(2)

Cash STI Deferred STI

Deferred STI

31 Dec 2017

Executives

M Brydon

M Kelly

G Agriogiannis

AL Dell

BD Lemmon

potential STI
opportunity (1)

as % of

STI maximum

1,438,910

612,232

436,720

257,088

412,000

31 .4

12 .8

13 .2

(2 years)

(3 years)

(Total)

awarded

No . of rights

137,005

68,503

34,251

68,502

10,115

32,907

16,454

8,227

8,226

16,453

54,384

27,192

13,596

27,192

2,430

4,015

(1) Where the actual STI payment is less than the maximum potential, the difference is forfeited and does not become payable in subsequent years .

(2) The 2017 STI was determined in conjunction with the finalisation of 2017 results .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20173.2

Long Term Incentive

3.2.1

Long Term Incentive - outcomes

During 2017, the 2013 Award was tested for earliest exercise in May 2017 and vested at 82 .9%:

> The Total Shareholder Return component vested at 100 .0% with the Company achieving a Total

Shareholder Return of 107 .4% being the 82nd percentile of the Comparator Group .

> The compound annual EPS growth rate over the 2014 to 2016 fi nancial period was 6 .6% with

the EPS component partially vesting at 65 .9% .

The chart below illustrates Adelaide Brighton’s total shareholder return over the measurement period

for the 2013 Award . The Total Shareholder Return of 107 .4% resulted from share price growth and

payment of ordinary and special dividends totalling 101 .5 cents fully franked over the period .

ABC shareholder returns - share price growth and TSR
(October 2012 to December 2016) (Index = 100,

Source: ASX, First Advisers Pty Ltd

Dividends
= 37 .7%

Share
price
growth
= 69 .7%

ABC TSR
= 107 .4%

240

220

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180

160

140

120

100

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ABC share price growth
ABC TSR (share price growth + dividends reinvested)

Details of the movement in Awards held by Executives during the 2017 fi nancial year are set out below .

Table 6

For the year ended

Number held

Number

31 Dec 2017

at 1 Jan 2017

granted during
the year(1)

Number

exercised /

Number

Number held

Value of

lapsed /

at 31 Dec
2017(4)

Awards at
grant date (5)

vested during
the year(2)

forfeited during
the year(3)

Value per

share at

the date of
exercise(6)

Executives

M Brydon

M Kelly

G Agriogiannis

AL Dell

BD Lemmon

1,331,100

273,188

215,746

44,502

1,344,040

822,296

583,989

101,707

153,601

299,428

85,455

205,436

51,822

32,540

48,888

82,132

31,684

16,942

500,411

306,138

252,176

155,984

117,995

99,410

45,315

9,347

199,662

147,152

5 .76

5 .88

5 .76

(1) This represents the maximum number of Awards granted in 2017 that may vest to each Executive . As the Awards granted in 2017 only vest on satisfaction of performance

conditions which are to be tested in future fi nancial periods, none of the Awards as set out above vested or were forfeited during the year . At the end of the applicable performance
period, any Awards that have not vested will expire .

(2) These Awards which were exercisable during 2017 were in fact exercised, being the 2013 Award . The number of Awards that vested during the period and exercisable at 31

December 2017 is NIL . The number of Awards that vested but not yet exercisable at 31 December 2017 is NIL .

(3) This includes the portion of 2013 Award that reached the end of its performance period on 31 December 2016 that did not meet the performance conditions and was forfeited .

(4) Awards subject to performance conditions which remain unvested (2014, 2015, 2016 and 2017 Awards), and which will be tested for vesting during the period 2018 to 2021 .

(5) Fair value of Awards granted during 2017 as at grant date .

(6) The value per share at the date of exercise is the Volume Weighted Closing Price which is the average of the closing price and number of Adelaide Brighton Limited shares traded

on the Australian Securities Exchange for the fi ve trading days before the exercise date, but not including the day of exercise . The aggregate value of Awards that vested during the
year is $3,087,312 based on the Volume Weighted Closing Price .

Adelaide Brighton Ltd and its controlled entities
for the year ended 31 December 2017

4 Executive remuneration

Fixed remuneration is reviewed annually

From 1 January 2017 the Board resolved

4.1

Fixed annual remuneration

having regard to relevant factors including

to increase fixed remuneration across the

performance, market conditions (both

executive team by 3 to 4 per cent, in line with

The amount of fixed remuneration for

generally and in the markets in which the

the Company’s policy of setting remuneration

an individual executive (expressed as a

Group operates), growth and comparable

levels based on the size and nature of an

total amount of salary and other benefits,

roles within peer companies and similar

executive’s role (and impact of the role on the

including superannuation contributions) is

roles across a comparator group comprising

business) and individual performance in roles .

set with regard to the size and nature of an

those companies in the ASX 51-150 . For

Fixed remuneration levels continue to remain

executive’s role, the long term performance

someone who has performed successfully

conservative relative to peer companies of a

of an individual, his or her future potential

in their role for a number of years, FAR set

similar market capitalisation .

within the Group and market practice . The

between the median and 75th percentile of

Company’s stated approach is also to set

the comparator would be expected .

fixed remuneration levels at relatively modest

levels compared to peers for executives

who are new to their roles and to then

progressively increase remuneration based

on individual performance in that role .

4.2

At-risk remuneration - Short Term

Incentive

Adelaide Brighton’s STI is the Company’s

at risk short term incentive component of

the remuneration mix for senior executives,

including Executives .

A summary of the key features of the 2017

STI is as follows:

Form and purpose of the STI

Who participates in the STI?

Participation in the STI is generally offered to the CEO and Managing Director and senior

executives who are able to have a direct impact on the Group’s performance against the

relevant performance hurdles .

Why does the Board consider the STI an

The STI is designed to put a meaningful proportion of senior executives’ remuneration at risk, to

appropriate incentive?

be delivered on the achievement of performance targets linked to the Group’s annual business

objectives, ensuring senior executives create sustainable value for shareholders .

Does the STI comprise a deferred component?

Yes .

For STI awards for the 2017 financial year onwards, 50% of STI awards will be deferred (unless

otherwise determined by the Board) . This is an increase from 2016 where 25% of the award

was deferred .

Performance conditions

When and how are the STI performance

All performance conditions are set by the Board and agreed with the executive .

conditions set?

In approving financial targets under the STI, the Board considers a number of factors, including

the industry in which we operate and the extraneous factors including market conditions that

impact our financial performance and those of our competitors . These include the dynamics of

the construction and resources industries, exchange rates and energy considerations .

Our management team has responded well to external pressures over recent years, and has

generated positive return for longer term shareholders .

Accordingly, the Board strongly believes that our STI targets need to be set in this context in

order to continue to attract and motivate a highly capable senior executive team who can drive

the continued delivery of strong results for shareholders over the longer term .

Reward opportunity

What level of reward can be earned under

STI outcomes of financial targets vest progressively in accordance with the following scale:

the STI?

Financial target achieved

STI % for financial target

Below 95%

95%

Between 95% and 110%

110% or above

Nil

50%

Pro rata

100%

Non-financial objectives are set at a stretch level of performance .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Governance

How is performance against the performance

All performance conditions under the STI are clearly defined and measurable .

conditions assessed?

NPAT is used for setting and measuring Group financial performance for the purposes of the

STI as this more closely reflects the shareholder experience . Divisional financial performance will

continue to be based on EBIT performance .

In respect of the financial targets, the Board compares the actual NPAT earned against the

budgeted NPAT for the year, and assesses the degree to which the Group met these targets .

The Board may adjust for exceptional, abnormal or extraordinary factors which may have

affected the Group’s performance during the year .

The Board also considers the NRG Committee’s assessment of the CEO and Managing

Director’s performance against the agreed non-financial targets, and that of the senior

executives (based on the recommendation of the CEO and Managing Director) .

When is performance against the performance

Assessment of performance against the performance hurdles for the relevant year is

conditions determined and the award

determined at the February meeting of the NRG Committee and the Board, in conjunction with

made available?

finalisation of the Group’s full year results .

The cash award is paid following the release of the Company’s full year results in February . The

remainder of the award (the Deferred Rights) is made available as reasonably practical after the

announcement of the Company’s full year result .

What disposal restrictions apply to the

The 2017 Deferred Rights will be divided into two equal tranches:

Deferred Rights (and to dividends and

> the Deferred Rights in Tranche 1 and the shares acquired on their exercise may not be sold or

voting rights attach?)

otherwise disposed of until after 31 December 2019 (2 year disposal restriction); and

> the Deferred Rights in Tranche 2 and the shares acquired on their exercise may not be sold or

otherwise disposed of until after 31 December 2020 (3 year disposal restriction) .

No dividends (or voting rights) are received on the Deferred Rights during the

disposal restrictions .

On exercise, the Deferred Rights are converted to shares . The shares issued may not be sold

or otherwise disposed of until the restriction period ends . During the restriction period shares

are eligible to receive dividends and be voted .

Does the Board have an overriding discretion?

The Board has absolute discretion in relation to assessing performance and determining the

amount, if any, of STI awards .

Is there an ability to ‘claw back’ in appropriate

Yes . The STI Plan Rules provide the Board with a broad ability to claw back awards if

circumstances?

considered appropriate .

In addition to the STI Plan Rules, the Board also has a formal Clawback Policy which provides

the Board with the ability to reduce, forfeit or require repayment of incentives which vest (or may

vest) in the case of a material misstatement in Company financial results, serious misconduct

by a participant or in circumstances where incentive awards or vesting is based on incorrect

information not of a financial nature .

Cessation of employment or a change of control

What happens to STI awards on cessation of

Generally, if an Executive resigns or is terminated for cause, all STI entitlements will be forfeited .

employment?

The STI Plan Rules provide that in other circumstances, and at the discretion of the Board,

award opportunities will be pro-rata reduced to reflect the proportion of the measurement

period not worked . Any disposal restrictions applicable to shares acquired upon the exercise of

Deferred Rights will be lifted on cessation of employment .

How would a change of control of the Group

In the event of a takeover bid (or other transaction likely to result in a change in control of

impact on STI entitlements?

the Company), the Board has absolute discretion to take any action as provided under the

STI Plan Rules .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20174.3

At-risk remuneration – Long Term Incentive

The Company makes annual grants of Awards under the Executive Performance Share Plan (Plan) to all senior executives who are eligible

to participate .

A summary of the key features of the Plan as it applies to the 2017 LTI Award is as follows:

Driving performance

Who participates and how does the Plan drive

The LTI is offered to senior executives whose behaviour and performance have a direct impact

performance and align participants’ interests

on the Group’s long term performance . Its purpose is to focus executives on the Group’s long

with shareholders?

term business strategy to create and protect shareholder value over a four year performance

period, thus aligning executives’ interests more closely with shareholders .

Vesting, performance conditions and reward opportunity

What is the vesting / performance period?

The 2017 Awards will be tested and become exercisable to the extent of any vesting from

1 May 2021 .

What happens on the exercise of Awards?

Shares are delivered to the executive on the exercise of the Awards . Awards are granted at no

cost to the executive and no amount is payable by the executive on the exercise of the Awards .

How is the TSR performance condition measured

The Company’s TSR performance must equal or exceed the growth in the returns of the

and what amount can be earned?

median companies of the S&P/ASX 200 Accumulation Index (XJO Al), excluding all GICS

Any unexercised 2017 Awards will expire on 30 September 2021 .

Financial companies and selected resources companies over the period from 31 December

2016 to 31 December 2020 .

The 2017 Awards vest progressively in accordance with the following scale:

TSR growth relative percentile ranking

% of Awards subject to TSR hurdle to vest

Below 50%

50%

Between 50% and 75%

75% or above

Nil

50%

Pro rata

100%

How is the EPS performance condition calculated

The EPS performance hurdle requires the compound annual growth in EPS of the Company

and what amount can be earned?

over the relevant performance period to equal or exceed 5% per annum before any Awards

will vest .

The Board retains overall discretion to make adjustments in favour of, or against, management

to ensure that they do not enjoy a windfall gain nor suffer an unfair penalty for matters that were

not in their control or reasonable foresight .

Awards under the 2017 Award are to vest progressively in accordance with the following scale:

Compound annual growth in EPS

% of Awards subject to EPS hurdle to vest

Below 5% per annum

5% per annum

Between 5% and 10% per annum

10% per annum or above

Nil

50%

Pro rata

100%

Is re-testing permitted?

No . Re-testing of either of the performance conditions applicable to a tranche of Awards is

not permitted .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Governance

Is there ability to ‘claw back’ in

appropriate circumstances?

Yes . The rules of the Plan have, for some time, provided the Board with a broad ability to claw

back Awards if considered appropriate .

In addition to the rules of the Plan, the Board also has a formal Clawback Policy which provides

the Board with the ability to reduce, forfeit or require repayment of incentives which vest (or may

vest) in the case of a material misstatement in Company financial results, serious misconduct

by a Participant or in circumstances where incentive awards or vesting is based on incorrect

information not of a financial nature .

What other conditions apply to the Awards

An executive’s entitlement to shares under an Award may also be adjusted to take account of

(including voting rights and dividends)?

capital reconstructions and bonus issues .

The rules of the Plan 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) .

Until the Awards vest, executives have no legal or beneficial interest in Adelaide Brighton

Limited shares, no entitlement to receive dividends and no voting rights in relation to any

securities granted under the 2017 Award, or any of the other 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 .

Cessation of employment or a change of control

What happens to Awards that are not yet

If an Executive resigns or is terminated for cause, the Awards in respect of any tranche that is

exercisable on cessation of employment?

not exercisable will generally be forfeited .

The rules of the Plan provide that in other circumstances, and at the discretion of the Board, 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 .

How would a change of control of the Group

In the event of a takeover bid (or other transaction likely to result in a change in control of

impact on LTI entitlements?

the Company), an executive will only be allowed to exercise his or her Awards to the extent

determined by the Board as provided under the rules of the Plan .

5 Executive Service Agreements

The remuneration and other terms of employment for Executives are set out in formal employment contracts referred to as Service Agreements . All

Service Agreements are for an unlimited duration and details of Executives’ entitlements on termination are set out below . All Service Agreements

may be terminated immediately for serious misconduct, in which case Executives are not entitled to any payment on termination other than

remuneration and leave entitlements up to the date of termination .

Table 7

Name

M Brydon

Notice periods

Separation payments (1)

6 months’ notice by either party

6 months fixed annual remuneration where the Company terminates on notice .

(or payment in lieu)

M Kelly

3 months’ notice by either party

12 months fixed annual remuneration where the Company terminates on notice .(2)

(or payment in lieu)

G Agriogiannis

3 months’ notice by either party

9 months fixed annual remuneration where the Company terminated on notice .

(or payment in lieu)

AL Dell

6 months’ notice by either party

6 months fixed annual remuneration where the Company terminates on notice .

(or payment in lieu)

BD Lemmon

6 months’ notice by either party

6 months fixed annual remuneration where the Company terminates on notice .

(or payment in lieu)

(1) In the case of resignation, no separate 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) .

(2) No separation payment will exceed the limit under the Corporations Act 2001 .

On termination of employment for any reason, the CEO and other Executives are prohibited from engaging in any activity that would compete with

the Group for a period of six months in order to protect the Group’s business interests . In the event of resignation, at the option of the Company,

Mr Brydon and Mr Kelly may be paid a monthly amount equivalent to the Executive’s monthly fixed remuneration at the time of termination during the

period of restraint to support the enforceability of the restraint .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20176 Non-executive Directors’ fees

6.1

Policy and approach to setting fees

Overview of policy

Non-executive Directors receive a base fee in relation to their service as a Director of the Board,

and an additional fee for membership of, or for chairing a committee .

The Chairman, taking into account the greater time commitment required, receives a higher fee

but does not receive any additional payment for service on the respective committees .

The total amount of fees paid to non-executive Directors is determined by the Board on the

recommendation of its NRG 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 . These fees are 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 NRG Committee takes into account:

> Independent professional advice;

> Fees paid by comparable companies;

> The general time commitment and responsibilities involved; and

> The level of remuneration necessary to attract and retain Directors of a suitable calibre .

Aggregate fees approved by shareholders

Total fees, including committee fees, were set within the maximum aggregate amount of

$1,600,000 per annum approved at the 2017 Annual General Meeting .

Base fees for 2017

Following an independent benchmarking exercise in 2016 that revealed non-executive Director

fees had fallen out of line with market peers, in 2017 fees for non-executive Directors were

increased to ensure fee levels remain competitive to attract and retain appropriately qualified

Directors . This has been a particular focus of the Board due to its ongoing commitment to

Board renewal .

Accordingly for the 2017 financial year the base fee for the Chairman of the Board and the

non-executive Directors was increased by approximately 12% and 18% respectively . Fees

for a Committee Chairman and Committee Member increased by approximately 18% and

5% respectively .

The Board does not expect to increase non-executive Director fees in the near future .

Fees payable to non-executive Directors are inclusive of contributions to superannuation .

Base fees (Board)

Non-executive Chairman(1)

Non-executive Director

370,000

130,000

Committee fees

Committee chair

Committee member

Audit, Risk and Compliance Committee

Nomination, Remuneration and Governance

Committee

Safety, Health and Environment Committee

30,000

15,000

(1) The Chairman of the Board receives no additional fee for Committee work .

In accordance with 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 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20177 Key Management Personnel disclosure tables

7.1

Non-executive Directors’ statutory remuneration

Details of non-executive Directors’ remuneration are set out in the following table:

Table 8

L V Hosking

(Chairman)

R D Barro

G F Pettigrew

K B Scott-Mackenzie

A M Tansey

Z Todorcevski (2)

Total non-executive

Directors’ remuneration

Fees and allowances

Directors’ base fees

Committee fees (incl.

Year

(incl. superannuation)

superannuation)

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

370,000

330,000

130,000

110,000

130,000

110,000

130,000

110,000

130,000

110,000

101,268

991,268

770,000

15,000

14,294

60,000

53,999

45,000

39,705

45,000

39,705

3,750

168,750

147,703

Post-employment

benefits

Superannuation
contributions (1)

23,449

12,580

10,783

17,273

14,909

15,183

12,998

15,183

12,998

9,111

92,779

75,137

Total

370,000

330,000

145,000

124,294

190,000

163,999

175,000

149,705

175,000

149,705

105,018

1,160,018

917,703

(1) Superannuation contributions are made on behalf of non-executive Directors which satisfy the Group’s obligations under applicable Superannuation Guarantee Charge legislation .

(2) Z Todorcevski was appointed a non-executive Director on 22 March 2017 . He was appointed a member of the Board’s Audit, Risk and Compliance Committee and Nomination,

Remuneration and Governance Committee effective 16 November 2017 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20177.2

Executive statutory remuneration

Table 9

Post employment

Equity based

Short term benefits

Cash salary

Other

(FAR)

Cash STI (1)

benefits

benefit

Super-
annuation (2)

benefits

Deferred

Long term

STI (1)

incentive (3)

Total

awards (4)

% of

remuneration

consisting of

Executives

M Brydon

M Kelly

G Agriogiannis

AL Dell

BD Lemmon

Year

2017

1,408,910

152,941(5)

30,000

283,725

1,875,576

2016

1,362,000

643,102

166,667(5)

35,000

214,368

403,849

2,824,986

2017

2016

2017

2016

2017

2016

2017

2016

735,290

713,000

273,629

525,900

68,503

510,000

219,212

404,480

388,000

16,454

90,725

485,000

27,192

458,333

133,080

30,000

20,000

24,000

30,000

113,457

878,747

91,210

248,090

1,355,929

68,502

58,079

740,984

73,070

122,531

944,813

16,454

26,024

487,412

30,241

15,622

534,528

27,192

52,918

622,302

44,360

134,623

800,396

Total executive

remuneration

2017

3,559,580

112,149

152,941

134,000

112,148

534,203

4,605,021

2016(6) 3,555,866

1,392,807

166,667

147,800

464,269

1,035,797

6,763,206

(1) STI payment includes payments relating to 2017 performance accrued but not paid as at 31 December 2017 .

(2) Includes Company contributions to superannuation and allocations by employees made by way of salary sacrifice of fixed remuneration .

(3) 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 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 the 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 in Note 27 .

(4) % of remuneration for the financial year which consists of the amortised annual value of Awards issued under the Adelaide Brighton Limited Executive Performance Share Plan .

(5) Living Away from Home Allowance payment made pursuant to Mr Brydon’s Service Agreement to assist him in discharging his duties from the Company’s Sydney office .

(6) Total executive remuneration for 2016 includes total remuneration of $288,494 for former KMP, M Miller . Refer to the 2016 Remuneration Report for full details of the remuneration .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 20177.3

Equity holdings of Key Management Personnel

A summary of Executives’ and non-executive Directors’ current shareholdings in the Company as at 31 December 2017 is set out below .

While the Board has considered minimum shareholding guidelines for non-executive Directors, it has continued to determine that it is not appropriate

to require a particular holding, given that this is a matter for individual preference . The Board considers that Executives’ interests are sufficiently

aligned to those of our shareholders through the LTI and STI Deferral (as the LTI and STI Deferral are subject to share price fluctuation) .

Table 10 (1)

Executives

M Brydon

M Kelly

G Agriogiannis

AL Dell (2)

BD Lemmon

Non-executive Directors

LV Hosking

RD Barro (3)

GF Pettigrew

KB Scott-Mackenzie

AM Tansey

Z Todorcevski (4)

Granted as remuneration during the year

Balance at

beginning of year

LTI

Deferred STI

to other changes

of year

Net movement due

Balance at end

39,296

5,000

4,851

227,579,355

7,739

5,000

10,000

20,000

215,746

153,601

82,132

45,315

39,610

16,854

13,502

5,588

8,197

(215,746)

(158,601)

(82,132)

(45,315)

78,906

16,854

13,502

5,588

8,197

5,000

9,851

18,904,990

246,484,345

9,000

16,739

5,000

10,000

20,000

(1) The balances reported in this Table 10 include shares held directly, indirectly or beneficially by each KMP or close members of their family or an entity over which the person or the

family member has either direct or indirect control, joint control or significant influence as at 31 December 2017 .

(2) Mr Dell commenced in the position of Executive General Manager, Concrete Products effective from 1 May 2015 . He was not eligible for shares granted under the LTI 2013 Award .

(3) The balances relating to Mr Barro include shares owned by entities over which Mr Barro has a significant influence, or which he jointly controls, but he does not control these

entities himself .

(4) Mr Todorcevski was appointed a non-executive Director on 22 March 2017 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017INCOME STATEMENT

For the year ended 31 December 2017

($ 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 and associate 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

Consolidated

Notes

2017

22(a)

7(a)

1,560.0
(1,009.9)
(243.8)

306.3
19.6
(20.7)
(72.3)
(13.6)
35.1

254.4
(72.3)

182.1

182.0
0.1

182.1

Cents

2016

1,396 .2
(885 .8)
(195 .5)

314 .9
14 .5
(21 .9)
(68 .4)
(13 .0)
28 .5

254 .6
(68 .4)

186 .2

186 .3
(0 .1)

186 .2

Cents

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

4
4

28.0
27.9

28 .7
28 .6

Adelaide Brighton Ltd and its controlled entities for the year
ended 31 December 2017. The above income statement
should be read in conjunction with the accompany notes.

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2017

($ million)

Profit for the year

Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Changes in the fair value of cash flow hedges
Income tax relating to these items

Items that will not be reclassified to profit or loss
Actuarial gain on retirement benefit obligation

Income tax relating to these items

Other comprehensive income for the 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

20(a)
20(a)
7(c)

26(b)

7(c)

Consolidated

2017

182.1

2016

186 .2

0.4
-
-

1.9

(0.6)

1.7

(0 .9)
1 .3
(0 .4)

1 .7

(0 .5)

1 .2

183.8

187 .4

183.7
0.1

183.8

187 .5
(0 .1)

187 .4

Adelaide Brighton Ltd and its controlled entities for the year
ended 31 December 2017. The above statement of comprehensive
income should be read in conjunction with the accompany notes.

BALANCE SHEET

As at 31 December 2017

($ 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
Retirement benefit asset
Joint arrangements and associate
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
Other non-current liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Share capital
Reserves
Retained earnings

Capital and reserves attributable to owners of the Company
Non-controlling interests

Total equity

Notes

2017

2016

Consolidated

9(i)
10
11

10
26(b)
22
12
14

17
7(f)
16

18
20(a)
20(b)

57.6
241.0
174.3

1.9

474.8

37.3
3.5
160.3
1,037.2
299.9

1,538.2

2,013.0

145.8
0.3
9.8
33.8
15.1

204.8

428.9
86.0
45.0
0.1

560.0

764.8

21 .5
204 .6
160 .2

3 .8

390 .1

34 .4
2 .3
151 .2
978 .4
270 .3

1,436 .6

1,826 .7

117 .0
0 .4
15 .4
31 .9
3 .3

168 .0

309 .6
89 .9
39 .0
0 .1

438 .6

606 .6

1,248.2

1,220 .1

733.1
1.9
510.6

1,245.6
2.6

1,248.2

731 .4
2 .9
483 .3

1,217 .6
2 .5

1,220 .1

Adelaide Brighton Ltd and its controlled entities for the year
ended 31 December 2017. The above balance sheet should
be read in conjunction with the accompanying notes.

STATEMENT OF CHANGES IN EQUITY

Notes

Notes
Notes

For the year ended 31 December 2017

Consolidated
For the year ended 31 December 2017
For the year ended 31 December 2017
Consolidated
Consolidated

($ million)

($ million)
Balance at 1 January 2017
($ million)
Balance at 1 January 2017
Profit for the year
Balance at 1 January 2017

Profit for the year
Other comprehensive income
Profit for the year

Other comprehensive income
Total comprehensive income for the year
Other comprehensive income
Total comprehensive income for the year
Deferred hedging gains and losses and cost
Total comprehensive income for the year
of hedging transferred to the carrying value
Deferred hedging gains and losses and cost
Deferred hedging gains and losses and cost
of inventory purchased in the period
of hedging transferred to the carrying value
of hedging transferred to the carrying value
of inventory purchased in the period
Transactions with owners in their
of inventory purchased in the period
capacity as owners:
Transactions with owners in their
Transactions with owners in their
capacity as owners:
Dividends provided for or paid
capacity as owners:
Dividends provided for or paid
Executive performance share plan
Dividends provided for or paid
Executive performance share plan
Executive performance share plan

19
18(b)/20(a)
19
18(b)/20(a)
18(b)/20(a)

Balance at 31 December 2017

Balance at 31 December 2017
Balance at 1 January 2016
Balance at 31 December 2017
Balance at 1 January 2016
Profit for the year
Balance at 1 January 2016
Profit for the year
Other comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Other comprehensive income
Total comprehensive income for the year
Deferred hedging gains and losses and cost
Total comprehensive income for the year
of hedging transferred to the carrying value
Deferred hedging gains and losses and cost
Deferred hedging gains and losses and cost
of inventory purchased in the period
of hedging transferred to the carrying value
of hedging transferred to the carrying value
of inventory purchased in the period
Transactions with owners in their
of inventory purchased in the period
capacity as owners:
Transactions with owners in their
Transactions with owners in their
capacity as owners:
Dividends provided for or paid
capacity as owners:
Dividends provided for or paid
Executive performance share plan
Dividends provided for or paid
Executive performance share plan
Executive performance share plan

19
18(b)/20(a)
19
18(b)/20(a)
18(b)/20(a)

Balance at 31 December 2016

Balance at 31 December 2016
Balance at 31 December 2016

Attributable to owners of Adelaide Brighton Limited

Attributable to owners of Adelaide Brighton Limited
Attributable to owners of Adelaide Brighton Limited

Share
capital
Share
Share
capital
731.4
capital
731.4
-
731.4

-
-
-

-
-
-
-
-

-
-

-
1 .7
-
1 .7
1.7
1 .7
1.7
1.7

733.1

733.1
729.2
733.1
729.2
-
729.2
-
-
-
-
-
-
-
-

-
-

-
2 .2
-
2 .2
2.2
2 .2
2.2
731.4
2.2
731.4
731.4

Reserves

Reserves
2.9
Reserves
2.9
-
2.9

-
0 .4
-

0 .4
0.4
0 .4
0.4
0.4

(0 .9)

(0 .9)
(0 .9)

-
(0 .5)
-
(0 .5)
(0.5)
(0 .5)
(0.5)
(0.5)

1.9

1.9
1.2
1.9
1.2
-
1.2
-
-
-
-
-
-
-
-

0 .9

0 .9
0 .9

-
0 .8
-
0 .8
0.8
0 .8
0.8
2.9
0.8
2.9
2.9

Retained
earnings
Retained
Retained
earnings
483.3
earnings
483.3
182 .0
483.3

182 .0
1 .3
182 .0

1 .3
183.3
1 .3
183.3
183.3

-
-

(156 .0)

(156 .0)
(156 .0)

(156.0)

-
-

(156.0)
(156.0)

510.6

510.6
474.3
510.6
474.3
186 .3
474.3
186 .3
1 .2
186 .3
1 .2
187.5
1 .2
187.5
187.5

-
-

(178 .5)

(178 .5)
(178 .5)

(178.5)

-
-

(178.5)
483.3
(178.5)
483.3
483.3

Total

Total
1,217.6
Total
1,217.6
182 .0
1,217.6

182 .0
1 .7
182 .0

1 .7
183.7
1 .7
183.7
183.7

(0 .9)

(0 .9)
(0 .9)

(156 .0)

(156 .0)
1 .2
(156 .0)
1 .2
(154.8)
1 .2
(154.8)
(154.8)

1,245.6

1,245.6
1,204.7
1,245.6
1,204.7
186 .3
1,204.7
186 .3
1 .2
186 .3
1 .2
187.5
1 .2
187.5
187.5

0 .9

0 .9
0 .9

(178 .5)

(178 .5)
3 .0
(178 .5)
3 .0
(175.5)
3 .0
(175.5)
1,217.6
(175.5)
1,217.6
1,217.6

Non-controlling
interests
Non-controlling
Non-controlling
interests
2.5
interests
2.5
0 .1
2.5

Total equity

Total equity
1,220.1
Total equity
1,220.1
182 .1
1,220.1

0 .1
-
0 .1

-
0.1
-
0.1
0.1

-
-

-
-
-
-
-
-
-
-

2.6

2.6
2.6
2.6
2.6
(0 .1)
2.6
(0 .1)
-
(0 .1)
-
(0.1)
-
(0.1)
(0.1)

-
-

-
-
-
-
-
-
-
2.5
-
2.5
2.5

182 .1
1 .7
182 .1

1 .7
183.8
1 .7
183.8
183.8

(0 .9)

(0 .9)
(0 .9)

(156 .0)

(156 .0)
1 .2
(156 .0)
1 .2
(154.8)
1 .2
(154.8)
(154.8)

1,248.2

1,248.2
1,207.3
1,248.2
1,207.3
186 .2
1,207.3
186 .2
1 .2
186 .2
1 .2
187.4
1 .2
187.4
187.4

0 .9

0 .9
0 .9

(178 .5)

(178 .5)
3 .0
(178 .5)
3 .0
(175.5)
3 .0
(175.5)
1,220.1
(175.5)
1,220.1
1,220.1

Adelaide Brighton Ltd and its controlled entities for the year
ended 31 December 2017. The above statement of changes in
equity should be read in conjunction with the accompany notes.

STATEMENT OF CASH FLOWS

For the year ended 31 December 2017

($ million)

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)
Joint venture distributions received
Interest received
Interest paid
Other income
Income taxes paid
Income taxes refunded

Net cash inflow from operating activities

Cash flows from investing activities
Payments for property, plant, equipment and intangibles
Payments for acquisition of businesses, net of cash acquired
Proceeds from sale of property, plant and equipment
Loans to joint venture entities
Repayment of loans from other parties

Net cash outflow from investing activities

Cash flows from financing activities
Proceeds from issue of shares
Draw down / (repayment) of borrowings
Dividends paid to Company’s shareholders

Net cash outflow from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents

Cash and cash equivalents at the end of the year

Notes

2017

2016

Consolidated

1,661.3
(1,379.4)
26.4
1.6
(13.0)
8.6
(81.3)
-

224.2

(89.1)
(80.2)
17.7
(3.1)
0.6

(154.1)

3.5
118.5
(156.0)

(34.0)

36.1

21.5
-

57.6

1,536 .1
(1,239 .1)
18 .6
1 .5
(12 .1)
6 .2
(67 .2)
4 .4

248 .4

(86 .5)
-
23 .2
(2 .0)
0 .6

(64 .7)

4 .0
(21 .0)
(178 .5)

(195 .5)

(11 .8)

33 .3
-

21 .5

9(ii)

18
9(iv)
19

9(i)

Adelaide Brighton Ltd and its controlled entities for the year
ended 31 December 2017. The above statement of cash flows
should be read in conjunction with the accompany notes.

NOTES TO THE FINANCIAL REPORT

1 Summary of significant accounting

New accounting standards and

(b) Principles of consolidation

policies

interpretations

and reissue the financial statements .

AASB 15 Revenue From Contracts With

Subsidiaries are entities over which the

Adelaide Brighton Limited (the Company) is

a company limited by shares, incorporated

and domiciled in Australia whose shares

are publicly traded on the Australian

Securities Exchange (ASX) .

The financial report was authorised for

issue by the Directors on 16 March 2018 .

The Directors have the power to amend

The principal accounting policies

adopted in the preparation of these

consolidated financial statements are

either set out below or included in the

accompanying notes . 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 Limited and its subsidiaries .

(a) Basis of preparation

These general purpose financial statements

have been prepared in accordance with

Australian Accounting Standards and

Accounting Standards Board and the

Corporations Act 2001 . The Company is a

for-profit entity for the purpose of preparing

the financial statements .

Certain new accounting standards and

interpretations have been published that

are not mandatory for 31 December 2017

reporting periods . The Group’s assessment

of the impact of these new standards and

interpretations is set out below .

(i) Subsidiaries

The consolidated financial statements

incorporate the assets and liabilities of all

subsidiaries controlled by Adelaide Brighton

Limited as at 31 December 2017 and the

results of all subsidiaries for the year then

ended . The Company and its subsidiaries

AASB 15 Revenue From Contracts With

together are referred to in this financial report

Customers

as “the Group” .

Customers will replace AASB 118 which

Group has control . The Group controls

covers contracts for goods and services

an entity when the Group is exposed to,

and AASB 111 which covers construction

or has rights to, variable returns from its

contracts . The new standard replaces the

involvement with the entity and has the ability

existing notion of risk and rewards with

to affect those returns through its power to

the notion of control to recognise when a

direct the activities of the entity .

good or service transfers to a customer .

The Group performed an assessment of

the impact of the new standard and based

on the results the standard will not have a

material impact on the financial statements .

The standard is mandatory for financial years

commencing on or after 1 January 2018 and

Adelaide Brighton will adopt the standard at

that time .

Subsidiaries are fully consolidated from the

date on which control is transferred to the

Group . They are deconsolidated 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(d)) .

Intercompany transactions, balances

and unrealised gains on transactions

between Group companies are eliminated .

AASB 16 Leases will replace the current

Unrealised losses are also eliminated

standard on lease accounting, AASB

unless the transaction provides evidence

117 . AASB 16 introduces a single lessee

of the impairment of the asset transferred .

accounting model and requires the lessee to

Accounting policies of subsidiaries have

Interpretations issued by the Australian

AASB 16 Leases

Comparative information has been

recognise assets and liabilities for all leases

been changed where necessary to ensure

re-stated where appropriate to

with a term of more than 12 months, unless

consistency with the policies adopted by

enhance comparability .

the underlying asset is of low value . A lessee

the Group .

Historical cost convention

These financial statements have been

prepared under the historical cost

convention, except for the circumstances

where the fair value method has

been applied as detailed in the

accounting policies .

Compliance with IFRS

is required to recognise a right-of-use asset

representing its right to use the underlying

leased asset and a lease liability representing

its obligations to make lease payments . An

assessment of the impact of the standard

has been undertaken by the Group . Based

upon current leases, adopting the standard

would result in the recognition of a right of

use asset with a value of $75 .9 million and

(ii) Employee Share Trust

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 .

The consolidated financial statements

a corresponding liability at 31 December

of the Adelaide Brighton Limited Group

2017, and reduce 2017 net profit after tax

also comply with International Financial

by $1 .2 million . The standard is mandatory

Reporting Standards (IFRS) as issued by

for financial years commencing on or after

the International Accounting Standards
Board (IASB) .

1 January 2019 and Adelaide Brighton will
adopt the standard at that time .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 1 Summary of significant accounting

On consolidation, exchange differences

Where settlement of any part of cash

policies (continued)
(iii) Non-controlling interests

arising from the translation of any net

consideration is deferred, the amounts

investment in foreign entities, and

payable in the future are discounted to their

Non-controlling interests in the results and

of borrowings and other financial

present value as at the date of exchange .

equity of subsidiaries are shown separately

instruments designated as hedges of

The discount rate used is the entity’s

in the consolidated income statement and

such investments, are recognised in other

incremental borrowing rate, being the rate at

balance sheet respectively . The Group

comprehensive income .

which a similar borrowing could be obtained

treats transactions with non-controlling

interests that do not result in a loss of

control as transactions with equity owners

of the Group . For changes in ownership

interests, the difference between any

consideration paid and the relevant share

acquired of the carrying value of net assets

When a foreign operation is sold or

any borrowings forming part of the net

from an independent financier under

comparable terms and conditions .

investment are repaid, a proportionate share

Contingent consideration is classified

of such exchange differences is reclassified

either as equity or a financial liability .

to profit or loss, as part of the gain or loss

Amounts classified as a financial liability

on sale where applicable .

are subsequently remeasured to fair value

with changes in fair value recognised in the

income statement .

(e) Rounding of amounts

of the subsidiary is deducted from equity .

(d) Business combinations

The acquisition method of accounting

is used to account for all business

(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 Limited’s functional and

presentation currency .

combinations, including business

The Company is of a kind referred to in

combinations involving equities or

the Australian Securities and Investments

businesses under common control,

Commission Corporations (Rounding in

regardless of whether equity instruments or

Financial / Directors’ Reports) Instrument

other assets are acquired . The consideration

2016/191, relating to the ‘’rounding off’’ of

transferred for the acquisition of a subsidiary

amounts in the financial report . Amounts

comprises the fair values of the assets

in the financial report have been rounded

transferred, the liabilities incurred and the

off in accordance with that instrument to

equity interests issued by the Group . The

the nearest one hundred thousand dollars,

consideration transferred also includes the

unless otherwise stated .

(ii) Transactions and balances

fair value of any contingent consideration

Foreign currency transactions are

arrangement and the fair value of any

(f) Goods and Services Tax (GST)

translated into the functional currency

pre-existing equity interest in the subsidiary .

Revenues, expenses and assets are

using the exchange rates prevailing at

Acquisition-related costs are expensed as

recognised net of the amount of associated

the dates of the transactions . Foreign

incurred . Identifiable assets acquired and

GST, unless the GST incurred is not

exchange gains and losses resulting from

liabilities and contingent liabilities assumed

recoverable from the taxation authority . In

the settlement of such transactions and

in a business combination are, with limited

this case it is recognised as part of the

from the translation at year end exchange

exceptions, measured initially at their

cost of acquisition of the asset or as part of

rates of monetary assets and liabilities

fair values at the acquisition date . On an

the expense .

denominated in foreign currencies are

acquisition-by-acquisition basis, the Group

recognised in the income statement or

recognises any non-controlling interest in the

deferred in equity if the gain or loss relate

acquiree either at fair value or at the non-

to a qualifying cash flow hedge .

controlling interest’s proportionate share of

(iii) Foreign operations

the acquiree’s net identifiable assets .

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

The results and financial position of

The excess of the consideration transferred,

in the balance sheet .

all the foreign operations that have a

the amount of any non-controlling interest

functional currency different from the

in the acquiree and the acquisition date

presentation currency are translated into

fair value of any previous equity interest

the presentation currency as follows:

in the acquiree over the fair value of the

> Assets and liabilities for each balance sheet

Group’s share of the net identifiable assets

presented are translated at the closing rate

acquired is recorded as goodwill . If those

at the date of that balance sheet;

amounts are less than the fair value of the

> Income and expenses for each income

net identifiable assets of the subsidiary

statement and statement of comprehensive

acquired and the measurement of all

income are translated at average exchange

amounts has been reviewed, the difference

rates (unless this is not a reasonable

is recognised directly in profit or loss as a

approximation of the cumulative effect

bargain purchase .

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 flows .

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 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.FINANCIAL PERFORMANCE OVERVIEW

2 Segment reporting

(a) Description of segments

Management has determined the operating segments based on the reports reviewed by the CEO and Managing Director . These reports include

segmental information on the basis of product groups and are used to regularly evaluate how to allocate resources and in assessing performance .

The two reportable segments have been identified as follows:

> Cement, Lime, Concrete and Aggregates

> Concrete Products

The operating segments Cement, Lime, Concrete and Aggregates individually meet the quantitative thresholds required by AASB 8 as well as

meeting the aggregation criteria allowing them to be reported as one segment . The Group considered aggregation of these segments appropriate

due to the similarity of the markets that the products are sold, the consistent regulatory environment for the production, handling and use of the

products, distribution method and underlying demand drivers . Concrete Products meets the quantitative threshold therefore and is reported as a

separate segment . Joint arrangements and associates related to the reportable segments form part of the above two reportable segments .

The major end-use markets of the Group’s products include residential and non-residential construction, engineering construction, alumina

production and mining .

(b) Segment information provided to the CEO and Managing Director

The segment information provided to the CEO and Managing Director for the reportable segments is as follows:

31 December 2017
($ million)

Total segment operating revenue

Inter-Company revenue

Revenue from external customers
Depreciation and amortisation
EBIT
Share of net profits of joint venture and associate entities accounted
for using the equity method

31 December 2016
($ million)

Total segment operating revenue

Inter-Company revenue

Revenue from external customers
Depreciation and amortisation
EBIT
Share of net profits of joint venture and associate entities accounted
for using the equity method

Cement, Lime, Concrete

Concrete

Unallocated

Total

and Aggregates

Products

1,401.4

(95.5)

1,305.9
(69.4)
286.6

147.6

147.6
(7.8)
10.2

-
(5.3)
(30.3)

1,549.0

(95.5)

1,453.5
(82.5)
266.5

35.1

Cement, Lime, Concrete
and Aggregates

Concrete
Products

Unallocated

Total

1,216 .6

(74 .9)

1,141 .7
(65 .1)
287 .8

28 .5

149 .2

149 .2
(8 .4)
11 .4

-
(4 .6)
(33 .1)

1,365 .8

(74 .9)

1,290 .9
(78 .1)
266 .1

28 .5

Sales between segments are carried out at arms length and are eliminated on consolidation .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 2 Segment reporting (continued)

The operating revenue is assessed by the CEO and Managing Director and includes revenue from external customers and a share of revenue from

the joint ventures and associates in proportion to the Group’s ownership interest, excluding freight, interest and royalty revenue . A reconciliation of

segment operating revenue to revenue from continuing operations is provided as follows:

($ million)

Total segment operating revenue
Inter-Company revenue elimination
Freight revenue
Other production revenue
Interest revenue
Royalties

Revenue from continuing operations

Consolidated

2017

1,549.0
(95.5)
89.5
15.1
1.5
0.4

1,560.0

2016

1,365 .8
(74 .9)
97 .3
6 .0
1 .5
0 .5

1,396 .2

The CEO and 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

2017

266.5
(12.1)

254.4

2016

266 .1
(11 .5)

254 .6

Revenues of $268 .5 million (2016: $215 .3 million) are derived from a single customer . These revenues are attributable to the Cement, Lime,

Concrete and Aggregates segment .

3 Critical accounting estimates and assumptions

The Group makes estimates and assumptions in preparing the financial statements . The resulting accounting estimates will, by definition, seldom

equal the related actual results . This note provides an overview of the areas that involved a higher degree of judgement or complexity and of items

which are more likely to be materially adjusted due to estimates and assumptions differing to actual outcomes . The areas involving significant

estimates and assumptions are listed below .

> Impairment of assets - Note 15

> Provisions for close down and restoration costs - Note 16(iv)

> Defined benefit superannuation plan - Note 26

Detailed information about each of these estimates and assumptions is included in Notes 15, 16(iv) and 26 together with information about the basis

of calculation for each affected line item in the financial statements .

4 Earnings per share

Accounting policy - 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 assuming

conversion of all dilutive potential ordinary shares .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

4 Earnings per share (continued)

(cents)

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

Consolidated

2017

28.0
27.9

2016

28 .7
28 .6

Consolidated

2017

2016

650,067,492

649,395,882

2,767,452

2,919,824

Weighted average number of ordinary shares and potential ordinary shares used as the

denominator in calculating diluted earnings per share

652,834,944

652,315,706

($ million)

Reconciliation of earnings used in calculating earnings per share
Basic and diluted earnings per share

Profit after tax

(Profit)/loss attributable to non-controlling interests

Profit attributable to ordinary equity holders of the Company used in calculating basic

and diluted earnings per share

5 Revenue and other income

Accounting policy - revenue recognition

Revenue is recognised for the major business activities as follows:

(i) Sales revenue

Consolidated

2017

2016

182.1

(0.1)

186 .2

0 .1

182.0

186 .3

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 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 period in which the services are rendered .

(ii) Interest income

Interest income is recognised using the effective interest rate method .

Revenue from continuing operations

Sales revenue

Interest from joint ventures

Interest from other parties

Royalties

Other income
Net gain on disposal of property, plant and equipment
Fair value accounting gain on business acquisition
Rental income
Other

1,558.1

1,394 .3

0.7

0.8

0.4

0 .7

0 .8

0 .4

1,560.0

1,396 .2

10.4
4.5
1.2
3.5

19.6

8 .4
-
2 .9
3 .2

14 .5

Total revenue and other income

1,579.6

1,410 .7

The Group has a strategy of divesting properties that are released from operational activities as a result of a rationalisation and improvement program .

During the year the Group realised a net gain on the sale of properties of $11 .1 million (2016: $8 .4 million) which is recognised in other income .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

6 Expenses

Accounting policy - borrowing costs

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and

prepare the asset for its intended use or sale . Other borrowing costs are expensed .

($ million)

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
Defined contribution superannuation expense
Operating lease rental charge
Impairment expense recognised on trade debtors
Provision for inventory

Finance costs
Interest and finance charges paid / payable
Unwinding of the discount on restoration provisions and retirement benefit obligation
Fair value loss/(gain) on forward foreign currency contracts at fair value through profit or loss

Total finance costs
Amount capitalised 1

Finance costs expensed

Notes

2017

2016

Consolidated

21(b)

4.3
71.4
4.9

80.6

1.9

169.0
11.7
9.2
18.3
-

13.5
1.1
-

14.6
(1.0)

13.6

4 .4
66 .5
5 .2

76 .1

2 .0

156 .3
11 .7
6 .6
0 .7
0 .7

12 .3
1 .1
0 .2

13 .6
(0 .6)

13 .0

1 The rate used to determine the amount of borrowing costs to be capitalised is the average interest rate applicable to the Group’s outstanding borrowings during the year, in this case

2 .8% p .a . (2016: 2 .5% p .a .) .

7 Income tax

Accounting policy - 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 and to previously unrecognised

tax losses . The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the end of the reporting period .

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 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 .

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 consolidation

Adelaide Brighton Limited and its wholly owned Australian subsidiaries implemented the tax consolidation legislation as of 1 January 2004 . Adelaide
Brighton Limited, 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 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

7 Income tax (continued)

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 Limited .

Amounts receivable or payable under a 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 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 .

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 .

($ million)

(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% (2016: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non allowable expenses
Non assessable income
Non assessable capital profits
Rebateable dividends
Fair value adjustment
Other deductions
Previously unrecognised capital tax losses offset against capital gains
Under provided in prior years

Aggregate income tax expense

Aggregate income tax expense comprises:
Current taxation expense
Net deferred tax
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

Actuarial gain on retirement benefit obligation (Note 26)
Changes in the fair value of cash flow hedges (Note 20(a))

(d) Tax losses

Unused tax losses for which no deferred tax asset has been recognised:
Revenue losses
Capital losses

Consolidated

2017

2016

254.4

76.3

254 .6

76 .4

2.6
(3.4)
-
(4.6)
-
(0.7)
(0.3)
2.4

0 .7
(1 .9)
-
(4 .0)
-
(1 .3)
(1 .9)
0 .4

72.3

68 .4

71.8
(3.5)
4.0

72.3

(0.8)
(0.3)

(1.1)

0.6
-

0.6

69 .9
(1 .7)
0 .2

68 .4

(1 .1)
(0 .9)

(2 .0)

0 .5
0 .4

0 .9

0.5
11.3

0 .4
11 .6

This benefit for tax losses will only be obtained if:

(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 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

Consolidated

2017

2016

1.4

33.1
3.0

37.5

(37.5)

28.9
7.4

(1.1)

-
2.3

37.5

100.5
10.4
12.6

123.5
(37.5)

86.0

118.8
4.4
(0.3)
(1.6)
2.2

123.5

1 .7

24 .6
1 .7

0 .9

28 .9

(28 .9)

28 .1
2 .3

(0 .9)

(0 .6)
-

28 .9

101 .6
9 .7
7 .5

118 .8
(28 .9)

89 .9

113 .5
0 .6
0 .4
4 .3
-

118 .8

7 Income tax (continued)

($ million)

(e) Non-current deferred tax assets

The balance comprises temporary differences attributable to:

Share based payment reserve

Provisions
Other assets

Tax losses

Deferred tax assets - before offset

Offset deferred tax liability (Note 7(f))

Net deferred tax assets - after offset

Movements:
Opening balance at 1 January - before offset
Recognised in the income statement

Recognised in other comprehensive income

Recognised in equity

Under/(over) provision in prior year
Acquired in business combinations

Closing balance at 31 December - before offset

(f) Non-current deferred tax liabilities

The balance comprises temporary differences attributable to:

Property, plant and equipment
Inventories
Other

Deferred tax liabilities - before offset
Offset deferred tax assets (Note 7(e))

Net deferred tax liabilities - after offset

Movements:
Opening balance at 1 January - before offset
Recognised in the income statement
Recognised in equity
(Over)/under provision in prior year
Acquired in business combinations

Closing balance at 31 December - before offset

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

8 Business combinations

During 2017, the Company acquired the following businesses:

> Central Pre-Mix Concrete in Victoria in February 2017 .

> Davalan Concrete in South Australia in June 2017 .

> Holcim’s concrete and aggregates operations in the Northern Territory in July 2017 .

Each of these businesses is a strategic fit with our existing operations and are in line with Adelaide Brighton Ltd’s business strategy of

vertical integration .

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

Purchase consideration
Cash paid
Contingent consideration

Total purchase consideration

Cash and cash equivalents
Trade and other receivables
Inventories
Joint arrangements
Freehold land
Buildings
Property, plant and equipment
Mineral reserves
Asset retirement cost
Intangibles
Deferred tax asset
Trade and other payables

Employment benefit liabilities, including superannuation

Provision - restoration liability
Current tax liability
Borrowings
Deferred tax liability

Net identifiable asset acquired

Add: goodwill
Less: gain on bargain purchase

Net assets acquired

Fair value

$ million

80 .2
-

80.2

-
-
5.1
-
10.6
8.7
21.7
8.1
3.6
-
2.3
-

(1.0)

(3.6)
-
-
(2.2)

53.3

31.4
(4.5)

80.2

The goodwill is attributable to two acquisitions and relates to the expected synergies expected to arise from the Company’s vertical integration

strategy and the workforce . None of the goodwill is expected to be deductible for tax purposes .

A gain relating to a bargain purchase of $4 .5 million was recognised on one of the acquisitions within other income in the Income Statement .

The gain on acquisition reflects the Group’s overall strategy of completing on acquisitions, where negotiating conditions allow, at values

approximating the fair value of the tangible assets . Transaction costs associated with the acquisitions of $5 .0 million are included in administration

costs in the Income Statement .

The acquired businesses contributed revenues of $80 .3 million and net profit before tax, excluding the gain on acquisitions and acquisition related

expenses, of $2 .5 million .

If the acquisitions had occurred on 1 January 2017, the annualised consolidated revenue and net profit before tax for the year ended 31 December

2017 would have been $108 .3 million and $7 .6 million respectively . These amounts have been calculated using the Group’s accounting policies and

by adjusting the results of the businesses to reflect additional depreciation and amortisation that would have been charged assuming the fair value

adjustments to property, plant and equipment had applied from 1 January 2017, together with the consequential tax effects .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

9 Note to statement of cashflows

(i) Cash and cash equivalents

Accounting policy - cash and cash equivalents

Cash and cash equivalents includes cash on hand, term deposits and 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 .

($ million)

Current
Cash at bank and in hand

Term deposits

Cash and cash equivalents

(a) Offsetting

Consolidated

2017

2016

56.0

1.6

57.6

19 .8

1 .7

21 .5

The Group has an offsetting agreement with its bank for cash facilities . The agreement allows the Group to manage cash balances on a total basis,

offsetting individual cash balances against overdrafts . The value of overdrafts at 31 December 2017 was $nil (2016: $nil) .

(b) Risk exposure

The Group’s exposure to interest rate risk is discussed in Note 21 . The maximum exposure to credit risk at the end of the reporting period is the

carrying amount of each class of cash and cash equivalents mentioned above .

(ii) Reconciliation of profit after income tax to net cash inflow from operating activities

Profit for the year
Doubtful debts

Depreciation, amortisation and impairment

Share based payments

Finance charges on remediation provision

(Gain) on sale of non-current assets

Share of profits of joint ventures, net of dividends received

Non-cash retirement benefits expense

Non-cash remediation obligation

Fair value accounting gain on acquisition of business

Capitalised interest

Other

182.1
18.3

82.5

(2.9)

1.1

(6.4)

(8.6)

0.7

(4.3)

(4.5)

(1.0)

(0.8)

186 .2
0 .7

78 .1

(2 .9)

1 .1

(8 .4)

(9 .9)

0 .2

0 .8

(0 .6)

0 .4

Net cash provided by operating activities before changes in assets and liabilities

256.2

245 .7

Changes in operating assets and liabilities, net of effects from purchase of

business combinations:

Increase / (decrease) in inventories

Increase / (decrease) in prepayments

Increase / (decrease) in receivables

Increase / (decrease) in trade creditors

Increase / (decrease) in provisions

(Decrease) / increase in taxes payable

(Decrease) / increase in deferred taxes payable

Increase / (decrease) in other operating assets and liabilities

Net cash inflow from operating activities

(9.0)

(1.8)

(53.0)

27.6

2.3

(5.5)

(4.3)

11.7

224.2

1 .3

1 .1

1 .9

(2 .3)

(0 .7)

0 .4

4 .5

(3 .5)

248 .4

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

9 Note to statement of cashflows (continued)

(iii) Net debt reconciliation

($ million)

Cash and cash equivalents
Borrowings - repayable within one year (including overdraft)

Borrowings - repayable after one year

Net debt

Consolidated

2017

57.6
(0.3)

(428.9)

(371.6)

(iv) Reconciliation of movements of liabilities to cash flows arising from financing activities

($ million)

Net debt as at 1 January 2016

Cash flows

Other non-cash movements

Net debt as at 31 December 2016

Cash flows
Other non-cash movements

Net debt as at 31 December 2017

Other assets

Liabilities from financing activities

Cash/
Bank
Overdraft

Liquid
Investments

Finance
Leases due
within 1 year

Finance
Leases due
After 1 year

Borrowings
Due within
1 year

Borrowings
Due after
1 year

33 .3

(11 .8)

21.5

36 .1
-

57.6

-
-

(1 .0)

0 .6

(0.4)

0 .1
-

(0.3)

(0 .7)

0 .4

(0.3)

0 .3
-

-
-

(328 .8)

20 .0

(0 .5)

(309.3)

(118 .9)
(0 .7)

(428.9)

2016

21 .5
(0 .4)

(309 .6)

(288 .5)

Total

(297 .2)

9 .2

(0 .5)

(288.5)

(82 .4)
(0 .7)

(371.6)

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

BALANCE SHEET ITEMS

10 Trade and other receivables

Accounting policy - trade and other receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less loss allowance provision . Trade receivables

are typically due for settlement no more than 30 to 45 days from the end of the month of invoice .

The Group applies the simplified approach to providing for expected credit losses for all trade receivables as set out in Note 21(b) .

The amount of the provision is recognised in the income statement . When a trade receivable for which a loss allowance provision 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 .

Notes

2017

2016

Consolidated

($ million)

Current
Trade receivables

Loss allowance provision

Amounts receivable from joint ventures
Prepayments

Other receivables

Total current

Non-current
Loans to joint ventures

Other non-current receivables

Total non-current

Movement in loss allowance provision
Opening balance at 1 January

Amounts written off during the year

200.1

(19.5)

180.6

50.3
6.5

3.6

241.0

35.4

1.9

37.3

1.2

18.3

19.5

167 .2

(1 .2)

166 .0

28 .3
5 .1

5 .2

204 .6

32 .3

2 .1

34 .4

1 .8

(1 .5)

0 .9

1 .2

Loss allowance provision recognised during the year

21(b)

Closing balance at 31 December

Fair value and credit, interest and foreign exchange risk

Due to the short term nature of current 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 21 .

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.
11 Inventories

Accounting policy - inventories

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 . Cost includes the reclassification

from equity of any gains or losses on qualifying cashflow hedges relating to purchases of raw materials .

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 .

Inventory quantities are verified through stocktakes where inventory is either counted or, in the case of bulk materials, volumetric surveys are

converted to weight using density factors . Certain volumetric surveys are performed by independent surveyors utilising aerial and laser surveys .

($ million)

Current
Finished goods

Raw materials and work in progress

Engineering spare parts stores

Consolidated

2017

2016

73.6

56.9

43.8

174.3

70 .6

60 .1

29 .5

160 .2

Inventory expense
Inventories recognised as expense during the year ended 31 December 2017 and included in cost of sales amounted to $948 .5 million

(2016: $808 .3 million) .

12 Property, plant and equipment

Accounting policy - 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 .

(i) Mineral reserves

Mineral reserves are amortised based on annual extraction rates over the estimated life of the reserves from 2 - 50 years . 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 5 - 10 years .

(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

20 - 40 years

> Plant and equipment

3 - 40 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 . Gains and

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

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 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

12 Property, plant and equipment (continued)

Consolidated at 31 December 2017

($ million)

At cost

Accumulated depreciation

Net book amount

Reconciliations

Carrying amount at

1 January 2017
Additions

Disposals

Business combinations

Reclassification
Depreciation/amortisation

Carrying amount at

31 December 2017

Freehold
land

Buildings

Leasehold
property

Plant &
equipment

Mineral
reserves

Asset
retirement
cost

In course of
construction

Total

178 .5

154 .4

178.5

(65 .4)

89.0

167 .0
1 .3

(0 .9)

10 .6

0 .5
-

83 .8
0 .6

(0 .1)

8 .7

0 .3
(4 .3)

9 .6

(3 .8)

5.8

6 .2
0 .1

-
(0 .5)

1,383 .7

(865 .8)

517.9

495 .8
42 .6

(3 .2)

21 .7

29 .6
(68 .6)

218 .0

(43 .7)

174.3

165 .2
5 .9

8 .1

-
(4 .9)

34 .1

(8 .9)

25.2

19 .6
4 .3

3 .6

-
(2 .3)

46 .5

2,024 .8

(987 .6)

46.5

1,037.2

40 .8
38 .9

(33 .2)
-

978 .4
93 .7

(4 .2)

52 .7

(2 .8)
(80 .6)

178.5

89.0

5.8

517.9

174.3

25.2

46.5

1,037.2

Consolidated at 31 December 2016

At cost

Accumulated depreciation

Net book amount

Reconciliations

Carrying amount at

1 January 2016
Additions

Disposals

Reclassification

Depreciation/amortisation
Other

Carrying amount at
31 December 2016

Leased assets

167 .0

145 .9

167.0

(62 .1)

83.8

155 .9
21 .3

(9 .2)

(1 .0)

-
-

84 .3
0 .9

(0 .2)

3 .2

(4 .4)
-

9 .5

(3 .3)

6.2

6 .1
0 .7

(0 .1)

(0 .5)
-

1,329 .4

(833 .6)

495.8

497 .4
41 .9

(5 .3)

26 .6

(64 .8)
-

204 .0

(38 .8)

165.2

170 .0
0 .4

(5 .2)
-

26 .3

(6 .7)

19.6

21 .0
0 .1

(1 .2)
(0 .3)

40 .8

1,922 .9

(944 .5)

40.8

978.4

51 .4
21 .2

(31 .8)

-
-

986 .1
86 .5

(14 .7)

(3 .1)

(76 .1)
(0 .3)

167.0

83.8

6.2

495.8

165.2

19.6

40.8

978.4

Plant and equipment includes the following amounts where the Group is a lessee under a finance lease:

($ million)

Cost
Accumulated depreciation

Net book amount

13 Assets classified as held for sale

Accounting policy - assets held for sale

Consolidated

2017

1.2
(0.5)

0.7

2016

1 .6
(0 .5)

1 .1

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 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 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 13 Assets classified as held for sale (continued)

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 .

Signed contracts are in existence for the sale of these assets held for sale and the assets are held at their carrying value . The timing is normal for

the nature of the contract for sale in the Concrete Products segment .

($ million)

Current

Land and buildings
Plant and equipment

14 Intangible assets

Accounting policy - intangible assets

(i) Goodwill

Consolidated

2017

2016

1.6
0.3

1.9

1 .3
2 .5

3 .8

Goodwill is measured as described in Note 1(d) . Goodwill on acquisitions of subsidiaries is included in intangible assets . Goodwill on acquisition of

joint ventures is included in the investment 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 which are expected to benefit from the business

combination 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 20 years .

(iii) Software

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 .

($ million)

31 December 2017

Cost
Accumulated amortisation

Carrying amount at 31 December 2017

Opening balance at 1 January 2017

Reclassification

Additions in current year
Amortisation charge

Closing balance at 31 December 2017

Consolidated

Other

Goodwill

Software

intangibles

Total

280.1
-

280.1

248.7

31.4
-

280.1

18.9
(10.4)

8.5

9.4

0.9

-
(1.8)

8.5

12.7
(1.4)

11.3

12.2

(0.8)

-
(0.1)

11.3

311.7
(11.8)

299.9

270.3

0.1

31.4
(1.9)

299.9

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.
14 Intangible assets (continued)

($ million)

31 December 2016

Cost
Accumulated amortisation

Carrying amount at 31 December 2016

Opening balance at 1 January 2016

Reclassification

Additions in current year
Amortisation charge

Closing balance at 31 December 2016

15 Impairment tests

Consolidated

Other

Goodwill

Software

intangibles

Total

248 .7
-

248 .7

-
-

248 .7

18 .0
(8 .6)

9 .4

11 .2

(0 .1)

-
(1 .7)

9 .4

13 .3
(1 .1)

12 .2

13 .0

(0 .5)

-
(0 .3)

12 .2

280 .0
(9 .7)

270 .3

272 .9

(0 .6)

-
(2 .0)

270 .3

Goodwill is not subject to amortisation and is 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 .

(a) 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 .

($ million)

Cement and Lime

Concrete and Aggregates

Cement, Lime, Concrete and Aggregates segment
Concrete Products segment

Consolidated

2017

134.0

137.3

271.3
8.8

280.1

2016

134 .0

105 .9

239 .9
8 .8

248 .7

The recoverable amount of a CGU is determined based on value-in-use calculations . These calculations use cash flow projections based on

2017 actual results and 2018 financial budgets approved by the Board . Projected cash flows are forecast for a period of greater than 5 years to

incorporate the construction cycle into demand assumptions for modelling purposes . The growth rate does not exceed the long term average

growth rate for the industry in which the CGU operates .

(b) Key assumptions used for value-in-use calculations

($ million)

Cement, Lime, Concrete and Aggregates

Concrete Products

2017

35.0

25.8

2016

37 .5

24 .9

2017

1.3

1.2

2016

1 .3

1 .2

2017

11.3

12.1

2016

10 .4

10 .9

Gross margin1

Growth rate2

Discount rate3

1 Gross margin (excluding fixed production costs) .

2 Weighted average growth rate used to extrapolate cash flows beyond the specific market forecast period of up to 11 years .

3 Pre-tax discount rate applied to cash flow projections .

Significant estimate - key assumptions used for value-in-use calculations

The Group tests annually whether goodwill, other intangible assets with an indefinite life and other non-current assets have suffered any impairment .

The recoverable amounts of cash generating units have been determined based on value-in-use calculations . These calculations require the use of

assumptions detailed above .

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 Group and that are believed to be reasonable under the circumstances .

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 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 16 Provisions

Accounting policy - 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 . Non-employee benefit 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) Short employee benefit 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 .

(ii) 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 high quality corporate bonds with terms to maturity and currency

that match, as closely as possible, the estimated future cash outflows .

(iii) Workers’ compensation

Certain entities within the Group are self insured for workers’ compensation purposes . For self-insured entities, provision is made that covers

incidents 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 .

(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 based on the net present value of the estimated future costs of a closure plan .

Estimate changes resulting from new disturbance, updated cost estimates including information from tenders, 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 period as part of finance costs .

Significant estimates - future cost to rehabilitate

Restoration provisions are based on estimates of the future cost to rehabilitate currently disturbed areas using current costs, forecast cost inflation

factors and rehabilitation requirements . The Group progressively rehabilitates as part of the quarrying process . Cost estimates are evaluated

at least annually on historical experience and other factors, including expectations of future events that are believed to be reasonable under

the circumstances .

Provisions for close down and restoration costs at the end of the year was $43 .1 million (2016: $38 .1 million) .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 16 Provisions (continued)

($ million)

Current

Employee benefits

Restoration provisions

Workers’ compensation
Other provisions

Non-current

Employee benefits
Restoration provisions

Consolidated

2017

2016

27.3

5.1

0.8
0.6

33.8

7.0
38.0

45.0

25 .9

5 .2

0 .1
0 .7

31 .9

6 .1
32 .9

39 .0

The current portion of employee benefits includes all of the accrued annual leave, the unconditional entitlements to long service leave where

employees are entitled to pro-rata payments in certain circumstances . However, based on past experience, the Group does not expect all

employees to take the full amount of accrued leave or require payment within the next 12 months . The following amounts reflect leave that is not

expected to be taken or paid within the next 12 months .

($ million)

Current leave obligations expected to be settled after 12 months

Consolidated

2017

4.0

2016

3 .5

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

($ million)

Opening balance at 1 January 2017
Additional provision recognised - charged to income statement
Additional provision recognised - business combinations
Additional provision recognised - charged to asset retirement cost
Charged to income statement - unwind of discount
Credited to income statement - reversal of amounts unused
Payments

Closing balance at 31 December 2017

Workers’

Restoration

Other

compensation

provisions

0.1
1 .2
-
-
-
-
(0 .5)

0.8

38.1
-
3 .6
4 .2
1 .1
(0 .7)
(3 .2)

43.1

0.7
0 .2
-
-
-
-
(0 .3)

0.6

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

CAPITAL STRUCTURE AND RISK MANAGEMENT

17 Borrowings and lease commitments

Accounting policy - 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 .

Accounting policy - 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 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 straight line basis over the

period of the lease .

($ million)

Current

Finance lease

Non-current

Bank loans - unsecured
Finance lease

Consolidated

2017

2016

0.3

0 .4

428.9
-

428.9

309 .3
0 .3

309 .6

The Group complied with the terms of borrowing agreements during the year .

Details of the Group’s exposure to interest rate changes is set out in Note 21 . Due to the short term fixed interest rates of the borrowings, the

carrying value is the fair value .

Lease commitments - finance leases

Commitments in relation to finance leases for various plant and equipment are payable as follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
Future finance charges
Total lease liabilities

The present value of finance lease liabilities is as follows:
Within one year

Later than one year but not later than five years

Minimum lease payments

Lease commitments - 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

0.3
-
0.3
-
0.3

0.3

4.9
14.9
128.9
148.7

0 .4
0 .4
0 .8
(0 .1)
0 .7

0 .4

0 .3

0 .7

4 .8
12 .9
130 .2
147 .9

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 17 Borrowings and lease commitments (continued)

Commitments for operating lease payments relate mainly to rental leases on property . The Group leases various properties under non-cancellable

operating leases which contain varying terms, escalation clauses and renewal rights . On renewal, the terms of the leases are either renegotiated or

the expiry date is extended under pre-negotiated terms .

18 Share capital

Accounting policy - share capital

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 .

($ million)

(a) Share capital

Issued and paid up capital

650,272,495 (2016: 649,654,099) ordinary shares, fully paid

(b) Movements in ordinary share capital

Opening balance at 1 January
618,396 shares issued under Executive Performance Share Plan (2016: 768,352) (i)

Closing balance at 31 December

Consolidated

2017

2016

733.1

731 .4

731.4
1.7

733.1

729 .2
2 .2

731 .4

(i) Ordinary shares issued under the Adelaide Brighton Limited Executive Performance Share Plan (refer Note 27) .

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

Under the Dividend Reinvestment Plan (DRP), holders of ordinary shares may elect to have all or part of their dividend entitlements satisfied by the

issue of new ordinary shares rather than by being paid in cash . Shares are issued under the DRP at a price determined by the Board . The operation

of the DRP for any dividend is at the discretion of the Board, which suspended the DRP in February 2015 with immediate effect, and has not been

reactivated since that time .

(e) Capital risk management

The Group’s objectives when managing capital are to safeguard the ability to continue as a going concern, continuing 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

issue new debt or redeem existing debt . The Group monitors capital on the basis of the gearing ratio . Adelaide Brighton’s target gearing ratio is 25%

to 45% .

Total borrowings
Less: cash and cash equivalents

Net debt
Total equity

Gearing ratio

(f) Employee share scheme and options

429.2
(57.6)

371.6
1,248.2

29.8%

310 .0
(21 .5)

288 .5
1,220 .1

23 .6%

Information relating to the employee share schemes, including details of shares issued under the schemes is set out in Note 27 .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

19 Dividends

($ million)

Dividends paid during the year

2016 final dividend of 15 .5 cents (2015 - 15 .0 cents) per fully paid ordinary share, franked at

100% (2015 - 100%) paid on 12 April 2017

2017 interim dividend of 8 .5 cents (2016 - 12 .5 cents) per fully paid ordinary share, franked

at 100% (2016 - 100%) paid on 5 October 2017

Total dividends - paid in cash

Dividend not recognised at year end

Since the end of the year the Directors have recommended the payment of a final

dividend of 16 cents (2016 15 .5 cents) per fully paid share, franked at 100% (2016: 100%) .

The aggregate amount of the proposed final dividend to be paid on 13 April 2018, not

The Company

2017

2016

100.7

97 .3

55.3

156.0

81 .2

178 .5

recognised as a liability at the end of the reporting period, is

104.0

100 .7

Franked dividend

The franked portion of the dividend proposed as at 31 December 2017 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 2018 .

($ million)

Franking credits available for subsequent financial years based on a tax rate of 30% (2016: 30%)

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; and

Consolidated

2017

136.4

2016

120 .8

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 $46 .0 million (2016: $43 .2 million) .

20 Reserves and retained earnings

(a) Reserves

Foreign currency translation reserve

Share-based payment reserve

Cash flow hedge 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

Cash flow hedge reserve

Opening balance at 1 January
Revaluation - gross
Reclassified to the carrying amount of inventory
Deferred tax on movement in reserve

Closing balance at 31 December

(0.3)

2.2

1.9

(0.7)
0.4

(0.3)

2.7
0.6
(0.2)
(0.9)

2.2

0.9
-
(1.3)
0.4

(0 .7)

2 .7

0 .9

2 .9

0 .2
(0 .9)

(0 .7)

1 .9
1 .0
0 .9
(1 .1)

2 .7

(0 .9)
1 .3
1 .3
(0 .8)

0 .9

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 20 Reserves and retained earnings (continued)

Nature and purpose of reserves

Foreign currency translation

Exchange differences arising on translation of foreign controlled entities and the foreign associate are recognised in other comprehensive income as

described in Note 1(c) and accumulated in a separate reserve within equity . The cumulative amount is reclassified to the income statement when the

net investment is disposed of .

Share-based payment

The share-based payment reserve is used to recognise the fair value of awards issued but not exercised . Refer Note 27 .

Cash flow hedge reserve

The cash flow hedge reserve is used to recognise the accumulated movement in fair value of instruments that qualify for hedge accounting . The

accumulated amount of a hedging instrument is transferred to the carrying value of inventory on recognition or, for hedges of items that are not non-

financial assets or non-financial liabilities, to the income statement at the time of recognising the item in the income statement .

(b) Retained earnings

($ million)

Opening balance at 1 January
Net profit for the year
Actuarial gain / (loss) on defined benefit obligation net of tax
Dividends

Closing balance at 31 December

21 Financial risk management

Financial risk management

Consolidated

2017

483.3
182.0
1.3
(156.0)

510.6

2016

474 .3
186 .3
1 .2
(178 .5)

483 .3

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange, interest rate risk, and commodity price 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 where the Group’s exposure is material .

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, which are reviewed on intervals appropriate to the individual

risk . 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 forward contracts to hedge certain currency risk exposures and price

caps to hedge the price risk related to certain electricity purchases .

(a) Market risk

(i) Foreign exchange risk

The Group’s activities, through its importation of cement, clinker, slag and equipment, 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 commitments and highly probable 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 Forward Exchange Contracts (FEC) to hedge its foreign exchange risk on these overseas trading activities against movements

in foreign currency exposure to the Australian Dollar . FECs are entered into for a duration in line with forecast purchases and currency matched to

the underlying exposure . Ineffectiveness of the hedge can arise primarily from changes in the timing of foreign currency payments compared to the

duration of the FEC .

The Group treasury risk management policy is to progressively hedge up to 100% of material highly probable purchases for up to nine months forward on

a rolling basis . Longer dated hedge positions are deemed too expensive versus the value at risk due to the respective currencies’ interest rate spread .

As at the end of the reporting period, the Group had the following exposure to foreign exchange risk, expressed in Australian dollar:

($ million)

Forward foreign exchange contracts:

Buy foreign currency
Sell Australian dollar (cash flow hedges)

Net exposure

Consolidated

2017

2016

24.2
(24.2)

35 .4
(36 .7)

(1 .3)

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

21 Financial risk management (continued)

(ii) Electricity price risk

The Group’s electricity purchases include market based pricing mechanisms, exposing cash flows to future movements in the underlying price of

electricity in certain markets . Electricity price risk is assessed on the basis of forward projections of the Group’s electricity demand and forecast market

pricing to calculate a Value At Risk (VAR) measure . Hedging the price risk is considered when the VAR outweighs the cost of risk mitigation alternatives .

The Group considers and utilises where effective, futures electricity price caps (Caps) to manage this risk exposure . Caps are available for the

relevant markets that the Group has price risk, matching the underlying price exposure of the Group . Ineffectiveness of the hedge arises from

differences in the quantity of actual electricity purchases compared to the nominal quantity of the hedging instrument .

(iii) Interest rate risk

The Group’s main interest rate risk arises from bank borrowings with variable rates which expose the Group to interest rate risk . Due to the

historically low levels of gearing, Group policy is to take on 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 debt facilities on periods up to 90

days, at a variable lending rate comprising the fixed bank margin applied to the daily bank bill swap rate effective at the date of each cash advance .

During both 2017 and 2016, the Group’s borrowings at variable rates 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 .

As at the end of the reporting period, the Group had the following exposure to variable and fixed rate financial instruments:

Variable rate instruments:

Cash at bank, on hand and at call
Bank facilities

Fixed rate instruments:

Finance leases

(iv) Summarised sensitivity analysis

Consolidated

2017

2016

Weighted

average

Balance

average

Balance

interest rate

$ million

interest rate

$ million

2.0%
2.83%

57.6
428.9

2 .0%
2 .93%

21 .5
309 .3

5.51%

0.3

5 .51%

0 .7

Foreign currency risk relating to assets and liabilities at year end is immaterial as the majority of sales and assets are denominated in Australian

Dollars, while the Group’s purchases that are in foreign currency are settled at the time of the transaction . Consequently, liabilities recognised at

31 December are generally in Australian Dollars . All borrowings are denominated in Australian Dollars .

Electricity price risk impacts on future purchases of electricity, therefore recognised liabilities for electricity purchases are not impacted .

The following table summarises the sensitivity of the Group’s floating rate borrowings to interest rate risk at the end of the reporting period .

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 .

($ million)

Interest rates - increase by 1%

Interest rates - decrease by 1%

(b) Credit risk

Consolidated

2017

2016

Impact on

post-tax

Impact on

post-tax

Impact on

profit

(3.0)

3.0

equity

(3.0)

3.0

profit

(2 .2)

2 .2

equity

(2 .2)

2 .2

Credit risk is managed on a Group basis using delegated 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, and financial guarantees . Financial guarantees are only provided in exceptional circumstances and are subject to approval
in accordance with the Board approved delegated authorities .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 21 Financial risk management (continued)

For banks and financial institutions, only independently rated parties with investment grade rating are accepted . Derivative counterparties and cash

transactions are limited to high credit quality institutions .

For trading credit risk, the Group assesses the credit quality of the customer, taking into account its financial position, past experience, external

credit agency reports and credit references . Individual customer risk limits are set based on internal approvals 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

non-account customers are settled either in cash, major credit cards or electronic funds transfer, mitigating credit risk . In relation to a small number

of customers with uncertain credit history, the Group has taken out personal guarantees in order to cover credit exposures . From the 1 August 2016

the Group commenced using credit insurance for selected accounts with a credit limit exceeding $0 .25 million . The maximum liability insured is

capped at $14 million .

The Company applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of the lifetime

expected loss provision for all trade receivables . The loss allowance provision as at 31 December 2017 is determined as set out below, which

incorporates past experience and forward looking information, including the outlook for market demand and forward looking interest rates .

Consolidated

2017

Gross

2016

Gross

Expected

Carrying

Expected

Carrying

loss rate

Amount

Provision

loss rate

Amount

Provision

0.11

0.22
2.09
73.26

$million

125.7

85.8
13.1
25.8

250.4

0.1

0.2
0.3
18.9

19.5

0 .12

0 .24
2 .35
31 .86

$million

112 .9

72 .5
7 .9
2 .2

195 .5

0 .1

0 .2
0 .2
0 .7

1 .2

Current

More than 30 days past due
More than 60 days past due
More than 90 days past due

Total

The gross carrying amount includes external receivables of $200 .1 million (2016: $167 .2 million) and joint venture receivables of $50 .3 million

(2016: $28 .3 million) .

In late 2017 the Group became aware of certain financial discrepancies which relate to transactions whereby it has been underpaid for products

supplied to customers . The Group has now completed analysis with the assistance of forensic accountants KPMG and as a result an additional

provision of $17 .1 million for the impairment of trade receivables was recognised in the balance sheet as at 31 December 2017 .

While the financial impact of the discrepancies has been quantified, investigations are continuing . The Company is also continuing its efforts to

recover amounts due .

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 credit standby

facilities that the Group has at its disposal to further reduce liquidity risk .

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 21 Financial risk management (continued)

Financing arrangements

($ million)

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

Credit standby arrangements

Total facilities

Bank overdrafts
Bank facilities

Used at balance date

Bank overdrafts
Bank facilities

Unused at balance date

Bank overdrafts
Bank facilities

Maturity profile of bank facilities . Maturing on:

5 January 2018

4 January 2019

6 January 2021

Consolidated

2017

2016

4.0
540.0

544.0

-
430.0

430.0

4.0
110.0

114.0

210.0

330.0

540.0

4 .0
540 .0

544 .0

-
310 .0

310 .0

4 .0
230 .0

234 .0

330 .0

210 .0

540 .0

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 . For bank facilities the cash flows have been estimated using interest rates applicable at the end of the reporting period .

Contractual maturities of financial liabilities

Consolidated

($ million)

31 December 2017

Non-derivatives

Trade payables
Bank facilities
Finance leases
Bank guarantees

Derivatives

Gross settled forward foreign exchange

contracts (cash flow hedges):
- (inflow)
- outflow

31 December 2016

Non-derivatives

Trade payables
Bank facilities
Finance leases
Bank guarantees

Derivatives

Gross settled forward foreign exchange

contracts (cash flow hedges):
- (inflow)
- outflow

< 6 months

6-12 months

1-2 years

> 2 years

Total

(Assets)/Liabilities

Carrying Amount

145.9
6.4
0.3
6.0

158.6

(23.8)
23.8

117 .0
4 .2
0 .4
24 .1

145 .7

(27 .5)
28 .4

0 .9

-
6.4
-
6.3

12.7

(0.4)
0.4

-
4 .3
0 .3
-

4 .6

(7 .9)
8 .3

0 .4

-
195.1
-
-

195.1

-
-

-
310 .1
0 .3
-

310 .4

-
-

-
250.1
-
23.2

273.3

-
-

-
-
-
-

-
-

145.9
458.0
0.3
35.5

639.7

(24.2)
24.2

117 .0
318 .6
1 .0
24 .1

460 .7

(35 .4)
36 .7

1 .3

145.8
428.9
0.3
-

575.0

-
-

117 .0
309 .3
0 .7
-

427 .0

(1 .3)
-

(1 .3)

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 21 Financial risk management (continued)

(d) Financial instruments, derivatives and hedging activity

The Company early adopted AASB 9 Financial Instruments from 1 January 2015 and implemented hedge accounting in late August 2015 . Under

hedge accounting, changes in the value of qualifying instruments during the hedging period are recognised in comprehensive income rather

than recognised in the income statement as the previous policy of the Group . The change to hedge accounting is undertaken prospectively, with

instruments held by the Group prior to the change accounted for in accordance with the previous policy .

The change in accounting policy allows the Company to manage risk in an effective manner, without the accounting treatment of the instruments

distorting the reported results .

Information about the impairment of trade and other receivables, their credit quality and the Group’s exposure to credit risk can be found in (b) above .

Accounting policy - financial instruments

The Group classifies its financial assets in the following categories: financial assets at amortised cost, financial assets at fair value through profit or

loss and hedging instruments . The classification depends on the purpose for which the financial assets were acquired, which is determined at initial

recognition based upon the business model of the Group .

(i) Financial assets at amortised cost

The Group classifies its financial assets as at amortised cost if the asset is held with the objective of collecting contractual cash flows and the

contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest . These include trade receivables and

bank term deposits . Bank term deposits are non-derivative financial assets with fixed or determinable payments that are not quoted in an active

market . They are financial assets at amortised cost and are included in current assets, except for those with maturities greater than 12 months after

the balance sheet date . Refer to Note 10 for details relating to trade receivables .

(ii) Financial assets through profit or loss

Forward foreign exchange contracts are derivative instruments entered into by the Group for the purpose of managing foreign currency risk prior

to late August 2015 which do not qualify for hedge accounting . 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 .

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 finance costs .

(iii) Hedging instruments

Financial instruments entered into by the Group for the purpose of managing foreign currency risk associated with its highly probable inventory

purchases and electricity price risk with its highly probable electricity purchases after late August 2015 qualify for hedge accounting . Instruments are

initially recognised at fair value on the date a contract is entered into .

Changes in fair value of instruments that qualify for hedge accounting are recognised in other comprehensive income in the cash flow hedge reserve .

Amounts accumulated in the hedge reserve are recognised as part of the initial carrying amount of an asset or liability or reclassified to the income

statement, depending upon the purpose of the hedging instrument .

Refer to Note 21(a) for details of the movements in the Group’s reserves relating to hedging activities .

100

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.
21 Financial risk management (continued)

(d) Financial instruments, derivatives and hedging activity (continued)

The effects of applying hedge accounting on the Group’s financial position and performance are as follows:

Hedging instrument - forward foreign exchange contracts
Carrying amount - $Million
Notional amount US Dollars - $Million
Notional amount Yen - $ million
Notional amount EURO - $ million
Maturity date
Hedge ratio
Change in value of outstanding hedge instruments since 1 January - $Million
Change in value of hedge item used to determine hedge effectiveness - $Million
Weighted average hedge rate - US Dollars

- Yen
- Euro

Fair value measurements

Fair value hierarchy

Consolidated

2017

2016

-
20.6
1.7
1.9
Jan - Aug 2018
1:1
-
-
A$1 : US$0.7769
A$1 : Yen 87.9
A$1 : EURO$0.6581

1 .3
32 .7
2 .7
-
Jan - Sep 2017
1:1
1 .3
(1 .3)
A$1 : US$0 .7511
A$1 : Yen 84 .3
-

The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes . The carrying amounts

of financial instruments disclosed in the balance sheet approximate to their fair values . AASB 13 Fair Value Measurement requires disclosure of fair

value measurements by level of the following fair value measurement hierarchy:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities .

Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly

(derived from prices) .

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs) .

(i) Recognised fair value measurements

The Group measures and recognises derivatives used for hedging foreign currency risk and electricity price risk at fair value on a recurring basis .

The Group held liabilities in relation to forward exchange contracts of $0 .2 million and assets of $0 .2 million (2016: assets of $1 .3 million) at the

end of the reporting period . There were no electricity price caps in place at 31 December 2017 or 31 December 2016 . The fair values of the

forward exchange contracts are measured with reference to forward interest rates and exchange rates at balance date and the present value of the

estimated future cash flows (level 2) .

(ii) Disclosed fair values

The Group also has a number of assets and liabilities which are not measured at fair value, but for which fair values are disclosed in the Notes .

The carrying value less impairment provision of current trade receivables and payables are assumed to approximate their fair values due to their short

term nature . For non-current receivables, the fair values are also not significantly different to their carrying amounts as a commercial rate of interest is

charged to the counterparty (level 3) .

The interest rate for current and non-current borrowings is reset on a short term basis, generally 30 to 90 days, and therefore the carrying value of

current and non-current borrowings equal their fair values (level 2) .

101

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.

GROUP STRUCTURE

22 Joint arrangements and associate

Accounting policy - joint arrangements and associate

(i) Associate entity

The interest in associate is accounted for using the equity method, after initially being recorded at cost . Under the equity method, the share of the

profits or losses of the associate 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 associate and transactions with the associate are eliminated to

the extent of the Group’s ownership interest until such time as they are realised by the associate on consumption or sale, unless they relate to an

unrealised loss that provides evidence of the impairment of an asset transferred .

(ii) Joint arrangements

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of the

Group to the joint arrangement .

Joint operations

Interests in joint operations are accounted for using the proportionate consolidation method . Under this method, the Group has recognised its share

of assets, liabilities, revenues and expenses .

Joint ventures

Interests in joint ventures are accounted for using the equity method . Under this method, the interests are initially recognised in the consolidated

balance sheet at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other

comprehensive income in the income statement and statement of other comprehensive income respectively . Dividends received are recognised as a

reduction in the investment in the joint venture .

When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint venture (which includes any long term interests that,

in substance, form part of the Group’s net investment in the joint venture), the Group does not recognise further losses, unless it has incurred

obligations or made payments on behalf of the joint venture .

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures .

Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred . Accounting policies of the

joint ventures have been changed where necessary, to ensure consistency with the policies adopted by the Group .

(a) Summarised financial information for joint ventures and associate

The following table provide summarised financial information for the joint ventures and associate which are individually immaterial and accounted for

using the equity method .

($ million)

Investment in joint ventures and associate

Profit from continuing operations

Other comprehensive income

Total comprehensive income

Total

Joint ventures

Associate

Consolidated

2017

121.3

33.6

2016

114 .2

25 .6

2017

39.0

1.5

2016

37 .0

2 .9

2017

160.3

35.1

2016

151 .2

28 .5

102

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 22 Joint arrangements and associate (continued)

(b) Interests in joint arrangements and associate

Name

Principal place of business

Aalborg Portland Malaysia Sdn . Bhd .(1)
Batesford Quarry(2)
Burrell Mining Services JV (2)

Malaysia

Victoria
New South Wales and Queensland

E .B . Mawson & Sons Pty Ltd and
Lake Boga Quarries Pty Ltd(3)
Independent Cement and Lime Pty Ltd(3)
Peninsula Concrete Pty Ltd(3)
Sunstate Cement Ltd(3)

New South Wales and Victoria

New South Wales and Victoria
South Australia
Queensland

Ownership interest

2017

2016

50
50

50
50
50

50
50

50
50
50

Activities

White clinker and cement manufacture

Limestone products
Concrete products for the coal

mining industry
Premixed concrete and quarry products

Cementitious product distribution
Premixed concrete
Cement milling and distribution

(1) Associate

(2) Joint operation

(3) Joint venture

Each of the above entities, except Aalborg Portland Malaysia Sdn . Bhd ., has a balance sheet date of 30 June which is different to the Group’s

balance sheet date of 31 December . Financial reports as at 31 December for the joint arrangements are used in the preparation of the Group

financial statements .

The Group has an unrecognised contingent liability to acquire the interest it does not own in certain of its joint ventures . Acquisition of the interest

is subject to exercise by the joint venture partner, the occurrence of which affects the value of the interest . The minimum amount of the contingent

liability is $31 .3 million (2016: $30 .8 million) .

23 Subsidiaries and transactions with non-controlling interests

The Group’s material subsidiaries at 31 December are set out below . The subsidiaries have share capital consisting solely of ordinary shares,

which are held directly by the Group, and the proportion of ownership interests held equals to the voting rights held by the Group . The country of

incorporation or registration is also their principal place of business .

Name of entity

Place of incorporation

Adbri Masonry Group Pty Ltd
Adbri Masonry Pty Ltd
Adelaide Brighton Cement Investments Pty Ltd
Adelaide Brighton Cement Ltd
Adelaide Brighton Management Ltd
Aus-10 Rhyolite Pty Ltd
Cockburn Cement Ltd
Exmouth Limestone Pty Ltd
Hurd Haulage Pty Ltd
Hy-Tec Industries Pty Ltd
Hy-Tec Industries (Queensland) Pty Ltd
Hy-Tec Industries (Victoria) Pty Ltd
Morgan Cement International Pty Ltd
Northern Cement Ltd
Premier Resources Ltd
Screenings Pty Ltd
Southern Quarries Pty Ltd

Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia

Australia

Ownership interest held

by the Group

2017

2016

100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100

100

100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100

100

Class of

Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord

Ord

103

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.24 Deed of cross guarantee

As at the date of this report, Adelaide Brighton Limited, 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, Adbri Masonry Pty Ltd, Hurd Haulage Pty Ltd, Aus-10 Rhyolite Pty Ltd, Screenings Pty Ltd, Southern Quarries Holdings

Pty Ltd, Direct Mix Holdings Pty Ltd, Southern Quarries Pty Ltd and Central Pre-Mix Concrete 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, wholly owned entities classified as a “Closed

Group” are relieved from the requirement to prepare a financial report and Directors’ report under ASIC Corporations (Wholly-owned companies)

Instrument 2016/785 (formerly Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission) .

Direct Mix Holdings Pty Ltd is ineligible for relief under the Class Order and is classified as a member of the “Extended Closed Group” for the

purposes of the Instrument .

Central Pre-Mix Concrete Pty Ltd was added to the “Closed Group” during 2017 .

Set out below is a consolidated balance sheet as at 31 December 2017 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
Retirement benefit asset
Joint arrangements and associate
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
Other non-current liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Contributed equity
Reserves
Retained earnings

Total equity

104

2017

2016

50.4
242.6
166.4
1.9

461.3

37.3
3.5
91.7
21.4
997.4
293.6

17 .4
203 .7
159 .8
3 .8

384 .7

34 .3
2 .3
90 .3
21 .4
962 .5
268 .2

1,444.9

1,906.2

1,379 .0

1,763 .7

140.9
0.1
9.9
33
14.9

198.8

428.9
85
42.4
0.1

556.4

755.2

140 .2
0 .1
15 .4
31 .8
3 .3

190 .8

309 .4
88 .9
38 .9
0 .1

437 .3

628 .1

1,151.0

1,135 .6

733.1
1.4
416.5

731 .4
2 .9
401 .3

1,151.0

1,135 .6

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.24 Deed of cross guarantee (continued)

Set out below is a condensed consolidated statement of comprehensive income and a summary of movements in consolidated retained earnings for

the year ended 31 December 2017 of the Closed Group .

($ million)

Profit before income tax

Income tax expense

Profit for the year

Retained earnings 1 January

Profit for the year
Other comprehensive income
Dividends paid

Retained earnings 31 December

25 Parent entity financial information

2017

240.9

(71.0)

169.9

401.3

169.9
1.3
(156.0)

416.5

2016

247 .1

(69 .4)

177 .7

400 .9

177 .7
1 .2
(178 .5)

401 .3

The financial information for the parent entity, Adelaide Brighton Limited (“the Company”), has been prepared on the same basis as the consolidated

financial statements, except as set out below .

(i) Investments in subsidiaries, associate and joint arrangements

Investments in subsidiaries, associate and joint arrangements are accounted for at cost in the financial statements of the Company . 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 . 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

The Company and its wholly owned Australian controlled entities have implemented the tax consolidation legislation .

The Company 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, the Company 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 the Company 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 Company 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 .

(iv) Share based payments

The grant by the Company of options over its equity instruments to employees of subsidiary undertakings in the Group is treated as a receivable

from that subsidiary undertaking .

105

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.
25 Parent entity financial information (continued)

(a) Summary financial information

The individual financial statements for the Company show the following aggregate amounts:

($ million)

Balance sheet

Current assets

Total assets

Current liabilities

Total liabilities

Net assets

Shareholders’ equity

Share 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

($ million)

Bank guarantees

2017

2016

2,277.1

2,674.6

1,298.8

1,762.7

911.9

1,975 .2

2,372 .8

1,130 .7

1,475 .1

897 .7

725.9

724 .3

2.2

183.8

911.9

169.1

2017

7.4

2 .7

170 .7

897 .7

200 .5

2016

10 .3

The parent entity did not have any contingent liabilities as at 31 December 2017 or 31 December 2016 other than the bank guarantees detailed above .

26 Retirement benefit obligations

Accounting policy - retirement benefit obligations

Except those employees that opt out of the Group’s superannuation plan, 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 .

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 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 high quality corporate 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 in the statement of comprehensive income . They are included in retained earnings in the statement of changes in equity and in the balance

sheet . Past service costs are recognised immediately in the income statement .

106

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.26 Retirement benefit obligations (continued)

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 .

Significant estimate - key assumptions

The present value of defined benefit superannuation plan obligations depends on a number of factors that are determined on an actuarial basis using

a number of assumptions . These include selection of a discount rate, future salary increases and expected rates of return . The assumptions used to

determine the obligations and the sensitivity of balances to changes in these assumptions are detailed in Note 26(d) .

(a) Superannuation plan details

Other than those employees that have opted out, 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 . The Superannuation

Industry (Supervision) legislation (SIS) governs the superannuation industry and provides a framework within which superannuation plans operate .

The SIS Regulations require an actuarial valuation to be performed for each defined benefit superannuation plan every three years, or every year if

the plan pays defined benefit pensions .

Plan assets are held in trusts which are subject to supervision by the prudential regulator . Funding levels are reviewed regularly . Where assets are

less than vested benefits, being those payable upon exit, a management plan must be formed to restore the coverage to at least 100% .

The Plan’s Trustee is responsible for the governance of the Plan . The Trustee has a legal obligation to act solely in the best interests of Plan

beneficiaries . The Trustee has the following roles:

> Administration of the Plan and payment to the beneficiaries from Plan assets when required in accordance with the Plan rules;

> Management and investment of the Plan assets; and

> Compliance with superannuation law and other applicable regulations .

The prudential regulator, the Australian Prudential Regulation Authority (APRA), licenses and supervises regulated superannuation plans .

Membership is in either the Defined Benefit or Accumulation sections of the Plan . The accumulation 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, and are guaranteed benefits to the

equivalent of the notional balance they would have received as accumulation members through additional contributions from the Group . The defined

benefit section of the Plan is closed to new members . During the 12 months to 31 December 2017, all new employees, who are members of this

fund, have become members of the accumulation category of the Plan .

There are a number of risks to which the Plan exposes the Company . The more significant risks relating to the defined benefits are:

> Investment risk - the risk that investment returns will be lower than assumed and the Company will need to increase contributions to offset

this shortfall .

> Salary growth risk - the risk that wages and salaries (on which future benefit amounts will be based) will rise more rapidly than assumed, increasing

defined benefit amounts and thereby requiring additional employer contributions .

> Legislative risk - the risk that legislative changes could be made which increase the cost of providing the defined benefits .

> Timing of members leaving service - a significant amount of benefits paid to members leaving may have an impact on the financial position of

the Plan, depending on the financial position of the Plan at the time they leave . The impact may be positive or negative, depending upon the

circumstances and timing of the withdrawal .

The defined benefit assets are invested in the Mercer Growth investment option . The assets are diversified within this investment option and

therefore the Plan has no significant concentration of investment risk .

107

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.
26 Retirement benefit obligations (continued)

(b) Balance sheet amounts

The amounts recognised in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:

Present value of

Fair value of

Net obligation/

obligation

plan assets

(asset)

51.4

1.7
1.7
0.2

3.6

-
(0.3)
0.9

0.6

-
0.9

(11.7)

44.8

(53.7)

-
(1.8)
(0.2)

(2.0)

(2.5)
-
-

(2.5)

(0.9)
(0.9)

11.7

(48.3)

52 .4

(53 .7)

1 .8

1 .9

0 .1

3 .8

-
(0 .1)

(0 .1)

-
1 .0

(5 .7)

51 .4

(2 .0)

(0 .1)

(2 .1)

(1 .6)
-
-

(1 .6)

(1 .0)
(1 .0)

5 .7

(53 .7)

(2.3)

1.7
(0.1)
-

1.6

(2.5)
(0.3)
0.9

(1.9)

(0.9)
-

(3.5)

(1 .3)

1 .8

(0 .1)

1 .7

(1 .6)
(0 .1)
-

(1 .7)

(1 .0)
-

(2 .3)

($ million)

At 1 January 2017

Current service cost
Interest expense/(income)
Transfers in

Remeasurements

Return on plan assets, excluding amounts included in interest expense/(income)
(Gain) from change in financial assumptions
Experience (gain)

Contributions:

Employers
Plan participants

Payments from Plan:

Benefit payments

At 31 December 2017

At 1 January 2016

Current service cost

Interest expense/(income)

Transfers in

Remeasurements

Return on plan assets, excluding amounts included in interest expense/(income)
(Gain) from change in financial assumptions
Experience (gain)

Contributions:

Employers
Plan participants

Payments from Plan:

Benefit payments

At 31 December 2016

108

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.26 Retirement benefit obligations (continued)

The major categories of plan assets are as follows:

Australian equity
International equity
Fixed income
Property
Cash
Other

Total

31 December 2017

Unquoted

$ million

12.6
15.4
10.1
6.3
1.0
2.9

48.3

31 December 2016

Unquoted

in %

26%
32%
21%
13%
2%
6%

100%

$ million

13 .4
16 .1
10 .8
6 .4
3 .8
3 .2

53 .7

in %

25%
30%
20%
12%
7%
6%

100%

The assets set out in the above table are held in the Mercer Growth investment fund which does not have a quoted price in an active market . There

are no amounts relating to the Company’s own financial instruments, and property occupied by, or other assets used by, the Company .

(d) Actuarial assumptions and sensitivity

The significant actuarial assumptions used were as follows:

Discount rate - % p .a .

Future salary increases - % p .a . - first year

Future salary increases - % p .a . - second year
Future salary increases - % p .a . - thereafter

The sensitivity of the defined benefit obligation to changes in the significant assumptions is:

Consolidated

2017

2016

3.3

2.0

3.5
3.0

3 .7

2 .0

3 .5
3 .8

31 December 2017

Discount rate
Future salary increases

31 December 2016

Discount rate
Future salary increases

Change in assumption

Increase in assumption

Decrease in assumption

Impact on defined benefit obligation

0 .50 ppts
0 .50 ppts

Decrease by 1 .6%
Increase by 1 .2%

Increase by 1 .7%
Decrease by 1 .1%

Decrease by 1 .7%
Increase by 1 .4%

Increase by 1 .8%
Decrease by 1 .3%

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant . In practice, this is unlikely to

occur, and changes in some of the assumptions may be correlated . When calculating the sensitivity of the defined benefit obligation to significant

actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of

the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet .

(e) Defined benefit liability and employer contributions

The Group made contributions to the Plan at rates of between 6% and 9% of member salaries . Expected contributions to the defined benefit plan for

the year ending 31 December 2018 are $0 .7 million (2017: $0 .8 million) .

The weighted average duration of the defined benefit obligation is 6 years (2016: 6 years) .

109

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.
27 Share-based payment plans

Accounting policy - share-based payments

Share-based compensation benefits are provided to executives via the Adelaide Brighton Limited Executive Performance Share Plan (“the Plan”

or “EPSP”) .

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 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, 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 Plan is administered by the Adelaide Brighton employee share plan trust; see Note 1(b)(ii) .

(a) Employee Share Plan

The establishment of the Adelaide Brighton Limited Employee Share Plan was approved by special resolution at the Annual General Meeting of the

Company held on 19 November 1997 . Subject to the Board approval of grants, 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 (2016 - 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 Plan provides for grants of Awards to eligible executives . This plan was approved by shareholders at the Annual General Meeting held on

19 November 1997 .

Under the Plan, eligible executives are granted Awards (each being an entitlement to a fully paid ordinary share of Adelaide Brighton Limited, subject to

the satisfaction of performance conditions) on terms and conditions determined by the Board . On exercise of the Award following vesting, participants

are issued shares of the Company . Detailed discussion of performance conditions is set out in the Remuneration Report on pages 50 to 69 .

The exercise price for each Award is $nil .

Movement in number of Awards outstanding

Outstanding at beginning of the year

Granted

Forfeited
Exercised
Expired

Outstanding at the end of the year

Exercisable at the end of the year

Consolidated

2017

2016

2,919,824

2,986,287

593,583

-
(618,396)
(127,559)

701,889

-
(768,352)
-

2,767,452

2,919,824

The average value per share at the earliest exercise date during the year was $5 .76 (2016: $5 .08) . The value per share is calculated using the

Volume Weighted Closing Price which is the average of the closing price and number of Adelaide Brighton Limited shares traded on the Australian

Securities Exchange for the five trading days before the exercise date, but not including the day of exercise .

110

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 27 Share-based payment plans (continued)

The fair value of Awards at the grant date are independently determined using a pricing model . For the purposes of pricing model inputs, the

share price for calculation of the Award value is based on the closing published share price at grant date . The impact of the Award’s performance

conditions have been incorporated into the valuation through the use of a discount for lack of marketability and TSR vesting conditions . Volatility

of the Company’s share price has been considered in valuing the Awards, however the independent valuer has reached the conclusion that the

volatility is not a factor in assessing the fair value of the Awards .

The tables below set out the key assumptions used by the independent valuer in their valuation model to assess the fair value of the Awards .

Awards granted in 2017 - weighted average pricing model inputs

Share price at grant date - per share
Expected future dividends - per share
Risk-free interest rate - % p .a .
Lack of marketability discount - % p .a .
TSR condition discount
Earliest exercise date

2017 Awards

$5 .62
$0 .79
1 .97
2 .25
50%
1-May-21

Awards granted in 2016 - weighted average pricing model inputs

2016 Awards

2015 Awards

2014 Awards

2013 Awards

2012 Awards

Share price at grant date - per share
Expected future dividends - per share
Risk-free interest rate - % p .a .
Lack of marketability discount - % p .a .
TSR condition discount
Earliest exercise date

$5 .68
$1 .04
1 .58
2 .75
50%
1-May-20

$4 .43
$0 .71
2 .35
2 .50
50%
1-May-19

$3 .84
$0 .66
1 .87
2 .50
50%
1-May-18

$3 .84
$0 .60
1 .87
2 .50
50%
1-May-17

- Tranche 2

$3 .84
$0 .35
1 .88
2 .50
50%
1-May-16

Comparative information has been updated to reflect the most recent Award valuations undertaken by the independent valuer .

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 Group recognised share based payments expense of $619,965 during the year (2016: $1,149,092) .

The weighted average remaining contractual life of Awards outstanding at the end of the period was 1 .8 years (2016: 1 .8 years) .

111

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements.
OTHER

28 Related parties

(a) Compensation of Key Management Personnel

($ million)

Short-term employee benefits
Post employment benefits
Share-based payments

Consolidated

2017

2016

5.3
0.1
0.5

5.9

6 .6
0 .1
1 .0

7 .7

(b) Other transactions with Key Management Personnel

R D Barro, a Director of Adelaide Brighton Limited, is Managing Director of Barro Group Pty Ltd . Barro Group Pty Ltd and Adelaide Brighton Limited,

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 and the Group . 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 Brydon, CEO and Managing Director, and M Kelly, a senior executive of Adelaide Brighton Limited, have been Directors of Sunstate Cement Ltd

during the reporting period . G Agriogiannis, a senior executive of Adelaide Brighton Limited and M Kelly are also Directors of the Mawson Group .

During the year, the Group traded significantly with Independent Cement and Lime Pty Ltd, Sunstate Cement Ltd, the Mawson Group and Aalborg

Portland Malaysia Sdn . Bhd ., which are all joint ventures or associates of the Group .

All transactions involving the Barro Group Pty Ltd and Adelaide Brighton Limited and its subsidiaries, Independent Cement and Lime Pty Ltd and its

subsidiaries, Sunstate Cement Ltd, the Mawson Group and Aalborg Portland Malaysia Sdn . Bhd . were conducted on standard commercial terms .

Transactions entered into during the year with Directors of the Company and the Group, or their related parties, are on standard commercial terms

and conditions, and include the purchase of goods from the Group and the receipt of dividends from the Company .

Aggregate amounts of the above transactions by subsidiaries and joint ventures with the

Directors and their related parties:

Sales to Director related parties
Purchases from Director related parties

Consolidated

2017

2016

80,951,994
18,967,244

71,983,392
20,818,254

Details of interests in controlled entities are set out in Note 23 . The ultimate parent company is Adelaide Brighton Limited .

(d) Joint arrangement and associate entities

The nature of transactions with joint arrangement and associate entities is detailed below:

Adelaide Brighton Cement Ltd and Morgan Cement International Ltd supplied finished products and raw materials to Sunstate Cement Ltd,

Independent Cement and Lime Pty Ltd and Peninsula Concrete Pty Ltd . Hy-Tec Industries Pty Ltd, Hy-Tec Industries (Victoria) Pty Ltd, Hy-Tec

Industries (Queensland) Pty Ltd, Adbri Masonry Group Pty Ltd, Adelaide Brighton Cement Ltd and Cockburn Cement Ltd purchased finished

products, raw materials and transportation services from Sunstate Cement Ltd, Independent Cement and Lime Pty Ltd and Aalborg Portland

Malaysia Sdn . Bhd .

All transactions are on normal commercial terms and conditions and transactions for the supply are covered by shareholder agreements .

112

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 28 Related parties (continued)

(e) Transactions with related parties

The following transactions occurred with related parties:

($’000)

Sales of goods

Joint venture entities

Purchases of materials and goods

Joint venture entities
Associate entities

Interest revenue

Joint venture entities

Dividend and distribution income

Joint venture entities

Superannuation contributions

Consolidated

2017

2016

307,037

242,702

115,210
6,597

84,375
8,142

659

719

26,413

18,582

Contributions to superannuation funds on behalf of employees

12,628

12,707

Loans advanced to:

Joint venture entities

(f) 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:

($’000)

Current receivables

Joint venture entities (interest)
Joint venture entities (trade)

Non-current receivables

Joint venture entities (loans)

Current payables

Joint venture entities (trade)

3,125

2,046

Consolidated

2017

2016

313
49,977

338
28,041

35,049

31,917

7,997

3,686

Outstanding balances are unsecured and repayable in cash . No provisions for doubtful receivables have been raised in relation to any

outstanding balances .

(g) Loans to related parties

A loan to a joint venture entity, Independent Cement and Lime Pty Ltd, has interest charged at commercial rates on the outstanding balance . Interest

revenue brought to account by the Group during the reporting year on this loan was $659,420 (2016: $718,972) .

29 Events occurring after the balance sheet date

No matter or circumstance has arisen since 31 December 2017 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 .

30 Commitments for capital expenditure

($ million)

Capital expenditure contracted for at the reporting date but not recognised as

liabilities is as follows:

Within one year

Consolidated

2017

2016

15.0

12 .6

113

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017. Notes to and forming part of the consolidated financial statements. 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

(b) Non-audit services

PricewaterhouseCoopers Australian firm
Other assurance services

32 Contingencies

Details and estimates of maximum amounts of contingent liabilities are as follows:

($ million)

(a) Guarantees

Bank guarantees

(b) Litigation

Consolidated

2017

2016

855,313

748,359

20,550

40,949

Consolidated

2017

2016

35.4

24 .1

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 .

114

Adelaide Brighton Ltd and its controlled entities for the year
ended 31 December 2017. Notes to and forming part of
the consolidated financial statements.

DIRECTORS’ DECLARATION

AUDITOR’S INDEPENDENCE DECLARATION

In the Directors’ opinion:

Auditor’s Independence Declaration

(a) the financial statements and notes set out

on pages 70 to 114 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

2017 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

grounds to believe that the members of the

Extended Closed Group identified in Note 24 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 24 .

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 CEO and 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 Brydon

Director

Dated 16 March 2018

As lead auditor for the audit of Adelaide Brighton

Limited for the year ended 31 December 2017,

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 Limited and the entities it controlled

during the period .

MT Lojszczyk

Partner

PricewaterhouseCoopers

Adelaide 16 March 2018

Liability limited by a scheme approved

under Professional Standards Legislation .

PricewaterhouseCoopers
ABN 52 780 433 757
Level 11, 70 Franklin 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 2017

115

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ADELAIDE BRIGHTON LTD

Report on the audit of the

financial report

Independence
We are independent of the Group in

> We chose reported profit before tax as

the appropriate metric because, in our

Our opinion

In our opinion:

The accompanying financial report of

Adelaide Brighton Limited (the Company)

and its controlled entities (together

the Group) is in accordance with the

Corporations Act 2001, including:

accordance with the auditor independence

view, it is the benchmark against which the

requirements of the Corporations Act

performance of the Group is most commonly

2001 and the ethical requirements of

measured . It is also a generally accepted

the Accounting Professional and Ethical

benchmark in practice . Property profits

Standards Board’s APES 110 Code of Ethics

were removed from materiality calculations

for Professional Accountants (the Code)

on the basis that these transactions are

that are relevant to our audit of the financial

distinguishable from the continuing product

report in Australia . We have also fulfilled our

trading activities of the Group .

other ethical responsibilities in accordance

> We selected 5% based on our professional

(a) giving a true and fair view of the Group’s

with the Code .

financial position as at 31 December 2017

and of its financial performance for the year

Our audit approach

judgement noting that it is also within the

range of commonly acceptable profit related

thresholds in the industry .

then ended

(b) complying with Australian Accounting

Standards and the Corporations

Regulations 2001 .

What we have audited
The Group financial report comprises:

> the consolidated balance sheet as at

31 December 2017

An audit is designed to provide reasonable

assurance about whether the financial

Audit scope

report is free from material misstatement .

> Our audit focused on where the Group

Misstatements may arise due to fraud

made subjective judgements; for example,

or error . They are considered material if

significant accounting estimates involving

individually or in aggregate, they could

making assumptions and considering

reasonably be expected to influence the

inherently uncertain future events .

economic decisions of users taken on the

> We conducted an audit of the most

basis of the financial report .

significant components being Cement

and Lime (primarily focusing on the

South Australian and Western Australian

businesses which comprise the bulk of

these operations) which, in our view, were

financially significant to the financial report .

> Additionally, we performed specific risk

focused audit procedures in relation to the

Group’s Cement and Lime component in the

Northern Territory, Concrete and Aggregates

components in Sydney and Queensland

and Concrete Products . Audit procedures

were also performed over acquisition of the

Central Pre-Mix Concrete, Davalan Concrete

Pty Ltd and Holcim Northern Territory

concrete and aggregates businesses .

> the consolidated income statement for the

We tailored the scope of our audit to ensure

year then ended

> the consolidated statement of

that we performed enough work to be able

to give an opinion on the financial report as

comprehensive income for the year then

a whole, taking into account the geographic

ended

and management structure of the Group, its

> the consolidated statement of changes in

accounting processes and controls and the

equity for the year then ended

industry in which it operates .

> the consolidated statement of cash flows for

the year then ended

> the notes to the consolidated financial

statements, which include a summary of

significant accounting policies

> the directors’ declaration .

Basis for opinion

We conducted our audit in accordance

with Australian Auditing Standards . Our

Materiality

responsibilities under those standards

> For the purpose of our audit we used overall

are further described in the Auditor’s

Group materiality of $9 .7 million, which

responsibilities for the audit of the financial

represents approximately 5% of the Group’s

report section of our report .

We believe that the audit evidence we have

obtained is sufficient and appropriate to

provide a basis for our opinion .

profit before tax after excluding current year

gains on sale of properties (property profits) .

> We applied this threshold, together with

qualitative considerations, to determine the

scope of our audit and the nature, timing

and extent of our audit procedures and to

evaluate the effect of misstatements on the

financial report as a whole .

116

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017
> Independent Cement and Lime Pty Ltd

> Outside the operations identified above,

Key audit matters are those matters that, in

and Sunstate Cement Ltd were the largest

the Group includes components which

our professional judgement, were of most

contributors to the Group’s share of net

individually and collectively do not

significance in our audit of the financial report

profits from joint ventures and associates .

contribute materially to the overall Group

for the current period . The key audit matters

Other auditors audited the financial reports

result . We have obtained an understanding

were addressed in the context of our audit

for Independent Cement and Lime Pty Ltd

of these operations and performed

of the financial report as a whole, and in

and Sunstate Cement Ltd for the year ended

analytical procedures .

30 June 2017 . We determined the level of

involvement we needed to have to be able to

Key audit matters

forming our opinion thereon, and we do not

provide a separate opinion on these matters .

Further, any commentary on the outcomes

conclude whether sufficient appropriate audit

> Amongst other relevant topics, we

of a particular audit procedure is made in

evidence had been obtained for our opinion

communicated the following key audit

that context .

on the Group financial report as a whole,

matters to the Audit and Risk Committee:

including reviewing the work of these other

- Accounts receivable;

auditors . Due to the different balance dates

- Recoverability of goodwill and property,

utilised by these joint ventures, we performed

plant and equipment;

audit procedures for the period 1 July 2017

- Estimation of restoration provisions;

to (and as at) 31 December 2017, including

- Business combination accounting; and

substantive analytical procedures over the

- Measurement of inventory quantities .

financial results, to obtain sufficient evidence

These are further described in the Key audit

in respect of the results for the year ended

matters section of our report .

and financial position as at 31 December

2017 for our opinion .

Key audit matter

Accounts receivable

(Refer to notes 10 & 21)

The financial report of the Group included trade and other receivables

of $241 .0 million as at 31 December 2017 .

During the year, the Group identified discrepancies whereby it has

been underpaid for products supplied .

How our audit addressed the key audit matter

Our procedures included, amongst others, considering the expert’s

methods, competency objectivity and results of their work . Having

done so, we were satisfied that we could use the work of the Group’s

expert for the purpose of our audit .

We requested confirmation of the outstanding balance directly from

selected customers on interim and year end accounts receivable

balances . Where confirmation requests were not responded to by

The Group engaged an external expert to assist in analysing the

customers, we performed alternative procedures including testing

discrepancies . As a result, the Group identified that $17 .1 million

the balance to proof of delivery and subsequent cash received from

of its accounts receivable was impaired as at 31 December 2017,

the customers .

which has been recognised as a bad debt for the year ended

31 December 2017 .

To test the recoverability of accounts receivable, we assessed the

Group systems’ calculation of the age of the individual balances

This was a key audit matter as the identification of discrepancies

through comparison to a sample of invoices . Based on our

meant there was a higher assessed risk of material misstatement,

assessment of risk and financial significance, we examined cash

resulting in greater audit effort to address the matter, particularly over

received from customers after year end over aged receivables for

the recoverability of accounts receivable .

the purpose of assessing recoverability . We assessed the Group’s

proposed accounting treatment of the provision for doubtful

debts . Where aged balances had not yet been paid by customers

and had not been provided for, we made further enquiries to

assess recoverability .

We assessed the impact of the discrepancies on our broader fraud

risk assessment and response across other key transactions . We also

performed journals testing based on specific risk criteria identified .

117

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Key audit matter

How our audit addressed the key audit matter

Recoverability of goodwill and property, plant and equipment

We evaluated the Group’s cash flow forecasts and the process by

(Refer to notes 12, 14 & 15)

The financial report of the Group includes goodwill of $280 .1 million

and property, plant and equipment of $1,037 .2 million as at

31 December 2017 .

In order to assess recoverability of these assets, the Group prepared

financial models (hereafter, “the models”) as at 31 December 2017 to

determine if the carrying values of goodwill and property, plant and

equipment were supported by forecast future cash flows, discounted

to present value .

Given the significance of the Group’s recorded goodwill and property,

plant and equipment balances to the financial position of the

which they were developed . We compared the 2018 forecast in the

models to the Board approved budgets . We checked that prior year

budgets have been materially consistent with actual performance to

assess the Group’s ability to make reliable forecasts . We found that

the Group’s previous forecasts had been materially accurate .

We compared growth rate assumptions with external forecasts for the

industry and found the growth rate assumptions in the models to be

consistent with these .

We performed a sensitivity analysis of the discount rate and growth

rate assumptions . No material impairment was identified through

this analysis .

Group, and the judgments and assumptions required in preparing a

The Group engaged an expert to assist them in determining the

discounted cash flow model (including budgeted cash flows, growth

discount rates applied in the impairment models . We assessed them

rates and discount rates), the recoverability of these assets was a key

as Group experts, and considered their methods, competency, and

audit matter .

objectivity . Having done so, we were satisfied that we could rely on

the work of the Group’s expert for the purpose of our audit . We have

assessed that the WACC employed in the cash flow forecasts are

consistent with those recommended by Group’s expert .

Key audit matter

How our audit addressed the key audit matter

Estimation of restoration provisions

(Refer to note 16)

The Group recognised restoration provisions of $43 .1 million in relation

to the rehabilitation of presently operating quarries and concrete plants .

The estimation of rehabilitation provisions was a key audit matter

because the estimation of rehabilitation provisions involves

significant judgement to estimate future costs and to assess

rehabilitation requirements .

We assessed whether a provision was included for all sites that

required rehabilitation based on our knowledge of the Group’s

operations, review of new lease contract agreements, review of

meeting minutes, and discussions with management . We did not

identify any omissions from our procedures .

We focussed our attention on sites where there had been a material

change to the nominal cost from the previous period, or where we

would have expected there to be a material change based on our

knowledge of the business . There were no sites that had a material

The rehabilitation provision for sites being actively remediated is

change to nominal cost to rehabilitate in the current year .

material and reflected tendered cost estimates for future stages

of rehabilitation, as well as costs to complete the current stage

of rehabilitation .

For sites where there was no material change in the nominal cost to

rehabilitate, our procedures were limited to assessing whether the

provisions had been updated to reflect any new knowledge gained

For other quarries not currently being actively remediated, the

from rehabilitation planned in other areas or changes in rehabilitation

provision was determined via the cost estimate process completed

requirements . The provisions for these sites were tested on initial

annually by operational staff . The Group estimates future costs

recognition, or since the last significant change to nominal cost .

to rehabilitate each site (nominal cost) based on rehabilitation

requirements, current costs, and forecast cost inflation factors . These

are then discounted in order to estimate the net present value of the

provision . Cost inflation and discount rates are based on published

government rates .

For sites being actively remediated, we compared the movement

in the provision recognised with external quotes for the next stage

of work to be performed . We found the provision estimate was

consistent with the external quotes . To assess the Group’s ability to

estimate accurately, we also compared previous period’s estimates of

costs to the actual costs .

118

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017Key audit matter

How our audit addressed the key audit matter

Accounting for business combinations

We performed the following procedures over the acquisitions, based

(Refer to note 8)

on size and risk:

The Group has made three acquisitions in the current year being

> ssessed the independent valuations experts as Group experts,

Central Pre-Mix Concrete (Central), Davalan Concrete and Holcim

and for each expert considered the valuer’s method, competency

Northern Territory’s concrete and aggregates business (Holcim) .

and objectivity .

Accounting for this business combinations was a key audit matter

given that this involved significant judgements to be made .

> agreed the fair value of assets and liabilities acquired to valuation

reports prepared by the Group’s independent valuation experts .

> assessed the appropriateness and completeness of liabilities

Under Australian Accounting Standards, the Group was required

recognised on acquisition .

to estimate the fair value of assets and liabilities acquired . This

Where there were costs incurred which were related to acquisitions,

estimate particularly involved making judgements regarding the fair

we performed audit work to test that such costs were expensed and

value of the assets acquired and the period over which they are

not capitalised, or included in, purchase consideration as required by

expected to provide benefits to the Group . The Group was assisted

Australian Accounting Standards .

by independent valuations experts to determine the fair value of the

assets acquired .

Key audit matter

How our audit addressed the key audit matter

Measurement of inventory quantities for raw materials and
work in progress
(Refer to note 11)

We assessed the independent surveyors as Group experts, and for

each expert considered the surveyor’s method, competency and

objectivity . We were satisfied that we could use their work for the

Of the Group’s $174 .3 million of recorded inventory on hand at

purpose of our audit .

31 December 2017, $56 .9 million comprised raw materials and work

We obtained and inspected the survey results for material stockpiled

in progress .

Raw materials and work in progress inventory is typically stockpiled

prior to consumption or sale . The measurement of these inventories

inventory locations . We reperformed the Group’s conversion of the

quantities identified from the surveyors’ reports to tonnages using the

Group’s internally assessed density factors .

is a key audit matter as the measurement of inventory quantities for

We compared the density factors used to results of the Group’s

stockpiled inventory is complex . The Group relies on independent

internal laboratory testing that occurred during the year and (where

surveyors to perform volumetric surveys to estimate the quantity

available) to prior year density factors for the same raw material .

stockpiled for these inventory types . Survey quantity results, which

Given the nature of the inventory, the density factors do not usually

are reported in cubic metres, are converted to tonnages using

vary significantly year on year . We identified no significant changes in

density factors .

these factors in the current year or other factors which would require

a change .

Other information

We expect the remaining other information

In connection with our audit of the financial

The directors are responsible for the

other information . The other information

comprises the information included in the

Group’s annual report for the year ended

31 December 2017, but does not include

the financial report and our auditor’s

report thereon . Prior to the date of this

auditor’s report, the other information we

to be made available to us after the date

report, our responsibility is to read the

of this auditor’s report, including the

other information identified above and,

Performance Summary, Chairman’s Report,

in doing so, consider whether the other

Managing Director and CEO Report, Finance

information is materially inconsistent with the

Report, Map and Review of Operations,

financial report or our knowledge obtained

Sustainability Report, Financial History,

in the audit, or otherwise appears to be

Information for Shareholders and Corporate

materially misstated .

Governance Statement .

obtained included the Director’s Report and

Our opinion on the financial report does not

Diversity Report .

cover the other information and accordingly
we do not express any form of assurance

conclusion thereon .

119

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017If, based on the work we have performed

Auditor’s responsibilities for the audit

on the other information that we obtained

of the financial report

prior to the date of this auditor’s report,

we conclude that there is a material

misstatement of this other information, we

are required to report that fact . We have

nothing to report in this regard .

Our objectives are to obtain reasonable

assurance about whether the financial

report as a whole is free from material

misstatement, whether due to fraud or error,

and to issue an auditor’s report that includes

When we read the other information not yet

our opinion . Reasonable assurance is a high

received as identified above, if we conclude

level of assurance, but is not a guarantee

that there is a material misstatement therein,

that an audit conducted in accordance with

we are required to communicate the matter

the Australian Auditing Standards will always

to the directors and use our professional

detect a material misstatement when it exists .

judgement to determine the appropriate

Misstatements can arise from fraud or error

action to take .

Responsibilities of the directors for the

financial report

and are considered material if, individually

or in the aggregate, they could reasonably

be expected to influence the economic

decisions of users taken on the basis of

The directors of the Company are

the financial report .

responsible for the preparation of the

financial report that gives a true and fair view

in accordance with Australian Accounting

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 gives

a true and fair view and is free from material

A further description of our responsibilities

for the audit of the financial report is located

at the Auditing and Assurance Standards

Board website at:

http://www .auasb .gov .au/auditors_

responsibilities/ar1 .pdf . This description

forms part of our auditor’s report .

misstatement, whether due to fraud or error .

Report on the remuneration report

In preparing the financial report, the directors

are responsible for assessing the ability of

Our opinion on the remuneration report
We have audited the remuneration report

the Group to continue as a going concern,

included in pages 50 to 69 of the directors’

disclosing, as applicable, matters related

report for the year ended 31 December 2017 .

to going concern and using the going

concern basis of accounting unless the

directors either intend to liquidate the Group

or to cease operations, or have no realistic

alternative but to do so .

In our opinion, the remuneration report of

Adelaide Brighton Limited for the year ended

31 December 2017 complies with section

300A of the Corporations Act 2001 .

Responsibilities
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 .

PricewaterhouseCoopers

MT Lojszczyk

Partner

Adelaide 16 March 2018

Liability limited by a scheme approved

under Professional Standards Legislation .

PricewaterhouseCoopers

ABN 52 780 433 757
Level 11, 70 Franklin Street,

Adelaide SA 5000

GPO Box 418, Adelaide SA 5001

Telephone +61 8 8218 7000

Facsimile +61 8 8218 7999

www .pwc .com .au

120

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017FINANCIAL HISTORY

Year Ended

Dec

Dec1

Dec

Dec2

Dec

(A$ million unless stated)

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

Statements of financial

performance

Sales revenue

Depreciation, amortisation

1,560 .0 1,396 .2 1,413 .1 1,337 .8 1,228 .0 1,183 .1 1,100 .4 1,072 .9

987 .2 1,022 .4

888 .4

794 .7

717 .3

and impairments

(82 .5)

(78 .1)

(77 .8)

(75 .0)

(70 .6)

(65 .2)

(57 .8)

(52 .8)

(56 .8)

(52 .4)

(51 .8)

(47 .0)

Earnings before interest and tax

266 .5 266 .1

298 .6

247 .5

222 .7

222 .1

219 .82 216 .2

185 .3

189 .1 171 .3

148 .8

134 .1

Net interest earned (paid)

(12 .1)

(11 .5)

(13 .0)

(15 .0)

(14 .1)

(14 .6)

(17 .0)

(14 .0)

(16 .7)

(33 .8)

(21 .7)

(15 .2)

(14 .0)

Profit before tax, abnormal

and extraordinary items

254 .4 254 .6

285 .6

232 .5

208 .6

207 .5

206 .4

202 .2

168 .6 155 .3

149 .6

133 .6

120 .1

Tax expense

(72 .3)

(68 .4)

(77 .8)

(59 .9)

(57 .5)

(54 .6)

(58 .0)

(50 .8)

(45 .4)

(34 .5)

(35 .7)

(31 .0)

(29 .2)

Non-controlling interests

0 .1

(0 .1)

0 .1

(0 .1)

(0 .5)

Net profit after tax

attributable to members

182 .0 186 .3

207 .9

172 .7

151 .1

153 .0

148 .4

151 .5

123 .1

120 .8

113 .9

102 .1

90 .9

Group balance sheet

Current assets

474 .8 390 .1

403 .1

387 .4

390 .2

363 .7

307 .8

274 .1

308 .8

290 .8

233 .1

224 .7

211 .0

Property, plant and equipment

1,037 .2 978 .4

986 .1

994 .2

889 .7

902 .5

851 .0

760 .6

774 .3

801 .9

742 .5

694 .2

665 .6

Receivables

Investments

Intangibles

37 .3

34 .4

32 .9

32 .7

31 .4

29 .6

160 .3 151 .2

142 .2

139 .9

138 .5

129 .0

27 .2

97 .2

30 .4

87 .7

30 .4

72 .5

28 .4

67 .6

29 .5

66 .9

27 .5

40 .8

23 .3

38 .1

299 .9 270 .3

272 .9

266 .4

183 .9

184 .8

183 .0

179 .1

169 .0

169 .4

164 .4

164 .6

165 .0

Other non-current assets

3 .5

2 .3

1 .3

0 .0

3 .5

0 .0

2 .7

22 .9

19 .0

Total assets

2,013 .0 1,826 .7 1,838 .5 1,820 .6 1,633 .7 1,613 .1 1,466 .2 1,331 .9 1,355 .0 1,358 .1 1,239 .1 1,174 .7 1,122 .0

Current borrowings and creditors

146 .1 117 .4

123 .9

122 .7

105 .4

115 .0

99 .2

106 .4

106 .5

98 .4

145 .5

125 .8

323 .5

Current provisions

58 .7

50 .6

55 .4

44 .2

105 .8

78 .5

34 .5

52 .6

55 .4

44 .5

49 .5

54 .1

58 .2

Non-current borrowings

428 .9 309 .6

329 .5

390 .1

259 .1

299 .3

258 .7

150 .2

200 .5

410 .5

281 .9

210 .7

1 .0

Deferred income tax and other

non-current provisions

131 .1 129 .0

122 .4

126 .9

101 .6

114 .4

116 .7

88 .4

95 .6

102 .8

94 .3

109 .1

105 .3

Total liabilities

Net assets

Share capital

Reserves

Retained pofits

764 .8 606 .6

631 .2

683 .9

571 .9

607 .2

509 .1

397 .6

458 .0

656 .2

571 .2

499 .7

488 .0

1,248 .2 1,220 .1 1,207 .3 1,136 .7 1,061 .8 1,005 .9

957 .1

934 .3

897 .0

701 .9

667 .9

675 .0

634 .0

733 .1 731 .4

729 .2

727 .9

699 .1

696 .6

694 .6

692 .7

690 .4

540 .4

514 .0

513 .3

1 .9

2 .9

1 .2

3 .3

4 .3

2 .1

2 .3

2 .6

2 .9

3 .5

14 .5

13 .3

510 .6 483 .3

474 .3

402 .8

355 .6

304 .4

257 .3

236 .0

200 .6

155 .0

136 .4

139 .8

14 .0

98 .4

Shareholders' equity attributable

to members of the Company

1,245 .6 1,217 .6 1,204 .7 1,134 .0 1,059 .0 1,003 .1

954 .2

931 .3

893 .9

698 .9

664 .9

666 .4

625 .7

Non-controlling interests

2 .6

2 .5

2 .6

2 .7

2 .8

2 .9

3 .0

3 .1

3 .0

8 .6

8 .3

Total shareholders' funds

1,248 .2 1,220 .1 1,207 .3 1,136 .7 1,061 .8 1,005 .9

957 .1

934 .3

897 .0

701 .9

667 .9

675 .0

634 .0

Share information

Net Tangible Asset Backing

($/share)

1 .46

1 .44

1 .34

1 .38

1 .29

1 .22

1 .19

1 .15

0 .97

0 .93

0 .94

0 .87

Return on funds employed

16 .7% 17 .5% 19 .8% 17 .7% 17 .0% 18 .0% 19 .4% 20 .0% 17 .3% 18 .0% 18 .1% 16 .7% 15 .9%

Basic earnings per share (¢/share)

28 .0

Diluted earnings (¢/share)

Total dividend (¢/share) 3

Interim dividend (¢/share)3

27 .9

24 .5

8 .5

28 .7

28 .6

28 .0

8 .5

32 .0

31 .9

27 .0

8 .0

Final dividend (¢/share)3

12 .0

11 .5

11 .0

Special dividend (¢/share)3

4 .0

8 .0

26 .9

26 .8

17 .0

7 .5

9 .5

23 .7

23 .4

19 .5

7 .5

9 .0

3 .0

24 .0

23 .8

16 .5

7 .5

9 .0

23 .3

23 .2

16 .5

7 .5

9 .0

23 .9

23 .7

21 .5

7 .5

9 .0

5 .0

20 .4

20 .3

13 .5

5 .5

8 .0

22 .2

22 .0

15 .0

6 .5

8 .5

21 .0

18 .8

16 .8

20 .8

16 .4

16 .2

18 .5

6 .0

9 .0

3 .5

5 .0

7 .5

6 .0

10 .5

4 .25

6 .25

Gearing

29 .8% 23 .6% 24 .6% 31 .6% 23 .4% 30 .9% 26 .0% 15 .9% 19 .6% 55 .3% 48 .4% 33 .6% 35 .8%

1 Restated for final acquisition accounting values for businesses purchased in 2014

2 Restated for changes to accounting policies (Note 42 to the 2013 Financial Statements)

3 Fully franked

121

Adelaide Brighton Ltd and its controlled entities for the year ended 31 December 2017THIS REPORT IS PRINTED BY AN INDEPENDENTLY AUDITED CARBON

NEUTRAL PRINTER ON 100% POST CONSUMER RECYCLED CARBON

NEUTRAL MANUFACTURED PAPER ACCREDITED BY THE FOREST

STEWARDSHIP COUNCIL USING VEGETABLE BASED INKS MADE FROM

RENEWABLE RESOURCES WITH ALL PAPER WASTE RECYCLED

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 Southern Quarries logo, the
Direct Mix logo, the Penrice Quarry & Mineral logo, the Central Pre-Mix logo, the Central Quarries
logo and the Davalan logo are trade marks of Adelaide Brighton Ltd or its related bodies corporate.

The Sunstate Cement logo is a registered trade mark of Sunstate Cement Ltd used with permission.
The I logo is a registered trade mark of Independent Cement and Lime Pty Limited used with permission.
The Mawson logo is a registered trade mark of E. B. Mawson & Sons Pty Ltd used with permission.
Batesford Quarry logo is a trade mark of Adelaide Brighton Cement Ltd and Geelong Lime Pty Ltd.
The Burrell logo is a trade mark of Burrell Mining Products, Inc used with permission.
The Aalborg Portland logo is a trade mark of Cementir Holding SpA used with permission.

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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