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CanWel Building Materials Group LtdANNUAL REPORT 2021 Table of
Contents
Board of Directors
Executive Management
Corporate Governance
Directors’ Report
Chairman of the Remuneration Committee Letter
Remuneration Report
Auditor’s Independence Declaration
Consolidated Financial Statements
Consolidated Income Statement
Consolidated Statement of
Other Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Statement of Shareholders
Corporate Information and Important dates
02
05
09
15
19
22
34
40
44
47
52
54
61
63
69
73
75
79
84
88
111
112
113
114
115
116
117
118
161
163
169
170
Five Year Summary
Chairman’s Letter
Managing Director’s Overview
Financial Overview
Group Structure
Building Products Australia
Building Products North America
Property
Investments
Health and Safety
Overview of Sustainability
Environment
Community
Our People
i p Brickworks Annual Report 2021
Jolyn Place
Austral Bricks San Selmo
Smoked in Custom Blend
Rosebery, NSW
$239m
Statutory NPAT
s20%
$285m
Underlying NPAT*
i95%
61¢
Total full year dividend
per share
i3%
53.4%
1-year Total Shareholder
Return (TSR)
Versus All Ordinaries
Accumulation Index
30.4%
* This is an alternative measure of earnings that
excludes significant items, which are separately
disclosed in the consolidated financial statements.
Brickworks Annual Report 2021 p 01
Five Year
Summary
Total revenue
Total EBITDA2
Underlying net
profit after tax2
Dividends
$8 0 3 m
$785 m
$919 m
$95 0 m
$ 8 9 0 m
$278 m
$311 m
$34 6 m
$281 m
$ 4 53 m
$20 0 m
$226 m
$234 m
$14 6 m
$28 5 m
51.0¢
54.0¢
57.0¢
59.0¢
61.0 ¢
7
1
0
2
8
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0
2
9
1
0
2
0
2
0
2
1
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2
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2
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2
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2
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2
0
2
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2
7
1
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2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
All revenue and earnings measures exclude significant items and discontinued operations unless otherwise stated.
1
2
Certain comparative amounts have been restated as a result of changes to the accounting policy in respect of Software as a Service (“SaaS”)
arrangements following the IFRS Interpretations Committee agenda decision published in April 2021 (refer to Note 7.6 in the Financial Statements).
This is an alternative measure of earnings that excludes significant items, which are separately disclosed in the consolidated financial statements.
02 p Brickworks Annual Report 2021
All revenue and earnings measures exclude significant items and discontinued operations unless otherwise stated.
1
2
Certain comparative amounts have been restated as a result of changes to the accounting policy in respect of Software as a Service (“SaaS”)
arrangements following the IFRS Interpretations Committee agenda decision published in April 2021 (refer to Note 7.6 in the Financial Statements).
This is an alternative measure of earnings that excludes significant items, which are separately disclosed in the consolidated financial statements.
Brickworks Annual Report 2021 p 03
201720182019202012021Growth$000$000$000$000$000%Total revenue 803,397 785,238 918,695 949,926890,313(6%)Earnings before interest and tax2Building Products Australia 69,943 78,554 57,138 32,59644,38436%Building Products North America – – 6,180 10,0618,525(15%)Property 90,588 93,979 157,806 129,437252,67995%Investments 103,097 123,498 103,725 50,77196,94691%Head office and other expenses (12,432) (13,664) (15,026)(16,849)(19,417)(15%)Total EBIT 251,196 282,367 309,823 206,016383,11786%Total EBITDA 277,814 310,535 346,472280,912453,47661%Finance costs (12,436) (14,456) (23,883)(26,243)(18,735)29%Income tax (38,949) (42,269) (51,712)(33,484)(79,148)(136%)Underlying net profit after tax2 199,811 225,642 234,228 146,289285,23495%Significant items net of tax (8,175) (46,886) (37,333)168,297(45,061)NADiscontinued operations net of tax (including significant items) (5,426) (3,314) (42,253)(16,508)(1,010)NANet profit after tax (including significant items and discontinued operations) 186,210 175,442 154,642 298,078239,163(20%)Per share earnings and dividendsBasic earnings per share (cents) 124.9 117.5 103.3 198.8158.3(20%)Underlying earnings per share (cents)2 134.1 151.1 156.5 97.6188.893%Final dividend per share (cents)34.036.038.039.040.03%Total dividends per share (cents) 51.0 54.0 57.059.061.03%RatiosNet tangible assets per share ($) 11.77 12.42 13.28 14.0813.88(1%)Statutory return on shareholders’ equity9.5%8.5%7.1%12.4%9.6%(22%)Underlying return on shareholders’ equity210.2%10.9%10.8%6.1%11.5%89%Interest cover ratio (underlying) 17.1 18.1 17.9 8.120.4151%Gearing (net debt to equity)14.9%14.7%11.7%18.9%20.9%11% Hey House
GB Masonry Honed in Porcelain
Gold Coast, QLD
$239m
Statutory NPAT
s20%
$285m
Underlying NPAT*
i95%
158.3¢
Basic earnings
per share
s20%
188.8¢
Underlying earnings
per share*
i93%
40¢
Final dividend
per share
i3%
61¢
Total full year dividend
per share
i3%
04 p Brickworks Annual Report 2021
/ 04 / Brickworks Limited / Annual Report 2021
* This is an alternative measure of earnings
that excludes significant items, which are
separately disclosed in the consolidated
financial statements.
158.3¢Basic earnings per share s20%188.8¢Underlying earnings per share* i93%40¢Final dividend per sharei3%61¢Total full year dividend per sharei3%$239mStatutory NPATs20%$285mUnderlying NPAT*i95% Chairman’s
Letter
On behalf of your Board of Directors, it gives me great pleasure to present Brickworks’ Annual
Report for the 2021 financial year. Despite the continued challenges presented by the COVID-19
pandemic, I am pleased to report that our diversified portfolio of attractive assets has again
delivered a strong and resilient performance.
Resilience in challenging times
2021 was another unique year, dominated by the worldwide
impact and response to the COVID-19 pandemic. As with
all businesses, Brickworks has faced the challenges and
uncertainties presented by the pandemic, with each of our
divisions impacted in different ways.
The pandemic has accelerated the trend towards online
shopping and this has increased demand for prime industrial
land located close to transport hubs. This has had a positive
impact on the value of our property assets.
More recently, the emergence of the Delta strain of the virus
has led to widespread lockdowns in our major capitals, and a
range of restrictions on building activity. This has stifled the
momentum that was building across the industry.
The latest outbreak underscores the significant uncertainty we
continue to face. It is remarkable that 18 months since the onset
of the pandemic, our two major cities are currently in lockdown
and we have travel restrictions in place across virtually the
entire country.
Within building products, our North American operations were
particularly hard-hit by the pandemic in the first half of the year,
with many of our staff directly impacted. I would like to pass on
my condolences to all those affected, particularly those staff
who have lost loved ones.
In the face of these immense challenges, I am proud of the
resilient response from Brickworks management and staff. Our
teams across Australia and North America have responded
efficiently to changing regulations and government health orders,
to ensure the compliant and safe operation of our facilities.
With the rapid rollout of the vaccine program, easing of
restrictions and government stimulus packages, conditions
steadily improved across the United States during the second half.
The Australian operations experienced mixed conditions
throughout 2021. Whilst government incentives supported
demand for housing across the country, apartment construction
was at the lowest level for many years. Extended lockdowns in
Melbourne and shorter periods of disruption in other states,
together with supply-chain issues across the industry, also
presented significant challenges.
Record Underlying NPAT
I am pleased to report that the Company has delivered another
strong financial result, despite the challenges presented by the
pandemic. Brickworks reported a record underlying Net Profit
After Tax (NPAT) of $285 million, up 95% on the prior year.
After including significant items and discontinued operations,
the statutory NPAT was $239 million, down 20% from the record
result achieved in the prior year, which included a large one-off
profit in relation to our shareholding in WHSP.
Brickworks Annual Report 2021 p 05
Chairman’s Letter
Underlying earnings before interest, tax and depreciation
(EBITDA) from continuing operations was $453 million, up 61%
on the prior year, and after depreciation, EBIT was $383 million,
up 86%.
We are proud to have achieved these results without receiving
any government assistance or support payments in relation to
the pandemic, even though many of our operations have been
impacted.
Building our assets
Brickworks’ business model is also focussed on building a
diversified portfolio of assets with increasing asset value.
Therefore, I am particularly pleased to report an exceptional
year of asset growth for our Company.
At the end of the financial year, Brickworks was backed by
inferred net assets worth $4.5 billion3, an increase of around
$1.5 billion over the year. This includes our 39% stake in WHSP,
net tangible assets within Building Products and our 50% share
in the Property Trust, offset by net debt.
Since the end of the financial year, the market value of our stake
in WHSP has increased by a further $0.3 billion, taking our
inferred asset value to $4.8 billion4.
On a per share basis, inferred net assets has increased by 149%
over the past ten years, from $12.73 in 2011, to $31.74 today (as at
21 September 2021).
Brickworks Inferred Net Assets ($/share)
$12.73
$12.4 8
$13.10
$14.59
$14.16
$17.10
$18.13
$20.41
$21.9 6
$20.13
$29.83
$ 31.74
Dividends and Capital Management
The Directors have declared a fully franked final dividend of
40 cents per share, up 3% on the prior year. This brings total
dividends for the year to 61 cents per share, up 2 cents or 3%.
We are proud of our long history of increasing dividends, which
we have maintained or increased for over 45 years. We have
been one of the few ASX200 companies who have increased
dividends to our shareholders during the pandemic and have
not needed to raise equity or receive government support
payments.
This is a testament to our strong financial position, prudent
capital management and our diversified business model. We
know that many of our shareholders rely on this income stream,
particularly during these difficult times.
Despite our significant investment program over the past few
years, our borrowing level remains conservative, with gearing of
21% at the end of the year.
Board and Governance
Brickworks has a strong and stable Board that is committed to
acting in the best interests of shareholders and ensuring that
Brickworks is well-positioned for future growth.
The Board regularly reviews its capabilities and composition
to ensure an optimal mix of skills, knowledge, and experience
to safeguard the continued and long-term success of the
Company.
The Board currently comprises seven directors, including four
independent non-executive directors.
A period of further board transition is planned over the next few
years, with Robert Webster having advised me that he will not
seek re-election at the 2022 Annual General Meeting, when his
current three-year term concludes.
Michael Millner’s term also concludes at the same time.
To assist with an orderly transition process, Michael intends to
offer himself for re-election in 2022, before retiring at the 2023
Annual General Meeting.
As part of our succession plan, it is the Company’s intention
to engage external consultants to assist with the appointment
of one or more new independent non-executive directors to
replace Robert and Michael.
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4
Inferred net assets comprise: Investments based on the market
value of Brickworks’ shareholding in WHSP (ASX: SOL) at 31 Jul
2021, Property based on Brickworks’ 50% share of net property
trust assets, Building Products based on net tangible assets, offset
by net debt.
As at the close of trade on 21 September 2021.
06 p Brickworks Annual Report 2021
La Scala
GB Masonry Honed
in Porcelain
Brisbane, QLD
In Conclusion
Brickworks’ diversified portfolio of attractive assets and
our robust balance sheet provides us with the resilience to
overcome any short-term challenges such as the ongoing
uncertainty in relation to COVID-19.
The continued strong performance of the Company is a credit to
our staff. On behalf of the Board, I would like to thank all our staff
and our executive management team for their ongoing efforts
and commitment.
We believe the Company is well-positioned for further growth.
In particular, we are investing to meet the growing demand for
prime industrial property, and we will continue to support our
North American business as it expands. We also have two major
capital projects well underway in Building Products Australia,
both of which will significantly improve our competitive position
in the Sydney market.
Our investment in WHSP continues to deliver strong returns
and asset growth. The recent merger of WHSP with Milton
Corporation provides exciting new opportunities, with increased
scale and liquidity.
I would also like to thank my fellow directors and our
shareholders for your continued support.
Robert Millner
Chairman
Brickworks Annual Report 2021 p 07
61 Nickson Street
Austral Bricks La Paloma Azul
Surry Hills, NSW
$453m
Total EBITDA*
i61%
LTIFR 2.9
Lost Time Injury
Frequency Rate
i93%
TRIFR 14.3
Total Recordable Injury
Frequency Rate
s12%
1,961
Total Employees
i0.2%
* This is an alternative measure of earnings that
excludes significant items, which are separately
disclosed in the consolidated financial statements.
08 p Brickworks Annual Report 2021
08 p Brickworks Annual Report 2021
$453mTotal EBITDA*i61%1,961Total Employeesi0.2% Managing Director’s
Overview
In a tumultuous year headlined by the widespread disruption caused by the COVID-19 pandemic, it
gives me pleasure to report that 2021 has been another successful year for Brickworks. Not only has
the Company delivered record underlying earnings, but we have also made significant progress on the
implementation of a range of strategic initiatives to position the Company for long-term growth.
COVID-19 Response
Sustainability
The past 18 months have been unlike any other time in my more
than 20 years as Managing Director of Brickworks. But I have
never been prouder of our employees, who have responded
without fuss to the many challenges they have faced.
The pandemic has fundamentally changed how we interact at
work. Extended travel restrictions and lockdowns have reduced
face-to-face meetings. To compensate we have increased our
level of internal communication more than ever, utilising video
technology to efficiently carry out daily management meetings
and staff communications.
Many of our operations have been impacted by the pandemic,
with a number of our building products facilities closed
for various periods, as governments enforced intermittent
restrictions on sales and manufacturing activities. In North
America, the direct impact on our employees meant that some
operations needed to be temporarily curtailed due to a lack of
operational staff.
The operational and workforce challenges have, to some
degree, been at odds with the exceptional results achieved this
year, with the Company delivering record underlying earnings.
This is headlined by record Property earnings, driven by a
significant uplift in the value of our industrial property assets.
After a subdued start to the year, we have experienced steadily
increasing demand for our building products across Australia and
the United States, with Government stimulus packages leading to
a surge in detached house approvals in both countries.
Sustainability is at the heart of our purpose: to make beautiful
products that last forever. Products that stand the test of time.
Our bricks are a sustainable product, made from clay and shale
that is naturally abundant. They are guaranteed for 100 years,
and many installed 100 years ago remain in service today. Their
longevity also allows bricks to be recycled and re-used, unlike
many competing building products.
In 2020 we developed our new sustainability strategy, “Build for
Living: Towards 2025”. This strategy focuses on the opportunity
to make buildings and cities safe, resilient and sustainable.
It sets a clear pathway with 15 measurable targets and
commitments across the pillars: Responsible Business,
Environment, Our People and Community.
We are achieving pleasing progress across many aspects of
sustainability. For example, across our Australian operations we
have achieved a reduction in carbon emissions of 45% since
2006. This is supported by capital investments into modern,
fuel-efficient production processes, as well as product redesign,
use of recycled material and on-board fuels, and firing our kilns
with green fuels such as landfill gas.
We are also proud to offer Australia’s only fully certified carbon
neutral brick range.
Brickworks is also active in the community and has a long-
standing partnership with the Children’s Cancer Institute,
having made direct and indirect contributions of over $4 million
since 2002.
Brickworks Annual Report 2021 p 09
Managing Director’s Overview
Incu HQ
Bowral Bricks in Capitol Red
Rosebery, NSW
Safety
At Brickworks, we believe there is no task that is so important we
can’t take the time to find a safe way to do it.
subdued, due primarily to disruptions and uncertainty in the
early stages of the pandemic.
In 2021, we recorded just one lost time injury across our
Australian operations. This represents 0.4 lost time injuries per
million hours worked, in line with last year’s record low injury rate.
As the year progressed, demand steadily improved, with
building activity buoyed by the various government stimulus
measures put in place across the country.
A sustained decrease in injuries across Australian operations
has been achieved over the past decade, through the
disciplined implementation of safety management systems and
procedures, together with behavioural leadership and safety
training programs.
These initiatives continue to be rolled out across our operations
in North America where injury rates are significantly higher than
in Australia. In North America there were 10 lost time injuries
during the year, translating to 6.2 lost time injuries per million
hours worked, up from 3.5 in the prior year. Encouragingly, the
total recordable injury rate decreased to 21.1, from 24.3 last year.
Building Products Australia5
Building Products Australia recorded an EBITDA from continuing
operations of $97 million in 2021. After including depreciation and
amortisation, EBIT was $44 million, up 36% on the prior year.
FY2021 was a year of steady progress for Building Products
Australia. Early in the financial year, demand was relatively
Whilst underlying demand was strong and broad-based across all
states, sales momentum was stifled by the impact of intermittent
lockdowns in our two largest markets, Sydney and Melbourne.
Performance in Austral Bricks Queensland was particularly
strong, buoyed by robust growth in detached house building,
market share growth, and strong operational performance of the
Rochedale plant, following upgrade works completed over the
past few years.
During the year, we accelerated several exciting initiatives
focussed on the critical areas of new product development,
capital projects, customer communications and staff training.
Our work in new product development led to our “B20” event in
September 2020, the biggest product launch in the Company’s
history. This included the release of an exciting range of over 100
innovative new bricks, roof tiles and masonry products. These
products have been well received by the market, and building
on the success of this event, we are now preparing for a similar
event later this year.
5
All revenue and earnings measures exclude significant items and discontinued operations unless otherwise stated.
10 p Brickworks Annual Report 2021
BUILDING PRODUCTS
Australia
$44m
Segment EBIT
i36%
North America
US$6m
Segment EBIT
s6%
PROPERTY
$253m
Segment EBIT
i95%
INVESTMENTS
$97m
Segment EBIT
i91%
Our major investment program continues to progress. Pleasingly, the new Oakdale
East masonry plant reached practical completion in July, and our team is currently
working through the commissioning process. Meanwhile, construction of our brick
facility at Horsley Park is also well underway.
Both of these projects have experienced significant interruptions over the past
18 months, particularly due to travel bans that have restricted the mobility of
our engineering crews and overseas-based suppliers. However, our teams have
shown persistence and initiative to overcome the unprecedented challenges and
keep these projects moving forward.
Building Products North America
In local currency, Building Products North America delivered EBITDA of
US$20 million, up 10% on the prior year and EBIT of US$6 million, down 6%.
When converted to Australian dollars, EBITDA was relatively flat at $26 million
and EBIT was down 15% to $9 million.
Operations in the United States were more significantly impacted by the
pandemic compared to Australia, with sales activity across several states being
restricted for various periods during the first half. In addition, our operations were
directly impacted due to COVID-19 cases across our workforce and the significant
challenges with maintaining safe working practices in the midst of the pandemic.
Market conditions steadily improved throughout the second half, albeit the
recovery was most pronounced in the detached housing market. In contrast to
Australia, our North American operations are more exposed to the non-residential
market, and the recovery in this segment was more subdued.
In response to the buoyant detached housing activity, we have increased
penetration into the southern residential market, including sales into Texas. This
large market is well serviced by our low-cost Adel plant in Iowa, acquired in 2019
as part of the Sioux City Brick acquisition.
During July, I was fortunate to spend two weeks with our team in the United States,
where I visited many of our facilities and customers.
Having only recently established our operations in North America, with three
acquisitions since 2018, it was pleasing to see the strong sense of identity and
unified culture across all of our operations.
I am extremely proud of our leadership team, who have navigated this newly
consolidated business through the extreme challenges of the past 18 months,
whilst also making strong progress on our numerous strategic initiatives.
In August, we were pleased to announce our further expansion, with the
acquisition of IBC6, the leading brick distributor in Illinois and Indiana. This will
significantly increase the scale of our direct distribution network, increasing our
store count from 10 to 27.
Importantly, sales volume through the IBC network will underpin production
volume at our Midwest plants, which have ample capacity to accommodate
additional sales growth.
We know the business well, having enjoyed a strong relationship with IBC since
our entrance into the North American market three years ago.
We are pleased to welcome IBC’s 225 staff to the Brickworks Group, and we
look forward to building on the strong position they have established since their
inception in 1981.
The acquisition will bring our total workforce in the United States to more than 1,000.
6
The acquisition comprised certain assets of Southfield Corporation, including Illinois
Brick Company (“IBC”).
Brickworks Annual Report 2021 p 11
Managing Director’s Overview
Property
Property delivered another year of strong asset growth and
earnings in 2021. Brickworks share of net Property Trust assets
increased by another $184 million over the past 12 months, to
finish the year at $911 million.
Property also generated a record EBIT of $253 million, almost
double the prior year.
Property Trust earnings were again the key driver of the result.
All Property Trust assets were revalued during the year and
this resulted in a strong revaluation profit of $149 million,
representing Brickworks’ 50% share of the overall valuation gain.
We have seen unprecedented demand for our industrial
property facilities. The rapid growth in online shopping has
increased the importance of well-located distribution hubs
and sophisticated supply chain solutions. This was highlighted
by a number of significant industrial property transactions in
Western Sydney over the past six months, with the pricing of
these transactions underpinning the valuations of our high-
quality portfolio.
Also within the Property Trust, development profits of $24 million
were recorded on the completion of facilities at Oakdale South
and Oakdale East. The Oakdale East development reached
practical completion just prior to the end of the financial year. In
addition to our new masonry plant, this precinct includes a new
display, sales centre and office space for many of our Sydney
based staff, as well as four other facilities to be tenanted by other
customers.
During the year, a land sale profit of $52 million was recorded,
primarily relating to the recognition of previously unrealised
profits associated with the prior sale of Oakdale West, after lease
agreements with a number of tenants became unconditional.
Investments
Brickworks holds a 39% stake in WHSP, and this investment is a
core asset of Brickworks that has brought diversity and reliable
earnings to the Company for more than 50 years.
Our investment in WHSP provides a cash flow stream via
dividends that allows long term strategic decision making by
sheltering the business during cyclical downturns. In total, cash
dividends of $58 million were received during the year, up 3% on
the prior year.
EBIT from Investments was up 91% to $97 million in 2021, with
WHSP earnings benefitting from higher contributions from New
Hope Corporation and Round Oak Minerals.
12 p Brickworks Annual Report 2021
Group Outlook
The outlook varies across each of our divisions.
Within Building Products Australia, underlying demand across
the country is strong, with a large backlog of detached house
construction work in the pipeline. This follows the various state
and federal incentives which prompted an unprecedented surge
in approvals early in 2021.
In most states across the country, this healthy pipeline of
work is translating to strong sales into the detached housing
segment, and we expect this will continue for the remainder of
the financial year. In some areas, sales volume is being limited
by the availability of trades, with bricklayers in Western Australia
and roof tilers across all regions, in particularly short supply.
In New South Wales, sales in the first two months of the financial
year have been impacted by the latest outbreak of COVID-19
and the restrictions put in place to reduce the spread. In early
August, daily brick sales were down by around 50%. Since
then we have seen a steady improvement, with sales now back
to around 90% of the level prior to the outbreak. To control
inventory, our Punchbowl kiln and one of our two kilns at Plant
3, Horsley Park, were taken offline. In recent weeks, we have
restarted the kiln at Plant 3, in response to the increasing sales.
In the short term significant uncertainty persists, with the
potential for new restrictions remaining ever-present across
all states. A case in point is the snap two-week shutdown of
construction sites in Melbourne, as announced by the Victorian
government in recent days.
However, with vaccination rates across the country now
approaching government targets, we are hopeful that by the
second half of the financial year, the prospect of any further
restrictions will be behind us, and all states will experience a
period of elevated activity.
Looking further ahead, the outlook is clouded by uncertainty
around the timing and extent of a return to immigration. It is
also clear that government stimulus has brought forward a large
volume of work that has the potential to leave a void once the
existing pipeline is exhausted.
The ongoing completion of major projects and upgrade works
will support earnings over the medium and longer-term. This
includes the new Austral Masonry facility at Oakdale East and
the Horsley Park brick plant.
Additional capital investments are also under consideration in
New South Wales, including an upgrade to increase capacity at
Plant 1 (Horsley Park), and a dry press brick plant on our land at
New Berrima, to replace the Bowral plant.
In the short term, mixed market conditions are expected to
persist in North America. Like in Australia, there has been a
strong increase in single-family residential approvals across
the country. Offsetting this, the key non-residential building
segment remains relatively subdued.
Kurrajong Centre for Learning
Bowral Bricks in Simmental Silver
Springfield, QLD
With extensive plant rationalisation activities undertaken
to increase utilisation, and upgrades almost completed at
Hanley and Sergeant Bluff to improve efficiency, significant
manufacturing cost reductions are anticipated once production
volumes normalise.
The integration of IBC has been progressing well since the
acquisition in August, and performance has so far been in line
with expectations.
Assuming there are no further major disruptions caused by
the pandemic, we expect improved sales, manufacturing cost
reductions and the additional contribution from IBC to deliver
higher earnings from North America in the 2022 financial year.
Over the long term, North American operations are expected
to deliver further earnings growth for many years to come,
with Brickworks focussed on implementing our proven market
strategy focussed on style and premium product positioning.
Turning to Property, activity within the Trust remains strong,
with developments at Oakdale South, Rochedale and Oakdale
West expected to drive growth in rent and asset value over the
next few years.
The Oakdale West Estate is now 58% pre-committed, with
several new tenants joining Amazon and Coles. Demand for
remaining space is high and availability is becoming limited,
particularly for facilities over 35,000m2.
The completion of the new brick plant at the Horsley Park Plant
2 site in late 2022, will allow the release of additional land at
Oakdale East, where Plant 3 is currently located.
This land is likely to be sold into the Trust, and will therefore
allow further expansion of the Oakdale East estate to meet the
growing demand from tenants.
As always, Property earnings will depend on the timing of
development activity and land sale transactions, and the extent
of any revaluations.
We are also excited by the outlook for our investment in WHSP,
following the recent merger with Milton Corporation.
The effect of this merger will be that Brickworks ownership
interest in WHSP will reduce to 26.1%. However, WHSP will
become significantly larger, with net assets post the merger of
over $9 billion.
The merger will provide WHSP with increased scale, diversification
and liquidity to pursue additional investment opportunities, and
we expect WHSP to continue to deliver superior long-term returns
and consistent dividend growth well into the future.
Our People
The past 12 months has been another extremely challenging
period for our employees in both Australia and North America.
We have been forced to work remotely, with many of our staff
impacted by lockdowns, and working from home for long periods.
Travel restrictions have meant that we have seen less of each
other, even at a time when many have needed more support.
Whilst this had the potential to impact our culture, which is
built on care, collaboration and teamwork, we have found new
ways to stay connected. Whilst it might not always be the same,
video technology has allowed us to communicate regularly and
maintain personal connections across our operations.
In these difficult times, we are fortunate to have a strong group of
leaders, and a positive and committed workforce. Including our
new IBC employees, we now have 2,225 employees, and it is their
energy and dedication that will continue to drive our success.
I would also like to take this opportunity to thank the Board of
Directors and the executive team who have provided steadfast
support and guidance as we navigate these unprecedented times.
Lindsay Partridge AM
Managing Director
Brickworks Annual Report 2021 p 13
Fish Lane Town Square
Bowral Bricks in Capitol Red &
Nubrik Custom Pavers
Brisbane, QLD
$519m
Net debt
i14%
21%
Gearing
(net debt/equity)
i11%
$453m
Total EBITDA1
i61%
$383m
Total EBIT1
i86%
$140m
Cashflow from
operating activities
i89%
1
This is an alternative measure of earnings
that excludes significant items, which are
separately disclosed in the consolidated
financial statements.
14 p Brickworks Annual Report 2021
Financial
Overview
Highlights
◗ Statutory NPAT including significant items, down 20% to $239 million
◗ Underlying NPAT from continuing operations before significant items, up 95% to $285 million
◗ Underlying EBIT from continuing operations before significant items, up 86% to $383 million. EBITDA up 61% to $453 million
◗ Building Products Australia EBIT up 36% to $44 million, EBITDA up 7% to $97 million
◗ Building Products North America EBIT down 6% to US$6 million, EBITDA up 10% to US$20 million (AU$9 million EBIT, AU$26 million
EBITDA)
◗ Property EBIT up 95% to $253 million, net Property Trust assets up $184 million
◗
Investments EBIT up 91% to $97 million, BKW share of WHSP market value up $1.235 billion during FY2021
◗ Operating cashflow up 89% to $140 million
◗ Final dividend of 40 cents fully franked, up 1 cent or 3% (Record date 3 November 2021, payment date 24 November 2021)
◗ Total full year dividend of 61 cents fully franked, up 2 cents or 3%
Earnings7
Brickworks posted a statutory Net Profit After Tax (NPAT) from
continuing operations of $239 million for the year ended 31 July
2021, down 20% on the prior year.
Last year’s Statutory result included a significant one-off profit
in relation to our shareholding in WHSP, triggered by the merger
of its associate TPG with Vodafone.
After excluding the impact of significant items and discontinued
operations, Underlying NPAT in financial year 2021 was up 95%
to $285 million.
Underlying earnings before interest, tax and depreciation
(EBITDA) from continuing operations was $453 million, up 61%
on the prior year. After depreciation and amortisation, EBIT was
$383 million, up 86%.
On revenue of $687 million, Building Products Australia EBIT
was $44 million, up 36% on the prior year (EBITDA was $97
million, up 7%). The higher earnings were due to a broad-based
reduction in operating costs that supported improved margins
across all business units. In addition, there was a steady increase
in building activity during the year, translating to growing sales
volume and a strong second half EBIT of $28 million.
In New South Wales, this sales momentum came to an abrupt
halt in the last two weeks of the year, with a new COVID-19
outbreak resulting in the state government imposing a
temporary pause on construction activity in greater Sydney.
Building Products North America contributed an EBIT of US$6
million (AU$9 million), down 6% on the prior year. EBITDA was
up 10% to US$20 million (AU$26 million). Building activity in
Glen-Gery’s key non-residential markets was significantly
7
All revenue and earnings measures exclude significant items and discontinued operations unless otherwise stated.
Brickworks Annual Report 2021 p 15
Financial Overview
lower, especially in the first half, with many major projects being
delayed or withdrawn due to disruptions and uncertainty caused
by the pandemic. The lower market activity in key markets
resulted in reduced like-for-like sales volume and lower plant
utilisation across the network, increasing unit production costs.
Like in Australia, conditions improved in the second half
in response to government stimulus and pent-up housing
demand.
Property EBIT was a record $253 million, driven by another
strong performance from the 50/50 joint venture property trust
with the Goodman Group (“Property Trust”). Brickworks share
of the net asset value within the Property Trust increased by
$184 million during the year, and now stands at $911 million. The
increasing value of the Property Trust assets reflects a wider
structural change across the economy, as companies modernise
their supply chains in response to consumer preferences, such
as online shopping.
Investments EBIT was up 91% to $97 million, primarily due to
higher contributions from New Hope Corporation and Round
Oak Minerals to WHSP earnings. The market value of Brickworks
39.4% shareholding in WHSP increased by $1.235 billion during
the year and stood at $3.079 billion at 31 July 2021.
Total borrowing costs were down 29% to $19 million, with
underlying interest cover finishing the year at a conservative
20 times.
Underlying income tax from continuing operations was
$79 million, up from $33 million in the prior year, due to the
higher earnings from the combined Building Products and
Property Groups.
Significant items reduced NPAT from continuing operations by
$45 million for the period. This comprised:
◗ Costs of $11 million in relation to WHSP significant items.
◗ An $18 million cost arising from the net impact of the
income tax expense in respect of the equity accounted
WHSP profit, offset by the impact of fully franked WHSP
dividend income, adjusted for the movements in the
franking account and the circular dividend impact.
Significant Items
Significant items relating to WHSP
Income tax from the carrying value of WHSP
Restructuring activities
COVID-19 costs
Acquisition costs incurred in FY2021
Acquisition costs incurred in prior years
Other costs
Total (Continuing Operations)
16 p Brickworks Annual Report 2021
Mainview Boulevard Family Learning Centre
Daniel Robertson in Hawthorn Cambridge & Surrey
Truganina, VIC
◗ Restructuring costs of $13 million (net of tax), including ERP
implementation costs, the relocation of the Austral Masonry
plant in Sydney and the post-upgrade commissioning of
the Austral Bricks plant in Cardup (Perth). In North America,
costs were incurred in relation to the closure of several retail
outlets and the staged decommissioning of production at
the York plant.
◗ COVID-19 related costs of $3 million (net of tax), reflecting
the unabsorbed fixed costs in relation to manufacturing
plant slowdowns as a result of COVID-19 absenteeism in
North America, and incremental COVID-19 costs incurred
across the Group.
Gross
$m
(11)
–
(18)
(5)
(4)
0
(2)
(39)
Tax
$m
–
(18)
5
2
1
4
1
(6)
Net
$m
(11)
(18)
(13)
(3)
(3)
4
(1)
(45)
◗ Acquisition costs of $3 million (net of tax) during FY2021,
primarily in relation to the purchase of certain assets of
Southfield Corporation (“IBC”), completed in August 2021.
◗ A tax benefit of $4 million, in relation to US acquisition
costs incurred in prior years, previously considered non-
deductible.
◗ Other costs of $1 million (net of tax).
Cash Flow
Total cash flow from operating activities was $140 million, up
89% from $74 million in the prior year, which was adversely
impacted by $54 million in tax on the December 2018 sale of
7.9 million WHSP shares.
Capital expenditure was $117 million during the year, with the
Company midway through a significant investment program
across a range of major projects. Project spend included
deployment of a new enterprise resource planning (ERP)
system across Australia, a new masonry plant at Oakdale East
in New South Wales, a new brick plant at Horsley Park in New
South Wales and a major upgrade to the Hanley brick plant in
Pennsylvania.
Balance Sheet
During the year total shareholders’ equity was up $77 million to
$2.480 billion.
Net tangible assets (‘NTA’) per share was $13.88 at 31 July 2021,
down from $14.08 at 31 July 2020. The decline was due to a
decrease in the market value of WHSP’s listed investments,
and the recognition of lease liabilities in relation to a number of
significant new long-term leases (with the corresponding right-
of-use assets excluded from the NTA calculation in line with
financial reporting guidelines).
Total interest-bearing debt was $658 million at 31 July 2021.
After including cash on hand, net debt at the end of the year was
$519 million, an increase of $64 million for the 12-month period.
Gearing (net debt to equity) was 21% at 31 July 2021, up from 19%
at 31 July 2020.
Net working capital was $352 million at 31 July 2021, including
finished goods inventory of $226 million, up $8 million on the
prior year.
Dividends
Directors declared a fully franked final dividend of 40 cents
per share for the year ended 31 July 2021, up 3% from 39 cents.
Together with the interim dividend of 21 cents per share, this
brings the total dividends paid for the year to 61 cents per share,
up 2 cents or 3% on the prior year.
Brickworks Annual Report 2021 p 17
GB Masonry Kite Breeze Block
a collaboration with Adam Goodrum
18 p Brickworks Annual Report 2021
/ 18 / Brickworks Limited / Annual Report 2021
Group
Structure
Brickworks has a diversified corporate structure that has delivered stability of earnings over the
long term. There are four divisions within the Brickworks Group structure:
Building Products
Australia
Building Products
North America
Property
Investments
Brickworks Annual Report 2021 p 19
Group Structure
Servite College
UrbanStone Bespoke Pavers
Tuart Hill, WA
Building Products Australia
Building Products North America
Building Products Australia is a leading manufacturer and
distributor of building products across all Australian states.
Since 2002, the Building Products Group has grown from a two-
state brick manufacturer, in New South Wales and Queensland,
to a diversified national building products business.
In total, Building Products Australia comprises 28 manufacturing
sites and more than 45 design centres and design studios across
the country. This is complemented by an extensive reseller
network that includes over 100 additional displays.
The portfolio includes:
◗ Austral Bricks: Australia’s largest clay brick manufacturer
with significant market positions in every state
◗ Bristile Roofing: A leading roof tile manufacturer, offering
supply and install of locally produced concrete and
imported terracotta tiles
◗ Concrete Products: Recently been formed as a separate
division within Brickworks, bringing together Austral
Masonry, Austral Precast and a 33% interest in the Southern
Cross Cement joint venture
Building Products North America was established upon the
acquisition of Glen-Gery in November 2018. This was followed
by further bolt-on acquisitions of Sioux City Brick in August 2019
and Redland Brick assets in February 2020.
Brickworks North America now has a leading position in the
Midwest, Northeast and Mid-Atlantic states, and has a strong
focus on architectural and premium products.
It has 10 brick plants and one manufactured stone plant.
Following the recent acquisition of IBC, it has 27 company-
operated distribution outlets and a vast reseller network.
Property
The Property division was established to maximise the value
of land that is surplus to the Building Products business.
Operational land that becomes surplus to the business needs
is transferred to the Property division where it is assessed for
optimum land use. In some cases, land is rezoned to residential
and sold. Alternatively, the land is rezoned industrial and
transferred into the Property Trust for development.
20 p Brickworks Annual Report 2021
The Joint Venture Industrial Property Trust is a 50/50
partnership between Brickworks and Goodman Industrial Trust.
The Property Trust was established in 2005, for the specific
purpose of capturing the initial valuation uplift from rezoning
and then benefitting from the long-term value appreciation and
the stable, growing annuity-style income stream derived from
the developed assets.
Given the prime location of Brickworks land assets, the value
creation opportunity through rezoning, development, and
ongoing capital gains was foreseen at the inception of the Trust
and was a key strategic rationale for its creation.
Over the past decade, it has grown significantly and now
has a total asset value of $2.7 billion. After including debt,
Brickworks 50% share of the Property Trust has an equity value
of $911 million.
In addition to the Property Trust, the Company holds around
3,600 hectares of operational land and 330 hectares of
development land in Australia, and 3,200 hectares of
operational land in the United States.
Investments
Investments consists primarily of a 39.4% interest in Washington
H. Soul Pattinson, an ASX listed company (ASX: SOL) with a
market capitalisation of $7.814 billion as at 31 July 2021 (market
value of Brickworks share $3.079 billion).
WHSP is a diversified investment house with a portfolio
encompassing many industries including its traditional field of
pharmaceuticals, as well as mining, building materials, property
investment, telecommunications, financial services and other
equity investments.
This strategic investment in WHSP dates back to 1969 and
delivers a stable dividend stream that provides Brickworks
with security to weather periods of weaker building products
demand.
The investment has also delivered strong long-term returns to
shareholders.
Post year end, WHSP completed a merger with Milton
Corporation (ASX: MLT), resulting in Brickworks shareholding
reducing to 26.1% of the larger entity.
Brickworks Annual Report 2021 p 21
AUSTRALIA
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
North Queensland Stadium
Austral Masonry Diamond Blocks
in standard grey and Terraçade
Baguettes in Gibson
Townsville, QLD
Building Products
Australia
Market conditions
Building activity in Australia was mixed during the 12 months
to June 2021. Despite the impacts of the pandemic, detached
housing activity was very strong, with a 32% increase in
commencements compared to the prior year. By contrast, multi-
residential and non-residential building activity decreased 4%
and 11% respectively.
The pandemic has resulted in increased consumer demand
for lower density living, and this is resulting in a shift towards
detached housing from multi-residential alternatives. This is
favourable for Austral Bricks and Bristile Roofing, due to the
relatively high usage of bricks and roof tiles in detached houses.
However, the full impact of the increased detached housing
activity was not felt during the year. Usage of bricks and roof
tiles on-site typically lags a housing commencement by 3-6
months, however this has extended during the current upturn.
Supply chain delays have been caused due to a range of factors
such as the sudden surge in demand following government
incentives introduced in 2020, shortages of some building
products such as timber, and site constraints in some areas due
to COVID-19 related restrictions.
Detached housing commencements increased across all states,
with total starts of 135,100 for the twelve months to June 2021.
Western Australia was the standout, with an 87% increase vs the
prior year, albeit this comes off a 30-year low point for activity in
that state.
Annualised multi-residential commencements across the
country were 66,900 at June 2021, the lowest level since 2012.
All states other than Queensland were down on the prior year.
22 p Brickworks Annual Report 2021
AUSTRALIA
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Brickworks Annual Report 2021 p 23
Building Products
Australia
Change in Commencements
(FY2021 v FY2020)8
80
60
40
20
0
-20
-40
-60
22 %
25 %
27 %
-4 %
-22 %
-9 %
-9 %
16 %
-11%
3 6 %
7 %
-2 4 %
87 %
0 %
-7 %
NSW
VIC
QLD
SA
WA
Detached
Multi-Residential
Non-Residential
33 %
32 %
22 %
-4 %
-11%
AUS
-5 6 %
TAS
Jolyn Place
Austral Bricks San Selmo
Smoked in Custom Blend
Rosebery, NSW
The increased consumer preference for lower density housing
has also resulted in a surge in regional demand. Detached house
approvals in regional areas across the country increased by 51%
for the 12 months to June 2021, compared to the prior year.
Non-residential building was lower across all major states during
the year, with private investment in offices, accommodation and
retail all scaled back in response to the pandemic.
Revenue from continuing operations for the year ended 31 July
2021 was up marginally to $687 million. An increase in revenue
in Austral Bricks was offset by lower revenue in Concrete
Products and Bristile Roofing.
EBIT from continuing operations was $44 million, up 36% on the
prior year, and EBITDA was $97 million.
EBIT of $28 million was achieved in the second half, significantly
higher than the first half. Early in the financial year, demand was
relatively subdued, due in part to disruptions and uncertainty
caused by the pandemic. However, demand steadily increased
over the period, as consumer confidence recovered and
building activity was buoyed by the various government
stimulus measures put in place across the country.
This momentum came to an abrupt halt in New South Wales
late in the financial year, with the State Government announcing
a two-week pause of all construction work in greater Sydney,
in response to a new outbreak of COVID-19. The significantly
reduced sales volume across our largest and most profitable
market had an estimated $3 million adverse impact on earnings
in July.
8
Source: BIS Oxford Economics Australian Building Forecasts, June 2021. Figures shown are for the 12 months ended in June.
24 p Brickworks Annual Report 2021
Building Products
Australia
Revenue by State and location map
Export
$6m
WA
$41m
SA
$30m
Total
$687m
Design Centre
Brick Plant
Masonry Plant
Roofing Plant
Precast Plant
Softwood Mill
Cement Terminal (JV)
QLD
$99m
NSW (incl. ACT)
$288m
VIC
$209m
TAS
$14m
Brickworks Annual Report 2021 p 25
2020
$m
684
91
33
13%
5%
2021
$m
687
97
44
14%
6%
Change
%
1%
7%
36%
7%
35%
Albury House
GB Masonry Smooth in Nickel
Albury, NSW
Building Products
Australia
Overview of FY2021 Results
Year Ended July
Revenue
EBITDA
EBIT
EBITDA margin
EBIT margin
26 p Brickworks Annual Report 2021
Building Products
Australia
Highlights
$687m
Revenue
i1%
1,160
Full Time Employees
s2%
LTIFR 0.4
Safety
p
Revenue by division
Austral Bricks
$417m
Concrete Products
$159m
Bristile Roofing
$111m
i5%
s9%
s2%
Revenue by State
NSW
QLD
VIC
WA
SA
TAS
Export
42%
14%
31%
6%
4%
2%
1%
Commencements by State
NSW
QLD
VIC
WA
SA
TAS
43%
15%
30%
6%
4%
2%
Brickworks Annual Report 2021 p 27
Brickworks Annual Report 2021 p 27
Building Products
Australia
AUSTRALIA
Austral Bricks
Austral Bricks’ earnings increased 8% for the twelve months
ended 31 July 2021, with sales revenue up 5% to $417 million.
The increased earnings were primarily due to a strong performance in
Queensland, where a significant uptick in building activity, market share growth
and lower manufacturing costs all contributed to the improved result.
Revenue
$417m
Prior to the restrictions imposed in Sydney at the end of the financial year, all east
coast kilns were operating at capacity, with one kiln at Plant 3, Horsley Park in
New South Wales having been restarted in February to alleviate supply pressures
across the East Coast. In August (post financial year-end), in response to the new
restrictions in New South Wales, kilns at Punchbowl and Horsley Park Plant 3 were
taken off-line.
NORTH AMERICA
$ 428 m
$ 4 47 m
$ 414 m
i5%
$39 6 m
$ 417 m
The sharp recovery in housing activity in Western Australia has resulted in a
strong increase in demand. This has necessitated a ramp-up in production during
the second half, amidst tight industry supply.
The acquisition of Midland brick assets by BGC, approved by the ACCC in
December, provides improved clarity in relation to the competitive environment,
after many years of corporate restructuring and industry uncertainty.
Building works have recommenced at Horsley Park for a new $130 million face
brick plant at Plant 2, following a temporary pause during July and August in
relation to COVID-19 restrictions. This facility, with a capacity of 130 million bricks
per annum, will be the most advanced brick plant in the world, and is expected to
be completed by the end of the 2022 calendar year.
During the year, development approval was secured for the construction of a
new 50 million brick capacity dry press brick plant on Brickworks owned land at
New Berrima. With a budget of circa $70 million, this plant will replace the current
Bowral plant, which has been in operation for almost a century. The new plant will
deliver significant cost savings and environmental benefits, through utilising on-
site clay reserves, and a modern fuel-efficient kiln.
EXCLUSIVE DISTRIBUTION
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
28 p Brickworks Annual Report 2021
West-End Glebe
Bowral Bricks in Simmental Silver and Brahman Granite,
Austral Bricks in Charming Black
Glebe, NSW
Brickworks Annual Report 2021 p 29
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Building Products
Australia
AUSTRALIA
AUSTRALIA
Concrete
Products
Concrete Products has recently been formed as a separate business unit within Building Products
Australia, bringing together the established Austral Masonry and Austral Precast operations, and
Brickworks’ 33% share of the Southern Cross Cement joint venture.
Concrete Products earnings improved on the prior year, despite
NORTH AMERICA
a 9% decline in revenue to $159 million for the twelve months to
31 July 2021.
NORTH AMERICA
The decrease in revenue is primarily due to the exit from precast
operations in Western Australia and a reduced operation
in Queensland. In addition, sales in New South Wales were
lower, as a result of the sharp decline in multi-residential and
commercial building in Sydney.
Austral Precast earnings improved, despite the lower revenue,
driven by manufacturing efficiency and lower overhead costs.
Austral Precast continues to focus on a range of product
development initiatives such as “Double Wall”, a cost-effective
product that offers significant advantages over alternative
systems such as lightweight permanent formwork solutions.
Sales of this product increased significantly over the year and
continues to gain market acceptance in a range of applications.
EXCLUSIVE DISTRIBUTION
The disruptions caused by the plant transition in New South
Wales resulted in a decreased contribution from masonry
operations in New South Wales during the year. However,
performance across other key states improved, with particularly
strong demand in North Queensland.
Improved margins were driven by cost reduction initiatives,
productivity improvement programs and the continued growth
of premium paving and retaining wall products. The business
continues to pursue diversification from traditional grey block
products, and the appeal of this broader market offer has
improved the competitive position within the home building,
trade and retail segment.
In its first full year of operation, Southern Cross Cement has
successfully provided quality, cost-effective cement to Austral
Masonry and Bristile Roofing operations in Brisbane, as well as
to other Joint Venture shareholders.
EXCLUSIVE DISTRIBUTION
In December operations ceased at the Austral Masonry plant at
Prospect in Sydney, to be replaced by a new facility on Property
Trust land at Oakdale East.
Operational performance has been pleasing, albeit a
sharp increase in shipping rates had an adverse impact on
performance during the second half.
This new plant reached practical completion in July, with the
commissioning program now well underway. The new facility
will be one of the most advanced masonry plants in the world.
Whilst there has been some disruption and increased costs
during the transition phase, the new plant will deliver lower costs
and a broader product range, placing the business in a very
strong competitive position in this key market.
30 p Brickworks Annual Report 2021
Mt Eliza
GB Masonry GB Smooth in Nickel
Mount Eliza, VIC
Revenue
$159m
s9%
$16 9 m
$183 m
$19 6 m
$175 m
$159 m
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Brickworks Annual Report 2021 p 31
AUSTRALIA
Building Products
Australia
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Bristile Roofing
Bristile Roofing earnings were significantly higher than
the prior year, despite a slight decrease in revenue to
$111 million. This includes sales from the Fyshwick roof
tile batten mill, operating as “Capital Battens”.
Roof tile sales volume across the country was relatively steady, with an
increase in Queensland, offset by small declines across other states. In
Queensland, major hail storms in October, November and March provided a
boost to sales volumes.
The business has implemented a refocussed and simplified business strategy,
with an emphasis on the core roof tile range. A reduction in unit manufacturing
costs and prior year restructuring initiatives resulted in improved margins
during the year. In addition, improved product quality from both the Wacol and
Dandenong production plants has gained positive market feedback.
During the second half, as sales volume increased, supply chain issues
emerged, with trade shortages across the country and a shortage of timber
trusses becoming an increasing issue for tile and metal roof installations.
Capital Battens recorded increased revenue and earnings, with the mill
operating at capacity for the entire year.
32 p Brickworks Annual Report 2021
Revenue
$111m
s2%
$141 m
$14 5 m
$131 m
$113 m
$111 m
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Bristile Roofing Concrete Roof Tiles
Duo Collection
Brickworks Annual Report 2021 p 33
AUSTRALIA
NORTH AMERICA
Building Products
North America
EXCLUSIVE DISTRIBUTION
Market Conditions
The COVID-19 pandemic has had a significant impact on building activity across the United States,
with wide-ranging implications across building segments and regions.
Building activity, particularly in the non-residential segment, was
heavily impacted in the first half of the financial year, with many
major projects delayed or cancelled by state authorities due
to financing concerns. In addition, approvals for new projects
slowed significantly in the lead-up to the US presidential
election in November.
Throughout the second half, there was a steady improvement in
activity in all segments and regions, in response to government
stimulus programs and a general re-opening of the economy in
response to the vaccine roll-out.
Change in Commencements
(FY2021 v FY2020)9
Single Family
Multi-Residential
Non-Residential
40
30
20
10
0
-10
-20
2 8 %
3 4 %
31%
3 0 %
7 %
3 0 %
4 %
3 0 %
5 %
-5 %
-10 %
-6 %
-15 %
-15 %
-14 %
Northeast
Mid-Atlantic
Midwest
Other
USA
9
Source: Dodge Analytics USA Building Starts Forecast – June 2021. Figures shown are for the 12 months ended in June.
34 p Brickworks Annual Report 2021
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Location map
Brick Plants
Landmark
Stone Plant
Design Studio
Brickworks Annual Report 2021 p 35
MENYVAWVPAMIOHINILWIMNNDSDNEIAMOKYTNNCSCKSOKARTXLAMSALGAFLVTNHMARICTNJMDDCDE Building Products
North America
Across the country, the total value of building activity
commenced for the 12 months to June 2021 was up 5%
compared to the prior year. A 30% increase in single-family
residential commencements and a 5% increase in multi-
residential commencements was offset by a 14% reduction in
non-residential activity.
Glen-Gery’s primary exposure is the non-residential building
segment in the Northeast, Mid-Atlantic and Midwest regions.
Activity in these markets was down 10%, 6% and 15%
respectively.
By contrast, the single-family home segment, which accounts
for 38% of Glen-Gery volume, was up 28% in the Northeast,
34% in the Mid-Atlantic and 30% in the Midwest.
Overview of FY2021 Result
Building Products North America revenue was US$152 million
(AU$202 million) for the 12 months to 31 July 2021, 2% below
the prior year. EBITDA for the year was up 10% to US$20 million
(AU$26 million) and EBIT was down 6% to US$6 million
(AU$9 million).
The revenue and earnings delivered in financial year 2021 were
significantly impacted by the pandemic, and do not accurately
reflect the rapid growth phase currently underway and the
significant achievements of the North American business over
the past 12 months.
The decrease in sales primarily reflect the lower level of building
activity in Glen-Gery’s core markets, partially offset by the
full year impact of the acquisition of Redland Brick assets in
February 2020.
Overview of FY2021 Results
Year Ended July10
Revenue (US$)
EBITDA (US$)
EBIT (US$)
Revenue (A$)
EBITDA (A$)
EBIT (A$)
EBITDA margin
EBIT margin
5 Franklin Place
Sioux City Brick
Ebonite Smooth
New York City, USA
2020
$m
155
18
7
230
27
10
12%
4%
2021
$m
152
20
6
202
26
9
13%
4%
Change
%
(2%)
10%
(6%)
(12%)
(1%)
(15%)
13%
–
10 An average exchange rate for each half year period is used to convert from US$ to AU$. The conversion rates used are: 1H21 US$0.73; 2H21
US$0.77; 1H20 US$0.68; 2H20 US$0.66
36 p Brickworks Annual Report 2021
Building Products
North America
Highlights
$202m
Revenue
s12%
801
Full Time Employees
i3%
LTIFR 6.2
Safety
i77%
Revenue by Region
North East
Mid Atlantic
Mid West
Other
28%
24%
35%
13%
Revenue by End Market
Single Family
Non Residential
Multi Residential
38%
42%
20%
Brickworks Annual Report 2021 p 37
Building Products
North America
The Brickyard
Glen-Gery Aspen White
Smooth Thin Brick
Los Angeles, California, USA
In response to the pandemic, various local and state
government restrictions were intermittently imposed during
the first half, including limitations on trades at building sites in
key regions such as New York, New Jersey, Massachusetts and
Pennsylvania. The reduced building activity was compounded
further by severe winter weather conditions.
Following the winter low in February, sales increased month
on month through until June, as the vaccination program
rapidly increased and the economy re-opened. However, sales
momentum was adversely impacted in July, with the summer
holiday period causing construction activity to slow in many
areas.
Earnings were impacted by lower plant utilisation and the
workforce challenges associated with maintaining safe working
practices in the midst of the pandemic. This challenge was most
pronounced in the first half, with more than half of all staff being
unable to work for various periods. As such, operations at many
plants were disrupted by staffing issues.
In July, a fire at the Lawrenceville grinding plant resulted in
reduced production and increased costs.
Despite the challenging year, the business has made strong
progress on a range of key strategic priorities.
Significant rationalisation of manufacturing plants and retail
outlets has been accelerated through the pandemic. The
number of operating brick plants has been reduced from 16 to
10, resulting in the average age of the kiln fleet being halved, and
all but one kiln being fully automated. This process has involved
the transfer of almost 200 products to new plants and required
a significant effort from technical staff across the business.
This smaller network of more efficient, modern plants also offers
production flexibility, with three facilities having mothballed
kilns with additional capacity. This production flexibility has long
been an important competitive advantage in our Australian
operations and is critical to meet market cycles and fluctuations
in demand.
The rationalisation process resulted in the release of surplus
land, with sales of these properties contributing US$5 million in
EBIT during financial year 2021.
38 p Brickworks Annual Report 2021
Wegmans Hall – University of Rochester
Glen-Gery Facebrick 53-DD
Rochester, New York, USA
The plant rationalisation activities have also allowed for a more
focussed capital spending program. Upgrade works are now
almost complete at the Hanley plant in Pennsylvania, to deliver
improved product quality and plant efficiency. Modifications to
the clay preparation area were successfully commissioned in
November 2020, and this was followed by work on the extruder
and the setting line during the second half. Elsewhere, new kiln
cars have been installed at Sergeant Bluff in Iowa.
Upgrades are planned at Lawrenceville in Virginia, during the
next 12 months.
In August 2020, a new design studio in central Philadelphia was
officially opened, and this was followed in May 2021, by a new
supply centre in Des Moines. Additional studios in New York City
and Baltimore are scheduled to open in the coming months.
These studios and design centres will further enhance Glen-
Gery’s strong reputation for premium products and competitive
position in the high-value architectural segment.
Acquisition of Assets from Southfield Co.
On 2 August, just following the end of the financial year,
Brickworks completed the acquisition of certain assets of
Southfield Corporation, including Illinois Brick Company (“IBC”).
IBC was established in 1981 and has expanded over the past
4 decades through organic growth and acquisitions. It is the
largest independently owned and operated brick distributor in
the U.S., with 17 showrooms and distribution yards, all located
in Illinois and Indiana. Glen-Gery previously lacked a direct
distribution presence in these key Midwest states, with both
having a strong heritage of brick construction.
In addition to sales of around 70 million bricks per annum,
IBC offers a range of complementary building materials and
supplies such as stone, masonry, construction materials and
tools. These additional products make up around 50% of total
IBC sales.
The additional brick sales volume will underpin production
volume and increase utilisation at Glen-Gery’s Midwest plants,
including Marseilles in Illinois, Adel and Sergeant Bluff in Iowa,
Caledonia and Iberia in Ohio, and the manufactured stone plant
in Kentucky.
Brickworks Annual Report 2021 p 39
Property
FY2021 was another great year for Property, with record earnings, continued strong growth in the value
of the Property Trust, and unprecedented customer demand for industrial property, resulting in lease
pre-commitments ending the year at record levels.
Overview of FY2021
Continued capitalisation rate compression over many years has
crystallised the value that the Property Trust was specifically
established to capture. Since its inception over a decade ago,
Brickworks net asset value has increased at 18% per annum,
generating significant value for shareholders.
During FY2021, net property trust assets rose a further
$184 million to finish the year at $911 million.
Record Property EBIT of $253 million for the 2021 financial year
was up 95% on the prior year.
The Property Trust delivered an EBIT contribution of
$204 million, up 89% on the prior period.
Net trust income was up 3% to $31 million for the year. This
reflects the rental contribution from one new facility at Oakdale
South and rent increases across the balance of the portfolio.
Property Trust assets were revalued during the first half, resulting
in an average 25-basis point compression across the portfolio.
Subsequent to this revaluation process, there were a number
of significant industrial property transactions in Western
Sydney. Given the number of sales and the steep movement
in transaction pricing, a further independent revaluation of
Property Trust assets was completed during the second half.
40 p Brickworks Annual Report 2021
Brickworks Net Property Trust Assets ($ million)
$91 m
$174 m
$167 m
$176 m
$18 4 m
$185 m
$259 m
$29 9 m
$337 m
$332 m
$ 4 8 0 m
$538 m
$633 m
$727 m
$ 911 m
7
0
l
u
J
8
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Construction of Amazon Facility at Oakdale West, NSW – 17 August 2021
Overview of FY2021 Result
Year Ended July
Net Trust Income
Revaluation of properties
Development Profit
Property Trust
Land Sales
Property Administration and Other Expenses
Total
2020
$m
30
53
25
108
26
(4)
129
2021
$m
31
149
24
204
52
(4)
253
Change
%
3%
181%
(4%)
89%
100%
–
95%
This process resulted in further compression of capitalisation
rates by circa 60 to 65 basis points across the portfolio, resulting
in an overall revaluation profit of $149 million for the year.
This revaluation gain continues strong demand and sustained
growth in the value of the Property Trust over a number of
years. The COVID-19 pandemic has only fuelled this growth,
by accelerating industry trends towards online shopping and
increasing the importance of well-located distribution hubs and
sophisticated supply chain solutions.
Property Trust earnings were also boosted by a $24 million
development profit, following the practical completion of new
facilities at Oakdale East in July.
Property sales contributed a $52 million profit during the year,
primarily relating to the recognition of a portion of the previously
unrealised profits associated with the prior sale of Oakdale
West into the Property Trust. This follows a reclassification of
all the precincts within the Estate to “investment property”,
following the Coles and Amazon lease arrangements becoming
unconditional and additional pre-lease commitments being
secured.
Property administration expenses totalled $4 million, in line with
the prior year. These expenses include holding costs, such as
rates and taxes on properties awaiting development.
Brickworks Annual Report 2021 p 41
Property
Property Trust – Leased Properties
Estate
M7 Hub
Interlink
Oakdale Central
Oakdale South
Rochedale
Total
Property Trust Asset Value
Year Ended July
Leased properties
Land to be developed
Total Property Trust assets
Borrowings
Net Property Trust assets
Brickworks 50% share
Rental return on leased assets12
Reval. return on leased assets13
Total return on leased assets
Gearing on leased assets14
Asset
Value
$m
Gross
Lettable Area
‘000m2
Gross
Rental
$m/year
WALE11
years
Capitalisation
Rate
%
191
509
711
327
244
1,982
64
192
245
111
96
709
8
26
31
13
11
89
2020
$m
1,663
397
2,060
(606)
1,455
727
6%
10%
16%
36%
2.6
2.5
4.6
7.5
10.3
4.9
2021
$m
1,982
686
2,668
(845)
1,822
911
5%
22%
27%
32%
4.3%
4.2%
4.1%
4.0%
4.3%
4.2%
Change
%
19%
73%
30%
39%
25%
25%
(17%)
120%
69%
(11%)
Property Trust Asset Value
As at 31 July 2021, the total value of leased assets held within
the Property Trust was $1.982 billion. The annualised gross
rent generated from the Property Trust is $89 million, and
the average capitalisation rate is 4.2%. There are currently no
vacancies in the portfolio.
The Property Trust also holds a further $686 million in land and
infrastructure that is currently under development. This increased
significantly over the year due to development works at Oakdale
East (Stage 1) and the Amazon facility at Oakdale West.
Including the development land, the total value of assets held
within the Property Trust was $2.668 billion at the end of the year.
Borrowings of $845 million are held within the Property Trust,
giving a total net asset value of $1.822 billion. Brickworks’ 50%
share of net asset value was $911 million, up $184 million during
the year.
The total return on leased assets was 27% for the year, including
a rental return of 5% and a revaluation return of 22%.
Property Trust – Development Pipeline
The continuing strong demand for industrial land reflects
structural changes across the economy, as companies
modernise their supply chains in response to consumer
preferences, such as online shopping.
11 Weighted average lease expiry by income.
12 Based on Net Trust Income, divided by Brickworks share of leased properties less associated borrowings.
13 As above, but using revaluation profit.
14 Borrowings on leased assets / total leased assets.
42 p Brickworks Annual Report 2021
The Property Trust is ideally placed to take advantage of these
trends, with well-located prime industrial land on large lot sizes.
Current development activity at Oakdale in New South Wales
and Rochedale in Queensland will drive growth in rent and asset
value over both the short and medium-term.
In total, there is 284,100m2 of pre-committed gross lettable area
(“GLA”) across the various Property Trust Estates. The completion
of these facilities over the next two years will result in gross
rent within the Property Trust increasing by around $51 million,
representing an uplift of almost 60% from the current level.
The rental income per GLA achieved for these new
developments is significantly greater than the current
leased portfolio. This reflects the evolution towards more
sophisticated and specialised facilities, incorporating features
such as robotics, automation and multi-storey warehousing.
The development of these advanced facilities has become a
critical competitive advantage for many businesses in the new
economy and will continue to support the increasing value of
the Property Trust’s prime industrial land.
In addition to the pre-committed facilities, a further 227,900m2
of GLA remains available for development within the Trust and
will provide further opportunity for growth in the years ahead.
At Oakdale South, construction is well underway on a 25,100m2
GLA pre-committed facility (“Site 1C”), with completion
expected in October 2021. Amber Tiles and Yusen will each
occupy approximately half of this facility. Construction will soon
commence on the final lot within this Estate, consisting of a
12,900m2 GLA three-unit development and a 27,595m2 GLA
facility, with completion expected in the first quarter of the 2023
financial year.
At Oakdale West, the construction of the state-of-the-art Amazon
facility is well advanced. In total, this facility has a total floor area
of 190,000m2, across multiple levels, on a GLA of 53,500m2. This
facility is due for practical completion in December 2021.
Oakdale South, NSW – 11 August 2021
Major infrastructure works, including a roadway and bridge to
access the estate, were completed during the 2021 financial
year. These infrastructure works allowed the construction of
the Coles distribution warehouse to commence in January.
The Coles facility has a GLA of 66,000m2, with construction
expected to take around 18 months.
In the last six months, several new tenants have pre-committed
to facilities at Oakdale West. This includes a 35,500m2 GLA
facility for Woolworths and an 11,000m2 GLA warehouse for
Xylem. Including these new developments, the committed GLA
for Oakdale West is now 200,900m2, representing 58% of the
available building area. Demand for the remaining 180,000m2
of GLA is strong.
At Rochedale, three pre-commitments have now been secured
for the remaining 30,200m2 of GLA available at this Estate. This
comprises a 10,600m2 facility for Woolworths, a 16,800m2 facility
for CHEP and a 2,800m2 facility for Franklyn. All developments
at Rochedale, including these facilities, are expected to reach
practical completion during the 2022 financial year.
Operational and Development Land
Outside of the Trust, Brickworks retains other significant parcels
of surplus land, suitable for development in the future. The
largest site held for development is at Craigieburn in Victoria.
Brickworks is currently reviewing the option of an industrial
development on this land, given recent strong land growth in the
Melbourne industrial market.
In addition, operational land is utilised in the day to day activities
of Building Products Australia and North America. The total area
of operational land is around 3,600 hectares in Australia and
3,200 hectares in North America.
Brickworks Annual Report 2021 p 43
Investments
The EBIT from total investments (including interest income) was
up 91% to $97 million in the year ended 31 July 2021.
Washington H. Soul Pattinson Limited
(WHSP) ASX Code: SOL
Brickworks holds 94.3 million WHSP shares, equivalent to
a 39.4% interest in the Company (as at 31 July 2021). This
shareholding in WHSP is an important source of earnings and
cash flow diversification for the Company and has been a key
contributor to Brickworks’ success for more than four decades.
WHSP holds a significant investment portfolio in a number of
listed companies including Brickworks, TPG Telecom, New
Hope Corporation and Australian Pharmaceutical Industries.
Over more than five decades, WHSP has delivered an
uninterrupted dividend stream that reflects the earnings from
WHSP’s diversified investments. This dividend helps to balance
the cyclical earnings from Brickworks’ Building Products and
Property divisions.
The market value of Brickworks shareholding in WHSP was
$3.079 billion at 31 July 2021, up $1.235 billion from $1.844 billion
at 31 July 2020.
WHSP has delivered outstanding returns over the long term,
with a 20-year return of 13.4% per annum to 31 July 2021 being
4.7% ahead of the All Ordinaries Accumulation Index.
Brickworks’ investment in WHSP returned an underlying
contribution of $97 million for the year ended 31 July 2021, up
92% from $50 million in the prior year. The increase was driven
by higher earnings from New Hope Corporation and Round Oak
Minerals.
During the year cash dividends of $58 million were received,
up 3% on the prior year.
44 p Brickworks Annual Report 2021
Investment Market Exposure
Other Diversified
Building Products (BKW)
Telecom & IT
Mining & Energy
Financials
Healthcare
Property
52%
17%
16%
7%
4%
3%
1%
Merger with Milton Corporation
In June 2021, WHSP announced a proposed merger with Milton
Corporation (ASX: MLT). After receiving MLT shareholder
approval in September, this merger became effective on
21 September 2021.
The merger creates a larger and more diversified investment
house, with end-market exposure as shown in the chart below.
Total net asset value will increase to over $9 billion (up from
around $6 billion prior to the merger).
Importantly, the merger will provide WHSP with increased
liquidity to pursue new investment opportunities, with a
continued focus on long-term market outperformance and
growth in dividends.
Due to the addition of new MLT shareholders to the WHSP
register, Brickworks share in WHSP will reduce to 26.1%.
The merger will trigger a one-off non-cash profit for Brickworks,
due to the deemed disposal of WHSP shares. This profit is
expected to be in the range $375-425 million (after-tax).
Barrack Place
Bowral Bricks Bowral 76 in Bowral Brown
Sydney, NSW
Telecom/IT
Financial Services
Mining & Energy
Health/Pharmaceutical
$97m
EBIT from
Total Investments
i91%
Brickworks Annual Report 2021 p 45
Brickworks Annual Report 2021 p 45
LTIFR 2.9
Lost Time Injury
Frequency Rate
i93%
TRIFR 14.3
Total Recordable Injury
Frequency Rate
s12%
46 p Brickworks Annual Report 2021
Brickworks staff at
Rochedale Plant
Health and
Safety
There is no task that we undertake that is so important that we can’t take the time to find
a safe way to do it.
Strategy
Brickworks is committed to minimising the risks to health and
safety of its employees, contractors and the general public.
Continual improvement in health and safety is a key requirement
and underpinned by Brickworks Health and Safety Management
System. The system clearly defines roles, responsibilities,
accountabilities and targets and is aligned to ISO 45001.
The welfare of people on Brickworks sites continues to be
paramount during the COVID-19 pandemic. Brickworks was
prepared in 2014 to deal with biological threats, with systems
and equipment in place. Response to the COVID-19 threat was
swift and effective and remains a major focus.
Our 2025 strategy target is for continued reductions in injury
rates.
SAFETY
Continued reductions in injury rates
Performance (Group)
Brickworks consolidated total recordable injury rate has
improved year on year since the acquisition of the North
American operation in December 2018.
Brickworks consolidated lost time injury rate increased over
the last year, attributable to declined performance of the North
American operations. A roadmap for improvement is described
in further detail below.
Brickworks
Total Recordable
Injury Frequency
Rate (TRIFR)
Lost Time Injury
Frequency Rate
(LTIFR)
21.1
16.3
14.3
3.2
1.5
2.9
d
e
k
r
o
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s
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u
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/
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25
20
15
10
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3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
Brickworks Annual Report 2021 p 47
Health and Safety
Brickworks staff at Rochedale Plant
Performance (Australia)
Australia’s safety performance continues to improve, with
the lost time injury frequency rate remaining in line with the
previous year’s results at 0.4, and the total recordable injury
frequency rate for FY2021 at 9.3, a 21% decrease from FY2020.
Brickworks is moving its health and safety focus to the 'Presence
of Safety’, using lead indicators to drive health and safety
outcomes. Our framework uses lead indicators, targets and
management accountability to improve organisational safety
practices, which has resulted in lower recordable injury rates.
Respirable Dust and Silica
Brickworks has implemented strict controls against the risk
of respirable dusts and fibres. Worker health monitoring is
compliant with government regulations. A rigorous program
of static and worker exposure monitoring is ongoing at
all Brickworks sites, conducted by two qualified in-house
occupational hygienists. The occupational hygienists have
developed a core competency, with a focus on respirable dust,
fibre and noise programs. The focus on silica dust controls
includes the purchase of specialised respirator fit testing
equipment to ensure effective worker respiratory protection.
48 p Brickworks Annual Report 2021
Brickworks Australia
Total Recordable
Injury Frequency
Rate (TRIFR)
33.6
22.2
19.2
17.1
2 0.4
19.6
11.8
9.3
d
e
k
r
o
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40
35
30
25
20
15
10
5
0
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
Key Highlights FY2021
◗ No employee or contractor fatalities recorded FY2021
◗ Continued reduction in employee recordable injuries
FY2021
◗ Brickworks prepared for biological threats since 2014
◗ Computerisation of health and safety management
systems
◗ Brickworks core competence – Silica and hygiene
management
Brickworks Australia
Lost Time Injury
Frequency
Rate (LTIFR)
3.2
2.0
1.6
1.3
1.7
1.7
0.4
0.4
d
e
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3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
WHS Cloud Based Software
The Brickworks Safety, Health and Environmental
Management System (SHEMS) has been proven effective
in identifying and reducing risks, injuries and incidents in
the workplace.
However, the system’s implementation and application
remained isolated at a plant level. Paper forms were confined
to filing cabinets or scanned copies on local computers,
making it difficult to manage health and safety performance.
The SHEMS system has been digitised to three-dimensional
online modules, using a cloud based WHS software platform
that increases functionality, such as attaching pictures,
assigning actions, creating email notifications, and ensuring
all required form fields are completed.
Centralised, online information allows knowledge sharing
of health and safety management issues between plants
in Australia and North America. The online dataset can
be manipulated into detailed reports, accessed by senior
managers on any smart device. As the dataset grows,
any identified shortcomings of the system are reduced,
ensuring a continuous improvement cycle.
This transparency has improved safety management,
by providing the analytical tools that assist managers to
reduce risks and improve the welfare of employees and
others at Brickworks.
Safety Award
The safety team at Austral Masonry won Brickworks’ 2021
Safety Award for their dust free alternative to sweeping,
reducing workers’ exposure to silica. The team trialed a
vacuum unit at the Hemmant site in Queensland. The unit
is a fully enclosed pressurised cabin, supplied with HEPA
filtered air, and a skirting system around the front brushes
to better contain dust, compared to traditional sweepers.
The unit produced good results inside the factory shed and
out in the yard. The unit is a great alternative to sweeping
as it protects workers from respirable dust and reduces
fugitive dust emissions.
Brickworks Annual Report 2021 p 49
Health and Safety
Dumbarton Oaks Fellowship House,
Harvard University, Massachusetts, USA
Brickworks North America
Total Recordable
Injury Frequency
Rate (TRIFR)
Lost Time Injury
Frequency Rate
(LTIFR)
26.6
24.3
21.1
8.9
3.5
6.2
d
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r
o
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n
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30
25
20
15
10
5
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10
8
6
4
2
0
9
1
/
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2
0
2
/
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1
0
2
1
2
/
0
2
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
Performance (North America)
While the total recordable injury frequency rate for FY2021
was 21.1, a decrease from the previous year, the lost time injury
frequency rate increased to 6.2.
Improvement in health and safety is a key requirement and
Brickworks is focusing on integrating the success of the
Australian health and safety management system into the North
American business.
A clear safety roadmap has been established to rollout the
management system, which is aligned to ISO 45001, and clearly
defines roles, responsibilities, accountabilities and targets. The
safety roadmap will support reduced injury rates. A team of
people are focused on the integration, and progress is reported
monthly to the Brickworks Board of Directors. To support the
rollout the North American safety team has been expanded to
include three new members. To further embed a strong culture
of safety, the Health and Safety Director made personal site
visits to emphasise safety controls and behaviours.
Significant progress was achieved on the safety roadmap
during FY2021. Rollout of key elements of the Health and
Safety Management System was implemented, including the
implementation of the Safety Committee program, Incident
Reporting, Investigation and Record-keeping Program and a
Fit-For-Work Physiotherapy injury management program.
50 p Brickworks Annual Report 2021
The team also successfully migrated worksite inspections
to the Donesafe online software module and an audit and
assessment program was launched to assess compliance with
the Occupational Health and Safety Act (OHSA) requirements.
Behavioural safety training for employees and managers is
being investigated for implementation in FY2022. ‘Safety blitz’
events were completed to conduct annual compliance training
and celebrate positive safety behaviours.
Key Highlights
◗ No employee or contractor fatalities recorded FY2021
◗ Continued focus on harmonising Brickworks Australia’s
successful Health and Safety management systems into
North America to reduce injury rates
◗ Clear safety roadmap and management accountability and
targets
◗ Significant progress was achieved on the safety roadmap
during FY2021
◗ Scoping management and employee behavioral safety
training
◗ Launched audit and assessment program
Respirable Dust and Silica
A third-party contractor was engaged to conduct silica
monitoring for all plant locations and provide recommendations
to reduce silica exposure.
OSHA Voluntary Protection Program
The OSHA VPP (Voluntary Protection Program)
recertification took place in July 2021 at the Mid-
Atlantic Plant in Pennsylvania (US). The recertification
was conducted by two OSHA Compliance Specialists
and one Special Government Employee (SGE) and
included employee and leadership interviews, plant-wide
inspections, employee presentations, and an in-depth
review of documentation. There were no 90-day action
items identified.
Brickworks Annual Report 2021 p 51
Overview of
Sustainability
The built environment is the fabric of our cities and our lives and Brickworks’ products form part of
this ever-changing fabric. Brickworks products are integrated into thousands of homes, apartments,
commercial buildings, landscapes and infrastructure projects built each year.
Under these objectives, Brickworks is committed to delivering
on 15 targets by 2025 with the baseline year of FY2019, except
where otherwise noted. Build for Living: Towards 2025 can be
downloaded from Brickworks website www.brickworks.com.au
Sustainability Reporting
Brickworks understands its long-term responsibilities, and the
impact and influence the business has on the environment,
customers, employees, communities and shareholders.
Brickworks takes great pride in manufacturing building products
in a sustainable way, creating sustainable developments and
beautiful products that last forever. Sustainability and innovation
is integrated into product design to create greater energy and
resource efficiency over the operational lifetime of a building.
Brickworks 2021 Sustainability Report provides a chance to
cover these issues in depth, informed by international standards
such as the Global Reporting Initiative.
The Sustainability Report for the year ended 31 July 2021 shares
Brickworks sustainability journey with an overview of the
progress against targets and case studies. The Sustainability
Report can be found at www.brickworks.com.au
Build for Living: Towards 2025, Brickworks
Sustainability Strategy
Brickworks’ sustainability strategy, “Build for Living: Towards
2025”, recognises the substantial environmental and social
impacts of the built environment, and the role its products play
in creating sustainable developments. Brickworks understands
its responsibilities, and the impact and influence it has on
the environment, customers, employees, communities, and
shareholders.
The sustainability strategy focuses on the opportunity to make
buildings and cities safe, resilient and sustainable. Design that
incorporates sustainability brings greater energy and resource
efficiency over the operational lifetime of a building.
The sustainability strategy sets a clear pathway from the prior
year, with measurable commitments, to ensure Brickworks
continues to have a positive environmental and social impact,
with strong governance and a culture of care for the community.
At the heart of the strategy is Brickworks’ sustainability
framework, with three pillars: Responsible Business,
Environment and Our People and Community. Within these
pillars, Brickworks focuses on three core objectives to deliver
positive outcomes for stakeholders:
◗ Responsible Business: Leading Building Design - Safe,
Resilient, Sustainable
◗ Environment: Sustainable Manufacturing
◗ Our People and Community: Diversity and Strong Culture of
Care for Community.
52 p Brickworks Annual Report 2021
TOWARDS2025
Significant annual progress against our 2025 targets
Target
Our Progress
Thermal Design
We will provide leading research on passive solar
thermal design, enabling reduced lifetime energy use.
Release of new thermal research: Best Building
Products for higher NatHERs Ratings.
Life Cycle Education
We will support design tools, guidance, and information
to incorporate life cycle thinking into building design.
Provided 42 continuous professional development
sessions, educating 2,085 attendees.
Sustainable Products
By 2025 we will double our volume of products sold in
Australia that hold leading sustainable qualities.
21% increase in Carbon Neutral brick sales against
previous year, launched second Climate Active
offering.
Supply Chain
Continuing to reduce supply chain risks.
Modern Slavery Roadmap completed.
Status
Governance
Business Ethics and Whistle-blower Programs.
Governance programs formalised. Continued training.
Safety
Continue reductions in injury rates.
Injury rates reduced by 21% in Australia and 13% in
North America. Clear safety roadmap for U.S. business.
Engagement
Existing target of 100 community engagement
activities annually.
120 community engagement activities, exceeding our
target of 100.
Community Support
Supporting charities like the Children’s Cancer
Institute.
$196,028 collected for Children’s Cancer institute in
2020. CCI Engagement Plan developed for COVID safe
charity events.
Diversity and Inclusion
Stretch target: 35% female senior executives. Develop
and implement a Diversity and Inclusion Strategy.
28.1% female senior executive in Australia,
development of our Diversity and Inclusion Strategy.
Carbon
Invest in the transition to the hydrogen fuel economy.
Launched Hydrogen Feasibility Project with Murdoch
University.
Water
Reduce potable water use in water stressed areas.
8% less mains water usage in Australia v FY2020.
Rehabilitation
Drive progressive rehabilitation.
25,527m2 land rehabilitated in Australia.
Circular Economy
Year on year increase in recycled material use.
61% increase in recycled material use, 12.5% recycled
content in raw materials in Australia.
Emission Control
Over $2 million investment in emission abatement.
$3.25M invested in emission abatement.
Energy Efficiency
Stretch target: 10% increase in gas efficiency at
Austral Bricks plant by 2030.
Total gas efficiency at Austral Bricks plant has
improved by 3.5% and natural gas efficiency has
improved by 7.4% since 2018.
KEY: Achieved Materially Progressed Progressed
Brickworks Annual Report 2021 p 53
Environment
Brickworks is committed to managing our operations in an environmentally sustainable manner,
whilst considering economic and social influences.
Compliance15
Brickworks treats all non-compliance instances with the utmost
importance. Details of incidents, notices and complaints are
raised at the weekly General Manager’s meeting, attended
by the Managing Director. Each non-compliance incident
is investigated and tracked to ensure corrective actions are
undertaken within deadlines.
FY2021
FY2020
AUS
USA
AUS
USA
Prosecutions
Penalty Notices
Reportable Incidents
Total Incidents
0
0
12
35
0
2
1
1
0
0
26
47
0
0
4
4
Brickworks Compliance Statistics
Incident reporting procedures and training are a central part
of the EMS, raising awareness and identifying corrective and
preventative actions. Seven of the 12 Australian reportable
incidents related to water discharge at Austral Bricks sites. To
address these incidents, Automatic Treatment Basins are being
installed at German Church and Ford Road Quarries, Qld, and
Horsley Park Quarry, NSW.
The North American business received two penalty notices
during FY2021. Pittsburgh Plant Quarry received a penalty
notice for water discharge exceeding the aluminium limit in
March 2020. A water sample was mistakenly submitted as a dry
weather discharge, with aluminium analysed to be slightly over
the limit. A wet weather discharge does not require aluminium
to be analysed. The incident was administrative in nature and
thus designated as low significance by the State Regulator who
issued a US$1,000 penalty notice in December 2020. A second
penalty notice was issued in June 2021 for a Hanley Plant Quarry
water discharge that exceeded the manganese permitted limit.
Corrective actions were immediately instituted under guidance
from the Pennsylvania State Agency and the penalty was reduced
from US$2,600 to US$1,500. The FY2022 target remains at zero
environmental fines and continued risk reduction.
EMISSION CONTROL
Over $2 million investment in emission
abatement
The Air Environmental Program will continue identifying
investments in leading environmental initiatives. During FY2019-
FY2020, over $2.7m was invested in emissions abatement
scrubber equipment installed at Horsley Park Plant 3. Future
investments in environmental initiatives, as part of the Air
Environmental Program, will be considered in relation to capital
expenditure, technical projects and stakeholder collaboration.
$2.9m was spent on Hydrogen Fluoride pollution control
equipment for air emissions in Plant 2 in FY2021. This
investment is expected to deliver reductions in emissions at the
15 Reported environmental fines and penalties include those received and paid during the reporting year (ending 31 July). Penalties received
regarding property notices are excluded.
54 p Brickworks Annual Report 2021
Water
Brickworks’ 2025 target is to reduce potable water usage in
water stressed areas.
WATER
Reduced potable water use in water
stressed areas
Water resource management is most important in water
stressed areas. During FY2021, 126 ML of potable mains
water use was recorded at sites in Australia, an 8% decrease
compared to the previous year. This decrease includes a 9%
reduction in potable water usage in our medium-high risk sites.
Building Products Australia
Total Potable Water Usage (kL)
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
FY2020
FY2021
Water Risk Area
Low
Medium-High
Extremely High
Low-Medium
High
source. An additional $149,000 (AUD) was spent on pollution
control equipment for air emissions in Australia during FY2021.
By 2026, over $2M (AUD) additional investment in emissions
abatement is scheduled.
$1.0M (USD) has been approved to begin upgrades on the
Glen-Gery Pittsburgh Plant kiln pollution control equipment in
FY2022. The proposed upgrades are intended to improve the
general condition, reliability, and overall operation of the existing
pollution control device. The proposed upgrades are currently
scheduled to begin mid 2Q FY2022.
Resources and Waste
Brickworks is progressing towards a circular economy by closing
the loop, thus minimising production waste and reusing and
recovering resources in the value chain. Opportunities for the
reuse of waste are a key focus area for the brick and concrete
businesses to decrease material costs, increase resource
efficiency and drive a circular economy. Brickworks’ 2025 target
is for a year-on-year increase in recycled material use.
CIRCULAR ECONOMY
Year on year increase in recycled material use
Measured recycled content of Australian building products was
61% higher than the previous year. A total of 256,940 tonnes
of recycled material was used in place of raw materials, such
as clay and cement. This is approximately 12.5% of Australian
building products total production by weight. A further 13,159
tonnes of sawdust was used in place of natural gas.
Building Products Australia
Recycled content (tonnes)
300,000
250,000
200,000
150,000
100,000
50,000
0
FY2020
FY2021
Brickworks Annual Report 2021 p 55
Environment
Energy
In FY2021, Brickworks Building Products Australia’s (BBP) total
energy usage was 4.1PJ, a 6% reduction from 4.4PJ the previous
year.
Building Products Australia
Total Energy Consumption16
(PJ)
4.4
4.6
5.1
5.8
5.2
5.2
4.9
4.4
4.1
6
5
4
3
2
1
0
Building Products Australia
Energy Intensity
(TJ / $ million revenue)
7.8
7.2
7.3
7.7
6.8
6.4
6.5
6.4
6.0
8
7
6
5
4
3
2
1
0
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
Building Products Australia
FY2021 Energy Mix
Energy intensity (energy consumption vs revenue) was 6TJ per
million dollars of revenue across BBP Australia, a 6.3% decrease,
reflecting fluctuations in revenue between FY20 and FY2021.
The majority (74%, 3.1 PJ) of the Company’s Australian energy
requirements comes from natural gas, largely used at Austral
Bricks’ manufacturing facilities. Gas efficiency is measured at a
factory level and results are reported to the Managing Director
weekly.
Natural Gas
74%
Biofuels
13%
Electricity
8%
Liquid Fossil
Fuels
5%
Coal
0%
In FY2021, alternative biofuels made up 13% of Brickworks’
Australian energy mix, down from 14% in FY2020. Biofuel
sources include landfill gas and sawdust. Austral Bricks Horsley
Park Plant 1 and 3 both continue to substitute natural gas with
landfill gas, sourced from neighbouring landfills. Sawdust is the
primary fuel used to fire the kiln at Austral Bricks Longford, TAS,
and is acquired from various Tasmanian sawmills.
16 Total energy consumption is for Australian operations only. Energy
consumption associated with recently acquired North American
operations will continue to be monitored and reported, if material to
the Group.
56 p Brickworks Annual Report 2021
Investing in Energy Efficiency Towards 2030
Renewable Energy and Biogas
Since its inception, Brickworks Building Products has invested
in the latest kiln, equipment and manufacturing technologies to
improve productivity, product quality and energy efficiency.
FY2018 marked the start of a strategic 10-year investment vision
to drive energy efficiency across Australia. By 2030, major plant
upgrades are expected to improve total gas efficiency across
Austral Bricks Australia by stretch target 10%, based on FY2018
levels.
ENERGY EFFICIENCY
Stretch target: 10% increase in gas efficiency
at Austral Bricks plant by 2030
Baseline FY18
During FY2019, the Austral Bricks Horsley Park Plant 2 kiln was
shut down in preparation for an upgrade to a state of the art
brick manufacturing facility. Plant 2 is expected to commence
commissioning in FY2023. The graph below depicts Austral
Bricks Gas efficiency trend. Total Gas efficiency (including
landfill gas at Horsley Park and sawdust at Longford) has
improved by 3.5% since FY2018. Natural gas efficiency has
improved by 7.4% since FY2018.
Austral Bricks Gas Efficiency
(GJ / '000 Standard Brick Equivalent)
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
Total Gas Efficiency
Natural Gas Efficiency
Brickworks is planning for investments into the latest
manufacturing technologies in the North American business.
Upgrades will provide improvements in productivity, product
quality and energy efficiency. Improvements in kiln gas
efficiency across North America will be tracked and reported
annually.
*
y
c
n
e
i
c
i
f
f
e
e
c
i
t
c
a
r
p
t
s
e
b
l
a
n
o
i
t
a
n
r
e
t
n
I
Bigler
Capitol Leased
Redfield
Cushwa**
Caledonia kiln 2**
INDUSTRY RANGE
Brickworks has long-since used biogas and sawdust for
renewable energy generation. The Alternative Fuels Program
saw Brickworks Australia achieve 13% energy use composition
of biofuels in FY2021.
Global kiln refurbishment program
Driving energy efficiency beyond international benchmarks
–
Performance of U.S. kilns against International
Leading Energy Efficiency Benchmarks
Brickworks Building Products – North
American Natural Gas and Electricity Usage
EFFICIENCY – energy per brick produced
International best
practice efficiency*
GLEN GERY kilns
Sergeant Bluff
Lawrenceville
Adel
Marseilles
Hanley
Iberia
Caledonia
York
Mid-Atlantic
Pittsburgh
Our vision
• Glen Gery has a significant investment program to
reinvigorating local manufacturing by upgrading kilns
dating back to WWII with leading energy efficient kilns
U.S. Focus
• Global kiln refurbishment program to drive energy efficiency
beyond international benchmarks
• Retirement of inefficient kilns dating from the 1940s
Performance of Retired U.S. kilns against International
Leading Energy Efficiency Benchmarks
EFFICIENCY – energy per brick produced
GLEN GERY kilns
Remaining old kilns are being retired as part of the replacement and investment strategy
INDUSTRY RANGE
Low energy use
Higher energy use
*
International Benchmark – Energy Efficiency target set by Brick
Development Association (UK) (Specific Energy Consumption per tonne)
** Data not available
14
Low energy use
Higher energy use
*
International Benchmark – Energy Efficiency target set by Brick
Development Association (UK) (Specific Energy Consumption per tonne)
During FY2021, 10 clay brick factories owned by Brickworks
were in operation in North America, all fuelled by natural gas.
Consumption of natural gas in Brickworks Building Products
North American business was 1.7PJ in FY2021, up from the 1.5PJ
used in FY2020. Electricity usage in FY2021 was 51GWh. In
FY2022, Brickworks will collect and report on North American
total energy use.
Carbon (Australia)
Australian greenhouse gas emissions are reported and audited
for the Australian National Greenhouse and Energy Reporting
Scheme (NGERS). Scope 1 and Scope 2 carbon emissions are
determined using the methodology and factors outlined within
NGERS. Reported carbon emissions include those associated
with Brickworks Building Products Australian operations only,
for the reporting period 1 July 2020 to 30 June 2021. In FY2021,
emissions were 192,117 tCO2-e (Scope 1) and 70,827 tCO2-e
(Scope 2), a 6% decrease on the previous year.
Carbon intensity is 6.3% lower than the previous year,
attributable to improvements in gas efficiency.
Brickworks Annual Report 2021 p 57
Environment
Building Products Australia
Total Carbon Emissions
ktCO2-e
Building Products Australia
Carbon Intensity
(ktCO2-e / $ million revenue)
400
300
200
100
0
10 0
218
9 6
224
10 3
237
107
259
9 8
24 4
93
247
87
232
76
2 0 4
71
192
0.6
0.55
0.5
0.45
0.4
0.35
0.3
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
Building Products Australia
Carbon Emissions since 200517
(ktCO2-e)
Scope 1
Scope 2
Carbon emissions have followed a general downward trend,
with a 45% decrease compared to the base year 2005/0617
(Scope 1 and 2). The decrease is attributed to efficiencies gained
from alternate fuels, manufacturing consolidation, equipment
upgrades and operational improvements. Brickworks will explore
further carbon management strategies, greenhouse gas metrics
and setting targets during FY2022 as part of the Taskforce on
Climate-related Financial Disclosures (TCFD) review.
Carbon (North America)
Alongside Brickworks goal to report carbon informed by the
GRI Standards, a carbon emissions inventory for North America
will be built by FY2022, to enable a full estimate of carbon
emissions. Although Brickworks’ North American operations are
not required to report carbon emissions to the U.S. regulator,
this information will supplement ongoing carbon reporting for
the Brickworks group.
500
400
300
200
100
0
6
0
/
5
0
0
2
7
0
/
6
0
0
2
8
0
/
7
0
0
2
9
0
/
8
0
0
2
0
1
/
9
0
0
2
1
1
/
0
1
0
2
2
1
/
1
1
0
2
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
National Greenhouse and Energy Reporting Data from FY10.
17 Certain comparative information was amended in this Sustainability report to conform to the current year presentation.
Historic emissions prior to FY14 were based on Austral Bricks only, now includes all Brickworks Building Products Australia.
58 p Brickworks Annual Report 2021
Natural gas followed by electricity are the predominant
energy and carbon emissions sources for the North American
operations. Carbon emissions from natural gas and electricity
consumption were 109 ktCO2-e during FY2021.
Hydrogen
Hydrogen is expected to play a key role in the decarbonisation
of sectors, such as the replacement of natural gas. Renewable
hydrogen, produced through electrolysis from water using
renewable electricity, can provide industry with emission-free
energy. As a large gas user, this fuel may help Brickworks to
meet its greenhouse gas emissions reduction targets.
Brickworks is investing in the transition to a hydrogen fuel
economy through desktop and lab-scale trials, in partnership
with Murdoch University. The purpose of this investment is to
understand the use of hydrogen in the manufacturing of clay
bricks.
Launch of Hydrogen Feasibility Study
Brickworks kicked off its Hydrogen Feasibility Project in
December 2020, inviting representatives from Murdoch
University’s Environmental Engineering Team and ATCO
to a site tour of Austral Bricks Cardup, WA.
We are incrementally adopting the TCFD recommendations,
such as undertaking climate scenario analysis, identifying
risks and responses. Climate scenario analysis utilises three
scenarios to ensure portfolio stress testing aligns with the
TCFD guidelines.
During FY2021, our approach to a low carbon future was set
out in a Low Emission Technology Statement. This technology
statement and strategy is underpinned by the overarching
target to implement energy efficiency opportunities
through a global kiln replacement strategy and exploration
of opportunities to further increase low carbon fuels and
renewable electricity.
During FY2021, the Brickworks Sustainable Home Guide was
prepared, setting out a pathway to creating a sustainable
home using Brickworks sustainable products. The Brickworks
Sustainable Home Guide follows principles for sustainable home
design, based on leading standards such as Green Star Homes
and LEED for Homes by U.S. Green Building Council.
Brickworks Low Emission Technology Statement and
Sustainable Home Guide are available for download from
www.brickworks.com.au
Rehabilitation
Progressive rehabilitation is a key strategy for minimising
environmental risk, end-of-life closure costs and achieving
increased efficiency by reducing double handling of
rehabilitation materials.
Progressive rehabilitation of 25,527m2 was completed at sites
across Australia during FY2021. Progressive rehabilitation is
driven across the business by adding available land reviews to
annual rehabilitation planning.
Factory tour of Cardup with representatives from Murdoch
University, ATCO, Austral Bricks and Brickworks.
REHABILITATION
Drive progressive rehabilitation
CARBON
Invest in the transition to the hydrogen
fuel economy
Understanding Carbon Risks and
Opportunities
Brickworks is aligning its greenhouse gas reduction strategy with
the recognised standard of the Task Force on Climate-related
Financial Disclosures (TCFD) recommendations, including
risk management disclosures, metrics and targets. The TCFD
recommendations provide a disclosure framework supported by
investors and regulators. During FY2020, a plan was finalised to
meet the recommendations on the TCFD and approved by the
Brickworks Board and Audit and Risk Committee.
Community Engagement
Brickworks has developed community engagement plans
at relevant sites, identifying the socio-political context,
community concerns and expectations and when and how to
engage. In FY2021, we completed 120 community activities,
exceeding our target of 100 events. Engagement activities
included stakeholder meetings, site visits, investigating and
resolving complaints, donations and other forms of support
for community members and projects. These events help us
strengthen and maintain community relationships.
ENGAGEMENT
100 Community activities each year
Brickworks Annual Report 2021 p 59
60 p Brickworks Annual Report 2021
60 p Brickworks Annual Report 2021
Macquarie University
UrbanStone in 4 colours in shot blast finish
Macquarie Park, NSW
Community
Brickworks is committed to social responsibility in our communities, and we aim to make a valued
contribution to our communities.
Children’s Cancer Institute
Brickworks is a long-standing partner with the Children’s Cancer
Institute (CCI), the only independent medical research institute
in Australia dedicated to research into the causes, cure and
prevention of childhood cancer.
Brickworks became partner of CCI in 2002 with the first pledge
made towards the CCI Capital Appeal of $70,000. To date,
Brickworks’ total partner value exceeds $4 million dollars,
comprising of direct and indirect sources of revenue, including
corporate and staff donations, state fundraising, sponsorships
and supporting CCI events.
The reporting period for the CCI partnership is the 2020
calendar year and the team at Brickworks raised $196,028,
helping CCI move closer to achieving the vision of curing all
children with cancer.
COMMUNITY SUPPORT
Supporting charities like
Children’s Cancer Institute
Staff Donations
The ongoing company support for CCI’s work has been
supplemented with staff donations, primarily through the
Casual Friday program. In return for a payroll donation of $2
per week, staff are issued with a ‘Care for Cancer Kids’ shirt
to wear with their casual clothes on Fridays. 2020 saw the
Brickworks staff contribute an amazing $58,448 through
the Casual Friday program.
Brickworks staff offer their time and efforts to drive a range of
fundraising activities for CCI, including the Diamond Ball and
Build for a Cure initiative. Fundraising efforts were significantly
impacted, with most events cancelled due to COVID-19
restrictions. The Brickworks Charity Committee implemented
the 2021 CCI Engagement Plan to enable suitable fundraising
activities to occur to during the COVID-19 pandemic.
Australian Bushfire Support Campaign
Supporting Bushfire Victims
The Wooroloo Bushfire started on 1 February 2021 while
Perth, WA was under a COVID-19 lockdown. The devastating
fire destroyed 86 homes and displaced hundreds of local
residents.
For the second year, Brickworks Building Products offered
to help bushfire victims rebuild their homes. For any home
built with Austral Bricks, Brickworks’ Building Products
will replace all bricks, free of charge, including delivery.
For homes constructed from other building materials,
Brickworks will assist in the re-build, with 50% off all
materials in the Brickworks Building Products portfolio.
This initiative is available to bushfire victims for two years.
For Terms and Conditions see our website www.brickworks.
com.au/bushfire-relief
During FY2021, 73,320 bricks worth $61,517 were donated
to nine households affected by bushfire.
Endure for a Cure
Brickworks Annual Report 2021 p 61
62 p Brickworks Annual Report 2021
Our
People
COVID-19 Response
Brickworks has monitored the coronavirus disease (COVID-19)
since January 2020, acting with caution and following stringent
health advice. Brickworks implemented a COVID-19 business
continuity plan to minimise the chance of COVID-19 spreading
throughout the business. A set of regularly updated COVID-19
Guidelines are published on the Brickworks website, for both
customers and employees.
The health and wellbeing of employees and customers is of
the utmost importance to the company. Brickworks has been
prepared since 2014, with fully equipped biological kits in place
at all operational sites. The following initiatives are in place in
Australia throughout the duration of the pandemic:
◗ A national central store was established for COVID-19
personal protective equipment (PPE) supplies, ensuring a
constant supply across Brickworks
◗ National doctor network with Occupational Physician
adviser to Brickworks
◗ Deep cleaning between shifts
◗ Activity register of pandemic related absences and single
point of triage
◗ Temperature testing all people (including customers) at
all sites
◗ Unwell workers, contractors and customers with fevers are
not permitted on-site
◗ Brickworks hygiene program
◗ Sanitation caddies and PPE provided at all workstations
◗ Limitation of company travel
◗ Providing alternative arrangements to ensure that
employees are not travelling to and from work using
public transport
◗ Regular communications to all staff through emails,
providing the latest health advice with a focus on mental
health and personal wellbeing
◗ Leaders are empowered to have regular check ins with their
teams, checking on wellbeing and connectiveness
◗ IT infrastructure and an upgrade to video communications
enabling a quick transition for staff to work from home
◗ Compliance with Government Guidelines
◗ Regular General Manager COVID-19 meetings
◗ Daily World Health Organisation (WHO) situation reports
◗ Information training assigned to all Brickworks personnel
through the E-Learning platform
◗ Innovation communications throughout Brickworks
networking best practice initiatives being implemented
◗ Training reports to ensure assigned training is completed
◗ Physical separation of work teams
◗ Individual flexibility to help staff who have caring
responsibilities, especially during home schooling
◗ Networking with the Manufacturing Australia group of
companies to share learnings and best practice.
Remote working in response to COVID-19 has been effective
across the business. A survey was sent to employees following
the remote working experience, with positive feedback.
Business planning and scenario modelling tools have been
developed to support decision making.
COVID-19 has changed the way that Brickworks does business;
accelerating digital sales and marketing, offering contact-free
sample deliveries, virtual colour consultations, and the business
does not currently accept cash payments.
Brickworks Annual Report 2021 p 63
Our People
Workplace Profile
Total**
Female* **
Total
Female*
Australia
North America
Rapid Antigen Testing Oakdale, NSW
Management
Professionals
Tech/Trades
Administration
Sales
21%
7%
17%
14%
8%
Further COVID-19 Response Australia
Operators/Labourers
34%
24%
34%
5%
80%
43%
1%
19%
4%
2%
11%
3%
61%
25%
32%
11%
73%
17%
8%
During FY2021, implementation of COVID-19 responses
continued to develop to ensure the continued health and well-
being of employees and customers.
Recognising the important role of vaccinations, Brickworks
implemented Vaccination Leave provisions, to allow employees
time for obtaining vaccinations. Rapid Antigen Testing was
trialled and implemented at NSW facilities during the NSW
Government lockdown period from July 2021, providing an
additional level of screening and identification.
During FY2021, there were no positive COVID-19 cases on
Australian Brickworks sites.
Further COVID-19 Response North America
In North America, COVID-19 has affected staff, with 606 staff
absences recording 122 positive employee COVID-19 cases.
The government ordered temporary shutdowns to five facilities
at the start of the pandemic, resulting in 400 employees laid off
and 150 employees working from home. Policies, procedures
and guidelines are in place to minimise the spread of COVID-19
and the impact on the business.
Our Workplace Australia and North America
Key Employment Data
Australia
North America
*
**
Female % is a fraction of each profile type.
from WGEA data 2021
Culture and Engagement
Brickworks recognises that sustaining a strong culture,
driven by the diversity of our people, is critical to our long-
term success. During FY2021, we continued our focus on
the integration of the ‘WE ARE BRICKWORKS’ Values and
Behaviours. These values and behaviours drive organisational
unity and focus, by providing a simple way for employees to
understand what the organisation stands for, and how success
is achieved at Brickworks.
Brickworks values are firmly embedded in our practices, such as
recruitment, onboarding, performance management, promotion
and talent development.
Employee Retention
The strong commitment and positive engagement of our
employees remains a key focus through our employee value
proposition and multiple benefits offered to permanent
employees, including paid parental leave, support for further
education and employee share schemes.
Total Workforce
1160
801
Australia
North America
Total female breakdown
Female Senior Executives
23%
(up from 21%
in FY2020)**
28%
(up from 27%
in FY2020)**
20%
(up from 17%
in FY2020)
23%
(up from 15%
in FY2020
Average age of employees
Employees aged 50 and over
43.4
32.8%
45.5
43.3%
Average length of service
9.4 years
11.7 years
Employee Turnover
FY2020
FY2021*
FY2020
FY2021*
Voluntary
Total
13%
27%
13%
17%
19%
30%
32%
42%
64 p Brickworks Annual Report 2021
Brickworks Australia FY2021 employee voluntary turnover
(resignations and retirement) was 13.06%, with a total turnover
of 17.33%, an improvement of 10% on the previous year. The
voluntary turnover in North America is primarily a result of the
increasingly competitive job market in the United States during
the recovery from the COVID-19 pandemic. Turnover is reviewed
on a regular basis, along with exit interviews and pulse surveys
to help us understand focus areas that will improve employee
retention and engagement.
Brickworks North America employee voluntary turnover was
32% with a total turnover of 42%, 12% higher than the previous
year. The increase in voluntary turnover is a result of the worker
shortage crisis in the United States. During the recovery from
the COVID-19 pandemic, the demand for labour exceeded the
supply; especially within physical labor positions. 80% of the
voluntary turnover occurred in the general labor plant positions.
Brickworks North America has reviewed opportunities for
automation to reduce manual labour requirements, and revised
pay practices to incentivise productivity to remain competitive
in the labour market. The benefits of working at Brickworks
North America are described within the website https://www.
glengery.com/careers.
Brickworks Annual Report 2021 p 65
Our People
Talent Pipelines
At Brickworks, we aim to provide an employee experience that
aids staff growth and development. Brickworks is committed
to investing in the talent of our people, through formalised
graduate, apprentice, cadetships, mentoring and succession
planning programs.
Following the success of the Australian Graduate Program,
North America launched its Graduate Program, The Brew
Crew, designed to encourage company awareness, support
professional and personal skill development, and promote
organisational engagement. The first cohort are 10 emerging
professionals, under the age of 25, who will be provided
networking, mentoring, and learning opportunities focused on
the business and their careers.
Brickworks has continued to develop its talent pipeline entry
points by launching the Cadet Program. This is a structured
pathway which provides foundational level industry experience
for those undertaking their undergraduate degree. Those who
are identified as having leadership potential can apply to the
Graduate Program upon completion of their studies.
Brickworks has embedded Mentoring Programs since 2018 and
FY2021 saw the successful launch of an internally managed
program. The program allows participants to develop mentoring
skills and continues Brickworks commitment to developing a
culture of mentorship and growth.
Driving a Learning Culture
Brickworks is committed to creating a strong Learning
Culture. All managers and employees are encouraged to
undertake two hours of learning every week and further
their professional development by accessing a learning
allowance. Structured development programs are made
accessible to meet business and individual learning
requirements. During FY2021, Brickworks conducted a pilot
program that provided learners with direct access to online
training, encouraging employees to develop at their own
pace, with targeted learning to suit their individual needs.
Diversity and Inclusion
Brickworks is committed to creating a diverse and inclusive
culture, where all employees are treated with dignity and
respect, valued for their contributions and diverse backgrounds,
experiences and perspectives. By valuing diversity and
inclusion, Brickworks will:
◗ Deliver improved customer service, business performance
and strengthen corporate reputation
◗ Gain competitive advantage by understanding and
reflecting customers and local communities
◗ Engage employees by providing an open, fair and diverse
work environment.
66 p Brickworks Annual Report 2021
Brickworks is committed to ensuring equal opportunities,
eliminating all forms of discrimination, harassment, bullying and
victimisation in the workplace. A revised Diversity and Equal
Opportunity Policy was launched in FY2021 with a stronger
focus on sexual harassment. Training and education was
provided on the revised policy, along with Bystander Training for
Executives, to be rolled out across the business in FY2022. The
board is notified of complaints and non-compliances against
the policy including incidence of sexist behaviour. In FY2021
the Diversity Council, led by the Managing Director, conducted
a baseline Inclusion and Diversity survey, which has informed
the Brickworks Diversity and Inclusion Strategy. The Strategy
consists of 6 pillars:
1. Create a more gender-balanced workforce at all levels
2. Engage and empower everyone in the business
3. Increase opportunities for flexible working
4. Increase leader accountability for diversity and inclusion
5. Improve leader capability to address inappropriate
behaviours and encourage psychological safety
6. Support hiring and retention of under-represented groups.
Women in International Assignments
The North American business promoted Lara Robertson
to Vice President Design and Distributor Sales in August
2020. Lara joined the North American business from
Brickworks Australia in August 2019 as Director, Design
and Business Development. Lara has added oversight of
the distributor sales teams, supporting more than 700
customers nationwide and driving sales by leveraging the
Glen-Gery design and business development efforts.
In August 2021, Anna Lewin-Tzannes will join Glen-Gery
as New York Design Studio Manager from Brickworks
Australia. Anna will work closely with the Business
Development and Sales teams to drive the specification
and sale of Brickworks products from the global flagship
Design Studio on Fifth Avenue. Anna will be responsible for
ensuring the New York Design Studio is a world-class event
destination and hub for the design industry.
Assignments abroad provide employees with the
opportunity to develop their knowledge of the brick
industry around the globe, increase cultural literacy and
broaden perspectives.
Collective Bargaining Agreements
◗ A total of 77% of wages employees in Australia are
covered by a collective bargaining agreement and 48%
of agreements are union based. There has been a shift
over the last few years of employees seeking non-union
agreements with the Company.
◗ Brickworks North America has 4 non-union plants and
7 union plants. During FY2021, one collective bargaining
agreement was successfully negotiated and executed at
the Hanley plant.
◗ There are 465 labour employees in the North American
plants. Of those, 72% are union based employees covered
by collective bargaining agreements. The remaining
employees are not covered by any type of agreement.
◗ Brickworks Equal Opportunity Policy prevents unlawful
discrimination, including a person’s industrial activity, union
membership and political beliefs. Brickworks supports and
advocates for Freedom of Association.
Percentage of Employees Covered by
Collective Bargaining Agreements
Australia*
North
America**
Collective Bargaining Agreement
No Agreement
77%
23%
72%
28%
* Wages Employees Australia
**
Labour Employees North America
Composition of Collective Bargaining Agreements
Australia*
48%
52%
North
America**
100%
0%
Union Based
Non-Union Based
Compliance
A number of Fairwork conciliations have resulted in settlements,
with no fines or non-monetary sanctions received in FY2021.
Brickworks Annual Report 2021 p 67
44 Market Street
Austral Bricks Venetian Glass Brick
Natural in Arctic Crystal
Sydney, NSW
68 p Brickworks Annual Report 2021
Board of
Directors
Robert D. Millner
FAICD
Chairman
Director since 1997 (24 years)
Mr R. Millner is the non-executive Chairman of the Board. He first
joined the Board in 1997 and was appointed Chairman in 1999.
Mr Millner brings to the Board broad corporate, investment,
portfolio and asset management experience gained across
diverse sectors including telecommunications, mining,
manufacturing, health, finance, energy, industrial and property
investment in Australia and overseas.
He is an accomplished company director with an extensive
understanding of governance and compliance, reporting, media
and investor relations.
He is a member of the Remuneration Committee and the
Nomination Committee.
Mr Millner holds directorships in the following listed companies:
◗ Washington H. Soul Pattinson and Co. Ltd
◗ New Hope Corporation Ltd
◗ TPG Telecom Ltd
◗ BKI Investment Company Ltd
◗ Milton Corporation Limited
◗ Tuas Limited
During the last three years, he also held a listed company
directorship with Australian Pharmaceutical Industries Ltd
(resigning July 2020).
Lindsay R. Partridge AM
BSc. Hons. Ceramic Eng, FAICD, Dip CD
Managing Director
Since 2000 (21 years), joined the Company in 1985
Mr Partridge was appointed Managing Director in 2000.
He is a qualified ceramic engineer and has extensive
commercial, manufacturing, marketing, technical and
operational experience including numerous senior management
positions he has held in the building products manufacturing
sector in Australia and the USA.
Since his appointment as Managing Director Brickworks
has grown significantly in terms of size and profitability and
successfully expanded into industrial property development.
He is an experienced company director with substantial
expertise in governance, human resources, compliance
reporting, media, investor relations and mergers and
acquisitions.
He was awarded the Member of the Order of Australia in 2012 for
services to the Building and Construction Industry, particularly
in the areas of industry training and career development. and in
2018 was awarded the esteemed “Sir Phillip Lynch Award”, by
the Housing Industry Association in recognition of his immense
contribution to the Housing Industry.
Brickworks Annual Report 2021 p 69
Board of Directors
Mt Coot-Tha House
Austral Masonry Grey Blocks
Mount Coot-Tha, QLD
Michael J. Millner
MAICD
Deputy Chairman
Director since 1998 (23 years)
The Hon. Robert J. Webster
MAICD
Non-executive Director
Director since 2001 (20 years)
Mr M. Millner is a non-executive Director who was appointed to
the Board in 1998.
Mr Webster was appointed to the Board in 2001 and is a non-
executive Director.
As an experienced company director, Mr Millner has
considerable investment, portfolio and asset management
experience across the building products, manufacturing,
agricultural and property sectors in Australia and overseas.
He is President of the Royal Agricultural Society of NSW and
a Director of the Royal Agricultural Society of NSW (RAS)
Foundation.
As a former senior client partner and head of Asia Pacific Board
Services at Korn Ferry Mr Webster has particular skills in human
resources, recruitment and executive remuneration.
He also brings valuable experience to the Board in government
planning, energy and housing having served as Minister for
Planning, Minister for Energy, and Minister for Housing in New
South Wales.
Mr Millner is the Deputy Chairman of the Board, and a
member of the Remuneration Committee and the Nomination
Committee.
As an experienced company director and public-sector
leader his skills include Board leadership, governance, risk
management and compliance.
Mr Millner has no current listed company directorships. During
the last three years, he also held a listed company directorship
with Ruralco Holdings Ltd (resigning in 2019).
He is Chair of the Nomination Committee, a member of the
Remuneration Committee, the Audit and Risk Committee and
the Independent Board Committee.
Mr Webster has no other listed company directorships and has
held no other listed company directorships in the last three
years.
70 p Brickworks Annual Report 2021
Deborah R. Page AM
B.Ec, FCA, FAICD
Non-executive Director
Director since 1 July 2014 (7 years)
Malcolm P. Bundey
B.Bus (Accounting), GAICD
Non-executive Director
Director since 1 October 2019 (2 years)
Mrs Page was appointed to the Board in July 2014.
Mr Bundey was appointed to the Board in October 2019.
She has extensive financial expertise, having been a partner
at Touche Ross/KPMG Peat Marwick, and a senior executive
with the Lend Lease Group, Allen Allen and Hemsley and the
Commonwealth Bank.
She has specific experience in corporate finance, accounting,
audit, mergers & acquisitions, capital markets, insurance and
joint venture arrangements.
Mrs Page also has extensive experience as a company director
gained across ASX Listed, private, public sector and regulated
entities including in the telecommunications, utilities, insurance,
technology, renewables, funds management and infrastructure
sectors.
As an experienced director and Audit and Risk Committee
Chair her skills also include Board leadership, governance, risk
management and compliance.
Mrs Page is the Lead Independent Director and Chair of the
Independent Board Committee, Chair of the Audit and Risk
Committee, and a member of the Remuneration Committee and
the Nomination Committee.
Mrs Page is a member of Chief Executive Women.
Mrs Page holds directorships in the following listed companies:
◗ Pendal Group Limited
◗ Service Stream Limited
◗ Growthpoint Properties Australia Limited
During the last three years, she also held a listed company
directorship with GBST Holdings Ltd (resigning in 2019).
Mr Bundey has valuable experience as a CEO and Managing
Director with particular expertise in managing complex global
manufacturing operations including as CEO of Pact Group, CEO
of Evergreen Packaging, CEO of Graham Packaging and CEO of
Closure Systems International.
These companies each operated multi-location and
geographical plants across a wide range of regulatory
jurisdictions including Australia and the USA.
Mr Bundey also has extensive financial experience having been
a CFO at Goodman Fielder and a partner at Deloitte.
He has in depth knowledge of the health, safety and
environment risks associated with manufacturing operations
and expertise in mergers and acquisitions and asset
management.
He is Chair of the Remuneration Committee, a member of the
Nomination Committee, the Audit and Risk Committee and the
Independent Board Committee.
Mr Bundey has no current listed company directorships. During
the last three years, he was an executive director of Pact Group
Holdings Ltd (resigning from the board in September 2018).
Robyn N. Stubbs
B.Bus, M.Sc., GAICD
Non-executive Director
Director since 1 January 2020 (1.5 years)
Ms Stubbs was appointed to the Board on 1 January 2020.
She has valuable operational experience in property leasing,
sales and marketing, strategy and new product development
having spent more than 25 years in senior sales and marketing
roles in the media and property sectors.
Most recently Ms Stubbs was General Manager of Retail Leasing
at Stockland and prior to this she held property management,
sales and marketing roles at Lend Lease, Fairfax, Network Ten
and Unilever.
Ms Stubbs’ skills also include mergers and acquisitions, capital
markets, governance, risk management and compliance.
She is a member of the Remuneration Committee, the
Nomination Committee, the Audit & Risk Committee and the
Independent Board Committee.
Ms Stubbs holds a listed directorship in Aventus Group. During
the last three years she also held a listed company directorship
with InvoCare Limited (resigning in February 2021).
Brickworks Annual Report 2021 p 71
Come Home to Austral Bricks Campaign
Bowral Bricks in Simmental Silver
72 p Brickworks Annual Report 2021
72 p Brickworks Annual Report 2021
Executive
Management
Lindsay R. Partridge AM
BSc. Hons. Ceramic Eng, FAICD, Dip CD
Managing Director
Since 2000 (21 years), joined the Company in 1985
Refer to Board of Directors, page 69.
Robert Bakewell
B.Comm, CA
Chief Financial Officer
Mr Bakewell was appointed Chief Financial Officer in June 2016.
He is a chartered accountant with more than 36 years finance
and commercial experience in listed Australian and international
companies including significant experience in mergers
and acquisitions, restructuring, balance sheet and capital
management. He is responsible for all financial operations of
the business including group accounting and taxation, treasury,
banking and finance and investor relations.
Megan Kublins
Bs (Arch), B Arch
Executive General Manager –
Property & Development
Ms Kublins was appointed General Manager Property in
November 2001 and became Executive General Manager
Property in 2006. She has over 24 years’ experience in the
property industry gained in public and private organisations in
the capacity of both landowner and developer. She manages
all of Brickworks property assets, including over 3,500
hectares of land. Her primary focus is to identify value creation
opportunities within this portfolio. She is responsible for the
growth and management of the Goodman/Brickworks JV, which
was established and grown under her direction. Megan has
completed the Stanford Executive Program.
Susan Leppinus
B.Ec, Llb, Grad Dip App Fin
Company Secretary and General Counsel
Ms Leppinus was appointed Company Secretary and General
Counsel in April 2015. She is admitted to practice in NSW and
has over 16 years’ experience as a company secretary and
general counsel. She has worked closely with boards and
senior management in ASX 200 companies, and has significant
experience in mergers and acquisitions, contract negotiation,
corporate governance, corporate and commercial law. She is
responsible for the legal governance and company secretarial
functions of the Group, including liaising with the ASX, ASIC and
other regulatory bodies.
Brickworks Annual Report 2021 p 73
Jolyn Place
Austral Bricks San Selmo Smoked in Custom Blend
Rosebery, NSW
74 p Brickworks Annual Report 2021
Corporate
Governance
The Brickworks Limited (Company) Board is committed to developing and maintaining good corporate
governance and recognises that this is best achieved through its people and their actions.
The Company’s long-term future is best served by ensuring that its employees have the highest levels of honesty and integrity and
that these employees are retained and developed through fair remuneration. It is also critical to the success of the Company that an
appropriate culture is nurtured and developed, starting from the Board itself.
Brickworks full Corporate Governance Statement which provides detailed information about governance at Brickworks is available
on Brickworks’ website at www.brickworks.com.au
Brickworks Governance Framework
Brickworks Board
Audit & Risk
Committee
Nomination
Committee
Remuneration
Committee
Independent Board
Committee
◗ Financial reporting, internal and
external audit
◗ Risk management framework and
strategy, risk appetite and risk
profile
◗ Oversight of sustainability and
climate related risks and
opportunities
◗ Board and
Committee
membership
and renewal
◗ Remuneration
◗ To consider and make
policies,
practices
and related
disclosure
recommendations to the Board
when circumstances exist or
proposals are received when the
interests of WHSP may differ from
the interests of Brickworks or other
shareholders in Brickworks
Brickworks Managing Director & Chief Financial Officer
◗ Delegated limits of authority to manage the Company other than matters reserved
to the Board or as otherwise delegated to a Board Committee
Brickworks senior management
Brickworks Annual Report 2021 p 75
Ethical and responsible decision making
◗ The Board aims to ensure the Company continually builds
an honest and ethical culture.
◗ Brickworks has an established code of conduct which
centres on the Company and all Directors, senior
management and employees conducting themselves with
integrity in all business dealings. It also has Board policies
and conducts training of employees in relation to these
policies.
◗ Consistent with our commitment to act fairly, with honesty
and integrity Brickworks has a Whistleblower Policy and
has implemented Behonest@Brickworks an anonymous
whistleblower service delivered by Deloittte.
◗ The Company also has an Anti-Bribery and Corruption
Policy, Political Donations Policy, Securities Trading Policy
and Modern Slavery Policy.
Timely and balanced disclosure
◗ Brickworks is committed to keeping its shareholders
informed about the Company’s activities.
◗ The Company aims to provide relevant information to
shareholders in a timely manner which is supported by its
Continuous Disclosure Policy.
Safeguard integrity in financial reporting
◗ Brickworks process for verifying the integrity of periodic
corporate reports not subject to audit or review by an
external auditor is as follows:
◗
◗
reports are prepared by, or under the supervision of,
subject-matter experts;
reports are reviewed for material accuracy; and
◗
information in a report that relates to financial projections,
statements as to future financial performance or changes
to the policy or strategy of the Company (taken as a
whole) must be approved by the Board.
◗ The Board through the Audit and Risk Committee:
◗ monitors Company performance; and
◗ ensures the proper external reporting of financial
information.
Corporate Governance
Management and oversight
The Board
The Brickworks Board is responsible for the leadership,
oversight, development strategy and long-term success of
the Group. The Board works with management to consider
specific issues relevant to the overall conduct of our businesses
– including strategy, safety, sustainability, annual budget and
major acquisitions and disposals.
There is one executive and six non-executive Directors on the
Brickworks Board, 29% of which are women. The independence
of non-executive Directors is considered annually and the
Board has determined that four non-executive Directors are
independent. We ensure the Board has the appropriate blend
of skills, knowledge and experience, from a wide range of
industries, backgrounds, necessary to lead the Group. In 2021,
there were 10 full meetings of the Board.
Board Committees
The Board has established four permanent Committees to
assist in the execution of its responsibilities. The current
permanent Committees are the Audit & Risk Committee, the
Nomination Committee, the Remuneration Committee and the
Independent Board Committee. The role of these Committees
is to provide strategic direction, oversight and assurance on the
specific objectives set for each Committee. The Chairman of
each Committee reports to the Board on its deliberations and
minutes of Committee meetings are circulated to all Directors.
Committee Chairs also attend the Annual General Meeting to
answer questions from shareholders. Current membership
and terms of reference of each Committee are available on our
website.
Board renewal, development and evaluation
Our Directors are committed to ensuring the Board is diverse
and appropriately balanced in terms of business experience,
knowledge, skills and gender.
All newly appointed Directors receive extensive briefing
materials and the Chairman agrees an individually-tailored and
comprehensive induction programme.
A review of Board effectiveness is carried out on an annual basis.
This review takes into account the operation and performance
of the Board and its Committees, and the effectiveness of Board
communications.
Compliance
We have procedures in place to ensure compliance with our
obligations under the applicable rules and regulations, including
those issued by the Australian Securities Exchange.
76 p Brickworks Annual Report 2021
Philadelphia Design Studio
Philadelphia, Pennsylvania USA
Recognise and manage risk
◗ To ensure robust and effective risk management systems
are in place and operating effectively, the Board through the
Audit and Risk Committee:
Remunerate fairly and responsibly
◗ The Board through the Remuneration Committee ensures
that remuneration policies and practices are consistent
with strategic goals.
◗ determines the risk profile for the Company;
◗ The Company’s remuneration policy is to:
◗ ensures that business initiatives are consistent with its
◗ equitably reward executives with a mix of fixed
risk appetite;
◗
reviews the controls and systems in place to continually
mitigate risk;
◗ monitors the results of a risk based internal audit
program, and timely remediation of issues identified;
and
◗ oversees reporting and compliance requirements.
◗ Risk management is a priority for the Board and senior
management.
remuneration, short term and long-term incentives
aimed at attracting and retaining executives who will
create value for shareholders; and
◗ ensure appropriate succession planning is in place.
◗ Non-executive directors receive no incentive payments and
there are no retirement benefits in place. Contributions to the
retirement allowance plan for non-executive Directors were
discontinued on 30 June 2003. Under legacy arrangements,
non-executive Directors appointed prior to 30 June 2003
were entitled to receive benefits upon their retirement from
office. These benefits were frozen with effect from 30 June
2003, and are not indexed. Since 30 June 2003 no new
Directors have been entitled to join this plan.
Brickworks Annual Report 2021 p 77
South Bank
UrbanStone Commercial Australian Granite Pavers
South Bank, QLD
78 p Brickworks Annual Report 2021
Directors’
Report
The Directors of Brickworks Limited present their report and the financial report of
Brickworks Limited and its controlled entities (referred to as the Brickworks Group or
the Group) for the financial year ended 31 July 2021.
Directors
The names of the Directors in office at any time during or since the
end of the year are:
◗ Robert D. Millner FAICD (Chairman)
◗ Michael J. Millner MAICD (Deputy Chairman)
◗ Lindsay R. Partridge AM BSc. Hons. Ceramic Eng, FAICD,
Dip. CD (Managing Director)
◗ Deborah R. Page AM B.Ec, FCA, FAICD
◗ The Hon. Robert J. Webster MAICD
◗ Malcolm P. Bundey B.Bus (Accounting), GAICD
◗ Robyn N. Stubbs B.Bus, M.Sc., GAICD )
◗ Brendan P. Crotty LS, DQIT, Dip.Bus Admin
(retired from the Board 24 November 2020)
Each Director’s experience and special responsibilities are set out
on pages 69 to 71 of this Annual Report.
Details for each Director’s directorships of other listed companies
held at any time in the three years before the end of the financial
year and the period of which such directorships are held are:
Robert D. Millner
◗ Washington H. Soul Pattinson and Co. Ltd
◗ New Hope Corporation Ltd
◗ TPG Telecom Ltd
◗ BKI Investment Company Ltd
◗ Milton Corporation Limited
◗ Tuas Limited
◗ Australian Pharmaceutical Industries Ltd
since 1984
since 1995
since 2000
since 2003
since 1998
since 2020
Appointed 2000
Resigned 2020
Michael J. Millner
◗ Ruralco Holdings Ltd
Deborah R. Page AM
◗ GBST Holdings Ltd
◗ Pendal Group Ltd
◗ Service Stream Ltd
◗ Growthpoint Properties Australia Ltd
Malcolm P. Bundey
◗ Pact Group Holdings Ltd
Robyn N. Stubbs
◗ Aventus Group
◗ Invocare Limited
Appointed 2007
Resigned 2019
Appointed 2016
Resigned 2019
since 2014
since 2010
Appointed 2021
Appointed 2015
Resigned 2018
since 2015
Appointed 2017
Resigned 2021
Company Secretary
◗ Susan L. Leppinus B.Ec; Llb; Grad Dip App Fin
Brickworks Annual Report 2021 p 79
Directors’ Report
Principal Activities
The Brickworks Group manufactures a diverse range of building
products throughout Australia and North America, engages
in development and investment activities to realise surplus
manufacturing property, and participates in diversified investments
as an equity holder.
No other matter or circumstance has arisen since the end of the
financial year that has significantly affected the current financial
year, or may significantly affect in subsequent financial years:
◗ the operations of the Brickworks Group;
◗ the results of those operations; or
◗ the state of affairs of the Brickworks Group.
Consolidated Result of Operations
The consolidated net profit for the year ended 31 July 2021 of
the Brickworks Group after income tax expense, amounted to
$239,163,000 compared with $298,078,000 for the previous year.
Likely developments and expected results
of operations
The Review of Operations gives an indication of likely developments
and the expected results of operations in subsequent financial years.
COVID-19
Brickworks has been monitoring Coronavirus disease (COVID-19)
since January 2020 and has treated the situation with the
utmost caution, following the most stringent health advice. We
implemented a COVID-19 business continuity plan to minimise
the chance of COVID-19 spreading throughout the business and
published a set of regularly updated COVID-19 Guidelines on the
Brickworks website – for customers and employees.
Further information regarding the Company’s response to COVID-19
and the health and safety of its employees is outlined on pages 9
and 63 to 64 of this Annual Report.
Sustainability
We continue to improve our sustainability performance, delivering
a positive impact for our stakeholders. This year the Brickworks
Board approved the Sustainability Strategy “Build for Living:
Towards 2025”. The strategy sets a clear pathway, with measurable
commitments, to promote positive environmental and social
impacts, with strong governance and a culture of care for our
community. The strategy is available on our website
www.brickworks.com.au.
The 2021 Sustainability Report available at www.brickworks.com.
au provides detailed information about environmental, social and
governance performance over the last financial year. The report
includes our US operations and is informed by the Global Reporting
Initiative (GRI) core standards.
During FY2020, Brickworks finalised a plan to meet the
recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD) with an ambition to publish a TCFD response
document by FY2022.
Through this process, long term carbon management strategies
are being explored. During FY2021, our approach to a low carbon
future was set out in a Low Emission Technology Statement.
This technology statement and strategy is underpinned by the
overarching target to implement energy efficiency opportunities
through a global kiln replacement strategy and exploration of
opportunities to further increase low carbon fuels and renewable
electricity.
During FY2021 the Brickworks Sustainable Home Guide was
prepared, setting out a pathway to creating a sustainable home
with Brickworks products. The Brickworks Sustainable Home Guide
follows principles for sustainable home design as based on leading
standards such as Green Star Homes and LEED for Homes by U.S.
Green Building Council.
Dividends
The Directors recommend that the following final dividend be
declared:
Ordinary shareholders – 40 cents per share (fully franked)
The record date for the final ordinary dividend will be 3 November
2021, with payment being made on 24 November 2021.
Dividends paid during the financial year ended 31 July 2021 were:
(a) Final ordinary dividend of 39 cents per share (fully franked)
paid on 25 November 2020 (2019: 38 cents).
(b)
Interim ordinary dividend of 21 cents per share (fully franked)
paid on 28 April 2021 (2020: 20 cents).
Review and Results of Operations
A review of Brickworks Group operations and the results for the year
is set out on pages 5 to 45 and forms part of the Directors’ Report.
State of Affairs
There were no significant changes in the state of affairs of the
Brickworks Group during the year, other than those events referred
to in the Review of Operations and Financial Performance and the
Financial Statements.
After Balance Date Events
On 2 August 2021 Brickworks entered into a binding agreement to
acquire certain assets of Southfield Corporation, including Illinois
Brick Company (“IBC”) for US$47.8 million (AU$64.8 million). IBC is
the largest independently owned and operated brick distributor in
the United States of America.
On 21 September 2021 Washington H Soul Pattinson (WHSP)
completed an acquisition of 100% of the share capital in Milton
Corporation Limited (“Milton”). The existing Milton shareholders
(other than WHSP) will be issued new WHSP shares in exchange
for their Milton shares. The number of shares to be issued was
determined on 2 September 2021.
Following the issue of new WHSP shares, the Group will own 26.1%
of issued ordinary shares of WHSP, compared to 39.40% at 31 July
2021. On completion of the Milton/WHSP transaction, the change in
ownership stake is expected to result in a non-cash gain on deemed
disposal for the Brickworks Group during the financial year ending 31
July 2022. This gain will be determined with reference to the equity
accounted value of the Group’s investment in WHSP as of completion
date and the market value of newly issued WHSP shares, net of
deferred income tax expense. Based on a preliminary assessment
reflecting the WHSP share price as of completion date it is expected
this gain will be in the range of $375-425 million (after tax).
80 p Brickworks Annual Report 2021
Environmental performance
The Group is subject to various state and federal environmental
regulations in Australia and the United States. Many sites also
operate under additional requirements issued by local government.
There is significant environmental regulation requiring compliance
of Brickworks’ building products manufacturing and associated
mining and quarry activities with legislation that often differs across
and within each state. Due to the scale and diversity of the operation
there is a risk of non-compliances occurring. To manage these risks,
Brickworks continually improves management systems, compliance
registers and procedures, in addition to the continuation of training,
audit and assurance programs. Annual returns, performance
statements and reports were completed where required for each
licence stating the level of compliance with site operating conditions.
The Board places a high priority on environmental issues and is
satisfied that adequate systems are in place for the management of
Brickworks’ compliance with applicable environmental regulations
under the laws of the Commonwealth, States and Territories of
Australia, and that plans are in place for the development and
implementation of equivalent systems to manage compliance with
the corresponding regulations under the laws of the United States.
Brickworks is not aware of any pending prosecutions relating to
environmental issues.
The Directors are not aware of any material non-compliance with
environmental regulations pertaining to the operations or activities
during the period covered by this Report which would materially
affect the business as a whole.
Further information regarding Brickworks approach to environmental
performance, compliance and approach to environmental
management and sustainability is set out on pages 52 to 59.
Risk Management
The Board of Brickworks has adopted a Risk Management
framework that identifies Risk Tolerance and Risk Appetite for the
Group and then considers how each identified risk is placed within
that framework.
That framework involves assessment of the likelihood of an event
occurring, the potential impact of each event and the controls and
processes in place to continually mitigate each risk.
The significant risks that may impact the achievement of the
Group’s business strategies and financial prospects are:
Building Products
The achievement of business objectives in the Building Products
Group may be impacted by the following significant risks:
Risk
Mitigation
Production
capacity
Energy Supply–
reliability and
cost of gas and
electricity
Energy requirements are managed through
retail energy agreements. For the east coast
operations, Santos supplies gas under a
long-term agreement, and the energy division
manages the day to day wholesale market
risks. Insurance coverage mitigates the risk of
interruption to electricity and gas supply.
Serious Safety
Incidents
Environmental
incident
Products –
alternative
products and
product failure
Shift in housing
trend
The Group has a strong safety culture and
notwithstanding a well-developed WHS
system (refer further “Health and Safety”)
the Group continues to focus on safety
improvements especially in response
to COVID-19 and more generally in the
expanding US business where health and
safety programs are being aligned with the
Australian operations. Mental health has
emerged as an area of concern with COVID-19
lockdowns and Brickworks Australia now
has 12 percent of total employees qualified in
Mental Health First Aid. This number will build
to 15 percent in FY2022 creating a support
capability within the business.
The Group has a strong commitment
to environmental protection and a
comprehensive environmental compliance
system. The Group continues to focus
on implementing equivalent systems in
the expanding US business (refer further
“Environmental”).
The Group has a strong focus on research,
development and quality control. The Group
monitors market trends and has strategies to
diversify its range of building products and its
marketing approach.
The Australian Building Products business
has greatest exposure to the detached
housing market. Over the past two decades
there has been a trend towards multi-
residential construction. The Group has
diversified its product suite to increase its
exposure to multi-residential construction
(through precast and masonry operations).
The COVID-19 pandemic has reversed this
trend, with strong growth in detached housing
accelerating over the past 18 months as
consumers preference for lower density living
has increased.
Exposure in the United States is significantly
more diversified, with approximately 50% of
sales to the commercial and multi-residential
market.
New competitor Whilst barriers to entry are significant the
Group monitors its Australian and US markets
for both domestic manufacturing and import
competitors and has adopted a customer
relationship and quality model, supported by
investment in research and development.
In both its Australian and US operations,
the Group manages production capacity by
adroit management of its manufacturing base
to correlate production to cyclical market
conditions as they occur. Production capacity
is underpinned by a long-term strategy of
plant upgrades moving to more efficient
plants. In this way the Group is able to meet
customer demand at the top of the cycle and
pare back capacity to demand levels as the
market cycles.
Brickworks Annual Report 2021 p 81
Directors’ Report
Business
Interruption –
plant failure or
underutilisation
and raw material
supply
Asbestos and
other respirable
dust risk
There are multiple facilities throughout
Australia that can transport products between
locations as and when required and also
multiple plants in the US with no single plant
so large as to represent an existential threat
to the whole operation. The major facilities
have rolling risk reviews and reporting by
outside parties. The business also maintains
significant insurance policies to manage the
physical loss of assets and any loss of income
from an insurable interruption. Raw materials
are generally secured through ownership
of raw material reserves and maintaining
prudent raw material stockpiles.
An asbestos management plan is in place.
Building cladding is regularly removed and
replaced with non-asbestos based materials.
Where any friable asbestos is found, either
within a plant or during rehabilitation, it is
immediately quarantined and removed by
qualified reputable contractors, using the
most diligent safety standards. Respirable
crystalline Silica is deemed carcinogenic and
a crystalline silica management plan is in
place. Inhalable and respirable dust exposure
measurements are occurring at all operational
sites with a health monitoring program.
Market Risk –
deteriorating
market
conditions
The Group is investing in geographic
expansion into new markets in the US and
product diversification, cost control and
continuous improvement of business.
Failure to
execute US
bricks strategy
effectively
In the Australian market there is a risk that
demand has been brought forward due to
COVID-19 related government stimulus,
and that as these stimulus packages wind
up, building activity will slump. This risk is
exacerbated by the potential for reduced
immigration in the medium term. The Group is
closely monitoring economic indicators.
A growth strategy in the United States,
including four major acquisitions over the past
three years, is currently being implemented.
Performance to date is lagging the initial
investment business case, due primarily
to COVID-19 related restrictions that have
impacted operations and sales over the past
18 months. However, underlying progress
against the strategy is well advanced, with
plant rationalisation activities largely complete
and significant investments made in plant
upgrades and sales and marketing initiatives.
82 p Brickworks Annual Report 2021
Property
The achievement of business objectives in Land and Development
may be impacted by the following significant risks:
Risk
Mitigation
Market Risk
Serious Safety
Incidents
Property Trust
Financing
Rezoning Risk
The industrial property cycle may deteriorate,
resulting in softening capitalisation rates
and lack of growth. The Group manages
the risk by monitoring the key economic
drivers, employing property professionals
who understand the property cycle and
undertaking development in joint venture with
Goodman Group.
The Group has a strong safety culture and a
well-developed WHS system (refer further
“Health and Safety”).
The joint property trusts maintain facilities
with multiple lenders with various tenors
between 5-10 years. In addition, gearing is
maintained at prudent levels through the
property cycles.
The Group takes a long-term approach to
achieving the highest and best use for each
property. The rezoning process for a property
usually commences prior to finalisation of its
existing use.
Group
The achievement of business objectives in the Group activities may
be impacted by the following significant risks:
Risk
Mitigation
Financing Risk
Cyber Security
Risk
The Group maintains conservative gearing
levels in recognition of the industry’s cyclical
nature. Senior debt facilities are maintained
with financial lenders with whom an open
and transparent relationship is maintained.
Multi-currency facilities (AUD and USD) are
maintained over various tenors ranging from
2 to 7 years.
The Group has assessed its main cyber security
threat as phishing to obtain sensitive company
or private information or a virus attack which
compromises the system. Investment in
technology has increased and risk controls
include the use of a VPN and antivirus software
to safeguard against incoming viruses from
personal computers. Preventative measures
include regular system penetration tests and
employee training with new leading-edge
end-point protection software and firewall
protection in place. A disaster recovery plan is
in place across the organisation.
COVID-19
Climate related
risk
The Group daily monitors and conforms with
Government COVID-19 regulations and has
well developed, responsive COVID-19 safety
plans at each site for both staff and customer
safety which include mandatory temperate
testing and QR Coding. With the exception
of the last two weeks of the 2021 financial
year in New South Wales, the construction
industry in both the US and Australia has been
designated an authorised industry sectors by
Government and so has not been impacted as
materially as other industries. Nevertheless,
some site closures have occurred in response
to local government lockdowns as required.
The Group continues to monitor COVID-19
economic impacts and to provide ongoing
support for staff wellbeing including allowing
time off for those getting vaccinations.
Brickworks is aligning its greenhouse gas
reduction strategy with the recognised
standard of the Task Force on Climate-
related Financial Disclosures (TCFD)
recommendations, including risk
management disclosures, metrics and targets.
Potential risks have been preliminarily identified
as consumer trends towards low embodied
carbon building products; physical impacts on
manufacturing operations; impacts on energy
cost and availability and a price on carbon.
In FY2022, we expect to make a public TCFD
Statement.
The Group has established a gas efficiency
target and an alternate fuels program that
considers emerging energy sources such
as hydrogen and the Sustainable Products
program includes the development of
products that hold leading sustainable
qualities including expanded carbon neutral
offerings. These strategic responses are
outlined in in a Low Emission Technology
Statement and Sustainable Home Guide.
Investments
The achievement of business objectives in Investment activities
may be impacted by the following significant risks:
Risk
Market Risk
Mitigation
The Group’s investment in WHSP is subject
to market movements and the underlying
performance of WHSP. The WHSP investment
is diversified across industries other than
those in which the balance of Brickworks
specialises, which provides a stable stream
of dividends over the long term. The WHSP
group may have significant exposure to the
Coal and Telecommunications Markets.
Meetings of Directors
The number of meetings of directors (including meetings of
committees of directors) held during the year and the number of
meetings attended by each director are set out below. All directors
were eligible to attend all director and committee meetings held.
k
s
i
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&
t
i
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u
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e
t
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e
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10
3
2
2
6
10
9
10
10
9
10
10
4
N/A
N/A
N/A
3
3
3
3
1
2
1
N/A
2
2
2
2
1
2
1
N/A
2
2
2
2
1
N/A
N/A
6
6
5
6
6
3
Number of
Meetings held:
Number attended:
R D Millner
M J Millner
L R Partridge
D R Page
R J Webster
M P Bundey
R N Stubbs
B P Crotty (August to
November 2020 only)
Directors Interests
As at 31 July 2021, Directors had the following relevant interests in
Brickworks shares:
Director
R D Millner
M J Millner
L R Partridge
D R Page
R J Webster
M P Bundey
R N Stubbs
Ordinary Shares
4,817,967
4,787,141
215,096
17,400
15,922
1,020
1,000
As at 31 July 2021, there were no contracts entered into by
Brickworks or a related body corporate to which any Director is
party, or under which any Director is entitled to benefit nor were
there any contracts which confer any right for any Director to call
for or deliver shares in, debentures of, or interests in a registered
scheme made available by Brickworks or a related body corporate.
Brickworks Annual Report 2021 p 83
Chairman of the
Remuneration Committee
Letter
On behalf of the Board of Directors, I am pleased to provide you with the FY2021 Remuneration Report
for which we are seeking your approval at the upcoming annual general meeting.
Our people and management of COVID-19
The safety of our people is always our primary concern and is a key measure of performance at Brickworks. Pleasingly our total recordable
injury frequency rate per million hours worked (TRIFR) reduced to 14.3 at 31 July 2021 from 16.3 at 31 July 2020 as we continue to target a
reduction of injury rates year on year.
The COVID-19 pandemic has created significant uncertainty and has tested Brickworks’ businesses, its people and culture. It is pleasing
to note that the Company’s performance has remained strong throughout this challenging period. Our staff have dealt professionally with
the risks, impacts and challenges of this unprecedented pandemic for the safety of our employees and in a manner that has meant limited
disruption to our workplaces.
Brickworks has not accessed the JobKeeper program in any part of its organisation during FY2021.
Operational and Financial Performance
Brickworks had another year of strong performance in FY 2021 delivering on several key growth initiatives to support future shareholder value
growth. This performance was a direct result of the considerable efforts of our entire Brickworks team, led by our senior executives.
Operational
Operationally the company achieved a number of key strategic objectives this year including:
◗ construction of a $75m Masonry plant;
◗ making good progress on the construction of a new $130m face brick plant at Horsley Park;
◗ completing upgrades to the face brick plant at Cardup WA;
◗ significant plant capital improvement and rationalisation program transitioning from 16 to 10 manufacturing plants in the USA;
◗ opening our new design studios in Philadelphia with studios in New York city and Baltimore scheduled to open in the coming months;
and
◗ acquisition post year end of Illinois Brick Company the largest independent brick distributor in the USA (acquired on 2 August 2021).
84 p Brickworks Annual Report 2021
Financial
Despite the significant headwinds caused by the global pandemic the Group has finished with a record year of outperformance.
◗ The annual EBIT from continuing operations (before significant items) generated by Building Products Australia has significantly
increased from $32.6 million in FY2020 to $44.4 million in FY2021.
◗ The annual EBIT (before significant items) generated by the Property division has significantly increased from $129.4 million in FY2020 to
$252.7 million in FY2021.
◗ The annual EBIT (before significant items) generated by Building Products North America has decreased from $10.1 million in FY2020 to
$8.5 million in FY2021. This reflected a 5.9% decrease in local currency terms and AUD/USD exchange rate movements compared to the
prior financial year.
◗ The Return on NTA for the Building Products Australia, Building Products North America and Property divisions demonstrates an
increase from FY2020 to FY2021 from 13.3% to 21.1%.
◗ Statutory Group NPAT (after significant items) in FY2021 amounted to $239.2 million compared to $298.1 million in FY2020. The prior
year NPAT included the Group’s share of significant one-off transactions of associate amounting to $169.1 million primarily driven by
a significant one-off item relating to the TPG/Vodafone merger completed in the prior year. Profit contributions from the associate
company are outside the control of management and are excluded from the profit measure applied to determine executive incentive
benefits.
Capital Management
◗ The Group operating cash flow for the year ended 31 July 2021 was $139.8 million which translated into a fully achieved maximum STI
target and was significantly higher compared to $74.1 million in the prior financial year.
◗ Brickworks has preserved its strong balance sheet position and conservative debt metrics as it has grown the Property Division and
expanded into Building Products North America whilst at the same time continuing to grow the dividends paid to shareholders. At 31 July
2021 Brickworks maintained a significant level of headroom in respect of its three key balance sheet and debt covenant metrics: Gearing
Ratio as calculated in line with debt agreements at 16.2%, Leverage Ratio at 2.46x and Interest Cover at 11.08x. During the financial year
ended 31 July 2021 Brickworks increased its dividend from 59.0 to 61.0 cents per share (2.56% increase).
For more detail on the Company’s operational and performance, please refer to the operational and financial results within the Directors’
report.
Remuneration Outcomes in FY2021
We continue to ensure that remuneration outcomes reflect the performance of the Group and are aligned to shareholder’s experience over
short and long-term timeframes. The key remuneration outcomes for the 2021 financial year included:
Executive fixed remuneration
The CEO and CFO fixed remuneration remained unchanged for FY2021.
Executive Incentives
◗ Short Term Incentives (STI): Recognising the Company’s strong operational, strategic M&A and financial performance and leadership during
a challenging 2021, the Board awarded 100% of the maximum annual STI opportunity to the Managing Director, Mr Lindsay Partridge and the
Chief Financial Officer, Mr Robert Bakewell, noting that financial and non-financial metrics set at the beginning of the year to trigger this, were
met. The Executive General Manager, Property and Development, Mrs Megan Kublins achieved 110% of the target annual STI opportunity.
With the STI cash incentive capped at 50% of total fixed remuneration the remaining amount of $3,806 relating to this overperformance was
added to the long-term incentive share allocation subject to vesting over the LTI’s plan vesting period.
◗ Long term incentives (Current Executive Rights LTI Plan): In FY2021 after approval from shareholders the Board awarded an LTI of 40% of
fixed remuneration to the Managing Director and CFO to be tested against absolute and relative TSR measures between 1 August 2020
to 31 July 2023.
◗ The Executive Rights Plan was introduced in 2019 and the first full allocation to the MD and CFO under this plan occurred in FY2020
following shareholder approval, and will be eligible for testing on 31 July 2022.
◗ Long term incentives (Historical LTI Plan): Independent assessment of the historical performance of share allocations made to the MD
and CFO between 2015 and 2018 which were eligible for testing at 31 July 2021 established the following:
◗ The Absolute TSR Performance (for testing of historical allocations) was 28.05%. Relative TSR Performance (for testing of historical
allocations) was at 164.8% of S&P ASX 200 Franking Credit Adjusted Total Return Index (XJOAI Franked).
◗ This performance has resulted in 100% of the historical LTI awards tested on 31 July 2021 vesting.
Board and Committee Fees
There was no change to the NED or Chair base fee or committee fees for FY2021.
Brickworks Annual Report 2021 p 85
Remuneration Changes Implemented in FY2021
STI – Setting the Target for Profit Performance
In setting the target for profit performance the Board introduced consideration of prior year’s performance.
Where the budget is greater than the previous year, then 80% of last year’s performance becomes the base profit and the budget becomes
the target profit.
Where the budget is less than the previous year, 80% of budget profit becomes the base profit and the prior year becomes the target profit.
By using both last year’s profit results and budget profit in tandem, the outcome of the bonus paid is properly referenced by the prior year.
When the profit increases, the STI for profit performance aligns with improved performance and when the profit is lower than the prior year,
any bonus paid will be below the prior year.
STI – Profit Performance Assumptions
As with previous years the performance of Building Products and Property is used to calculate financial targets (and WHSP is excluded).
However, from FY2021, Property Profit will include net property trust income, trust development profit, the sale of trust assets and Brickworks
land sales (less Brickworks property administration and other costs). It does not include property revaluations which are unrealised and
outside the control of management. A property revaluation gain of $148.9 million was recognised in FY2021. All property revaluation gains
were excluded from the profit measures used to determine the FY2021 incentive amounts payable.
Remuneration in FY2022
Retention of executives and highly skilled staff and pay for performance continues to be a high priority for the Brickworks Board.
Brickworks is a diversified Building Products, Investments and Property company today. Over the past three years Brickworks’ senior
executives have successfully transitioned the Building Products operation from a domestic based organisation to its next phase of growth into
an international building products group with significant operations in the US.
In light of the evolving nature and international diversification of the business and changing market trends in recent years, the Board
undertook a review of the remuneration framework. The new framework for FY2022 is aligned with the Group’s strategy and is designed
to align the key initiatives required for the development of a sustainable manufacturing profile across multiple jurisdictions with executive
remuneration.
The enhanced framework, recognises that the development and implementation of a sustainable manufacturing profile across the Group’s
international portfolio requires a long-term horizon, driven by short and medium-term project planning and execution.
Benchmarking undertaken during the year by independent consultants indicates that the STI and LTI opportunity for the MD and CFO is
significantly below market with standard market practice being for the STI and LTI to each equal to 100% of fixed remuneration. Recognising
this, the Board intends to review these opportunities for the MD and CFO in the FY2022 as outlined below.
86 p Brickworks Annual Report 2021
MD and CFO
Having considered the Group’s Strategy, focus on value creation and shareholder returns, and the benchmarking undertaken by independent
consultants during the year for the MD’s remuneration (outlined in more detail on pages 94 to 95), the Board has resolved to make no change
to the fixed remuneration for the MD and CFO but rather to increase the at risk component of their remuneration as follows1:
Remuneration Structure
Total Fixed Remuneration (TFR)
(including car allowance and
superannuation and other non-
monetary benefits)
MD
FY2022
MD
FY2021
CFO
FY2022
$1,571,319
$1,569,446
$820,854
CFO
FY2021
$818,981
(no change, except
for increase in
superannuation
guarantee levy of
$1,873)
(no change, except
for increase in
superannuation
guarantee levy of
$1,873)
Short Term Incentive
75% of TFR at target
60% of TFR at target
60% of TFR at target
60% of TFR at target
90% of TFR at
maximum
72% of TFR at
maximum
72% of TFR at
maximum
(no change)
72% of TFR at
maximum
75% of TFR
40% of TFR
60% of TFR
40% of TFR
Long Term Incentive (subject to the
relative and absolute TSR performance
measures being met over three years
with the FY2022 LTI grant for the MD to
be put to shareholders for approval at
the 2021 AGM).
Other Executives
For other executives salary increases of up to 3.5% (inclusive of the 0.5% increase in the superannuation guarantee levy) will apply for FY2022.
Non-Executive Director Fees
Having considered the Group’s Strategy and a benchmarking exercise undertaken by independent consultants during the year for non-
executive director fees the Board has resolved to increase non-executive director fees by 3.5% (inclusive of the 0.5% increase in the
superannuation guarantee levy) in FY2022. This represents a total increase in non-executive director fees of $35,434 compared to the fees
paid to current directors in FY2021. The current shareholder approved non-executive director fee pool is $1.3m. With the proposed FY2022
3.5% increase total non-executive director fees for current directors for FY2022 will be $1,059,323, well within the Shareholder approved fee
pool of $1.3 million.
The Board remains committed to a remuneration framework that supports the Company’s strategic objectives, effectively aligns performance
and rewards and motivates key executives.
We value your support and continue to regularly engage with shareholders and proxy advisors on remuneration matters.
I invite you to review the full report and thank you for your ongoing support.
Malcolm Bundey
Remuneration Committee Chair
1
Total FY22 fixed remuneration for the MD/CFO includes an impact of increased superannuation guarantee levy of $1,873 p.a.
Brickworks Annual Report 2021 p 87
Remuneration
Report
The Remuneration Report has been audited in accordance with s300A of the Corporations Act 2001.
1
1.1
Overview
Executive Summary
The Brickworks Board of Directors is committed to ensuring that its remuneration framework is focussed on driving a performance culture
that is closely aligned to the achievement of the Company’s strategy and business objectives as well as the retention of key members of the
senior management team.
The Remuneration Report received overwhelming support from shareholders at the 2020 AGM with 95.62% of votes in favour of the
Remuneration Report.
During FY2021 Brickworks reviewed the reports of proxy advisors and engaged with major shareholders and proxy advisors in relation
to remuneration matters. Positive improvements noted by proxy advisors in 2020 included the deferral of the MD’s and CFO’s 50% of STI
payments into equity for one year.
The Board will continue to review executive remuneration to ensure that it continues to align with Brickworks strategy, motivate management,
reflect market best practice and support the delivery of sustainable long-term returns to shareholders. As part of the review process we will
continue to engage with major shareholders and proxy advisors.
1.2
Details of Key Management Personnel (KMP)
The following persons had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly,
including any director (whether executive or otherwise) of that entity during the full financial year.
Directors
The following persons were directors of Brickworks Ltd during the full financial year:
Mr R Millner
Mr M Millner
Non-executive Chair
Non-executive Deputy Chair
Mr L Partridge
Executive Director (Managing Director)
Mrs D Page
Non-executive Director
The Hon. R Webster
Non-executive Director
Mr M Bundey
Mrs R Stubbs
Executives
Mr R Bakewell
Ms M Kublins
Non-executive Director
Non-executive Director
Chief Financial Officer
Executive General Manager
– Property & Development
88 p Brickworks Annual Report 2021
1.3. Remuneration Policy
Brickworks remuneration governance framework is set out below. While the Board retains ultimate responsibility, Brickworks’ remuneration
policy is implemented through the Remuneration Committee.
◗ Overall responsibility for the remuneration strategy and outcomes for executives and non-executive directors
◗ Reviews and, as appropriate, approves recommendations from the Remuneration Committee
Brickworks Board
External
Advisors
◗ Provide
independent advice,
information and
recommendations
relevant to
remuneration
decisions
◗ Throughout
the year, the
Remuneration
Committee and
management
received
information from
external providers
Aon related to
remuneration
market data and
analysis
◗ There were no
remuneration
recommendations
received from
external providers
during the year
Remuneration Committee
Monitors, recommends and reports to the Board on:
◗ Alignment of remuneration policies and procedures with Brickworks
strategic goals and human resource objectives and which enable Brickworks
to retain executives and directors who will create value for shareholders
◗ Equitably, consistently and responsibly rewarding executives including
incentive targets and achievement of the remuneration outcomes having
regard to the performance of Brickworks, the performance of the executives
and the general pay environment
◗ Employee share plans
◗ Board remuneration within aggregate approved by shareholders
◗ Overseeing induction of new non-executive directors
Nomination
Committee
Developing and
implementing a
process for the
evaluation of the
performance of the
Board of Directors
Managing Director & Human Resources Manager
Provides information to the Remuneration Committee for the Committee to recommend on:
◗ Incentive targets and outcomes
◗ Remuneration policy
◗ Long and short-term incentive participation
◗ Individual remuneration and contractual arrangements for executives
Human Resources
Monitors, recommends and reports to the Board on:
◗ Talent pools for senior management succession
◗ Assessment of performance against measurable objectives
◗ Management development frameworks and individual development progress for key talent
◗ Monitoring surveys conducted by the Company in relation to the culture of the organisation
◗ Initiatives to improve and drive a strong performance culture
1.4
Remuneration Committee
The Board has an established Remuneration Committee which operates under the delegated authority of the Board of Directors. The
Remuneration Committee charter is included on the Brickworks website (www.brickworks.com.au). All non-executive Directors of Brickworks
are members of the Remuneration Committee and the membership of the Remuneration Committee is as follows:
Mr M Bundey
Non-executive Committee Chair
Mr M Millner
Mr R Millner
Mrs D Page
Non-executive Director
Non-executive Director
Non-executive Director
The Hon. R Webster
Non-executive Director
Mrs R Stubbs
Non-executive Director
The Committee is chaired by Malcolm Bundey an independent non-executive director. The Committee is authorised by the Board to obtain
external professional advice, and to secure the attendance of advisers with relevant experience and expertise if it considers this necessary.
Brickworks Annual Report 2021 p 89
Remuneration Report
1.5
Use of remuneration consultants
Where the Remuneration Committee will benefit from external advice, it will engage directly with a remuneration consultant, who
reports directly to the Committee. In selecting a suitable consultant, the Committee considers potential conflicts of interest and requires
independence from the Group’s KMP as part of their terms of engagement.
◗ During the financial year, the Remuneration Committee appointed Aon as the remuneration adviser to provide information regarding
remuneration benchmarking for the MD and Non-Executive Director Fees.
◗ The consideration paid for the remuneration benchmarking for executives provided by Aon was $6,500.
◗ Remuneration information was provided to the Remuneration Committee as an input into decision making only. The Remuneration
Committee considered the information in conjunction with other factors in making its remuneration determinations.
◗ The Committee is satisfied the advice received from Aon is free from undue influence from the executives to whom the remuneration
information applies, as Aon were engaged by, and reported to, the Chairman of the Remuneration Committee.
◗ During the year no remuneration recommendations, as defined by the Corporations Act, were provided.
1.6
Board Policies for determining remuneration
Remuneration strategy and guiding principles
The guiding remuneration principles in Brickworks remuneration structure include:
◗ alignment between executive remuneration outcomes and shareholder outcomes;
◗ driving performance by linking remuneration outcomes to clearly specified targets; and
◗ reflecting market practice by benchmarking remuneration outcomes against relevant peer companies.
There are three main parts to the Brickworks business model:
1. The Building Products Group (Australia and North America) – Austral Bricks, Austral Masonry, Bristile Roofing, Austral Precast
and Glen-Gery;
2. The Property Group - exists to maximise the value of surplus land created by the Building Products business, and
3. Investments - represent 39.4% interest in Washington H. Soul Pattinson and has provided a stabilizer to the cyclical nature of the
Building Products earnings stream.
Brickworks uses key performance indicators across the Building Products and Property businesses to ensure that its executives:
◗ ensure that the health and safety of employees has the highest priority;
◗ improve profit, cash flows, production and operational efficiencies;
◗ rationalise non-performing assets; and
◗ retain key employees who have developed specialist skills and expertise in the industries in which the Group operates.
Retention of executives and highly skilled staff continues to be a high priority for the Remuneration Committee.
In our building products division it requires at least 5 to 10 years to become totally familiar with the complexities associated with the
manufacture of clay and concrete building products. The necessary skills that have been developed internally to deal with these challenges
cannot be procured easily outside the Brickworks group.
Similarly, the sale and marketing of building products is a function of good client relationships and product excellence developed over many
decades. Brickworks retains key executives who have been dealing with clients for 10 – 20 years.
The Property Trust established 14 years ago to develop land surplus to operations also requires in depth property and development skills and
experience.
Brickworks’ short-term performance incentive (STI) and its long-term incentive (LTI) scheme are designed to prioritise these corporate
objectives.
The STI program contains key performance measures for each executive outlined further in section 2.5.
The LTI program is outlined further in section 2.7.
90 p Brickworks Annual Report 2021
Remuneration Components
2
2.1. Remuneration structure
The core elements of Brickworks remuneration structure for the executive KMP are outlined below:
Total Executive Remuneration
FIXED
AT RISK
Fixed remuneration
Short-term incentive
Long-term incentive
Fixed remuneration having regard to the
market for jobs of comparable size and
responsibility
Brickworks' executives participate in an STI
plan
For the MD and CFO, the LTI is assessed
over three years and linked to:
The STI is weighted 75% to relevant
business unit financial metrics and 25% to
individual performance metrics
Refer to 2.5 for further details
◗ Relative total shareholder return
◗ Absolute total shareholder return
For the other executive KMP grants are
made following as assessment of prior year
performance
Refer to 2.7 for further details
◗ For the MD and CFO, equity with
performance assessed over three
years
◗ For other executives 20% of an LTI
grant vests annually on 31 July over
five years
◗ Base salary
◗ Superannuation
◗ Other benefits such as maintained
motor vehicles
◗ Other eligible salary sacrifice benefits
◗ 100% cash
◗ For the MD and CFO 50% deferred into
equity for one year
2.2 Historical performance, shareholder wealth and remuneration
Financial Performance
The following table shows a number of relevant measures of Group financial performance over the past five years. Although a detailed discussion
on the current year results is included in the review of operations and is not duplicated in full here, an analysis of the figures below demonstrates
sustainable dividend growth, and consistent performance notwithstanding our Building Products operation operates in a highly cyclical industry.
This highlights the benefit of our strategy and diverse operations in Investments and Property to complement the cycles in Building Products.
Measures of Group performance
5-year comparison
2017
2018
2019
2020
2021
Revenue and EBIT measures exclude discontinued operations
$1,000
$800
$600
$400
$200
$0
Total revenue
(millions)*
Combined Building Products
Australia, Building Products
North America and Property
EBIT before significant items
(millions)*
Net profit before significant
items after tax (millions)*
Statutory net profit after tax
including significant items
(millions)*
*
Statutory Group NPAT (after significant items) in FY2021 amounted to $239.2 million compared to $298.1 million in FY20. The prior year NPAT
included the Group’s share of significant one-off transactions of associate amounting to $169.1 million primarily driven by a significant one-off item
relating to the TPG/Vodafone merger completed in the prior year. Profit contributions from the associate company are outside the control
of management and are excluded from the profit measure applied to determine executive incentive benefits.
Brickworks Annual Report 2021 p 91
Remuneration Report
Gearing ratio
(must not exceed 40%)
Interest cover ratio
(must be greater than 3.5)
Leverage ratio
(must not exceed 3.5 times)
40%
30%
20%
10%
0%
13
11
9
7
5
3
4.0
3.0
2.0
1.0
0
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
The above graph shows the alignment of LTI outcome with medium to long term financial performance.
Total Shareholder Returns (TSR)
Our diversified portfolio of assets has translated into consistently strong absolute shareholder returns, including a return of 53.4% for the
year to 31 July 2021 compared to a 30.4% return delivered by All Ords Accumulation Index over the same period. An investment in Brickworks
shares has delivered strong absolute and relative returns over a wide range of time horizons, with a long-term annual shareholder return of
10.0% on a compound basis over the 20 years.
Annual TSR
Brickworks Ltd
All Ordinaries Accumulation Index
BKW Relative Performance
1 year
53.4%
30.4%
+23.0%
3 years
19.8%
10.2%
+9.6%
5 years
13.9%
10.4%
+3.5%
10 years
15 years
20 years
13.1%
9.9%
+3.2%
8.4%
7.3%
+1.1%
10.0%
8.7%
+1.3%
92 p Brickworks Annual Report 2021
Total Shareholder Return (Cumulative)
3-year comparison
120%
90%
60%
30%
0%
-30%
-60%
-90%
8
1
0
2
l
u
J
8
1
0
2
t
c
O
9
1
0
2
n
a
J
9
1
0
2
r
p
A
9
1
0
2
l
u
J
9
1
0
2
t
c
O
0
2
0
2
n
a
J
0
2
0
2
r
p
A
0
2
0
2
l
u
J
0
2
0
2
t
c
O
1
2
0
2
n
a
J
1
2
0
2
r
p
A
1
2
0
2
l
u
J
BKW
ABC
BLD
CSR
FBU
JHX
BSL
All Ords Accum
Employee Productivity
Brickworks Building Products productivity measures have also
improved over time.
Australia
The following graph shows historical revenue per employee. Despite
having grown substantially employee productivity has not been
compromised in the process.
United States
In North America the strategy has been to execute a capital
improvements plan and consolidate our manufacturing operations.
Since the initial Glen-Gery acquisition manufacturing headcount
has declined by 133 as a result of the plant rationalisation program.
Brickworks North America continues to invest in other areas,
including IT, Safety and Design Studios.
Building Products Australia
Revenue per Employee
($'000)
600
500
400
300
200
100
0
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Brickworks Annual Report 2021 p 93
Remuneration Report
2.3 Potential Remuneration Mix
Total remuneration for the MD and the other executives comprises both fixed remuneration and an at-risk component (STI and LTI). The
mix shown in the graph below is the potential remuneration based on the current remuneration at 31 July 2021 with STI and LTI based on
maximum opportunities.
This structure is designed to retain and pay executives competitively based on their performance.
Potential MD and CFO
Remuneration Mix
Fixed Remuneration
47.2%
LTI
18.8%
STI – Cash
17.0%
STI – Shares
(deferred for 1 year)
17.0%
Executive GM Property & Development
Remuneration Mix
Fixed Remuneration
50.0%
LTI
25.0%
STI – Cash
25.0%
2.4.
Remuneration Component – Fixed Remuneration
There has been no material increase in total fixed remuneration for any KMP during the FY2021 year.
A benchmarking exercise was undertaken during FY2021 by Aon and shows the MD’s target and maximum pay opportunities compared to
market median of industry peers as set out below:
Comparison of Brickworks MD Remuneration
to Industry Peer Group Remuneration
Brickworks MD
Peer Group*
$4.0m
$3.0m
$2.0m
$1.0m
$0
Fixed Remuneration
(FR)
Target STI
Maximum STI
Opportunity
Maximum LTI
Opportunity
Maximum Total
Remuneration
(Fixed Remuneration,
Max STI and Max LTI)
* The industry peer group includes 14 organisations engaged in property, manufacturing of construction materials, building products, commodities
and other products generally within 50% to 200% of BKW’s one-year average market capitalisation as follows: Abacus, ADBRI, BlueScope Steel, Boral,
Charter Hall, Cromwell Property, CSR, Growthpoint Properties, GUD Holdings, GWA Group, Incitec Pivot, James Hardie, Nufarm and Fletcher Building.
94 p Brickworks Annual Report 2021
By way of summary:
◗ The Brickworks MD has Fixed Remuneration positioned marginally higher than the 75th percentile of the industry peer group.
◗ Target STI is positioned between the industry peer group median and the 75th percentile.
◗ Maximum STI opportunity is below the market median against the industry peer group.
◗ Maximum LTI opportunity for Brickworks is significantly below market median against the industry peer group. The median maximum LTI
opportunity in this industry peer group is observed to be 100% of Fixed Remuneration compared to 40% for Brickworks.
◗ Overall the Maximum Total Remuneration of the MD is below the market median of the industry peer Group.
◗ The MD’s remuneration is reflective of the value that has been created for shareholders throughout his tenure as outlined below.
Total Shareholder Return
20-year comparison
Brickworks
10.0% p.a. growth (since July 2001)
All Ords Accumulation Index
8.7% p.a. growth (since July 2001)
600%
500%
400%
300%
200%
100%
0%
1
0
0
2
3
0
0
2
5
0
0
2
7
0
0
2
9
0
0
2
1
1
0
2
3
1
0
2
5
1
0
2
7
1
0
2
9
1
0
2
1
2
0
2
2.5.
Remuneration Component – Short-Term Incentives (STI)
The information below outlines the Company’s STI Plan for FY2021:
What is the
purpose and
objective of the
STI?
The STI is an annual incentive plan designed to reward executives for meeting or exceeding financial and non-financial
objectives over a one-year period. The STI has been designed to foster an organisational culture of collaboration, co-
operation and mutual respect which supports the objective of a long-term outperformance in both the financial and
non-financial areas of the business, mainly with annual measures linked to the business strategy, set at the beginning of
the financial year at levels that are challenging, yet achievable.
Brickworks Annual Report 2021 p 95
Remuneration Report
What is the
target and
maximum STI
opportunity?
MD and CFO
For the MD and CFO the STI is awarded in cash up to a maximum of 72% of total fixed remuneration (including base
salary, superannuation and car allowance).
The target STI opportunity for the MD and CFO being 60% of total fixed remuneration and maximum opportunity at 72%
of fixed remuneration is below market peers. Standard practice is for the STI opportunity to be equal to 100% of fixed
remuneration.
Is any part of
the STI awarded
deferred into
equity?
What is the
target and
maximum STI
opportunity?
How are STI
performance
measures
determined?
For FY2022 the STI opportunity for the MD will increase to 75% of total fixed remuneration at target and 90% of total
fixed remuneration at maximum. There will be no change to the STI target or maximum opportunity for the CFO.
Other Executives
For all other executives the STI is awarded in cash up to a maximum of 50% of total fixed remuneration (including base
salary, and superannuation but excluding car allowance). Any excess STI earned between the target and maximum
opportunity will not be paid as a cash bonus but will be added to the long-term incentive share allocation for that year
and will vest over the LTI’s plan vesting period.
MD and CFO
Half of any STI awarded to the MD and CFO will be deferred into shares for one year.
Should the employment of either the MD or CFO be terminated other than for cause, all deferred STI payments will
remain on foot and will be considered for assessment in the usual course as if their employment had continued with the
Company.
Other Executives
No STI awarded to other executives is deferred into equity.
The STI Target Opportunities are set out below:
Target STI
opportunity
MD & CFO
Other Executives** ***
60% of total fixed remuneration (inc. base
salary, car allowance and superannuation)
Between 10% and 50% of fixed remunera-
tion (inc. base salary and superannuation)
Maximum STI
opportunity (cash)*
72% of total fixed remuneration
50% of total fixed remuneration (including
base salary, car allowance and superannu-
ation)
*
For the MD/CFO maximum STI of 72% of total fixed remuneration is met when the Group NPAT measure (before significant
items, excluding equity accounted profit from associates (WHSP) and property revaluation gains) is at 110% of the profit target
and all the other financial and non-financial KPIs are met.
** STI as a proportion of base salary for an employee increases as that employee gains greater responsibility and has greater
capacity to influence the performance of the business as a whole.
*** Outperformance against the STI target above the maximum STI opportunity is recognised by the grant of shares or rights to
vest over the LTI plan’s performance period.
Each year at the beginning of the year the Remuneration Committee sets KPIs for the MD and CFO for the financial
year, with a view to directly aligning the individuals’ annual incentive opportunity to execution of the Group’s business
strategy.
The MD determines the KPIs which are aligned to the delivery of the strategy and performance of the business for other
executives.
STI profit targets are determined on an annual basis at the beginning of the financial year after consideration of many
complex factors including:
◗ the market outlook having regard to cyclical nature of building and construction industry;
◗ housing trends;
◗ energy supply;
◗ existing and new market competition;
◗ new and alternative products;
◗ interest rates; and
◗ cap rate compression.
The impact and the Company’s response to COVID-19 was also a key consideration this year, however no KPIs for
FY2021 were amended during the year as a consequence of COVID-19.
Payments under the STI are determined by performance against KPIs set at the beginning of the financial year.
STI performance measures and weightings vary by executive depending on individual accountabilities. The metrics and
their rationale for selection are as follows:
96 p Brickworks Annual Report 2021
Why are the
STI measures
adopted
considered
appropriate?
What is the
financial and
non-financial
component of
the STI Award
for the MD and
CFO and how is
it applied?
Financial measures (MD and CFO: 75%)
Group NPAT (before
significant items
excluding equity
accounted profit from
associates (WHSP) and
property revaluation
gains) – 37.5%
Focus attention on results and performance for segments for which they have direct
responsibility.
This is a gateway performance measure to receiving any other performance related
payments. The gateway is the minimum threshold measure of profit which must be
achieved before any STI is awarded. Once it is met performance is measured against the
other following financial and non-financial measures to determine the actual individual
awards.
Property profit will include net property trust income, trust development profit, the sale
of trust assets and Brickworks land sales (less Brickworks property admin and other
costs). It will not include property revaluations arising from cap rate compression or
expansion outside the control of management.
Cash generation – 37.5% Managing cash to ensure cash and working capital is available whenever and wherever
Non-financial measures – (MD and CFO: 25%)
required by the business.
Quality of earnings –
12.5%
This measure considers the quality of earnings result including goodwill and asset
impairment and windfall gains.
Safety and Health –
6.25%
People – 6.25%
This measure incentivises executives to demonstrate leadership in enhancing workplace
health and safety and taking a sustainable approach to operations through process
innovation.
The success of Brickworks depends on the people that work for the Company. This
measure will only reward executives for superior performance and demonstration of
effective leadership, talent development, retention, succession planning and gender
diversity, which are critical to the success of the business and underpin financial
performance.
Percentage of financial component of STI Award payable for the MD and CFO
The gateway performance measure to receiving any STI is a minimum threshold measure profit. The total available STI
Award determined based on the profit measure is allocated as outlined below and subject to further testing against
Operating Cash Flow and non-financial measures.
Profit – 37.5% of total available STI Award
Achievement
Below base profit
STI Award
0%
Between base profit and target profit
Between 100% and 110% of target profit
Pro rata award on a straight-line basis between 60% and 100%
of target STI
Pro rata award on a straight-line basis between 100% and 120%
of target STI being Maximum STI.
Setting the Target for Profit Performance
In setting the target for profit performance consideration is given to the prior year’s performance. Budget may be set
higher or lower than previous years after consideration of the many complex factors outlined above and including, but
not limited to, the very cyclical nature of the Building Products operations.
Where the budget is greater than the previous year, then 80% of last year’s performance becomes the base profit and
the budget becomes the target profit.
Where the budget is less than the previous year, 80% of budget profit becomes the base profit and the prior year
becomes the target profit.
By using both last year’s profit results and budget profit in tandem, the outcome of the bonus paid is properly
referenced by the prior year. When the profit increases, the STI for profit performance aligns with improved
performance and when the profit is lower than the prior year, any bonus paid will be below the prior year.
All property revaluation gains were excluded from the profit measures used to determine the FY2021 incentive amounts
payable.
Brickworks Annual Report 2021 p 97
Remuneration Report
What is the
financial and
non-financial
component of
the STI Award
for the MD and
CFO and how
is it applied?
continued
What is the
financial and
non-financial
component of
the STI Award
for Other
Executives
and how is it
applied?
Operating cash flow – 37.5% of total available STI Award
Achievement
STI Award
Below 80% of budgeted operating cash flow
0%
Between 80% and 100% of budgeted
operating cash flow
Pro rata award on a straight-line basis between 60% and 100%
of allocated STI Award
The Board of Brickworks is confident that achievement of profit and cash generation above 80% of target in the current
market conditions is considered as superior performance. The targets vary every year, are set with a view of delivering
challenging results and do not provide executives with a windfall gain.
The remaining 25% of any STI Award is subject to the achievement of challenging non-financial measures.
Percentage of financial component payable for other executive KMP (other than the MD and CFO)
Profit – 37.5% of total STI Award
Achievement
STI Award
Below base profit
0%
Between base profit and
target profit
> target profit
Pro-rata award on a straight-line basis between 50% and 100%
Pro rata award equal to the percentage over upper target to a maximum of 50% of total
fixed remuneration in cash with outperformance against the profit target recognised by
the grant of rights or shares over the LTI plans performance period
Operating cash flow – 37.5%
Achievement
STI Award
Below base target
0%
Between base target and
upper target
Straight line between 50% and 100%
The remaining 25% of any STI Award is subject to the achievement of challenging non-financial measures.
There is no upside available against cash and non-financial measures.
When and how
is the STI Award
assessed?
MD and CFO
At the end of the financial year the Remuneration Committee assesses actual performance against their respective KPIs
set at the beginning of the financial year and recommends the STI quantum to be paid to the individuals for approval by
the Board.
These assessment methods have been chosen as they provide the Remuneration Committee with an objective
assessment of each individual’s performance.
Other Executives
At the end of the financial year the MD assesses the executives’ actual performance against their respective KPIs set
at the beginning of the financial year and determines the STI quantum to be paid to the senior executives. The MD
provides these assessments to the Remuneration Committee annually for review and approval.
The Remuneration Committee and the MD have the discretion to consider the quality of earnings achieved including
any significant items, acquisitions and divestments and one-off events/abnormal/non-recurring items in determining
whether the financial KPIs have been achieved, wherever and whenever this is considered appropriate for linking
remuneration reward to Company performance.
The MD and CFO have 12.5% of their STI at risk in relation to quality of earnings and RONTA.
Is quality of
earnings a
relevant factor
in assessing STI
Awards?
Can the Board
clawback STI
Awards?
The Board and the Remuneration Committee have discretion about the remuneration outcomes wherever and
whenever this is considered appropriate. This discretion also applies in the event of financial misstatement, reputational
damage and/or evidence of misconduct.
98 p Brickworks Annual Report 2021
2.6. STI outcomes
The table below outlines the weighting of financial and non-financial KPIs in relation to each executive for financial year 2021 and the
performance achieved. Unless otherwise stated all earnings measures exclude significant items.
Executive
Measure(s)
Performance
Financial 75%
MD & CFO
Group NPAT (before significant items
excluding equity accounted profit
from associates (WHSP) and property
revaluation gains)
Group operating cash flow
EGM Property &
Development
Divisional profit against target for
Property
The Group NPAT (before significant items and excluding
property revaluation gains and equity accounted profit from
associates) was $84.4 million which translated into a fully
achieved maximum STI target and was significantly higher
compared to $58.7 million in the prior financial year.
The Group operating cash flow for the year ended 31 July
2021 was $139.8 million which translated into a fully achieved
maximum STI target
Property divisional profit (excluding property revaluation
gains) amounted to $103.8 million which was significantly
above the performance target and the prior year profit of
$76.3 million.
Outcome
100%
achieved
100%
achieved
100%
achieved
Divisional cash generation against
target
The cash flows generated by the Property division amounted
to $32.1 million and met the performance target.
100%
achieved
The Company does not disclose specific financial performance targets and even retrospective disclosure of such targets would put the
Company at a potential competitive disadvantage.
100%
achievement
of the KPI for
the MD
100%
achievement
of the KPI for
the CFO
100%
achievement
of safety KPIs
Non-financial 25%
MD & CFO
Return on net assets/quality of
earnings considerations
◗ Return on Net Tangible Assets for the Group excluding
investments in associates (WHSP) amounted to 21.1%
which translated into a fully achieved maximum STI
target..
Safety
Key lag target metrics across
Australia:
◗ LTI’s < 2
◗ MTI’s < 30
◗ LTIFR of 0.4 or less
◗ TRIFR of 11.8 or less
Key lead target metrics
◗ A 10% improvement in closing
open hazards across the
Australian business
◗ random drug and alcohol testing
of at least 25% of company
employees in Australia
◗ 10% of total employees with
certified qualifications in mental
health first aid across Australia
◗ leadership training for executives
◗ active participation in safety
committee meetings
◗ Overall improvement in
Brickworks North America into
Group safety measures
◗ Key lag target measures all met with enhanced safety
performance year-on-year at Brickworks Building
Products Australia measured by a greater than 10%
reduction in medical treatment injuries (MTI) and total
recordable injury frequency rate (TRIFR) compared to
FY2020. Long-term injuries (LTI) and long-term injury
frequency rate (LTIFR) remained at a low level and
consistent with the prior financial year.
◗ A greater than 10% reduction in TRIFR in North America
driven by a reduced number of First Aid Treatments
and MTI’s achieved despite an increased level of hours
worked compared to FY2020.
◗ Key lead target metrics all met, including:
◗ A greater than 10% improvement in closing open
hazards
◗ drug and alcohol testing embedded into the business
◗
traction in employee certified qualifications in mental
health
◗ Active participation by the MD and CFO in safety
committee meetings throughout the Company’s Australia
wide operations
◗ Group Safety improvements as per above
Brickworks Annual Report 2021 p 99
Remuneration Report
Executive
Measure(s)
Performance
Outcome
Non-financial 25%
MD & CFO
Succession Planning and Gender
Diversity
Key Metrics:
◗ Gender Diversity at the senior
executive level in Australia of at
least 25% by 31 July 2021 with an
improvement on FY2020
◗ Quarterly talent and succession
reviews
◗ Mentoring program for emerging
leaders in Australia
◗ Target internal promotion rate of
25% in Australia
◗ Inclusion of Brickworks North
America into Group Gender
Diversity and Succession
Planning
◗ Embed values in performance
management processes at all
levels of the organisation
100%
achievement
of succession
planning KPIs
◗ Improvement in gender diversity at the senior executive
level from 27% in FY2020 to 28% in FY2021
◗ Quarterly talent and succession reviews completed
and actions implemented for our top talent across the
business
◗ Mentoring program for key talent to develop, inspire and
support Brickworks future leaders
◗ Internal promotion rate at 47%
◗ Brickworks North America included into Group gender
diversity and succession planning programs
◗ Values and culture program embedded throughout the
organisation in performance management processes
EGM Property &
Development
Property Trust Return on net assets/
quality of earnings considerations
Return on Net Tangible Assets for the Property division of
27.7% which was translated into a fully achieved STI target.
Safety
Target Metrics:
◗ Category 1 events (fatalities) – nil
◗ Category 2 events (injuries, near
misses and development related
risks) <2
Enhanced safety performance as measured by the number of
safety events in the financial year ended 31 July 2021:
◗ Category 1 events (FY2021: nil, FY2020: nil)
◗ Category 2 events (FY2021: 1, FY2020: nil)
Mixture of Strategic and Operational
relevant to the executive
◗ Successfully managed Trust property leases to achieve
high occupancy rates (95% at 31 July 2021)
◗ The New Berrima DA approval was secured in the
financial year ended 31 July 2021.
100%
achievement
of non-
financial KPIs
STI achieved
The table below outlines the weighting of financial and non-financial KPIs in relation to each executive for 2021 and the performance achieved.
The following table outlines the percentage of target STI achieved (and forfeited) in relation to financial and non- financial KPIs, and the total STI
awarded, for each executive for 2021.
Target STI
Opportunity
$
Max STI
Opportunity
$
Weighting
%
Achieved1
%
Forfeited
%
Weighting
%
Achieved1
%
Forfeited
%
FINANCIAL
NON-FINANCIAL
$938,700
1,126,440
$481,800
578,160
75%
75%
120%
120%
256,250
278,500
75%
114%
0%
0%
0%
25%
25%
120%
120%
25%
100%
0%
0%
0%
STI
awarded
$
1,126,4402
578,1602
STI over
performance
subject to LTI
$
0
0
278,500
3,806
Executive
MD
CFO
EGM Property
& Development
1
2
Calculated as % of Target STI opportunity.
50% of MD and CFO’s STI awards deferred into equity for one year being $563,220 for the MD and $289,080 for the CFO.
100 p Brickworks Annual Report 2021
2.7. Remuneration Component - Long Term incentives (LTI) for FY2021
What is the LTI?
The Group operates an LTI Plan through the Brickworks Deferred Employee Share Plan and Executive Rights Plan in
which employees receive Brickworks Limited shares or performance rights. No consideration is payable by participants
for shares or performance rights under the terms of the plan.
What is the
scope of the
LTI?
What is the
purpose of the
LTI?
What is the LTI
Opportunity
for the MD and
CFO?
What is the LTI
Opportunity
for other
executives?
What LTI
performance
measures apply
to executives
(other than the
MD and CFO)?
What LTI
performance
measures apply
to the MD and
CFO?
The LTI includes:
◗ a broad-based employee share plan with 606 employees participating as at 31 July 2021 via 1,205,113 shares
on allocation of which 39.81% remain unvested (and 60.19% vested). In addition, 37,106 shares in the plan were
forfeited during the year to 31 July 2021; and
◗ an Executive Rights Plan with 24 employees participating as at 31 July 2021 via 392,498 rights on allocation of
which 83.45% remain unvested (and 16.55% vested). 5,874 rights were forfeited during the year to 31 July 2021.
The primary purpose of the LTI is the retention of the Company’s senior executive team.
The LTI also provides alignment between executive remuneration and shareholders, as measured by the absolute and
relative total shareholder return (TSR).
The value of shares or performance rights granted to the MD and CFO was a fixed 40% of total fixed remuneration
(including superannuation and car allowance). This fixed allocation is subject to Brickworks meeting the absolute and
relative TSR performance criteria set out below over the ensuing three-year period.
The LTI opportunity for the MD and CFO being 40% of fixed remuneration is below market peers. Standard practice is
for the LTI opportunity to be equal to 100% of fixed remuneration.
For FY2022, the LTI opportunity for the MD and CFO will increase from a flat rate of 40% to a flat rate of 75% for the MD
and 60% for the CFO.
For all other executives, the LTI entitlement is up to 50% of total fixed remuneration (excluding car allowance). The
allocation made is determined following assessment by the Board of the prior year’s performance against STI targets.
In years where STI targets are not met in difficult market conditions the Board awards half the LTI opportunity to other
executives.
The vesting of shares/ rights to other executives is undertaken progressively on 31 July for 20% on each anniversary
following the allocation date for five years.
50% of the award made is subject to Brickworks relative total shareholder return (TSR) vesting condition under which
Brickworks’ TSR is compared to the companies in the S&P/ASX 200 Franking Credit Adjusted Annual Total Return Index
over a period of three years from 1 August 2020 to 31 July 2023.
The share price used at commencement of each tranche for assessing both relative and absolute TSR performance of
Brickworks shares is the 90-day Volume Weighted Average Price (VWAP) prior to 31 July 2020. The actual share price
used to compare to the TSR target share price is the 90-day VWAP prior to 31 July 2023.
The remaining 50% of the award is subject to an absolute TSR p.a. compounding vesting condition also over the same
period.
Brickworks Annual Report 2021 p 101
Remuneration Report
How does the
Relative TSR
measure (50%
of each award)
work?
A summary of the Relative TSR measure for the MD and CFO is as follows.
Relative TSR measure proposed
FY2021 LTI allocation approved by shareholders at the 2020 AGM
Performance Period
3-year performance period commencing on 1 August 2020.
Measure
Brickworks’ relative TSR inclusive of all grossed dividends measured against the S&P/ASX 200
Franking Credit Adjusted Annual Total Return Index (XJOAI Franked Index)
Vesting
Below the median – 0% vesting
At the median – 50% vesting
Between the median and 60th percentile – pro-rata vesting on a straight-line basis between
50% and 100%
At the 60th percentile or above – 100% vesting
Re-testing
No re-testing. Testing to be undertaken once only at end of the 3-year period.
Dividends and
voting rights
Shareholder
approval
No dividends or voting rights on unvested performance rights.
Compensation for dividends will be provided at the end of the performance period only on
those rights that meet the performance criteria.
Yes for allocations made to the Managing Director
During 2020, Brickworks obtained independent advice regarding the distribution of XJOAI returns above the median
which is normally referred to as the index to establish what the level of the TSR performance was over the three previous
years at the 75th percentile.
XJOAI Returns
At Index Level
At 60th percentile
At 75th Percentile
BKW
1 Year to
31 July 2020
1 Year to
31 July 2019
1 Year to
31 July 2018
-9.9%
-5.4%
5.1%
-9.4%
10.5%
17.0%
30.3%
14.5%
17.9%
23.3%
33.7%
23.7%
We note the difficulty with delivering TSR results in excess of 5.1% in the current climate given ongoing uncertainty in
relation to lockdowns and permitted building activity.
It is extremely challenging and highly unlikely that Brickworks can generate TSR results in excess of 30% on a
sustainable long-term basis (pre COVID) given the cyclical nature of the building industry and ongoing capital
expenditure requirements without exposing the company to unnecessary risk.
More appropriately, Brickworks has adopted the 60th percentile, which requires a very challenging hurdle for 100%
vesting.
Overall, the Board’s emphasis is on establishing long term sustainable profit streams. The over-arching objective is
to reinvest to deliver sustainable long-term profits, while continually reducing production costs through technical
innovation.
A summary of the Absolute TSR measure for the MD and CFO is as follows.
Absolute annual compounding TSR measure proposed FY2021 LTI allocation
approved by shareholders at the 2020 AGM
Performance Period
3-year performance period commencing on 1 August 2020
Vesting
Less than 6% – 0% vesting
Equal to 6% – 50% vesting
Between 6% and 8% – pro-rata vesting on a straight-line basis between 50% and 100%
Equal to 8% or greater – 100% vesting
Re-testing
No re-test. Testing is to be undertaken once only at end of the 3-year period
Dividends and
voting rights
No dividends or voting rights on unvested performance rights
Compensation for dividends will be provided at the end of the performance period only on
those rights that meet the performance criteria
How does the
Absolute TSR
measure (50%
of each award)
work?
102 p Brickworks Annual Report 2021
Why is an
absolute TSR
measure
considered
appropriate
for LTI Awards
to the MD and
CFO?
Why is an
absolute TSR
measure
combined
with a relative
TSR measure
considered
appropriate
for LTI Awards
to the MD and
CFO?
Are
shareholders
asked to
approve LTI
Awards made to
the MD?
Can the Board
clawback LTI
Awards?
What happens
to LTI Awards
on a Change
of Control of
Brickworks?
What dividend
rights attached
to LTI Awards?
How are
LTI Awards
satisfied?
◗ Brickworks has a diversified
portfolio of assets through its
investment in Washington H. Soul
Pattinson & Company Limited
(WHSP)
◗ Brickworks’ look through asset
exposure* shows that, in addition
to building products (28%) and
property (20%), the Company
has exposure to other companies
in telecommunications, finance,
energy and health through its
investment in WHSP.
Brickworks directly manages this
interest through the independent
board committee (IBC). Management
of this interest included the sale of
WHSP shares in FY2019.
Brickworks Asset Exposure
Property
Telecoms
BP Australia
24%
21%
20%
BP North America 6%
Energy
Other
Finance
Health
7%
15%
4%
3%
*
Based on 31 January 2021 asset values reported by WHSP.
The Board believes that when combined with the STI, the performance criteria for the MD and CFO under the LTI
provides the most suitable link to long-term security holder value creation because:
◗ absolute TSR ensures vesting is commensurate with the Company’s actual TSR, meaning there are no awards
when TSR is negative and it also provides a good line of sight for the MD and CFO;
◗ measuring TSR on a relative basis levels the playing field by removing overall market movements and industry
economics for the evaluation of MD and CFO performance. Relative TSR provides a relative, external market
performance measure having regard to a peer group of ASX200 companies with which the Company competes for
capital, customers and talent;
◗ the use of relative TSR ensures that the MD and CFO are motivated to deliver returns that are superior to what a
security holder could achieve in the broader market and ensures as the most senior management they maintain a
strong focus on security holder outcomes;
◗ Brickworks calculates its after tax TSR incorporating the full value of franking credits. The S&P ASX 200 Franking
Credit adjusted annual total return Index also adjusts the total return for the tax effect of franking credits to ensure
consistency of calculations;
◗ the use of the S&P/ASX 200 Franking Credit adjusted annual total return Index was chosen as the relative
performance target following testing of this group against a range of historical and future share price/payout
scenarios to confirm that outcomes align with the Company’s historical notion of superior long-term performance;
◗ having regard to the overall size and market capitalisation of Brickworks, and the diverse nature of the Brickworks
Group across Property, Building Products and its investment in WHSP, the Board considers the XJOAI Franked
Index as the most appropriate Index for relative performance assessment; and
◗ while the Board appreciates that there are at times different views held by different stakeholders, it considers that
these measures provide the appropriate balance between market and non-market measures.
Yes. Performance rights allocated to the MD are put to shareholders for approval at the AGM.
Historically clawback clauses have not been applicable for LTI allocations. The Board and the Remuneration Committee
have discretion about the remuneration outcomes wherever and whenever this is considered appropriate. This
discretion also applies in the event of financial misstatement, reputational damage and/or evidence of misconduct.
If a change of control event occurs in relation to Brickworks Limited then any shares or performance rights held by the
employee share plan trust on behalf of a participant will vest immediately upon the announcement to ASX of a change
of control event.
Dividends will not be paid on unvested performance rights, and will only vest in proportion to the vested grants at the
end of the performance period.
The Board has the discretion to either purchase shares on-market or to issue new shares for participants.
During the year rights were granted to the MD, CFO and Senior Executives through the LTI executive rights plan. Shares
granted to employees other than the MD, CFO and Senior Executives were issued as new shares.
Brickworks Annual Report 2021 p 103
Remuneration Report
Under the Company’s Securities Trading Policy Brickworks shares are not permitted to be used to secure any type of
financial product such as margin loans or similar. Options, collars and/or other financial derivatives must not be used in
respect of any Brickworks shares.
Are executives
prohibited
from entering
financial
derivatives
in respect of
Brickworks
shares?
2.8. LTI Outcomes FY2021 MD and CFO
The following represents Brickworks’ performance against each TSR measure for historical allocations made prior to the rights allocation
made under the new Executive Rights LTI Plan implemented in 2019 which is not tested for a period of 3 years.
Brickworks TSR is defined as the change in share price plus dividends (grossed up for associated franking credits). This forms part of the
criteria used for assessing the vesting of LTI plan shares and performance rights under the absolute TSR test and relative TSR test.
Absolute TSR performance (for historical allocations made prior to FY2020)
For the purposes of the absolute TSR measure under the LTI plan, Brickworks’ TSR is calculated using a simple average of Brickworks’ 1-year
TSR, 2-year TSR, 3-year TSR, 4-year TSR and 5-year TSR. Brickworks’ TSR results as at 31 July 2021 are:
Test period from
3-Aug-2020
1-Aug-2019
1-Aug-2018
1-Aug-2017
1-Aug-2016
Year TSR
1-year TSR
2-year TSR
3-year TSR
4-year TSR
5-year TSR
Average TSR
Target Criteria
Outcome
Test period to
TSR Performance
31 July 2021
59.6%
22.2%
20.2%
21.4%
16.9%
28.0%
8%
100% vested
MD – 29,136 shares
CFO – 7,992 shares
Brickworks’ Average TSR of 28.0% has exceeded the target performance criteria (being 8%). This means that all of the tranches tested against
the absolute TSR measure vested at 31 July 2021 (including all unvested shares carried forward from the prior financial year).
Relative TSR performance (for historical allocations made prior to FY2020)
Brickworks’ performance (grossed up for franking credits) versus the S&P ASX 200 Franking Credit Adjusted Total Return Index (XJOAI
Franked) is:
XJOAI
Franked
Brickworks
(inc. Franking)
Brickworks
as % Index
Vesting criteria
pre 2018 allocations
Vesting criteria
2018 allocation
TSR
1 year
2 years
3 years
4 years
5 years
Simple average
31.5%
10.8%
12.5%
13.1%
15.5%
16.7%
59.6%
22.2%
20.2%
21.4%
16.9%
28.0%
168.4%
Relative vesting in FY2021
If Brickworks’ TSR as a
% of the index’s return is
greater than 100%, then
all shares subject to the
Relative Test will vest.
If Brickworks’ TSR as a
% of the index’s return is
greater than 120%, then
all shares subject to the
Relative Test will vest.
100% - vested
MD - 8,455 shares
CFO - 4,510 shares
100%
MD - 8,477 shares
CFO - 4,425 shares
Brickworks’ relative TSR performance of 168.4% was above the threshold for all shares to vest. This means that all of the tranches tested
against the relative TSR measure vested at 31 July 2021 (including all unvested shares carried forward from the prior financial year).
104 p Brickworks Annual Report 2021
2.9. Other Company wide share plan
In addition to the Brickworks Deferred Employee Share Plan referred to above, Brickworks operates the Brickworks Exempt Employee Share
Plan as part of the remuneration structure of the Group. All employees of Brickworks with a minimum 3 month’s service are eligible to join the
Brickworks Exempt Employee Share Plan, whereby the employee may salary sacrifice an amount toward the purchase of Brickworks ordinary
shares and the Company contributes a maximum of $3 per employee per week. The plans are aimed at encouraging employees to share in
ownership of their Company and help to align the interests of all employees with that of the shareholders.
2.10. Market purchases
In accordance with ASX Listing Rule 10.14, the Company contribution to the Brickworks Exempt Employee Share Plan is unavailable to
Directors of Brickworks.
An employee’s right to transact shares in a share plan is governed by the trust deeds for those Plans and the Company’s policy regarding
trading windows.
At 31 July 2021, there were 790 employees participating in the Brickworks Deferred Employee Share Plan and the Brickworks Exempt
Employee Share Plan, holding 1,311,619 shares (0.87% of issued capital).
During the year, all monthly share purchases through the Exempt Employee Share Plan were performed on market. Shares granted through
the Deferred Employee Share Plan to employees were issued as new shares.
3
3.1
Employment Contracts
Termination payments
A payment will be made by the Company to an executive upon termination or bona-fide retirement, equivalent to a proportion (not exceeding
100%) of each executive’s average base pay for the previous 3 years, and any unvested shares or performance rights held on behalf of
the executive will remain within the Brickworks Deferred Employee Share Plan and retain their vesting criteria. If an executive resigns, any
unvested shares will be forfeited. The Board and the Remuneration Committee have discretion about the remuneration outcomes wherever
and whenever this is considered appropriate. This discretion also applies in the event of financial misstatement, reputational damage and/or
evidence of misconduct.
Brickworks does not have fixed term contracts with its executives. It can terminate an executive’s employment on 2 months’ notice (or
payment in lieu of notice) and executives can terminate on 2 months’ notice (apart from the CFO who must be given 3 months’ notice, and the
MD who must be given 6 months’ notice).
If the MD or any other executives is subject to immediate termination (for cause as defined in their employment contract), Brickworks is not
liable for any termination payments to the employee other than any outstanding base pay and accrued leave amounts. All unvested shares or
performance rights held on their behalf by the Brickworks Deferred Employee Share Plan will be forfeited.
3.2. Executive Restraint
All executives gain strategic business knowledge during their employment. Brickworks will use any means available to it by law to ensure
that this information is not used to the detriment of the Company by any employee following termination. To protect the Group’s interests,
Brickworks had an enforceable restraint through the executive’s employment contract to prevent executives from either going to work for a
competitor, or inducing other employees to leave the Company, for a specified period.
The terms of the restraint to prevent employees from going to work for a competitor, customer or supplier are for commensurate periods
of between 6 and 12 months. A breach of the restraint conditions by an employee places at risk a potential monthly restraint payment at the
discretion of the Company.
The termination payments referred to above, together with the fact that most executives generally will also have unvested shares with a value
in excess of the base remuneration for the restraint period at any time, are intended to discourage executives with deep corporate knowledge
and significant capacity to contribute to the profitability of the Company from seeking employment with competitors.
Non-Executive Directors
4
The remuneration of non-executive Directors is determined by the full Board after consideration of Group performance and market rates for
Directors’ remuneration. Non-executive Director fees are fixed each year, and are not subject to performance-based incentives. Brickworks’
non-executive Directors are not employed under employment contracts.
The maximum aggregate level of fees which may be paid to non-executive Directors is required to be approved by shareholders in a general
meeting. This figure is currently $1,300,000, and was approved by shareholders at the 2017 Annual General Meeting. Brickworks’ constitution
requires that Directors must own a minimum of 500 shares in the Company within two months of their appointment. All Directors complied
with this requirement during the year.
Brickworks Annual Report 2021 p 105
Remuneration Report
The Directors Fees for FY2021 and FY2022 are as follows:
Chair
NED Base Fee
Member – Audit & Risk Committee
Member – Remuneration Committee
Member – Nomination Committee
Chair – Audit & Risk Committee
Chair – Remuneration Committee
Chair – Nomination Committee
FY2021
$260,000
$130,000
$8,000
$6,000
$4,000
$21,000
$15,750
$12,750
FY2022
$269,100
$134,550
$8,280
$6,210
$4,140
$21,735
$21,735
$13,196
Under legacy arrangements, non-executive Directors appointed prior to 30 June 2003 were entitled to receive benefits upon their retirement
from office. These benefits were frozen with effect from 30 June 2003, and are not indexed. The Company has obtained specific independent
legal advice regarding the entitlements of the three non-executive Directors referred to below which has confirmed that the amounts listed in
the table will be payable, as they have been grandfathered under the previous legislation relating to the retirement benefits of non-executive
Directors. These benefits for the three participating Directors, which have been fully provided for in the Company’s financial statements, are as
follows:
Name
R. Millner
M. Millner
R. Webster
Benefit as at 30 June 2003
$300,000
$150,000
$93,750
106 p Brickworks Annual Report 2021
5
5.1
Remuneration of Key Management Personnel
Table of Remuneration to KMP
The fees payable to non-executive Directors and the remuneration payable to other KMP during the financial year ended 31 July 2021 are disclosed
in the following table.
Year
Base fees/
salary
Non-
monetary
benefits
Post
Employment
(Super)
Total fixed
remuneration
Short Term
Incentive
Long Term
Incentive3
Retirement
benefit
Total
Directors
RD Millner
MJ Millner
BP Crotty
DR Page
2021
2020
2021
2020
2021
2020
2021
2020
237,443
237,443
127,854
127,854
42,627
142,580
161,061
155,180
RJ Webster
2021
143,151
2020
143,151
MP Bundey
2021
144,064
RN Stubbs
2020
2021
2020
114,117
135,017
79,333
–
–
–
–
–
–
–
–
–
–
–
–
–
–
22,656
260,099
22,557
260,000
12,199
140,053
12,146
140,000
4,050
46,677
13,545
156,125
–
161,061
5,820
13,659
13,599
13,746
161,000
156,810
156,750
157,810
10,841
124,958
1,035
136,052
–
79,333
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
LR Partridge
2021
1,542,650
2020
1,543,440
4,946
5,686
21,850
1,569,446
1,126,440
771,604
21,060
1,570,186
1,053,222
249,197
Total
2021
2,533,867
4,946
89,195
2,628,008
1,126,440
771,604
2020
2,543,098
5,686
99,568
2,648,352
1,053,222
249,197
Other Key Management Personnel
RC Bakewell
2021
MA Ellenor
Total
2020
2021
2020
2021
2020
775,525
781,940
535,306
535,940
1,310,831
1,317,880
21,606
19,459
7,219
6,061
28,825
25,520
21,850
21,060
21,694
21,060
818,981
578,160
258,622
822,459
553,160
–
564,219
278,500
330,672
563,061
278,500
341,495
43,544
1,383,200
856,660
589,294
42,120
1,385,520
831,660
341,495
Notes: In addition to the total benefits above, these KMPs accrued leave entitlements during the year as follows:
◗ L R Partridge: net increase of $27,072 in accrued leave entitlements (2020: $45,475 increase)
◗ R C Bakewell: net increase of $15,693 in accrued leave entitlements (2020: $12,525 increase)
◗ M Kublins: net decrease of $14,922 accrued leave entitlements (2020: $1,888 decrease)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
260,099
260,000
140,053
140,000
46,677
156,125
161,061
161,000
156,810
156,750
157,810
124,958
136,052
79,333
3,467,490
2,872,605
4,526,052
3,950,771
1,655,763
1,375,619
1,173,391
1,183,056
2,829,154
2,558,675
3
Reflects the value of the shares/executive rights vested during the financial year. Any share allocations tested against absolute and relative TSR
performance measures at 31 July 2020 did not vest. Only historical tenure based shares allocated to the Managing Director in 2015 and 2016
vested during the prior financial year.
Brickworks Annual Report 2021 p 107
Remuneration Report
5.2 Director and Key Management Personnel shareholdings
Directors
RD Millner
MJ Millner
DR Page
RJ Webster
MP Bundey
RN Stubbs
BP Crotty*
Held
31 July 2020
Granted as
Remuneration
Purchases
Shares
Disposed of
Held
31 July 2021
4,813,098
4,787,141
14,210
15,922
1,000
1,000
18,209
–
–
–
–
–
–
–
4,869
–
3,190
–
20
–
–
–
–
–
–
–
–
–
4,817,967
4,787,141
17,400
15,922
1,020
1,000
N/A
FPO
DESP
EEP
ERP
ERP STI Def
FPO
DESP
EEP
ERP STI Def
L R Partridge
71,000
91,179
–
33,400
31,443
26,917
25,000
–
112,896
74,283
–
64,843
26,917
Other Key Management Personnel
R C Bakewell
8,201
28,564
M Kublins
23,509
70,674
61
–
17,186
16,138
14,137
25,137
20,110
–
50
–
–
8,201
28,564
111
33,324
14,137
(35,332)
23,509
35,342
–
45,247
–
* Brendan Crotty retired from the Board on 24 November 2020
FPO
DESP
EEP
ERP
Fully paid ordinary shares.
These shareholdings are unvested shares held through the Brickworks Deferred Employee Share Plan which may not vest to the employee if
they do not satisfy vesting criteria.
Employee Exempt Plan.
Executive Rights Plan in which employees receive a payment or Brickworks Limited shares if the vesting criteria is met.
STI Def
Short Term Incentive Deferred Plan - MD and CFO’s 50% of STI awards deferred into equity for one year.
All share transactions by KMP were on normal terms and conditions on the Australian Securities Exchange.
No options over unissued shares or interests in Brickworks Limited or a controlled entity were granted or lapsed during or since the end of the
financial year and there were no options outstanding at the date of this report. No shares or interests have been issued during or since the end
of the year as a result of the exercise of any option over unissued shares or interests in Brickworks or any controlled entity.
End of the Remuneration Report
108 p Brickworks Annual Report 2021
Auditor’s Independence Declaration
Following a mandatory partner rotation, the financial year ended 31 July 2021 is the first year with Jodie Inglis as audit partner.
The Directors received an independence declaration from the auditor, EY. A copy has been included on page 111 of the report.
Provision of non-audit services by external auditor
During the year the external auditors, EY, provided non-audit services to the Group, totalling $515,888. The non-audit services were for the
provision of due diligence and tax advisory services.
The Directors are satisfied that the provision of non-audit services is compatible with general standard of independence for auditors imposed
by the Corporations Act 2001. The nature and the scope of each type of services provided means that auditor independence was not
compromised.
The details of total amounts paid to the external auditors are included in note 7.3 to the financial statements.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, EY, as part of the terms of its audit engagement agreement
against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify EY during or since
the financial year.
Proceedings on behalf of the Company
No person has applied for leave of the Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Indemnification of Directors and officers
The Company’s Rules provide for an indemnity of Directors, executive officers and secretaries where liability is incurred in connection with the
performance of their duties in those roles other than as a result of their negligence, default, breach of duty or breach of trust in relation to the
Company. The Rules further provide for an indemnity in respect of legal costs incurred by those persons in defending proceedings in which
judgment is given in their favour, they are acquitted or the Court grants them relief.
Since the end of the previous financial year, the Company has paid insurance premiums in respect of Directors’ and officers’ liability. The
insured persons under those policies are defined as all Directors (being the Directors named in this Report), executive officers and any
employees who may be deemed to be officers for the purposes of the Corporations Act 2001.
Rounding of Amounts
The Company has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
and accordingly, amounts in the financial report and Directors’ report have been rounded off to the nearest $1,000 where allowed under that
instrument.
Made in accordance with a resolution of the Directors at Sydney.
Dated:
23 September 2021
R.D. Millner
L.R. Partridge AM
Director
Director
Brickworks Annual Report 2021 p 109
House 1
GB Masonry Honed in Porcelain
Brisbane, QLD
110 p Brickworks Annual Report 2021
Auditor’s Independence
Declaration
Auditor’s Independence Declaration
to the Directors of Brickworks Limited
As lead auditor for the audit of the financial report of Brickworks Limited for the financial year ended 31 July 2021,
I declare 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 Brickworks Limited and the entities it controlled during the financial year.
Ernst & Young
Jodie Inglis
Partner
23 September 2021
Sydney
Brickworks Annual Report 2021 p 111
Consolidated Financial
Statements
Consolidated Income Statement
Consolidated Statement of Other Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
1
2
3
4
5
6
7
About this Report
Financial Performance
Operating Assets and Liabilities
Income Tax
Capital and Risk Management
Group Structure
Other Disclosures
113
114
115
116
117
118
118
120
128
133
138
146
156
112 p Brickworks Annual Report 2021
112 p Brickworks Annual Report 2021
Consolidated Income Statement
Continuing operations
Revenue
Cost of sales
Gross profit
Gain on bargain purchase
Other income
Distribution expenses
Administration expenses
Selling expenses
Note
2.2
6.5
2.2
Impairment of non-current assets
2.1, 3.2
Restructuring costs
Business acquisition costs
Other expenses
Share of net profits of associates and joint ventures
Profit from continuing operations before finance cost and income tax
Finance costs
Profit from continuing operations before income tax
Income tax expense
2.3
2.2
4.1
2021
$000
Restated1
2020
$000
890,313
(635,071)
949,926
(677,052)
255,242
272,874
–
12,105
(68,514)
(51,615)
(96,982)
(1,954)
(13,213)
(3,301)
(25,151)
340,746
347,363
(22,095)
325,268
(85,095)
3,776
469
(65,485)
(47,713)
(101,746)
(46,042)
(41,536)
(12,792)
(21,477)
475,639
415,967
(26,452)
389,515
(74,929)
Profit from continuing operations after tax
240,173
314,586
Discontinued operations
Loss from discontinued operations, net of income tax benefit
6.6
(1,010)
(16,508)
Profit after tax
239,163
298,078
Profit after tax attributable to:
Shareholders of Brickworks Limited
Earnings per share attributable to the shareholders of Brickworks Limited
Basic (cents per share)
Diluted (cents per share)
Basic (cents per share) from continuing operations
Diluted (cents per share) from continuing operations
2.4
2.4
2.4
2.4
The above consolidated income statement should be read in conjunction with the accompanying notes.
239,163
298,078
Cents
Cents1
158.3
157.9
159.0
158.6
198.8
198.7
209.9
209.7
1
Certain comparative amounts have been restated as a result of changes to the accounting policy in respect of Software as a Service (“SaaS”)
arrangements following the IFRS Interpretations Committee agenda decision published in April 2021 (refer to Note 7.6).
Brickworks Annual Report 2021 p 113
Consolidated Statement of
Other Comprehensive Income
Profit after tax
Other comprehensive income, net of tax
Items that may be subsequently reclassified to Income Statement
Share of increments/(decrements) in reserves attributable to associates and
joint ventures
Foreign currency translation
Income tax (expense)/benefit relating to these items
Net other comprehensive profit/(loss) that may be reclassified to Income Statement
Items not to be subsequently reclassified to Income Statement
Share of increments/(decrements) in reserves attributable to associates and
joint ventures
Net fair value gain/(loss) on financial assets at fair value through other
comprehensive income
Income tax (expense)/benefit relating to these items
Net other comprehensive income/(loss) not to be reclassified to Income Statement
Other comprehensive income/(loss), net of tax
Note
4.1
4.1
2021
$000
Restated1
2020
$000
239,163
298,078
(760)
920
228
388
(139,222)
(478)
41,910
(97,790)
(97,402)
9,818
(474)
(2,945)
6,399
2,121
331
(736)
1,716
8,115
Total comprehensive income
141,761
306,193
Total comprehensive income, attributable to:
Shareholders of Brickworks Limited
141,761
306,193
The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying notes.
1
Certain comparative amounts have been restated as a result of changes to the accounting policy in respect of Software as a Service (“SaaS”)
arrangements following the IFRS Interpretations Committee agenda decision published in April 2021 (refer to Note 7.6).
114 p Brickworks Annual Report 2021
Consolidated Balance Sheet
Cash and cash equivalents
Receivables
Inventories
Prepayments
Contract assets
Current income tax asset
Derivative financial assets
Total current assets
Inventories
Financial assets at fair value through other comprehensive income
Investments accounted for using the equity method
Property, plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
TOTAL ASSETS
Payables
Borrowings
Derivative financial liabilities
Current income tax liability
Post-employment liabilities
Contract liabilities
Lease liabilities
Other financial liabilities
Provisions
Total current liabilities
Borrowings
Derivative financial liabilities
Post-employment liabilities
Lease liabilities
Other financial liabilities
Provisions
Deferred income tax liability
Total non-current liability
TOTAL LIABILITIES
NET ASSETS
Issued capital
Reserves
Retained profits
TOTAL EQUITY
Note
5.2
3.1
3.1
3.1
4.2
5.7
3.1
5.3
6.3
3.2
3.3
3.2
3.1
5.4
5.4
4.2
3.5
3.1
3.3
6.5
3.4
5.4
5.4
3.5
3.3
6.5
3.4
4.2
5.5
5.6
2021
$000
139,825
132,447
285,392
9,524
3,956
8,618
101
Restated1
2020
$000
187,109
129,024
278,148
8,510
8,001
26,624
–
579,863
637,416
5,849
1,314
2,345,908
721,018
191,073
180,807
7,029
1,792
2,244,629
656,177
106,216
178,523
3,445,969
3,194,366
4,025,832
3,831,782
124,766
40,891
–
417
1,199
5,160
27,344
1,355
67,150
128,466
–
134
–
696
6,712
29,535
1,698
65,641
268,282
232,882
614,514
6,866
17,569
173,551
12,423
11,408
441,472
638,688
9,633
18,606
82,984
13,761
14,881
417,141
1,277,803
1,195,694
1,546,085
1,428,576
2,479,747
2,403,206
386,887
197,917
1,894,943
356,015
293,344
1,753,847
2,479,747
2,403,206
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Brickworks Annual Report 2021 p 115
Consolidated Statement of Changes in Equity
Notes
Issued capital
$000
Reserves
$000
Retained
profits
$000
Total
$000
For the year ended 31 July 2021
Restated balance at 1 August 20201
356,015
293,344
1,753,847
2,403,206
Profit after tax
Other comprehensive income/(loss) – net of tax
Net dividends paid
Share issue costs
Issue of issues through Dividend Reinvestment Plan
Issue of shares through employee share plan
Shares vested to employees
Shares purchased under STI scheme
Share of associates other movements in retained earnings
Share based payments expense
2.5
5.5
5.5
5.5
5.6
7.1
–
–
–
(144)
26,466
571
4,782
(803)
–
–
–
(97,402)
–
–
–
(571)
(4,782)
803
(154)
6,679
239,163
–
(74,881)
–
–
–
–
–
(23,186)
–
239,163
(97,402)
(74,881)
(144)
26,466
–
–
–
(23,340)
6,679
Balance at 31 July 2021
386,887
197,917
1,894,943
2,479,747
For the year ended 31 July 20201
Balance at 1 August 2019
Adjustment on the adoption of AASB 16 (net of tax)
351,229
–
283,357
–
1,532,772
(4,117)
2,167,358
(4,117)
Restated balance at 1 August 2019
351,229
283,357
1,528,655
2,163,241
Profit after tax1
Other comprehensive income – net of tax
Net dividends paid
Issue of shares through employee share plan
Net movement in associate reserve
Shares vested to employees
Share based payments expense
–
–
–
(10)
–
4,796
–
–
8,115
–
–
922
(4,796)
5,746
298,078
–
(71,964)
–
(922)
–
–
298,078
8,115
(71,964)
(10)
–
–
5,746
2.5
5.5
5.5
5.5
7.1
Balance at 31 July 2020
356,015
293,344
1,753,847
2,403,206
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
1
Certain comparative amounts have been restated as a result of changes to the accounting policy in respect of Software as a Service (“SaaS”)
arrangements following the IFRS Interpretations Committee agenda decision published in April 2021 (refer to Note 7.6).
116 p Brickworks Annual Report 2021
Consolidated Statement of Cash Flows
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other finance costs paid
Dividends and distributions received
Income tax refund/(paid)
Net cash from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchases of intangible assets
Purchase of investments in joint ventures
Proceeds from sale or return of investments
Proceeds from sale of subsidiary
Purchase of controlled entities, net of cash acquired
Net cash from/(used in) investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Payment of principal portion of lease liabilities
Proceeds from underwriter of Dividend Reinvestment Plan (DRP)
Share issue costs
Dividends paid
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash held
Effects of exchange rate changes on cash
Cash at the beginning of the financial year
Cash at the end of the financial year
Note
5.2
2021
$000
955,357
(892,961)
299
(22,723)
89,709
10,114
139,795
(117,181)
14,419
(2,727)
(8,050)
–
1,493
(1,689)
(113,735)
160,372
(140,000)
(29,182)
20,000
(144)
(83,932)
(72,886)
(46,826)
(458)
187,109
139,825
Restated1
2020
$000
999,521
(927,953)
404
(24,509)
84,764
(58,119)
74,108
(103,010)
9,607
–
(14,715)
35,140
3,543
(102,027)
(171,462)
439,302
(112,001)
(28,175)
–
–
(86,964)
212,162
114,808
(2,580)
74,881
187,109
Reconciliation of net profit attributable to shareholders of Brickworks Limited to net
cash from operating activities
Profit after tax
239,163
298,078
Adjustments for non-cash items
Depreciation and amortisation
Amortisation of right-of-use assets
Non-cash amortisation of borrowing costs
Capitalised borrowing costs on qualifying asset
Net fair value change on derivatives
Impairment of non-current assets
Non-cash profit on sale of land held for resale
Loss on disposal of subsidiary
Gain on bargain purchase
Net losses/(gains) on disposal of property, plant and equipment
Non-cash share based payment expense
Share of net profit of investments accounted for using the equity method
Net cash provided by operating activities before changes in assets and liabilities
Changes in assets and liabilities net of effects from business combinations
(Increase)/decrease in receivables
(Increase)/decrease in inventories
(Increase)/decrease in net contract assets
(Increase)/decrease in net assets held for sale
(Increase)/decrease in land held for resale
(Increase)/decrease in prepayments
(Decrease)/increase in payables
(Decrease)/increase in provisions
(Decrease)/increase in post-employment liabilities
(Decrease)/increase in other financial liabilities
(Decrease)/increase in current and deferred income tax
Net cash provided by operating activities
40,770
29,588
(455)
(852)
(3,003)
1,954
–
–
–
(7,298)
6,679
(251,037)
55,509
(5,545)
(8,308)
2,502
–
–
(1,069)
3,497
(1,593)
(94)
–
94,896
139,795
45,440
29,456
1,046
(960)
925
46,042
(28,019)
12,048
(3,813)
4,220
5,735
(390,875)
19,323
10,781
12,689
4,425
(82)
2,289
2,282
190
5,893
(625)
193
16,750
74,108
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Brickworks Annual Report 2021 p 117
Notes
to the Consolidated Financial Statements
1
About this report
This section sets out the basis upon which the financial statements are prepared as a whole. Significant and other accounting policies
underpinning the recognition and measurement basis of assets and liabilities are summarised throughout the notes to the financial
statements. Other accounting policies are outlined in note 7.6.
1.1
Statement of compliance and basis of preparation
The financial statements comprise Brickworks Limited and its controlled entities (the “Group”).
Brickworks Limited (ABN 17 000 028 526) is a for profit company limited by shares, incorporated and domiciled in Australia whose shares are
publicly traded on the Australian Stock Exchange (ASX code: BKW).
The nature of the operations and principal activities of the Group are described in note 2.1.
The Group’s consolidated financial statements are general purpose financial statements which:
◗ have been prepared in accordance with Australian Accounting Standards (AASBs), other authoritative pronouncements of the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001;
◗ comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB);
◗ incorporate the results of each controlled entity from the date Brickworks Limited obtains control and until such time as it ceases to
control an entity;
◗ have been prepared on a historical cost basis, except for derivative financial instruments, financial assets at fair value through other
comprehensive income and investment property held within the property trusts, which have been measured at fair value. Other financial
assets including receivables and borrowings have been measured at amortised cost;
◗ are presented in Australian dollars, which is the Group’s functional currency1;
◗ adopt all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the operations of the
Group and effective for reporting periods beginning on or after 1 August 2020;
◗ do not early adopt any Accounting Standards and Interpretations that have been issued or amended but are not yet effective as
disclosed in Note 7.6.
The financial statements were authorised for issue in accordance with a resolution of directors on 23 September 2021.
1
All values are rounded to the nearest thousand dollars or in certain cases, the nearest dollar, in accordance with the Australian Securities and
Investments Commission (ASIC) Corporations Instrument 2016/191.
118 p Brickworks Annual Report 2021
1.2
Key estimates or judgements
In the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates of future
events. The areas involving a higher degree of judgement and complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in the following areas:
Note
3.2(a)
3.2(c)
6.3(b)
Judgement/Estimate
Property, plant and equipment
Non-current assets impairment assessment
Fair value – investment property
1.3
COVID-19
The COVID-19 pandemic has had a significant impact on the economic environment in both Australia and North America.
The Group continues to actively manage the risks arising from COVID-19. This includes scenario and contingency planning, stress testing of
cash flows and sensitivity analysis. Significant estimates and judgments made in the process of applying the Group’s accounting policies have
been developed taking into account the uncertainty of the short-term and long-term effects of the pandemic.
1.4
Comparative information
Certain comparative information was amended in these financial statements to conform to the current year presentation. Except for the
changes to the accounting policy in respect of Software as a Service (“SaaS”) arrangements (refer to Note 7.6), these amendments do not
impact the Group’s financial result and do not have any significant impact on the Group’s statement of financial position.
The notes are organised into the following sections:
2
3
4
5
6
Financial
Performance
Provides the information that is considered most relevant to understanding the financial performance of
the Group.
Operating Assets
and Liabilities
Provides a breakdown of individual line items in the balance sheet that are considered most relevant to
users of the financial report.
Income Tax
Provides the information considered most relevant to understanding the taxation treatment adopted by
the Group during the financial year.
Capital and Risk
Management
Provides information about the capital management practices of the Group and its exposure to various
financial risks.
Group Structure
Explains significant aspects of the Brickworks’ group structure, including its controlled entities and equity
accounted investments in which the Group has an interest. When applicable, it also provides information
on business acquisitions or disposals of subsidiaries made during the year.
7
Other
Provides information on items which require disclosure to comply with AASBs and other regulatory
pronouncements and any other information that is considered relevant for the users of the financial report
which has not been disclosed in other sections.
Brickworks Annual Report 2021 p 119
Notes to the Consolidated Financial Statement
2
Financial Performance
This section provides the information that is considered most relevant to understanding the financial performance of the Group, including
profitability of its operating segments, significant items, nature of its revenues and expenses and dividends paid to the shareholders.
2.1
Segment reporting
Management identified the following reportable business segments:
Building Products
Australia
Manufacture of vitrified clay, concrete and timber products used in the building industry. Major product lines
include bricks, masonry blocks, pavers, roof tiles, floor tiles, precast walling and flooring panels, fibre cement
walling panels and roof battens used in the building industry.
Building Products
North America
Manufacture of vitrified clay and concrete products used in the building industry. Major product lines include
bricks and masonry blocks used in the building industry.
Property
Investments
Utilisation of opportunities associated with land owned by the Group, including the sale of property and
investment in Property Trusts.
Holds investments in the Australian share market, both for dividend income and capital growth, and includes the
investment in Washington H. Soul Pattinson and Company Limited (WHSP).
120 p Brickworks Annual Report 2021
31 July 2021
REVENUE
Sale of goods3
Revenue from supply and
install contracts4
Interest received
Rental revenue
Other operating revenue
Building
Products
Australia
$’000
Building
Products
North America
$’000
584,103
201,331
102,547
–
376
472
–
–
–
1,036
Revenue
687,498
202,367
149
RESULT
Segment EBITDA
Amortisation of right-of-use assets
Depreciation and amortisation
96,854
(24,801)
(27,669)
26,414
(4,787)
(13,102)
252,679
–
–
96,946
–
–
472,893
(29,588)
(40,771)
Segment EBIT
44,384
8,525
252,679
96,946
402,534
Property
$’000
Investments
$’000
Continuing
operations
$’000
Discontinued
operations2
$’000
Consolidated
$’000
–
–
–
74
75
–
785,434
–
299
–
–
299
102,547
299
450
1,583
890,313
–
–
–
–
–
–
–
–
–
–
785,434
102,547
299
450
1,583
890,313
472,893
(29,588)
(40,771)
402,534
(40,448)
(18,735)
(19,417)
323,934
(84,771)
(39,114)
(18,735)
(19,417)
325,268
(85,095)
(1,334)
–
–
(1,334)
324
Unallocated expenses
Significant items
Borrowing costs5
Other unallocated expenses
Profit/ (loss) before income tax
Income tax (expense)/benefit1
Profit/ (loss) after income tax
ASSETS
Segment assets
Unallocated assets
Total assets
LIABILITIES
Segment liabilities
Borrowings
Other unallocated liabilities
Total liabilities
OTHER
Share of profit of an associate and
a joint venture
Carrying value of investments
accounted for by the equity
method
Acquisition of non-current
segment assets
Non-cash expenses other than
depreciation and amortisation
1,187,936
463,764
911,170
1,454,242
192,969
242,045
1,599
243,861
240,173
(1,010)
239,163
4,017,112
8,720
4,025,832
680,474
655,404
210,207
–
–
–
–
4,017,112
8,720
4,025,832
680,474
655,404
210,207
1,546,085
–
1,546,085
843
18,191
–
–
253,989
85,914
340,746
911,170
1,416,547
2,345,908
72,758
44,423
8,050
42,034
33,411
–
–
–
125,231
75,445
–
–
–
–
340,746
2,345,908
125,231
75,445
Included in the income tax expense is tax expense related to significant items amounting to $5,623,000.
1
2 Refer to Discontinued operations – Note 6.6.
3 Recognised at a point in time.
4 Recognised over time.
5 Borrowing costs are presented net of fair value change on derivatives ($3,003,000) and exclude the unwind of discounting deferred consideration
related to the Redland Brick acquisition ($358,000) which is disclosed in the “Significant items” line.
Brickworks Annual Report 2021 p 121
Notes to the Consolidated Financial Statement
2.1
Segment reporting (continued)
31 July 2020 (restated)
REVENUE
Sale of goods3
Revenue from supply and
install contracts4
Sale of land held for resale3
Interest received
Rental revenue
Other operating revenue
Building
Products
Australia
$’000
Building
Products
North America
$’000
Property
$’000
Investments
$’000
Continuing
operations
$’000
Discontinued
operations2
$’000
Consolidated
$’000
573,262
230,102
–
–
803,364
8,120
811,484
110,140
–
–
91
455
–
–
–
50
116
–
35,140
–
149
17
–
–
404
–
–
404
110,140
35,140
404
290
588
–
–
–
–
–
110,140
35,140
404
290
588
949,926
8,120
958,046
Revenue
683,948
230,268
35,306
RESULT
Segment EBITDA
Amortisation of right-of-use assets
Depreciation and amortisation
90,780
(26,363)
(31,821)
26,773
(3,093)
(13,619)
129,437
–
–
50,771
–
–
297,761
(29,456)
(45,440)
(1,691)
–
–
296,070
(29,456)
(45,440)
Segment EBIT
32,596
10,061
129,437
50,771
222,865
(1,691)
221,174
Unallocated expenses
Significant items
Borrowing costs5
Other unallocated expenses
Profit/(loss) before income tax
Income tax (expense)/benefit1
Profit/(loss) after income tax
ASSETS
Segment assets
Unallocated assets
Total assets
LIABILITIES
Segment liabilities
Borrowings
Other unallocated liabilities
Total liabilities
OTHER
Share of profit of an associate and
a joint venture
Carrying value of investments
accounted for by the equity method
Acquisition of non-current
segment assets
Non-cash expenses other than
depreciation and amortisation
209,742
(26,243)
(16,849)
389,515
(74,929)
(9,397)
–
–
200,345
(26,243)
(16,849)
(11,088)
(5,420)
378,427
(80,349)
314,586
(16,508)
298,078
1,096,598
336,802
677,365
1,704,403
261,361
93,989
2,132
279,015
3,815,168
16,614
3,831,782
636,497
638,688
153,391
1,428,576
335
18,044
–
–
107,625
367,679
475,639
677,365
1,549,220
2,244,629
78,661
127,442
14,715
113,149
43,015
–
–
–
220,818
156,164
–
–
–
–
–
–
–
–
–
85
–
3,815,168
16,614
3,831,782
636,497
638,688
153,391
1,428,576
475,639
2,244,629
220,903
156,164
The Group has a large number of customers to which it provides products, with no individual customers that account for more than 10% of
external revenues.
1
Included in the income tax expense is tax expense related to
significant items amounting to $47,625,000.
2 Refer to Discontinued operations – Note 6.6.
3 Recognised at a point in time.
4 Recognised over time.
5
Borrowing costs are presented excluding the unwind of discounting
deferred consideration related to the Redland Brick acquisition
($209,000) which is disclosed in the “Significant items” line.
122 p Brickworks Annual Report 2021
Recognition and measurement
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur
expenses, whose operating results are regularly reviewed by the Group’s Chief Operating Decision Maker (CODM) to effectively allocate
Group resources and assess performance and for which discrete financial information is available.
Management identifies the Group’s operating segments based on the internal reports that are reviewed and used by the Board of
Directors in their role as the CODM. The operating segments are identified based on the consideration of the nature of products sold
and services provided. Discrete information about each of these business divisions is presented to the Board of Directors on a recurring
basis. A number of operating segments have been aggregated to form the Building Products segment. The accounting policies used
by the Group in reporting segments internally are the same as those disclosed in the significant accounting policies, with the exception
that significant items (i.e. those items which by their size and nature or incidence are relevant in explaining financial performance) are
excluded from trading profits. This approach is consistent with the manner in which results are reported to the CODM.
Significant items
Note
Restructuring costs – Australia1
Restructuring costs – North America2
Plant relocation and commissioning costs3
Acquisition costs4
ERP implementation costs5
COVID-19 – incremental costs6
COVID-19 – unabsorbed costs7
Change in accounting policy – Software as a Service (SaaS)7
Impairment of non-current assets8
Gain on bargain purchase – Sioux City Brick acquisition9
2021
$000
(5,138)
(5,588)
(4,514)
(3,659)
(3,209)
(2,936)
(2,389)
(948)
–
–
2020
$000
(30,470)
(11,066)
–
(13,000)
–
(912)
(8,705)
(1,151)
(46,042)
3,776
Significant items from continuing operations before income tax (excluding associates)
(28,381)
(107,570)
Income tax benefit on other significant items (excluding associates)10
Income tax benefit related to the Coronavirus Aid, Relief, and Economic Security Act
(“CARES Act”) in the United States of America10
11,871
26,543
–
5,241
Significant items from continuing operations after income tax (excluding associates)
(16,510)
(75,786)
Significant one-off transactions of associate11
Income tax expense arising from the carrying value of the investment in the associates (WHSP)10
(10,733)
(17,818)
317,312
(73,229)
Significant items after income tax (associates)
(28,551)
244,083
Significant items from continuing operations after income tax (including associates)
(45,061)
168,297
Other significant items12
Loss on disposal of business12
Significant items from discontinued operations before income tax
Income tax (expense)/benefit12
6.6
6.6
–
(1,334)
(1,334)
324
(7,211)
(2,186)
(9,397)
(6,090)
Significant items from discontinued operations after income tax
(1,010)
(15,487)
Recognition and measurement
Significant items are those which by their size and nature or incidence are relevant in explaining the financial performance of the Group
compared to the prior year.
Table notes on following page
Brickworks Annual Report 2021 p 123
Notes to the Consolidated Financial Statement
2.1
Segment reporting (continued)
Disclosed in ‘Restructuring costs’ line on the Income Statement.
1
2 Disclosed in ‘Restructuring costs’ ($4.7 million) and Impairment of
non-current assets’ ($0.9 million) lines on the Income Statement.
3 Disclosed in ‘Restructuring Costs’ ($3.4 million) and ‘Cost of sales’
($1.1 million) lines on the Income Statement.
4 Disclosed in ‘Business acquisition costs’ ($3.2 million) and ‘Finance
costs’ ($0.4 million) lines on the Income Statement.
5 Disclosed in ‘Other expenses’ ($2.2 million) and ‘Impairment of non-
current assets’ ($1.0 million) lines on the Income Statement.
6 Disclosed in ‘Other expenses’ line on the Income Statement.
7 Disclosed in ‘Cost of sales’ line on the Income Statement.
8 Disclosed in ‘Impairment of non-current assets’ line on the Income
Statement. Refer to Property, plant and equipment and intangible
assets – Note 3.2. (c).
9 Disclosed in ‘Gain on a bargain purchase’ line on the Income
Statement.
10 Disclosed in ‘Income tax expense’ line on the Income Statement.
11 Disclosed in ‘Share of net profits of associates and joint ventures’
line on the Income Statement.
12 Disclosed in the ‘Losses from discontinued operations, net of
income tax benefit’ line on the Income Statement.
2.2 Revenues and expenses
(a)
Revenue and other income
REVENUE
Revenue from contracts with customers
Sale of goods
Revenue from supply and install contracts
Sale of land held for resale
Other operating revenue
Interest received – other corporations
Rental revenue
Other
2021
$000
Restated
2020
$000
785,434
102,547
–
803,364
110,140
35,140
887,981
948,644
299
450
1,583
404
290
588
Total operating revenue from continuing operations
890,313
949,926
OTHER INCOME
Net gain on disposal of property, plant and equipment
Net fair value change on derivatives
Property development profits
Recovery of legal costs
Other items
Total other income from continuing operations
7,298
3,003
1,751
–
53
12,105
–
–
–
415
54
469
All remaining performance obligations related to supply and install contracts are expected to be recognised within one year.
124 p Brickworks Annual Report 2021
Recognition and measurement
Revenue is recognised when control of the asset has passed to
the buyer and the amount of revenue can be measured reliably.
Revenue is measured at the fair value of the consideration
received or receivable net of discounts, allowances and goods
and services tax (GST). Trade discounts and volume rebates
give rise to variable consideration. The variable consideration
is estimated at contract inception and constrained until the
associated uncertainty is subsequently resolved. The application
of the constraint on variable consideration increases the amount
of revenue that will be deferred.
The Group’s contracts for the sale of goods and associated freight
generally include one performance obligation. The revenue
is recognised at the point in time when control of the asset is
transferred to the customer, generally on delivery of the products.
The performance obligation is satisfied upon delivery of the goods
and payment is generally due within 30 to 60 days from delivery.
Performance obligations arising from supply and install contracts
are satisfied over time. On that basis, the Group recognise
revenue from these contracts over time.
The performance obligation related to supply and install
contracts is satisfied over time and payment is generally due
upon completion of installation and acceptance of the customer.
In some contracts, short-term advances are required before the
installation service is provided.
Revenue from the sale of land held for resale is recognised at the
point at which any contract of sale in relation to industrial land has
become unconditional, and at which settlement has occurred for
residential land.
Dividend revenue is recognised when the right to receive
a dividend has been established. Dividends received from
associates and joint ventures are accounted for in accordance
with the equity method of accounting.
Rental income from investment properties is accounted for on a
straight-line basis over the term of the rental contract.
Net gain/(loss) on disposal of property, plant and equipment is
recognised when the risks and rewards have been transferred
and the Group does not retain either continuing managerial
involvement to the degree usually associated with ownership,
or effective control over the assets sold. The gain is measured
as a difference between the amount receivable under the sale
contract and the carrying value of the disposed asset.
(b)
Expenses
Specific Expense Disclosures
Wages and salaries
Post-employment benefits expense
Health insurance expense – US employees
Share based payments expense
Other
2021
$000
207,166
12,788
9,444
6,679
8,541
Restated
2020
$000
222,716
14,225
9,689
5,746
7,243
Employee benefits expense from continuing operations
244,618
259,619
Research and development expenses
Depreciation of property, plant and equipment
Amortisation of right-of-use assets
Amortisation of intangible assets
3,311
40,724
29,588
46
2,413
45,375
29,456
65
Depreciation and amortisation from continuing operations
70,358
74,896
Net loss on the sale of property
Net loss on disposal of plant and equipment
Net loss on the sale of intangibles
Net loss on disposal of non-current assets
Interest and finance charges paid/payable
Interest on lease liabilities
Unwind of discounting on deferred consideration – Redland Brick acquisition
Net fair value change on derivatives
6.5 (b)
–
–
–
–
17,810
3,927
358
–
3,615
391
214
4,220
21,164
4,154
209
925
Total finance costs from continuing operations
22,095
26,452
Brickworks Annual Report 2021 p 125
Notes to the Consolidated Financial Statement
2.2 Revenues and expenses (continued)
Recognition and measurement
Employee benefits expense includes salaries and wages, leave entitlements (refer note 3.4), post-employment benefit (refer note 3.5),
share based payments and other employee entitlements. The expense is charged against profit in their respective expense categories
when services are provided by employees, except for share based payment expense which is recognised based on the vesting period
(refer note 7.1).
Finance costs expense relates primarily to the interest on interest bearing liabilities and is recognised in the period in which they are
incurred, except when they are included in the costs of qualifying assets in which they are capitalised up to the point that the asset is
ready for its intended use.
2.3 Share of net profits of associates and joint ventures
Share of net of profits of associates
Share of net profits of joint ventures
Notes
6.3 (a)
6.3 (b)
2021
$000
85,914
254,832
2020
$000
367,679
107,960
340,746
475,639
Recognition and measurement
Share of net profits of associates and joint ventures is accounted for using the equity method. The consolidated income statement
reflects the Group’s share of the results of associates and joint ventures.
Accounting policies applied with respect to the Group’s investments in associates and joint ventures are further outlined in Note 6.3.
2.4 Earnings per share (EPS)
Profit after tax attributable to shareholders of Brickworks Limited ($’000)
Weighted average number of ordinary shares used in the calculation of basic EPS (thousand)
Weighted average number of ordinary shares used in the calculation of diluted EPS (thousand)
Basic EPS (cents per share)
Diluted EPS (cents per share)
Basic EPS (cents per share) from continuing operations
Diluted EPS (cents per share) from continuing operations
2021
239,163
151,098
151,455
158.3
157.9
159.0
158.6
Restated
2020
298,078
149,902
150,041
198.8
198.7
209.9
209.7
Recognition and measurement
Basic earnings per share (EPS) ) is calculated by dividing the profit attributable to shareholders of Brickworks Limited, after eliminating
the effect of earnings related to the parent entity’s shareholding arrangements and excluding any costs of servicing equity other than
ordinary shares, by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS adjusts the figures used in the determination of basic EPS to reflect the after income tax effect of interest and other finance
costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for
no consideration in relation to these shares. Diluted earnings per share are shown as being equal to basic earnings per share if potential
ordinary shares are non-dilutive to existing ordinary shares.
126 p Brickworks Annual Report 2021
2.5 Dividends and franking credits
Type of dividend (fully franked)
Cents per share
2019 Final
2020 Interim
2020 Final
2021 Interim
2021 Final1
38.0
20.0
39.0
21.0
40.0
Dividends declared in each financial year
cents per share
Total amount
$’000
56,976
29,988
58,563
31,835
60,639
Date paid/payable
27 Nov 19
5 May 20
25 Nov 20
28 Apr 21
24 Nov 21
60
45
30
15
0
34.0
36.0
38.0
39.0
40.0
17.0
18.0
19.0
20.0
21.0
2017
2018
2019
2020
2021
Interim ordinary dividend
Final ordinary dividend
2020 Final ordinary dividend (PY: 2019)
2021 Interim ordinary dividend (PY: 2020)
Group’s share of dividend received by associated company
Franking account balance on a tax paid basis
2021
$000
58,563
31,835
(15,517)
74,881
181,801
2020
$000
56,976
29,988
(15,000)
71,964
203,535
The impact on the franking account of dividends resolved to be paid after 31 July 2021, but not recognised as a liability, will be a reduction
in the franking account of $26.0 million (2020: $25.1 million).
1
The final dividend for the 2021 financial year has not been recognised as a liability in this financial report because it was resolved to be paid after
31 July 2021. The amounts disclosed as recognised in 2021 are the final dividend in respect of the 2020 financial year and the interim dividend in
respect of the 2021 financial year.
Brickworks Annual Report 2021 p 127
Notes to the Consolidated Financial Statement
3
Operating Assets and Liabilities
This section provides further information about the Group’s operating assets and liabilities, including its working capital, property, plant
and equipment, right-of-use assets, intangible assets, lease liabilities and provisions.
3.1 Working capital
(a) Receivables
2021
$000
2020
$000
(b) Inventories
2021
$000
2020
$000
Trade receivables
Allowance for expected
credit losses
128,289
124,987
(2,134)
(2,063)
Net trade receivables
Other debtors
126,155
6,292
122,924
6,100
Current
Raw materials and stores
Work in progress
Finished goods
54,180
4,942
226,270
55,234
4,894
218,020
Total
285,392
278,148
Non-current
Raw materials
5,849
7,029
Write-down of inventories recognised as an expense for the 2021
financial year amounted to $6.7 million (2020: $11.9 million).
(c) Current payables
Trade payables and
accruals
124,766
128,466
Average terms on trade payables are 30 days from statement.
Movement in allowance
for expected credit
losses
Opening balance
Acquisition of subsidiary
Trade debts provided
Trade debts written-off
Foreign currency
exchange difference
Closing balance
Receivables past due
Receivables past due but
not impaired
Past due 0–30 days
Past due 30+ days
132,447
129,024
2,063
–
1,490
(1,401)
(18)
2,134
10,116
9,775
19,891
1,415
461
2,238
(1,964)
(87)
2,063
5,463
5,004
10,467
As at 31 July 2021 the contract assets amounted to $4.0 million (2020: $8.0 million) and contract liabilities to $5.2 million (2020: $6.7 million).
There has been no allowance for expected credit losses recognised related to the contract assets.
Recognition and measurement
Trade receivables are initially recognised at the value of the invoice issued to the customer and subsequently measured at amortised
cost and are subject to impairment.
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the
Group expects to receive, discounted at an approximation of the original effective interest rate.
Inventories are measured at:
◗ Raw materials: the lower of actual cost and net realisable value
◗ Finished goods and work in progress: the lower of cost and net realisable value. The cost of manufactured products includes direct
materials, direct labour and an appropriate portion of variable and fixed overheads. Fixed overheads are applied on the basis of
normal production capacity.
Net realisable value represents the estimated selling price less all estimated costs of completion and the estimated costs necessary to
make the sale.
128 p Brickworks Annual Report 2021
Contract assets are initially recognised for revenue earned from supply and install contracts as receipt of consideration is conditional
on successful completion of installation. Upon completion of installation and acceptance by the customer, the amounts recognised as
contract assets are reclassified to trade receivables.
Contract liabilities include advances received in relation to supply and install contracts as well as transaction price allocated to customer
incentive programs.
Trade and other payables are recognised when the Group becomes obliged to make future payments resulting from the purchase of
goods and services. Payables are stated at amortised cost.
3.2 Property, plant and equipment and intangible assets
(a)
Property, plant and equipment
Land and buildings
Plant and equipment
Total
Notes
2021
$000
2020
$000
2021
$000
Restated
2020
$000
2021
$000
Restated
2020
$000
Cost
Accumulated depreciation
and impairment losses
389,715
396,428
814,826
714,077
1,204,541
1,110,505
(74,473)
(75,639)
(409,050)
(378,689)
(483,523)
(454,328)
Net carrying amount 31 July
315,242
320,789
405,776
335,388
721,018
656,177
7.6
6.5
Net carrying amount at 1 August
Additions1
Change in accounting policy
Acquisitions through business
combinations
Adjustment on finalisation of acquisition
accounting
Disposals
Transfers to land held for resale
Transfer to asset held for sale
Impairment losses
Foreign currency exchange difference
Depreciation expense
320,789
12,206
–
299,792
7,350
–
335,388
106,778
(949)
297,779
90,221
(1,151)
656,177
118,984
(949)
597,571
97,571
(1,151)
–
61,519
–
12,585
–
74,104
–
(5,947)
–
–
(399)
(2,334)
(9,073)
(935)
(11,785)
(2,288)
(92)
(18,370)
(5,707)
(8,695)
–
(1,174)
–
–
(1,555)
(1,061)
(31,651)
–
(1,828)
–
–
(23,815)
(1,723)
(36,680)
–
(7,121)
–
–
(1,954)
(3,395)
(40,724)
(935)
(13,613)
(2,288)
(92)
(42,185)
(7,430)
(45,375)
Net carrying amount 31 July
315,242
320,789
405,776
335,388
721,018
656,177
As at 31 July 2021 capital works in progress, disclosed as part of plant and equipment, amounted to $170.2 million (2020: $95.0 million).
Recognition and measurement
Property, plant and equipment is measured at cost less depreciation and impairment losses. Subsequent costs are included in the
asset’s carrying amount 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. All other repairs and maintenance are charged to the income statement during the reporting
period in which they are incurred.
Depreciation commences on assets when it is deemed they are capable of operating in the manner intended by management. Assets
are depreciated over their estimated useful lives, except for leasehold improvements which are depreciated over the shorter of their
estimated useful life and the remaining lease period. Depreciation is charged to the income statement based on the rates indicated below.
Freehold land
Buildings
not depreciated
2.5%-4.0% prime cost
Plant and equipment
4.0%-33.0% prime cost, 7.5%-22.5% diminishing value
Carrying amounts are assessed for impairment whenever there is an indication they may be impaired. If the carrying amount of an asset
is greater than its estimated recoverable amount, the carrying amount is written down to its recoverable amount.
1
Additions to plant and equipment include $0.9 million of capitalised borrowing costs in the current year.
Brickworks Annual Report 2021 p 129
Notes to the Consolidated Financial Statement
3.2 Property, plant and equipment and intangible assets (continued)
Significant accounting judgements, estimates and assumptions
Estimation of useful lives of assets has been based on historical experience. The condition of assets is assessed at least annually and
considered against the remaining useful lives. Adjustments to useful lives are made when considered necessary.
(b)
Intangible assets
Notes
Goodwill
$’000
Brand
names
$’000
Other
$’000
Total
$’000
Cost
Accumulated amortisation and
impairment losses
264,682
17,129
3,198
285,009
(103,685)
–
(517)
(104,202)
Net carrying amount 31 July 2021
160,997
17,129
2,681
180,807
Net carrying amount 1 August 2020
Additions
Foreign currency exchange difference
Amortisation expense
161,205
–
(208)
–
17,318
–
(189)
–
–
2,727
–
(46)
178,523
2,727
(397)
(46)
Net carrying amount 31 July 2021
160,977
17,129
2,681
180,807
Cost
Accumulated amortisation and impairment losses
266,020
(104,815)
19,380
(2,062)
944
(944)
286,344
(107,821)
Net carrying amount 31 July 2020
161,205
17,318
–
178,523
Net carrying amount 1 August 2019
Acquisitions through business combinations
Adjustment on finalisation of acquisition accounting
Disposals
Impairment losses
Foreign currency exchange difference
Amortisation expense
6.5
6.5
157,943
4,211
688
–
(1,130)
(507)
–
19,765
–
–
–
(2,062)
(385)
–
944
–
–
(214)
(665)
–
(65)
178,652
4,211
688
(214)
(3,857)
(892)
(65)
Net carrying amount 31 July 2020
161,205
17,318
–
178,523
(c)
Impairment assessment
Allocation of goodwill and intangible assets with indefinite useful lives to cash generating units
(i)
Goodwill is allocated to the Group’s CGUs for impairment testing purposes. Building Products North America and national divisions within
the Building Products Australia operating segment are CGUs which represent the lowest level at which the results are monitored for internal
reporting purposes. At 31 July 2021 the following CGUs representing business operations have allocations of goodwill:
◗ Austral Bricks: $152.0 million (2020: $152.0 million)
◗ Building Products North America: $9.0 million (2020: $9.2 million)
For the purpose of impairment assessment outlined below brand names with indefinite useful lives with a carrying value of $17.1 million
(2020: $17.3 million) have been allocated to the following CGUs, which form part of the Building Products Australia and North America
operating segments:
◗ Austral Bricks: $9.0 million (2020: $9.0 million)
◗ Building Products North America: $8.1 million (2020: $8.3 million)
Each CGU tested for impairment has been valued based on value-in-use methodology, using the assumptions outlined in point (ii) below.
130 p Brickworks Annual Report 2021
(ii)
Austral Bricks and Building Products North America impairment assessment – key assumptions
Significant accounting judgements, estimates and assumptions
Management is required to make significant estimates and judgements in assessing the carrying amount of non-financial assets
for impairment. The valuations used to support the carrying amounts of each CGU (including goodwill, other intangible assets and
property, plant and equipment) are based on forward-looking assumptions that are by their nature uncertain. The nature and basis of
the key assumptions used to estimate the future cash flows and discount rates, and on which the Group has based its projections when
determining the recoverable value of each CGU, are set out below.
Calculation
method
The recoverable amount of each CGU is determined on the basis of value-in-use (VIU), unless there is evidence
to support a higher fair value less cost to sell.
VIU calculations use cash flows projections, inclusive of working capital movements, and are based on financial
projections approved by the Board covering a five-year period. Estimates beyond five years are calculated with a
growth rate that reflects the long-term growth rate.
Sales volumes
Sales volumes are management forecasts reflecting independent external forecasts of underlying economic
activity for the market sectors and geographies in which each CGU operates. A major driver of sales volumes
is the level of activity in the relevant segment in the building sector. Management has assessed the reported
forecast construction activity data in Australia and North America from external sources.
Sales prices
Management expects to obtain price growth over the forecast period. The assumed increases differ by CGU and
between different states where the CGU operates.
Costs
Costs are calculated taking into account historical gross margins, known cost increases, and estimated inflation
rates over the period that are consistent with the locations in which the CGUs operate.
Terminal value
earnings
Long-term
growth rates
Discount rate
For Australia the terminal value earnings are based on average historical earnings (6-7 years) moderated to
reflect structural changes to the market in which the CGU operates. For North America, taking into account the
businesses are newly acquired, the terminal value earnings are based on the average cashflows forecast over the
forecast period.
Long-term growth rates used in cash flow valuation reflect 2.5% (2020: 2.5%).
Management uses an independent external advisor to calculate the appropriate discount rate applied
consistently across all CGUs. For 2021, the pre-tax discount rate calculated including the impact of AASB 16 -
Leases for the Australian CGU was 12.36% and 11.45% for the North American CGU.
Sensitivity to changes in assumptions
(iii)
There are no CGUs where a reasonably possible change in a key assumption would result in an impairment to the carrying value of goodwill or
other indefinite useful life intangibles.
Brickworks Annual Report 2021 p 131
Notes to the Consolidated Financial Statement
3.3 Right-of-use assets and lease liabilities
As at 1 August 2020
New and modified leases
Leases terminated
Depreciation expense
Payment of principal portion of lease liability
Foreign exchange difference
Right-of-use assets
Property
Equipment
$’000
$’000
Vehicles
$’000
Total
$’000
Liabilities
$’000
66,519
64,738
(60)
(10,547)
–
(587)
37,203
47,734
(31)
(16,645)
–
(122)
2,494
2,840
(61)
(2,396)
–
(6)
106,216
115,312
(152)
(29,588)
–
(715)
(112,519)
(118,244)
157
–
29,182
529
As at 31 July 2021
120,063
68,139
2,871
191,073
(200,895)1
As at 1 August 2019
New and modified leases
Leases terminated
Depreciation expense
Payment of principal portion of lease liability
Foreign exchange difference
58,942
17,786
(204)
(10,031)
–
26
47,231
7,332
(433)
(16,872)
–
(55)
4,232
899
(49)
(2,588)
–
–
110,405
26,017
(686)
(29,491)
–
(29)
(115,514)
(26,017)
737
–
28,175
100
As at 31 July 2020
66,519
37,203
2,494
106,216
(112,519)1
During the year, the Group recognised rent expense of $4.3 million (2020: $1.6 million) from short-term leases and variable lease payments.
Recognition and measurement
The Group recognises right-of-use assets at the commencement of the lease (i.e. the date the underlying asset is available for use).
The initial measurement of right-of-use assets includes the amount of liabilities recognised and lease payments made at or before
the commencement date, less any incentives received. Right-of-use assets are subsequently measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. Unless the Group is reasonably certain to
obtain the ownership of the leased asset at the end of the lease term, the right-of-use assets are depreciated on a straight-line basis over
the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment assessments under AASB 136
Impairments of Assets. At the commencement of a lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any
lease incentives receivable, variable lease payments that depend on an index or rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include renewal periods where the Group is reasonably certain to exercise the renewal
option. Outgoings and other variable lease payments that do not depend on an index or a rate are recognised as expense as incurred. In
calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased
to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Short-term lease and leases of low-value assets
The Group applies a recognition exemption to leases that have a lease term of 12 months or less from the commencement date and do
not contain a purchase option. It also applies a recognition exemption to leases that are considered of low value. Lease payments on
short-term and low-value leases are recognised as expense on a straight-line basis over the lease term.
Judgements in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably
certain not to be exercised. After initial recognition, the Group reassesses the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew.
1
$27.3 million (2020: $29.5 million) included in current liabilities and $173.6 (2020: $83.0) million in non-current liabilities.
132 p Brickworks Annual Report 2021
3.4 Provisions
Employee
benefits
Notes
$’000
Opening balance 1 August 2020
Recognised / (reversed)
Foreign currency exchange
difference
Settled
51,255
64,361
(172)
(60,837)
Remedi-
ation
$’000
11,013
(838)
(99)
(754)
Infra-
structure
costs
$’000
Workers
compens-
ation
$’000
1,959
601
–
(1,413)
3,230
2,994
–
(2,178)
Site
Closures
$’000
8,028
3,393
(116)
(4,016)
Other
$’000
5,037
2,157
Total
$’000
80,522
72,668
(31)
(5,016)
(418)
(74,214)
Closing balance 31 July 2021
54,607
9,322
1,147
4,046
7,289
2,147
78,558
Current
Non-current
Total
Opening balance 1 August 2019
Recognised / (reversed)
Business combinations
Foreign currency exchange
difference
Transferred from liabilities held
for sale
Settled
6.5
51,097
3,510
54,607
49,821
69,695
2,889
1,424
7,898
9,322
10,348
2,888
3,894
1,147
–
1,147
875
1,190
–
4,046
7,289
–
–
2,147
–
67,150
11,408
4,046
7,289
2,147
78,558
2,156
1,815
130
1,660
14,607
1,075
788
3,644
932
65,648
93,839
8,920
(2,418)
(368)
–
(8)
(1,192)
(320)
(4,306)
–
(68,732)
–
(5,749)
–
(106)
550
(1,413)
–
(8,122)
1,000
(1,007)
1,550
(85,129)
Closing balance 31 July 2020
51,255
11,013
1,959
3,230
8,028
5,037
80,522
Current
Non-current
Total
47,054
4,201
333
10,680
51,255
11,013
1,959
–
1,959
3,230
–
8,028
–
5,037
–
65,641
14,881
3,230
8,028
5,037
80,522
Recognition and measurement
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
settlement will be required and the obligation can be reliably measured. The amount recognised as a provision represents the best
estimate of the consideration required to settle the present obligation at reporting date and uncertainties surrounding the obligation.
Provision for employee benefits is recognised in respect of the benefits arising from services rendered by employees to balance date.
Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the
liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the
estimated future cash outflows to be made for those benefits. Estimated future payments include related on-costs, reflect assumptions
regarding future wage and salary levels, employee departures and periods of service, and have been discounted using market yields on
Australian high quality corporate bond rates.
Provision for remediation is recognised for the estimated costs of restoring operational and quarry sites to their original state in
accordance with relevant approvals. The settlement of this provision will occur as the operational site nears the end of its useful life,
or once the resource allocation within the quarry is exhausted, which varies based on the size of the resource and the usage rate of
the extracted material. The landfill opportunities created through the extraction of clay and shale is considered to be a valuable future
resource. No provision is made for future rehabilitation costs when the rehabilitation process is expected to be cash flow positive.
Provision for infrastructure costs is recognised for the Group’s obligation for the estimated costs of completed infrastructure works in
relation to certain properties. The timing of the future outflows is expected to occur within the next financial year.
Provision for workers compensation relates to the Group’s self insurance for workers compensation program. The subsidiaries of
the Group are licensed self insurers in New South Wales, Victoria, Western Australia and Australian Capital Territory for workers
compensation insurance. The provision is determined with reference to independent actuarial calculations provided annually based
on incidents reported before year end. The timing of the future outflows is dependent upon the notification and acceptance of relevant
claims, and would be satisfied over a number of future financial periods.
Provision for site closures is recognised for the estimated costs of permanently closing manufacturing sites. The timing of the future
outflows is expected to occur within the next financial year.
Brickworks Annual Report 2021 p 133
Notes to the Consolidated Financial Statement
3.5 Post-employment liabilities
Following the acquisition of Glen-Gery in November 2018, the Group participated in two multi-employer defined benefit pension schemes,
being Aluminium, Brick and Glass Workers International Union (“AB&GW”) and National Integrated Group Pension Plan (“NIGPP”), which are
both held in the United States. In the prior year, Glen-Gery ceased to participate in the NGIPP.
As the Group is unable to identify its share of the assets and liabilities for the AB&GW scheme as insufficient information is available on which
to calculate this split (as confirmed with the scheme actuaries), it is accounted for on a defined contribution basis.
Unfunded vested benefits are allocated among active employer participating groups. This allows the multi-employer plan to assess
employers who withdraw from a plan with a share of the plan’s total unfunded vested liability. That share of unfunded liability is not determined
with reference to the employer’s participants nor the assets that were accumulated by that employer’s contributions. When an employer
withdraws, it may be required to pay the entire withdrawal liability over time, or a lesser amount based on certain limitations related to the
period of payments and the net worth of the employer.
The minimum contribution requirements for the AB&GW scheme are based on a minimum monthly charge per active employee.
In total, the AB&GW plan has a deficit as at 31 July 2021 of $17.6 million (2020: $17.7 million). With respect to this scheme based on the total
contributions made during 2021, the level of participation the Group made compared to other participating entities was 87% and the Group
has circa 63% of all members (active, deferred and retired). Management currently does not have any plans on withdrawing from this scheme.
The contribution rates agreed to be paid by the Group include an element of rehabilitation funding with respect to the total plan deficit. In
respect of the scheme, the arrangement gives rise to a present obligation and as such a liability of $18.8 million (2020: $19.3 million) has been
recognised at a present value of future committed contribution amounts required in respect of this scheme.
Total expected contributions to the plan, including an element of rehabilitation funding, for the next annual reporting year, being the year
ending 31 July 2021, amount to $1.2 million.
Opening balance 1 August 2020
Recognised
Settled
Foreign currency exchange difference
Closing balance 31 July 2021
Current
Non-current
Total
Opening balance 1 August 2019
Recognised
Withdraw payment NGIPP
Settled
Foreign currency exchange difference
Closing balance 31 July 2020
Current
Non-current
Total
Post-employment
liabilities
$’000
19,302
687
(759)
(462)
18,768
1,199
17,569
18,768
19,956
1,568
(855)
(478)
(889)
19,302
696
18,606
19,302
Recognition and measurement
Multi-employer plans are defined contribution plans or defined
benefit plans that pool the assets contributed by various
entities that are not under common control and use those
assets to provide benefits to employees of more than one
entity, on the basis that contribution and benefit levels are
determined without regard to the identity of the entity that
employs the employees concerned.
Where a multi-employer plan is a defined benefit plan, an entity
shall account for its proportionate share of the defined benefit
obligation, plan assets and cost associated with the plan in the
same way as for any other defined benefit plan.
When sufficient information is not available to use defined
benefit accounting for a multi-employer plan that is a defined
benefit plan, an entity shall account for the plan as if it were a
defined contribution plan.
Contributions payable to a defined contribution plan are
recognised as a liability, after deducting any contribution
already paid. Where contributions to a defined contribution
plan do not fall due wholly within twelve months after the end of
the period in which the employees render the related service,
they shall be discounted using the rate applicable to high
quality corporate bonds.
134 p Brickworks Annual Report 2021
4
Income Tax
This section provides the information considered most relevant to understanding the taxation treatment adopted by the Group during
the financial year.
The Group is subject to income taxes in Australia and United States of America. The entities incorporated in the United States of
America are not part of the Australian tax consolidated group and therefore taxed separately.
Tax consolidation
Brickworks Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group (Tax Group) under the
Australian Tax Consolidation regime. Brickworks Limited is the head entity of that group.
The Tax Group has entered into a tax sharing agreement whereby each company in the group contributes to the income tax payable
based on the current tax liability (or current tax asset) of the entity. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a standalone taxpayer in its own right. Such amounts are reflected in amounts receivable from or
payable to other entities in the Tax Group. In addition, the agreement provides for the allocation of income tax liabilities between the
entities should the head entity default on its tax payment obligations. At balance date, the possibility of default is considered remote.
Tax expense, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the Tax Group are
recognised in the separate financial statements of the members of the group. Any current tax liabilities (or assets) and deferred tax
assets arising from unused tax losses and tax credits of the members of the group are recognised by the parent company (as head entity
of the Tax Group).
4.1
Income tax expense
Profit from continuing operations before income tax
Loss from discontinued operations before income tax benefit
Profit before income tax
Prima facie tax expense calculated at 30%
(Decrease) / increase in income tax expense due to:
Franked dividend income
Share of net profits of associates
(Under)/overprovided in prior years
R&D tax incentive
Utilisation of carried forward capital losses
Tax rate difference in overseas entities
Disposal of subsidiary
Income tax benefit related to the Coronavirus Aid, Relief, and Economic Security
Act (“CARES Act”) in the United States of America
Impairment of non-current assets
Business acquisition costs
Gain on bargain purchase
Capital losses arising on disposal of property
Other non-allowable items
Income tax expense attributable to profit
Current tax (benefit)/expense
Deferred tax expense relating to movements in deferred tax balances
Overprovided in prior years
Utilisation of carried forward capital losses
Notes
6.6
4.2
2021
$000
325,268
(1,334)
Restated
2020
$000
389,515
(11,088)
323,934
378,427
97,180
113,528
(17,260)
9,303
(3,104)
(1,708)
(606)
815
–
–
–
–
–
–
151
84,771
(1,030)
89,511
(3,104)
(606)
(16,694)
(20,380)
(3,169)
(3,089)
(387)
731
8,759
(5,241)
2,224
1,916
(995)
664
2,482
80,349
(17,969)
101,874
(3,169)
(387)
Total income tax expense on profit
84,771
80,349
Brickworks Annual Report 2021 p 135
Notes to the Consolidated Financial Statement
4.1
Income tax expense (continued)
Notes
6.6
Income tax expense / (benefit) attributable to:
Profit from continuing operations
Loss from discontinued operations
Income tax expense attributable to profit
Income tax expense /(benefit) recognised directly in equity
Tax effect on movements in reserves attributable to equity accounted investments
Tax effect on movements in reserves attributable to financial instruments
Income tax expense /(benefit) recognised in other comprehensive income
Tax effect on the adoption of AASB 16 by associate
Tax effect on the adoption of AASB 16
Tax effect on share of associates other movements in retained earnings
Total income tax expense / (benefit) recognised directly in equity
4.2
Income tax assets and liabilities
(a) Current income tax liability/(asset)
Current income tax liability
Current income tax asset
2021
$000
Restated
2020
$000
85,095
(324)
74,929
5,420
84,771
80,349
(41,995)
(143)
(42,138)
–
–
(9,937)
(52,075)
3,582
99
3,681
760
1,524
–
5,965
2021
$000
417
(8,618)
2020
$000
–
(26,624)
Recognition and measurement
Current tax represents the amount expected to be paid or recovered in relation to taxable income for the financial year measured
using rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is
recognised as a liability (or asset) to the extent it is unpaid (or refundable).
136 p Brickworks Annual Report 2021
(b) Net deferred income tax liability
Equity accounted investments in associated and joint
ventures
Property, plant and equipment
Provisions
Tax losses and rebates
Intangibles
Other
Balance Sheet
Movement through
Income Statement
2021
$000
468,288
18,238
(29,731)
(12,010)
1,343
(4,656)
Restated
2020
$000
431,238
24,456
(31,643)
(3,599)
1,133
(4,444)
2021
$000
87,232
(5,345)
3,259
(1,731)
250
5,846
Restated
2020
$000
106,565
2,902
(2,104)
(9,782)
(2,423)
6,716
Net deferred income tax liability
441,472
417,141
89,511
101,874
Recognition and measurement
Deferred tax is recognised based on the amounts calculated using the balance sheet liability method in respect of temporary differences
between the carrying values of assets and liabilities for financial reporting and tax purposes. The tax cost base of assets is determined
based on management’s intention for that asset on either use or sale as appropriate. No deferred income tax is recognised for a taxable
temporary difference arising from an investment in a subsidiary, associate or a joint venture where the timing of the reversal of the
temporary difference can be controlled and it is probable that the difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset or liability
is settled, based on tax rates and tax laws that have been enacted or substantively enacted by reporting date.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which
deductible temporary differences can be utilised. The amount of benefit brought to account or which may be realised in the future is
based on the assumption that no adverse change will occur in income tax legislation and the anticipation that the economic entity will
derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed
by the law. The utilisation of tax losses depends on the ability of the Group to generate future taxable profits. The Group considers that it
is probable that future taxable profits will be available to utilise those deferred tax assets. The utilisation of the tax losses also depends
on the ability of the Group to satisfy certain tests at the time the losses are recouped.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Deferred income 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.
Brickworks Annual Report 2021 p 137
Notes to the Consolidated Financial Statement
5
Capital and Risk Management
This section provides information about the Group’s capital management and its exposure to various financial risks.
The Group’s activities expose it to a variety of financial risks: liquidity risk, market risk (including interest rate risk and foreign exchange
risk) and credit 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 interest rate risk,
foreign exchange risk, credit risk and the use of derivative financial instruments. The Group does not enter into or trade financial instruments,
including derivative financial instruments, for speculative purposes. The Group holds the following financial assets and liabilities at balance
date:
Financial assets
Cash and cash equivalents
Receivables
Financial assets at fair value through other comprehensive income
Derivative financial assets
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Other financial liabilities
Derivative financial liabilities
Total financial liabilities
Notes
2021
$000
2020
$000
5.2
3.1(a)
5.3
5.4(c), 5.7(a)
139,825
132,447
1,314
101
187,109
129,024
1,792
–
273,687
317,925
3.1(c)
5.4(a)
3.3
6.5(b)
5.4(c), 5.7(a)
124,766
658,341
200,895
13,778
6,866
128,466
641,169
112,519
15,459
9,767
1,004,646
907,380
Recognition and measurement
Assets and liabilities of the Group that are measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair
value is observable.
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
All assets and liabilities measured at fair value are identified in the relevant notes to the financial statements, and are either categorised
as Level 1 or Level 2. There were no transfers between category levels during the current or prior financial year.
A financial liability is derecognised when the obligation under the liability has been discharged, cancelled or expires, with any resulting
gain recognised in the income statement.
138 p Brickworks Annual Report 2021
5.1
Capital management
The Group manages its capital to ensure that all entities in the Group can continue as going concerns while maximising the return to
shareholders through an appropriate balance of net debt and total equity.
The Group’s capital structure consists of debt disclosed in note 5.4, cash and cash equivalents (refer note 5.2), issued capital (note 5.5),
reserves (note 5.6) and retained profits. The capital structure can be influenced by the level of dividends paid, issuance of new shares, returns
of capital to shareholders, or adjustments in the level of borrowings through the acquisition or sale of assets.
The Group’s capital structure is regularly measured using net debt to equity, calculated as net debt divided by a sum of net debt and total
equity. Net debt represents total drawn at the reporting date (refer note 5.4) less cash and cash equivalents (note 5.2) and total equity
includes contributed equity (note 5.5), reserves (note 5.6) and retained earnings.
The Group’s strategy during the year was to maintain the total debt to capital employed (at a consolidated level) below a loan facilities banking
covenant limit of 40% imposed per the syndicated loan facility agreement disclosed in note 5.4 (2020: 40%).
Net debt
Total equity
Capital employed
Net debt to capital employed
5.2 Cash and cash equivalents
Cash on hand
2021
$000
2020
$000
518,516
2,479,747
454,060
2,404,011
2,998,263
2,858,071
17.3%
15.9%
2021
$000
2020
$000
139,825
187,109
Recognition and measurement
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits. For the purpose of the statement of cash flows,
cash and cash equivalents is equal to the balance disclosed in the balance sheet.
5.3
Financial assets at fair value through other comprehensive income
The Group’s financial assets at fair value through other comprehensive income represent listed equities publicly traded on the Australian
Stock Exchange. The fair value of these investments is based on quoted market prices, being the last sale price, at the reporting date. These
are categorised as “Level 1” in the fair value hierarchy.
Equities – Listed
Total
Market value
2021
$000
1,314
1,314
2020
$000
1,792
1,792
Brickworks Annual Report 2021 p 139
Notes to the Consolidated Financial Statement
5.4 Borrowings
(a) Available loan facilities
Current
Interest-bearing loans
Unamortised borrowing costs
Non-current
Interest-bearing loans
Unamortised borrowing costs
2021
$000
2020
$000
40,891
–
40,891
–
–
–
617,450
(2,936)
641,169
(2,481)
614,514
638,688
In December 2020 the Group extended its $100.0 million working capital facility to 11 December 2022.
In the prior year the Group entered into a construction facility agreement with a facility limit of $46.0 million to fund the construction of the
Austral Masonry Oakdale East plant in New South Wales. Subsequent to 31 July 2021, the lender acquired the plant commissioned as part of
the first stage of the project for $25.6 million and leased it to the Group under a lease agreement with an initial period of 10 years. The maturity
date for the remaining facility amount was extended to July 2022.
There were no other changes to the Group’s loan facilities in the current year.
The Group designated its USD unsecured debt facilities as a hedging instrument to hedge the currency risk associated with translation of the
Group’s net investment in the US operations into the Group’s functional currency (AUD).
Except for Tranche A and B of the ITL facility, interest on the Group’s loan facilities is payable based on floating rates determined with
reference to the BBSY1 (AUD) and US LIBOR2 (USD) bid rate at each maturity. Further information with regards to management of the Group’s
interest rate risk is disclosed in Note 5.4(c).
The fair value of interest-bearing loans at 31 July 2021 approximated their carrying amount (2020: carrying amount).
Recognition and measurement
Borrowings are recorded initially at fair value of the consideration received, net of transaction costs. Subsequent to initial recognition,
borrowings are measured at amortised cost. Any difference between the proceeds 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. When the Group expects that it will continue to satisfy the criteria under its banking agreement that
ensures the financier is not entitled to call on the outstanding borrowings, and the term is greater than 12 months, the borrowings are
classified as non-current.
(b) Management of liquidity risk
The Group manages liquidity risk by maintaining a combination of adequate cash reserves, bank facilities and reserve borrowing facilities,
continuously monitored through forecast and actual cash flows, and matching the maturity profiles of financial assets and liabilities. The
Group’s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due. At 31 July 2021
the Group had AUD 185.0 million and USD 17.0 million of unused bank facilities (2020: AUD 190.0 million and USD 17.0 million).
In addition, the Group had AUD 5.0 million available under the Austral Masonry Oakdale East construction facility.
These facilities are subject to various terms and conditions, including various negative pledges regarding the operations of the Group, and
covenants that must be satisfied at specific measurement dates. A critical judgement is that the Group will continue to meet its criteria under
these banking covenants to ensure that there is no right for the banking syndicate to require settlement of the facility in the next 12 months.
The Bank Bill Swap Bid Rate (BBSY) is a benchmark interest rate quoted by Reuters Information Service.
1
2 US Libor is benchmark interest as referenced by the London Inter-bank Offered Rate (LIBOR).
140 p Brickworks Annual Report 2021
The maturity profile of the Group’s loan facilities at 31 July 2021 is outlined below.
Facility
Tranche A
Tranche B1
Tranche C
Syndicated multicurrency loan facility
Tranche A1
Tranche B1
Syndicated loan facility
Facility A-ITL
Facility B-ITL
Facility C-ITL
Syndicated ITL facility
Working capital facility
Construction facility agreement
Currency
AUD
AUD
AUD
AUD
USD
USD
USD
AUD
AUD
AUD
AUD
AUD
AUD
Limit
($m)
100
175
80
355
100
100
200
25
35
40
100
100
46
Drawn
($m)
Available
($m)
70
75
80
225
100
83
183
25
35
40
100
45
41
30
100
–
130
–
17
17
–
–
–
–
55
5
Maturity date
August 2023
August 2024
August 2022
August 2023
August 2024
February 2028
February 2026
February 2026
December 2022
July 20222
The table below analyses the undiscounted value of the Group’s financial liabilities and derivatives based on the remaining period at the reporting
date to maturity. For bank facilities the cash flows have been estimated using interest rates applicable at the end of the reporting period.
31 July 2021
Trade and other payables
Borrowings
Derivatives
31 July 2020
Trade and other payables
Borrowings
Derivatives
1 year or less
$’000
1 to 5 years
$’000
5 to 10 years
$’000
Total
$’000
124,766
55,932
–
–
622,234
6,866
–
25,844
–
124,766
704,010
6,866
180,698
629,100
25,844
835,642
128,466
14,978
134
–
773,050
9,633
–
27,290
–
128,466
815,318
9,767
143,578
782,683
27,290
953,551
1
2
During the year ended 31 July 2021, US$ 55.0 million was drawn from Tranche B, equivalent to AU$75.0 million.
Subsequent to 31 July 2021, the maturity date was extended from 25 September 2021 to 31 July 2022.
Brickworks Annual Report 2021 p 141
Notes to the Consolidated Financial Statement
5.4 Borrowings (continued)
(c) Management of interest rate risk
The Group’s main interest rate risk arises from fluctuations in the BBSY bid rate and US Libor relating to bank borrowings. Where appropriate,
the Group uses interest rate derivatives to eliminate some of the risk of movements in interest rates on borrowings, and increase certainty
around the cost of borrowed funds.
Interest rate swaps
The Group has entered into interest rate swaps contracts which allow the Group to swap floating rates into an average fixed rate of 2.76%
(2020: 2.66%). The contracts require settlement of net interest receivable or payable usually around every 90 days. The settlement dates
are aligned with the dates on which interest is payable on the underlying bank borrowings and are brought to account as an adjustment to
borrowing costs.
The fair value of interest rate swaps is outlined below. During the financial year ended 31 July 2021 the Group did not enter into new interest
swaps arrangements.
Notional Principal Amount
Average Interest Rate
Fair value
Less than 1 year
1 to 3 years
3 to 5 years
2021
$000
–
100,000
–
2020
$000
25,000
100,000
–
Total
100,000
125,000
2021
%
–
2.76
–
2.76
2020
%
2.27
2.76
–
2.66
2021
$000
–
6,866
–
6,866
2020
$000
134
9,633
–
9,767
The fair value of these derivatives is calculated using market observable inputs, including projected forward interest rates for the period of the
derivative. These are categorised as “Level 2” in the fair value hierarchy.
Recognition and measurement
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. The method of recognising the resulting gain or loss depends on whether the derivative is designated
as a hedging instrument and the nature of the item being hedged. The Group designates certain derivatives as either fair value or cash
flow hedges.
Changes in the fair value of derivatives that are designated as qualifying as fair value hedges are recorded in the income statement,
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
equity reserves. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Amounts deferred
in equity are recycled in the income statement when the hedged item is recognised in the income statement.
Changes in the fair value off derivatives which do not qualify for hedge accounting are recognised immediately in the income statement.
Sensitivity analysis
At 31 July 2021, if interest rates had been +/- 1% per annum throughout the year, with all other variables being held constant, the profit after
income tax for the year would have been $3.4 million higher or lower respectively (2020: $2.6 million higher/lower). There would not have been
any other significant impacts on equity.
142 p Brickworks Annual Report 2021
5.5 Contributed equity
Contributed equity
Ordinary shares, fully paid
Treasury shares
Movement in ordinary issued capital
Opening balance 1 August
Issue of shares through employee share plan
Dividend Reinvestment Plan (DRP)
underwriting agreement
Dividend Reinvestment Plan (DRP)
Share issue costs
2021
2020
Number of shares
Number of shares
2021
$’000
2020
$’000
151,596,520
(576,426)
149,937,589
(660,758)
397,060
(10,173)
366,455
(10,440)
149,937,589
223,060
149,771,794
165,795
1,080,001
355,870
–
–
386,887
356,015
366,455
4,283
20,000
6,466
(144)
363,515
2,950
–
–
(10)
Closing balance 31 July
151,596,520
149,937,589
397,060
366,455
Movement in treasury shares
Opening balance 1 August
Bonus shares through employee share plan
Shares purchased under Short-term incentive
(STI) scheme
Shares vested to employees
(660,758)
(190,403)
(41,054)
315,789
(810,821)
(165,795)
–
315,858
(10,440)
(3,712)
(803)
4,782
(12,286)
(2,950)
–
4,796
Closing balance 31 July
(576,426)
(660,758)
(10,173)
(10,440)
Recognition and measurement
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
Treasury shares represent own equity instruments which are issued or acquired for later payment as part of employee share-based
payment arrangements and deducted from equity. These shares are held in trust by the trustee of the Brickworks Deferred Employee
Share Plan and vest in accordance with the conditions attached to the granting of the shares. The accounting policy applied in respect of
share-based payments is disclosed in Note 7.1.
Brickworks Annual Report 2021 p 143
Notes to the Consolidated Financial Statement
5.6 Reserves
Capital
Profits
Reserve
$’000
Equity
Adjust-
ments
Reserve
$’000
Foreign
Currency
Reserve
Share-
based
Payments
Reserve
Investment
revaluation
reserve
Associates
and JVs
Reserve
$’000
$’000
$’000
$’000
General
Reserve
$’000
Notes
Total
$’000
Balance at 1 August 2020
88,102
(15,284)
36,125
(1,131)
6,482
1,792
177,258
293,344
Other comprehensive
income for the year
Share of associates
transfer to outside equity
interests
Shares purchased under
Short-term incentive
(STI) scheme
Issue of shares through
employee share plan
Shares vested to
employees
Share based payments
expense
7.1
7.1
–
–
–
–
–
–
42,138
66
–
–
–
–
–
–
–
–
–
920
–
–
–
–
–
–
–
803
(571)
(4,782)
6,679
(478)
(139,982)
(97,402)
–
–
–
–
–
(220)
(154)
–
–
–
–
803
(571)
(4,782)
6,679
Balance at 31 July 2021
88,102
26,920
36,125
(211)
8,611
1,314
37,056
197,917
Balance at 1 August 2019
Other comprehensive
income for the year
Change in ownership
interest in the associate
Shares vested to
employees
Share based payments
expense
7.1
7.1
88,102
(11,603)
36,125
(657)
5,532
1,461
164,397
283,357
–
–
–
–
(3,681)
–
–
–
–
–
–
–
(474)
–
–
–
–
–
(4,796)
5,746
331
11,939
8,115
–
–
–
922
922
–
–
(4,796)
5,746
Balance at 31 July 2020
88,102
(15,284)
36,125
(1,131)
6,482
1,792
177,258
293,344
As a result of adjustments identified within the WHSP 31 July 2020 financial statements, the Brickworks investment in WHSP at that date
was overstated by $56.6 million, deferred tax liabilities by $16.9 million and other comprehensive income by $40.9 million net of taxation
and reserves by $1.2 million, representing the equity accounted share of the adjustment. This has been adjusted in the current period and
$40.9 million reflected within Other Comprehensive Income. This adjustment had no impact on profit after taxation.
Nature and purpose of reserves
Capital profits reserve represents amounts allocated from Retained Profits that were profits of a capital nature.
Equity adjustments reserve includes amounts for tax adjustments posted directly to equity.
General reserve represents amounts for the future general needs of the operations of the entity.
Foreign currency translation reserve represents differences on translation of foreign entity financial statements.
Share-based payments reserve represents the value of bonus shares and rights granted to employees that have been recognised as an
expense in the income statement but are yet to vest to employees.
Investment revaluation reserve represents amounts arising on the remeasurements of financial assets at fair value through other
comprehensive income.
Associates and JVs reserve represents the Group’s share of its associates and joint ventures reserves balances recognised in line with
the equity method of accounting. The Company is unable to control this reserve in any way, and does not have any ability or entitlement
to distribute this reserve, unless it is received from its associates or joint ventures in the form of dividends or trust distributions.
144 p Brickworks Annual Report 2021
5.7 Management of other risks
(a)
Foreign exchange risk
Translation risk
The Group is exposed to fluctuations in US dollars (USD) related to translation of investments in overseas subsidiaries. Foreign currency
translation risk is the risk that upon consolidation for financial reporting the value of investment in foreign domiciled entities will fluctuate due
to changes in foreign currency rates.
The Group uses USD denominated borrowings to hedge the Group’s net investment in overseas subsidiaries. The related exchange gains/
losses on foreign currency movements are recognised in the Foreign Currency Translation Reserve. As at 31 July 2021 the net investment in
the US subsidiaries of the Group of USD 258.9 million (2020: USD 192.6 million) was hedged with USD denominated borrowings of USD 238.0
million (2020: USD 183.0 million).
Transaction risk
The Group does not have any material exposure to unhedged foreign currency receivables. Export sales are all made through Australian
agents or direct to overseas customers using Australian dollars or letters of credit denominated in Australian dollars. The trading of the
Group’s NZ subsidiary, which is in New Zealand dollars (NZD) is not material to the Group as a whole. Accordingly, any reasonably foreseeable
fluctuation in the exchange rate of NZD would not have a material impact on either profit after tax or equity of the Group.
The Group has a limited exposure to foreign currency fluctuations due to its importation of goods. The main exposure is to USD and Euros
(EUR). It is the policy of the Group to enter into forward foreign exchange contracts to cover specific currency payments, as well as covering
anticipated purchases for up to 12 months in advance.
The fair value of foreign currency forward contracts is outlined below:
USD forward contracts
EUR forward contracts
Net derivative liability
Fair value
2021
$000
20
81
101
2020
$000
–
–
–
The overall level of exposure to foreign currency purchases is not material to the Group. Accordingly, any reasonably foreseeable fluctuation in
the exchange rate of the USD and EUR resulting in changes to foreign currency receivables and payables would not have a material impact on
either profit after tax or equity of the Group.
(b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group
has adopted a policy of only dealing with creditworthy counterparties. The credit risk on liquid funds and derivative financial instruments is
considered low because these assets are held with banks with high credit ratings assigned by international credit-rating agencies.
The maximum exposure to trade credit risk at balance date to recognised financial assets is the carrying amount net of provision for doubtful
debts, as disclosed in the statement of financial position and notes to the financial statements. The Group’s debtors are based in the building
and construction industry; however the Group minimises its concentration of credit risk by undertaking transactions with a large number of
customers. The Group ensures there is not a material credit risk exposure to any single debtor.
The Group holds no significant collateral as security, and there are no significant credit enhancements in respect of these financial assets.
The credit quality of financial assets that are neither past due nor impaired is appropriate, and is reviewed regularly to identify any potential
deterioration in the credit quality. There are no significant financial assets that would otherwise be past due or impaired whose terms have
been renegotiated.
(c)
Equity price risk
The Group does not have material direct exposure to equity price risk, as the value of its share investment portfolio is insignificant, and hence
any fluctuations in equity prices would not be material to either profit after tax or equity of the Group.
The Group has significant indirect exposure to equity price risk through its investment in Washington H Soul Pattinson Co Ltd (WHSP). This
investment is accounted for as an equity accounted investment. WHSP has a significant listed investment portfolio which is accounted for
at fair value through equity, and contribute to the profit on subsequent disposal. As a result, fluctuations in equity prices would potentially
impact on both net profit after tax (where portions of the portfolios are traded) and equity (for balances held at the end of the period) which
would result in adjustments to the Group’s net profit after tax and equity.
At the time of preparing this report, there was no publicly available information regarding the effects of any reasonably foreseeable
fluctuations in equity values on net profit or equity of WHSP at 31 July 2021 or subsequently.
Brickworks Annual Report 2021 p 145
Notes to the Consolidated Financial Statement
6
Group Structure
This section explains significant aspects of Brickworks’ group structure, including equity accounted investments that the Group has an
interest in and its controlled entities. When applicable, it also provides information on business acquisitions made during the financial year.
Associated company
Note 6.3(a)
Parent entity
Note 6.1
Jointly controlled entities
Note 6.3(b)
43.30%
39.40%
50%
50%
Property Trusts
NZ Brick
Distributors
50%
50%
33.33%
Southern Cross
Cement
Controlled entities
Controlled entities
Note 6.2
6.1
Parent entity disclosures
Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Statement of financial performance
Profit after tax
Total comprehensive income
66.66%
JV Partners
2021
$000
2020
$000
36,698
1,486,457
(40,719)
(906,117)
163,565
1,348,913
(4,131)
(943,877)
576,319
564,470
386,887
114,934
74,498
356,015
109,186
99,269
576,319
564,470
69,248
69,248
41,686
41,686
The parent entity’s contingent liabilities of $25.2 million (2020: $25.3 million) were associated with a shareholder guarantee provided as part of
joint venture arrangements and bank guarantees issued in the ordinary course of business.
There are no contractual commitments for the acquisition of property, plant and equipment of the parent entity (2020: nil).
146 p Brickworks Annual Report 2021
6.2 Controlled entities
Details of wholly owned entities within the Brickworks Group of companies are as follows.
Entity
2021
2020
Entity
% Group’s interest
% Group’s interest
2021
2020
Incorporated in Australia
A.C.N. 000 012 340 Pty Ltd1
A.C.N. 074 202 592 Pty Ltd1
AP Installations (NSW) Pty Ltd1
AP Installations (Qld) Pty Ltd1
Austral Bricks (NSW) Pty Ltd1
Austral Bricks (Qld) Pty Ltd1
Austral Bricks (SA) Pty Ltd1
Austral Bricks (Tas) Pty Ltd1
Austral Bricks (Tasmania) Pty Ltd1
Austral Bricks (Vic) Pty Ltd1
Austral Bricks (WA) Pty Ltd1
Austral Bricks Holdings Pty Ltd1
Austral Masonry (NSW) Pty Ltd1
Austral Masonry (Qld) Pty Ltd1
Austral Masonry (Vic) Pty Ltd1
Austral Masonry Holdings Pty Ltd1
Austral Precast (NSW) Pty Ltd1
Austral Precast (Qld) Pty Ltd1
Austral Precast (Vic) Pty Ltd1
Austral Precast (WA) Pty Ltd1
Austral Precast Holdings Pty Ltd1
Austral Roof Tiles Pty Ltd1
Auswest Timbers Holdings Pty Ltd1
Bowral Brickworks Pty Ltd1
Brickworks Building Products Pty Ltd1
Brickworks Building Products (NZ) Pty Ltd1
Brickworks Cement Pty Limited1
Brickworks Construction Materials Pty Limited1
Brickworks Finance Pty Ltd1
Brickworks Supercentres Pty Ltd1, 2
Brickworks Head Holding Co Pty Ltd1
Brickworks Industrial Developments Pty Ltd1
Brickworks Properties Pty Ltd1
Brickworks Property Finance Co Pty Ltd
Brickworks Specialised Building
Systems Pty Ltd1
Brickworks Sub Holding Co No. 1 Pty Ltd1
Brickworks Sub Holding Co No. 2 Pty Ltd1
Brickworks Sub Holding Co No. 3 Pty Ltd1
Brickworks Sub Holding Co No. 4 Pty Ltd1
Brickworks Sub Holding Co No. 5 Pty Ltd1
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Incorporated in Australia
Brickworks Sub Holding Co No. 6 Pty Ltd1
Brickworks Sub Holding Co No. 7 Pty Ltd1
Brickworks Sub Holding Co No. 8 Pty Ltd1
Bristile Guardians Pty Ltd1
Bristile Holdings Pty Ltd1
Bristile Pty Ltd1
Bristile Roofing (East Coast) Pty Ltd1
Bristile Roofing Holdings Pty Ltd1
Capital Battens Pty Ltd
(formerly Auswest Timbers (ACT) Pty Ltd)1
Christies Sands Pty Ltd1
Clifton Brick Holdings Pty Ltd1
Clifton Brick Manufacturers Pty Ltd1
Daniel Robertson Australia Pty Ltd1
Davman Builders Pty Ltd1
Brickworks Building Products North
America Pty Ltd1
Hallett Brick Pty Ltd1
Hallett Roofing Services Pty Ltd1
Horsley Park Holdings Pty Ltd1
International Brick & Tile Pty Ltd1
J. Hallett & Son Pty Ltd1
Lumetum Pty Ltd1
Metropolitan Brick Company Pty Ltd1
Nubrik Concrete Masonry Pty Ltd1
Nubrik Pty Ltd1
Pilsley Investments Pty Ltd1
Prestige Brick Pty Ltd1
Prestige Equipment Pty Ltd1
Southern Bricks Pty Ltd1
The Austral Brick Co Pty Ltd1
The Warren Brick Co Pty Ltd1
Visigoth Pty Ltd1
Incorporated in the United States of America
Brickworks North America Corporation
Glen-Gery Corporation
Landmark Stone Products, LLC
Redfield Quarry, LLC
Sioux City Brick & Tile Company
Brickworks Eddie Acquisition Corporation
Brickworks Supply LLC
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
Recognition and measurement
Control is achieved when the Group is exposed to, or has rights to, variable returns from its involvement with an entity and has the ability
to affect those returns through its power to direct the activities of the entity.
The financial statements have been prepared by consolidating the financial statements of Brickworks Limited and its controlled entities.
All inter-entity balances and transactions are eliminated. All wholly owned entities within the Group have been consolidated in these
financial statements.
1
2
The entity is part of a deed of cross guarantee (refer note 6.4.).
Formerly Austral Facades Pty Ltd.
Brickworks Annual Report 2021 p 147
Notes to the Consolidated Financial Statement
6.3
Investments accounted for using the equity method
Associated companies
Joint ventures
Notes
6.3(a)
6.3(b)
2021
$000
2020
$000
1,416,547
929,361
1,549,220
695,409
Total investments accounted for using the equity method
2,345,908
2,244,629
Recognition and measurement
Under the equity method, the investments are carried in the consolidated balance sheet at cost plus post acquisition changes in the
Group’s share of net assets of an associate or a joint venture.
After applying the equity method of accounting, the Group determines whether it is necessary to recognise an additional impairment
loss with respect to its investment in an associate or joint venture. At each reporting date, the Group determines whether there is
objective evidence that the investment is impaired. If there is such evidence, the Group calculates the amount of impairment as a
difference between the recoverable amount of the associate or joint venture and its carrying amount, and the recognises the loss as
‘Share of net profits of associates and joint ventures’ in the income statement.
The consolidated income statement reflects the Group’s share of the results of operations of the associate/jointly controlled entity.
(a)
Associated company
Group’s interest
Contribution to Group
profit before tax
Carrying value
Market value
of shares
2021
%
2020
%
2021
$’000
2020
$’000
2021
$’000
2020
$’000
2021
$’000
2020
$’000
Washington H. Soul
Pattinson and Company
Limited
39.40
39.40
85,914
367,679
1,416,547
1,549,220
3,079,380
1,843,855
Washington H. Soul Pattinson and Company Limited’s (WHSP) shares are publicly traded on the Australian Stock Exchange (ASX code: SOL).
The nature of WHSP’s activities is outlined below:
Investing
Investments in cash, term deposits and equity investments (including investments in
telecommunications, pharmaceutical, property and agriculture businesses listed on the
Australian Stock Exchange)
Energy
Coal, oil and gas activities
Copper and gold operations
Copper and gold mining activities
In addition to the Group owning 39.40% (2020: 39.40%) of issued ordinary shares of WHSP, at 31 July 2021 WHSP owned 43.30%
(2020: 43.78%) of issued ordinary shares of Brickworks Limited.
The information disclosed below reflects the total amounts reported in the financial statements of WHSP amended to reflect adjustments
made by the Group in applying the equity method of accounting.
148 p Brickworks Annual Report 2021
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Outside equity interest (OEI)
Net assets
Equity accounted carrying value
Revenue
Profit after tax attributable to members
Other comprehensive income
Total comprehensive income
Dividends received by Brickworks Limited from the associate
2021
$000
2020
$000
1,335,986
5,566,309
(547,119)
(1,699,458)
(1,060,148)
902,996
5,947,266
(484,488)
(1,561,250)
(872,194)
3,595,570
3,932,330
1,416,547
1,549,220
1,501,778
1,368,467
273,196
(243,277)
29,919
57,532
986,002
31,247
1,017,249
55,646
WHSP’s lease commitments and contractual commitments for the acquisition of property, plant and equipment were not publicly available
at the time of preparation of this report (2020: $182,000 and $149.1 million, respectively). The Group has no legal liability for any expenditure
commitments incurred by associates.
Recognition and measurement
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Investments in associates are accounted for in the parent entity financial statements using the
cost method and in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost.
The associate’s accounting policies conform to those used by the Group for like transactions and events in similar circumstances.
The consolidated financial statements include eliminations related to the cross share-holding arrangement between the Group and the
associate.
Brickworks Annual Report 2021 p 149
Notes to the Consolidated Financial Statement
6.3
Investments accounted for using the equity method (continued)
(b)
Joint ventures
Information relating to joint ventures is outlined below.
Group’s interest
Contribution to Group
profit before tax
Carrying value
Principal activity
2021
%
2020
%
2021
$’000
2020
$’000
2021
$’000
2020
$’000
Domiciled in Australia
BGAI CDC Trust
BGAI Erskine Trust
BGAI1 Capicure Trust
BGAI1 Heritage Trust
BGAI1 Oakdale Trust
BGAI1 Oakdale East Trust
BGAI1 Oakdale South Trust
BGAI2 Rochedale BT Trust
BGAI2 Rochedale Trust
BGAI2 Rochedale North
Trust
BGMG1 Oakdale West Trust
Gain recognised on
recognition as investment
property and sale to third
parties
Property trusts
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
–
–
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
–
–
425
–
–
266
39,080
21,305
163,778
128,894
5,178
12,076
67,715
17,910
33,729
3,760
24,050
–
–
50,066
2,167
7,091
16,621
48,092
12,267
37,983
26,634
242,133
186,400
–
53,050
35,140
38,637
134,058
104,576
1,436
10,355
12,581
77,904
9,508
57,489
–
–
–
8,112
8,002
154,841
96,840
–
–
253,989
107,625
911,170
677,365
Property development,
management and
leasing
Southern Cross Cement
33.33
33.33
3
124
11,053
11,050
Import of cement
Domiciled in New Zealand
NZ Brick Distributors
50.00
50.00
840
211
7,138
6,994
Import and distribution
of building products
Total
–
–
254,832
107,960
929,361
695,409
Property Trusts and Southern Cross Cement have balance dates of 30 June. The balance date for NZ Brick Distributors is 31 March.
Contribution to Group profit before tax from Property Trusts is set out below.
Share of fair value adjustment of properties held by joint venture
Share of joint venture property rental profits
Fair value adjustment on recognition as investment property
2021
$000
172,478
31,445
50,066
2020
$000
78,068
29,557
–
Total equity accounted profit from Property Trusts
253,989
107,625
Profits or losses on transactions with joint ventures are deferred to the extent of the Group’s ownership interest where properties remain
classified as inventory by the joint venture, until such time as they are either realised by the joint venture on reclassification to investment
property or on sale. $50.1 million of previously unrealised profits were recognised in the year on reclassification of Oakdale West to investment
property following the change in use as evidenced by the progress made in respect of lease arrangements and lease pre-commitments
becoming binding. Investment property held by the joint venture represents property held to earn rentals and/or for capital appreciation.
The information disclosed below reflects the total amounts reported in the financial statements of joint ventures amended to reflect
adjustments made by the Group in applying the equity method of accounting. This information has been aggregated due to the similarity of
the risk and return characteristics.
150 p Brickworks Annual Report 2021
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Equity accounted carrying value
Other balance sheet disclosures
Cash and cash equivalents
Current financial liabilities
Non-current financial liabilities
Revenue
Depreciation and amortisation
Interest income
Interest expense
Profit after tax
Other comprehensive income
Total comprehensive income
Distributions received by Brickworks Limited from the joint ventures
Joint ventures’ expenditure commitments
Capital commitments
Contingent liabilities of joint ventures
Contingent liabilities incurred jointly with other investors
The entity has no legal liability for any contingent liabilities incurred by joint ventures
2021
$000
2020
$000
57,611
2,735,836
(207,075)
(716,776)
51,800
2,025,817
(45,295)
(630,068)
1,869,596
1,402,254
929,361
695,409
30,240
(178,229)
(689,282)
141,188
(3,853)
–
(14,157)
508,817
–
508,817
32,177
24,486
(27,492)
(552,020)
88,280
(31)
110
(16,976)
216,043
2,129
218,172
64,258
382,191
463,145
–
–
Recognition and measurement
A joint venture venture is a type of arrangement whereby the parties that have joint control of the arrangement have rights to net assets
of the joint venture. Joint control is the contractually agreed sharing of control arrangement, which exists only when the decisions about
relevant activities require unanimous consent of the parties sharing control.
The joint venture’s accounting policies conform to those used by the Group. When reporting dates of joint ventures are not identical to
the Group and the joint venture is not a disclosing entity, the financial information used is internal management reports for the same
period as the Group’s financial year.
Profits or losses on transactions with the joint venture are deferred to the extent of the Group’s ownership interest where properties
remain classified as inventory by the joint venture until such time as they realised by the joint venture on sale. Total unrealised eliminated
profits as at 31 July 2021 was nil (2020: $50.1 million).
Investment property held by the joint venture, which is property held to earn rentals and/or for capital appreciation, is measured initially
at cost, including transaction costs. Subsequent to initial recognition, investment property is measured at fair value. Gains or losses
arising from changes in fair value of investment property are included in the equity accounted share of the joint venture’s profit and
recognised in the income statement of the Group in the period in which they arise.
Significant accounting judgements, estimates and assumptions
Management is required to make significant estimates and judgements in assessing the fair value of investment property. An
independent valuation specialist was engaged to assess the fair value of investment properties held by the joint venture. The fair value
of investment properties is determined using recognised valuation techniques such as the capitalisation of net income method and
discounted cash flow method.
Brickworks Annual Report 2021 p 151
Notes to the Consolidated Financial Statement
6.4 Deed of cross guarantee
Brickworks Limited and a number of its subsidiaries (“Closed Group”) are parties to a deed of cross guarantee under which each company,
including Brickworks Limited, supports liabilities and obligations of other members of the Closed Group. By entering into the deed, the wholly
owned entities have been relieved from the requirement to prepare a financial report and directors’ report under ASIC Corporations (Wholly-
owned companies) Instrument 2016/785. The entities covered in the deed are listed in Note 6.2. Members of the Closed Group and parties to
the deed of cross guarantee are identical.
Set out below is a consolidated balance sheet, consolidated income statement and a summary of movements in consolidated retained profits
of the Closed Group.
Consolidated Balance Sheet
Current assets
Cash and cash equivalents
Receivables
Inventories
Prepayments
Derivative financial assets
Contract assets
Current tax asset
Total current assets
Non-current assets
Receivables
Other financial assets
Inventories
Investments accounted for using the equity method
Property, plant and equipment
Right-of-use assets
Intangibles
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Derivative financial liabilities
Lease liabilities
Contract liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial liabilities
Lease liabilities
Provisions
Deferred income tax liabilities
Total non-current liabilities
Total liabilities
Net assets
152 p Brickworks Annual Report 2021
2021
$000
2020
$000
55,135
108,789
174,890
5,578
101
3,956
–
348,449
249,361
275,721
5,849
1,434,738
536,512
160,465
163,723
167,004
101,081
175,706
6,000
–
8,001
9,945
467,737
169,136
276,199
7,029
1,567,264
490,240
85,042
161,042
2,826,369
2,755,952
3,174,818
3,223,689
101,644
40,891
–
21,817
4,156
53,200
221,708
614,513
6,866
142,913
7,850
212,139
984,281
1,205,989
107,315
–
134
26,026
6,375
51,131
190,981
638,688
9,633
64,956
11,751
255,403
980,431
1,171,412
1,968,829
2,052,277
Equity
Contributed equity
Reserves
Retained profits
Total equity
Consolidated Income Statement
Profit before income tax
Income tax expense
Profit after income tax expense
Movement in Consolidated Retained Earnings
Retained profits at the beginning of the year
Profit after income tax expense
Dividends paid
Share of associate’s transferred to outside equity interests
Retained profits at the end of the year
2021
$000
2020
$000
386,887
209,894
1,372,048
356,015
304,939
1,391,323
1,968,829
2,052,277
92,996
(14,205)
78,791
292,146
(58,986)
233,160
1,391,323
78,791
(74,881)
(23,185)
1,235,796
232,355
(71,964)
(4,864)
1,372,048
1,391,323
Brickworks Annual Report 2021 p 153
Notes to the Consolidated Financial Statement
6.5 Business combinations
(a)
Information on prior year acquisition
Acquisition of Sioux City Brick
In the prior year the Group acquired the assets and business of
Sioux City Brick & Tile Co (“Sioux City Brick”). Sioux City Brick has a
leading market position in the Midwest region of the United States.
During the financial year ended 31 July 2021, management finalised
the purchase price allocation without any changes to the amounts
disclosed on a preliminary basis in the 2020 financial report. The
final acquisition balance sheet is presented below:
Business acquired
Sioux City Brick
Acquisition of Redland Brick
In the prior year the Group acquired the assets of Redland Brick.
Redland Brick has a leading market position in the Northeast
and Mid-Atlantic regions of the United States. The purchase
consideration is comprised of upfront cash payments and deferred
consideration, subject to certain conditions being met.
During the financial year ended 31 July 2021, management finalised
the purchase price allocation without any changes to the amounts
disclosed on a preliminary basis in the 2020 financial report. The
final acquisition balance sheet is presented below:
Date acquired
Consideration
Cash paid ($’000)
Assets acquired
Cash ($’000)
Receivables ($’000)
Inventories ($’000)
Prepayments ($’000)
Property, plant and equipment ($’000)
Right-of-use assets ($'000)
Liabilities assumed
Trade and other payables ($’000)
Lease liabilities ($'000)
Deferred tax liabilities ($’000)
Provisions ($’000)
Fair value of net assets ($’000)
Gain on bargain purchase ($’000)
Direct costs relating to acquisition ($’000)
27 August 2019
Business acquired
Redland Brick
Date acquired
10 February 2020
49,526
1,195
6,417
25,230
149
30,608
1,441
(3,290)
(1,441)
(127)
(6,842)
53,340
3,8141
6,467
Consideration
Upfront cash payments ($’000)
Deferred consideration ($’000)
Total consideration ($’000)
Assets acquired
Inventories ($’000)
Prepayments ($’000)
Property, plant and equipment ($’000)
Right-of-use assets ($’000)
Liabilities assumed
Lease liabilities ($'000)
Deferred tax liabilities ($'000)
Provisions ($’000)
Fair value of net assets ($’000)
Goodwill arising on acquisition ($’000)
Direct costs relating to acquisition ($’000)
53,696
16,438
70,134
24,363
152
43,496
339
(339)
(10)
(2,078)
65,923
4,211
7,378
The deferred consideration was discounted using the rate
applicable to high quality corporate bonds and presented as
‘Other financial liabilities’. The net present value of the remaining
deferred consideration at 31 July 2021 amounts to $13.8 million2
(2020: $15.5 million)
Recognition and measurement
The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of
whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities
incurred or assumed at the date of exchange. Costs directly attributable to business combinations are expensed in the period in which
the acquisition is settled. When equity instruments are issued in an acquisition, the value of the instruments is their published market
price at the date of exchange.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date. The excess of the cost of acquisition over the fair value of the Group’s share of identifiable net assets acquired
is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is
recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.
1
2
Reflects the gain on bargain purchase translated using the spot rate at the acquisition date. The equivalent amount translated using the average
rate for the period recognised in the prior year Income Statement amounts to $3,776,000 with the difference on translation recognised in Foreign
currency translation reserve in equity.
$1.4 million (2020: $1.7 million) included in current liabilities and $12.4 million (2020: $13.8 million) in non-current liabilities.
154 p Brickworks Annual Report 2021
6.6 Discontinued operations
In the prior year, the Group completed the sale of the Auswest Timbers division. The results for the year ended 31 July 2021 and the prior year
have been presented as discontinued operations (net of tax).
(a)
Financial performance and cashflow information
Results of discontinued operations
Revenue
Expenses
Operating loss
Loss on disposal of subsidiary
Other significant items
Loss before tax
Income tax benefit/(expense)
Loss after tax
Deferred tax asset relating to discontinued operations
Income tax benefit related to operating loss
Income tax benefit related to other significant items
Income tax (expense)/benefit
Cash flows from discontinued operations
Net cash used in operating activities
Net cash from/(used) in investing activities
Net cash from financing activities
Net cash inflow/(outflow)
Basic (cents per share) from discontinued operations
Diluted (cents per share) from discontinued operations
2021
$000
2020
$000
–
–
–
(1,334)
–
(1,334)
324
8,120
(9,811)
(1,691)
(7,211)
(2,186)
(11,088)
(5,420)
(1,010)
(16,508)
–
–
324
324
(1,334)
1,493
–
159
(0.7)
(0.7)
(6,593)
670
503
(5,420)
(3,397)
3,458
–
61
(11.0)
(11.0)
Recognition and measurement
A discontinued operation is component of the entity that has been disposed of or is classified as held for sale and that represents a cash-
generating unit or a group of cash-generating units and is part of a single co-ordinated plan to dispose of such line of business or area of
operations. The results of discontinued operations are presented separately in the consolidated income statement.
Brickworks Annual Report 2021 p 155
Notes to the Consolidated Financial Statement
7
Other Disclosures
This section provides information on items which require disclosure to comply with AASBs and other regulatory pronouncements and
any other information that is considered relevant for the users of the financial report which has not been disclosed in other sections.
7.1
Share based payments
At 31 July 2021, the Brickworks Employee Share Plans had 790 members taking part who owned a combined 1,311,619 shares or 0.87% of
issued ordinary share capital (2020: 727 employee participants, 1,499,613 shares, 0.97%). These figures exclude shares held by employees
outside the Brickworks Employee Share Plans. This represented shares purchased under the salary sacrifice arrangements, as well as shares
held as part of the Brickworks equity compensation plan shown below.
(a)
Salary sacrifice arrangements
Brickworks Limited has an employee share ownership plan, which allows all employees who have achieved 3 months service with the Group
to purchase Brickworks Limited shares, using their own funds plus a contribution of up to $156 per annum from the Group. All shares acquired
under salary sacrifice arrangements are fully paid ordinary shares, purchased on-market under an independent trust deed.
(b)
Equity-based compensation plans
Deferred Employee Share Plan
The following table shows the number of fully paid ordinary shares held by the Brickworks Deferred Employee Share Plan that had been
granted as remuneration. This table does not include any shares held in the plan that were purchased by the employee under the salary
sacrifice arrangements described above.
Opening balance
Granted
Vested
Forfeited / withdrawn
Closing balance
Unvested
No. of shares
Vested
No. of shares
Total
No. of shares
608,303
206,312
(315,789)
(37,557)
805,287
–
315,789
(308,062)
1,413,590
206,312
–
(345,619)
461,269
813,014
1,274,283
The unvested shares vest to employees at 20% per year for each of the following 5 years, provided ongoing employment is maintained. In
addition, a performance hurdle related to the Group’s Total Shareholder Return (TSR) is applicable to the unvested shares granted to the
Managing Director and Chief Financial Officer. Unvested shares are unavailable for trading by the employees. All shares granted to employees
provide dividend and voting rights to the employee.
Executive Rights Plan
The Executive Rights Plan was introduced in the current year. The rights vest at 20% per year for each of the following 5 years, provided
ongoing employment is maintained. In addition, a performance hurdle related to the Group’s Total Shareholder Return (TSR) is applicable to
rights granted to the Managing Director and Chief Financial Officer.
222,573 rights were allocated in the current year (2020: 207,088) including 64,972 rights that vested on 31 July 2021 (2020: 31,289).
5,874 were forfeited during the year to 31 July 2021 (2020: nil).
A fair value of shares with a TSR performance hurdle has been determined with reference to an independent valuation. A summary of key
valuation assumptions is outlined below.
2021
24-Nov-20
Monte-Carlo simulation
3 years
$19.48
27.00%
0.08%
Grant date
Valuation method
Performance period
Grant date share price
Estimated volatility
Risk free rate (forward rates 1-6 years)
156 p Brickworks Annual Report 2021
Expense arising from share-based payment transactions
Fair value of vested shares held by the plan at the end of the year (based on 31 July share price)
Fair value of shares granted during the year
Fair value of executive rights granted during the year
6,679,267
19,715,590
(4,022,617)
(4,358,927)
5,746,093
12,892,698
(3,453,338)
(3,651,539)
More information regarding the Brickworks Employee Share Plans is outlined in the Remuneration Report included in the Directors’ Report.
2021
$000
2020
$000
Recognition and measurement
The fair value determined at the grant date of the equity-settled share based payments is expensed over the vesting period, with a
corresponding increase to the employee share reserve.
Unvested shares are included in the Contributed Equity as Treasury Shares (refer note 5.5).
7.2
Related party transactions
During the year material transactions took place with the following related parties:
◗ Property transactions with various trusts (listed in note 6.3) which are jointly owned by the Group and Goodman Australia Industrial Fund,
an unlisted property trust. There were no related party transactions this year (2020: $35.1m). All transactions with the property trust are
at arm’s length values.
◗ Directors and their direct-related entities are able, with all staff members, to purchase goods produced by the Group on terms and
conditions no more favourable than those available to other customers.
◗ There were no other transactions with key management personnel during the year (2020: Nil).
7.3 Auditor’s remuneration
Fees for auditing the statutory financial report of the parent covering the Group
– Other assurance services
Fees for other assurance and agreed-upon-procedures services under other legislation
or contractual arrangements where there is discretion as to whether the service is provided
by the auditor or another firm
– Due diligence, tax and other advisory services in relation to business combinations
– Taxation services
– Other services
Fees for other services
Total fees
2021
$
961,799
–
2020
$
1,053,363
6,500
–
6,500
93,188
422,700
–
201,235
164,567
53,558
515,888
419,360
1,477,687
1,479,223
The financial statements of the Group are audited by EY. Details of non-audit services provided by EY are outlined in the Directors’ Report.
Brickworks Annual Report 2021 p 157
Notes to the Consolidated Financial Statement
7.4 Commitments and contingencies
(a) Commitments
Contracted capital expenditure
Within one year
2021
$000
2020
$000
34,021
54,902
Contracted capital expenditure relates to contracts to supply or construct buildings or various items of plant and equipment for use in the
Building Products operating segment. These have not been provided for at balance date.
(b) Contingencies
Shareholder guarantee provided as part of joint venture arrangements and
bank guarantees issued in the ordinary course of business
2021
$000
2020
$000
57,783
63,385
The Group does not anticipate that any of the bank guarantees issued on its behalf will be called upon.
The entities forming the Group are parties to various legal actions against them that are not provided for in the financial statements.
These actions are being defended and the Group does not anticipate that any of these actions will result in material adverse consequences
for the Group.
7.5
Events occurring after balance date
On 2 August 2021 Brickworks entered into a binding agreement to acquire certain assets of Southfield Corporation, including Illinois Brick
Company (“IBC”) for US$47.8 million (AU$64.8 million). IBC is the largest independently owned and operated brick distributor in the United
States of America.
On 21 September 2021 Washington H Soul Pattinson (WHSP) completed an acquisition of 100% of the share capital in Milton Corporation
Limited (“Milton”). The existing Milton shareholders (other than WHSP) will be issued new WHSP shares in exchange for their Milton shares.
The number of shares to be issued was determined on 2 September 2021.
Following the issue of new WHSP shares, the Group will own 26.1% of issued ordinary shares of WHSP, compared to 39.40% at 31 July 2021.
The Group will maintain significant influence over the associate and will continue applying the equity method to account for its investment in
WHSP.
On completion of the Milton/WHSP transaction, the change in ownership stake is expected to result in a non-cash gain on deemed disposal
for the Brickworks Group during the financial year ending 31 July 2022. This gain will be determined with reference to the equity accounted
value of the Group’s investment in WHSP as of completion date and the market value of newly issued WHSP shares, net of deferred income
tax expense. Based on a preliminary assessment reflecting the WHSP share price as of completion date it is expected this gain will be in the
range of $375-425 million (after tax).
There have been no other events subsequent to balance date that could materially affect the financial position and performance of
Brickworks Limited or any of its controlled entities.
7.6 Other accounting policies
(a) Other accounting policies
Foreign exchange differences arising on the translation of monetary items are recognised in the income statement, except when
deferred in equity as a qualifying cash flow or net investment hedge.
Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is not
recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or
as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable or
payable to the taxation authority is included as a current asset or liability.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing cash
flows which are classified as operating cash flows.
158 p Brickworks Annual Report 2021
(b) New accounting standards, interpretations and amendments adopted by the Group
In June 2021, IFRIC published an agenda decision in relation to the accounting treatment when determining net realisable value (NRV) of
inventories, in particular what costs are necessary to sell inventories under IAS 2 Inventories. The Group is currently assessing the impact the
agenda decision will have on its current accounting policy and whether an adjustment to inventory may be necessary. Accordingly, a reliable
estimate of the impact of the IFRIC agenda decision on the Group cannot be made at the date of this report. The Group expects to complete
the implementation of the above IFRIC agenda decision as part of its reporting for the financial year ending 31 July 2022.
With the exception of interpretations on Software as a Service (SaaS) arrangements there were no new accounting standards, interpretations
and amendments significantly impacting the Group in the financial year ended 31 July 2021.
(c)
SaaS arrangements
In April 2021, IFRS Interpretations Committee (IFRIC) published an agenda decision for configuration and customisation costs incurred in
relation to implementation of SaaS arrangements. As a result, the Group has changed its accounting policy with respect to these costs. The
nature and effect of these changes is described below.
The Group’s accounting policy has historically been to capitalise costs related to the configuration of SaaS arrangements as non-current
assets in the Consolidated Balance Sheet, where they meet the relevant definition. The adoption of the above IFRIC agenda decision resulted
in a reclassification of these assets to recognition as an expense in the Consolidate Income Statement and Consolidated Statement of Other
Comprehensive Income, impacting both the current and prior periods presentation.
Historical financial information has been restated to account for the impact of the change in accounting policy in relation to SaaS
arrangements, as follows:
Consolidated Balance sheet
Property, plant and equipment
Total non-current assets
Total assets
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Retained earnings
Consolidated Income Statement and Other Comprehensive Income
Other expenses
Profit from continuing operations before income tax
Income tax expense
Profit for the year
Consolidated Statement of Cash Flows
Payments to suppliers and employees
Net cash from operating activities
Purchases of property, plant and equipment
Net cash used in investing activities
(c)
New standard not yet applicable
31 July 2020
as reported
$’000
657,328
3,195,517
3,832,933
(417,487)
(1,196,040)
(1,428,922)
2,404,011
1,754,652
(20,326)
390,666
(75,275)
298,883
(926,803)
75,258
(104,161)
(172,613)
Adjustments
As Restated
$’000
$’000
(1,151)
(1,151)
(1,151)
346
346
346
(805)
(805)
(1,151)
(1,151)
346
(805)
(1,151)
(1,151)
1,151
1,151
656,177
3,194,366
3,831,782
(417,141)
(1,195,694)
(1,428,576)
2,403,206
1,753,847
(21,477)
389,515
(74,929)
298,078
(927,954)
74,107
(103,010)
(171,462)
Certain new accounting standards, amendments and interpretations have been issued that are not effective for the financial year ended
31 July 2021. However, the Group intends to adopt the following new or amended standards and interpretations, if applicable, when they
become effective with no significant impact being expected on the Consolidated Financial Statements of the Group:
◗ Amendments to AASB 101 Classification of Liabilities as Current or Non-current
◗ Amendments to AASB 3 Reference to Conceptual Framework
Brickworks Annual Report 2021 p 159
Blackwattle Apartments
Bowral Bricks in Bowral Blue
Glebe, NSW
160 p Brickworks Annual Report 2021
160 p Brickworks Annual Report 2021
Directors’
Declaration
In the opinion of the Directors:
1.
the complete set of the financial statements and notes of the consolidated entity, as set out on pages 113 to 159, and the
additional disclosures included in the Remuneration Report section of the Directors’ Report designated as audited, are in
accordance with the Corporations Act 2001:
(a) comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
(b) give a true and fair view of the financial position as at 31 July 2021 and of the performance for the year ended on that date
of the consolidated entity;
2.
3.
the financial report also complies with International Financial Reporting Standards as issued by the International Accounting
Standards Board;
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
4. as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in
note 6.4 will be able to meet any obligations or liabilities to which they are or may become subject to, by virtue of the Deed of
Cross Guarantee.
This declaration is made after receiving the declaration required to be made to the Directors in accordance with s295A of the
Corporations Act 2001 for the financial year ended 31 July 2021.
This declaration is made in accordance with a resolution of the Board of Directors.
Dated:
23 September 2021
R.D. Millner
Director
L.R. Partridge AM
Director
Brickworks Annual Report 2021 p 161
University of Sydney
Terracade XP Smooth – Custom
1200mm – Whitehaven
Sydney, NSW
162 p Brickworks Annual Report 2021
Independent
Auditor’s Report
Independent Auditor’s Report to the Members of Brickworks Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Brickworks Limited (the Company) and its subsidiaries (collectively the Group), which comprises
the consolidated balance sheet as at 31 July 2021, the consolidated income statement, consolidated statement of other comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a) Giving a true and fair view of the consolidated financial position of the Group as at 31 July 2021 and of its consolidated financial
performance for the year ended on that date; and
b) Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in
the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with
the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the
current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon,
but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report,
including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment
of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the accompanying financial report.
Brickworks Annual Report 2021 p 163
Independent Auditor's Report
Valuation of investment properties held within joint venture property trusts
Why significant
How our audit addressed the key audit matter
The Group’s total assets include interests in joint venture
property trusts that are equity accounted. The primary assets
of these joint venture property trusts are investment properties
that are carried at fair value. Fair value was assessed by the
directors with reference to external independent property
valuations.
As disclosed in Note 6.3(b) of the financial report, during the
year the Group recognised a gain of $172.478 million for its
share of changes in fair value of investment properties held
within the joint venture property trusts.
As also disclosed in Note 6.3(b) of the financial report, the
valuation of investment properties is inherently subjective. The
valuations are highly sensitive to small changes in key inputs
such as the capitalisation rate, discount rate, net operating
income and weighted average lease expiry.
This was considered a key audit matter due to the significance
of the judgments required in determining the fair value of
investment properties which in turn impacts the share of profits
recognised from the joint venture property trusts.
Our audit procedures included the following:
◗ We discussed with management the following matters related
to the investment properties held within the joint venture
property trusts:
◗ movements in the investment property portfolio;
◗ changes in the condition of each property;
◗ controls in place relevant to the valuation process; and
◗
the status of investment properties under development.
◗ On a sample basis, we performed the following procedures on
the external independent valuations of selected properties:
◗ Evaluated the capitalisation rates adopted, and movements
in the year, based on our knowledge of the property
portfolio, published industry reports and comparable
property valuations;
◗ Evaluated other key assumptions and inputs including the
net operating income, discount rate, lease terms, budgeted
capital expenditure and lease incentives;
◗
Involved our real estate valuation specialists to assist
with the assessment of the valuation assumptions and
methodologies;
◗ Assessed the qualifications, competence, and objectivity of
the Group’s independent property valuation specialists.
◗ We have evaluated the Group’s assessment that property
valuations conducted during the year appropriately reflect the
fair value as at the Balance Sheet date by reviewing available
market data and assessing whether there are any material
changes in the key inputs to the valuation calculation since the
date of the external independent property valuations.
Gain on reclassification of inventory to investment property for property held within joint venture property trusts
Why significant
How our audit addressed the key audit matter
As set out in Note 6.3(b) of the financial report, the Group
is required to defer the profit on the sale of land to the joint
venture property trusts in which it maintains an interest. This
unrealised profit is recognised as income at the earlier of the
property being classified as an investment property within the
joint venture property trusts or sold externally.
During the year, a $50.066 million fair value gain was recognised
in relation to land reclassified as investment property,
representing the remainder of all previously deferred profits.
This was considered a key audit matter due to the value of the
gains recorded and the judgment required in determining the
reclassification to investment property.
Our audit procedures included the following:
◗ We evaluated the Group’s assessment that the properties met
the definition of investment property as set out in Australian
Accounting Standards by enquiring as to the Group’s intentions
for the property, reading board minutes and contractual
agreements supporting the change in intention.
◗ We evaluated the adequacy of the associated financial report
disclosures.
164 p Brickworks Annual Report 2021
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in the Company’s 2021
Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is to be included in the
Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the date of
this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion
thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed on the other information obtained 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.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian 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 misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as
applicable, matters relating 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.
Auditor’s Responsibilities for the Audit of the Financial Report
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 our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error 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 this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
◗ Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
◗ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
◗ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by the directors.
◗ Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
◗ Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report
represents the underlying transactions and events in a manner that achieves fair presentation.
◗ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We
remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and
to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial
report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Brickworks Annual Report 2021 p 165
Independent Auditor's Report
166 p Brickworks Annual Report 2021
Incu HQ
Bowral Bricks in Capitol Red
Rosebery, NSW
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 88 to 108 of the directors' report for the year ended 31 July 2021.
In our opinion, the Remuneration Report of Brickworks Limited for the year ended 31 July 2021, 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.
Ernst & Young
Jodie Inglis
Partner
23 September 2021
Sydney
Brickworks Annual Report 2021 p 167
168 p Brickworks Annual Report 2021
168 p Brickworks Annual Report 2021
Daylesford Longhouse
Austral Bricks Burlesque in Indulgent White
Elevated Plains, VIC
Statement of
Shareholders
Ordinary Shares
at 31 August 2021
Shareholders
Number of holders
Voting entitlement is one vote per fully paid
ordinary share % of total holdings by or on
behalf of 20 largest shareholders
Distribution of shareholdings:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Holdings of less than marketable parcel of
21 shares
21,987
72.21%
14,974
5,618
806
539
50
21,987
685
Substantial Shareholders
The names of the substantial shareholders as disclosed in the
shareholder notices received by the Company:
Shareholder
Washington H Soul Pattinson and Company
Limited
Number
of Shares
65,645,140
20 Largest Shareholders
as disclosed on the Share Register as at 31 August 2021
Number of
Shares
%
1 WASHINGTON H SOUL PATTINSON &
61,045,140
40.27
COMPANY LIMITED
2 HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
3
4
J P MORGAN NOMINEES AUSTRALIA
PTY LIMITED
CITICORP NOMINEES PTY LIMITED
5 MILTON CORPORATION LIMITED
14,299,742
9.43
8,936,417
5.89
5,478,505
3,234,567
3.61
2.13
6 NATIONAL NOMINEES LIMITED
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