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CanWel Building Materials Group LtdANNUAL REPORT 2022 Table of
Contents
Five Year Summary
Chairman’s Letter
Managing Director’s Overview
Financial Overview
Group Structure
Property
Building Products Australia
Building Products North America
Investments
Health and Safety
Overview of Sustainability
Environment
Community
Our People
i p Brickworks Annual Report 2022
02
05
09
15
19
22
26
38
44
47
52
54
63
65
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
71
75
79
83
88
91
115
116
117
118
South Bank
Australian Granite Pavers –UrbanStone Bespoke
Brisbane, QLD
$854m
Statutory NPAT
i257%
$746m
Underlying NPAT*
i159%
63¢
Total full year dividend
per share
i3%
11.2%
10-year Total Shareholder
Return (TSR)
Versus All Ordinaries
Accumulation Index
9.6%
* This is an alternative measure of earnings that
excludes significant items, which are separately
disclosed in the consolidated financial statements.
Brickworks Annual Report 2022 p 01
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
119
120
121
122
169
171
179
180
Five Year
Summary
Total revenue
Total EBITDA2
Underlying net
profit after tax2
Dividends
$712 m
$8 41 m
$8 9 8 m
$ 8 51 m
$1,0 93 m
$3 0 8 m
$34 4 m
$28 4 m
$ 4 54 m
$1,0 5 8 m
$227 m
$235 m
$152 m
$28 8 m
$74 6 m
54.0¢
57.0¢
59.0¢
61.0¢
6 3.0 ¢
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
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 due to the re-classification of Austral Precast as a discontinued operation.
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 2022
All revenue and earnings measures exclude significant items and discontinued operations unless otherwise stated.
1
2
Certain comparative amounts have been restated due to the re-classification of Austral Precast as a discontinued operation.
This is an alternative measure of earnings that excludes significant items, which are separately disclosed in the consolidated financial statements.
Brickworks Annual Report 2022 p 03
201812019120201202112022Growth$000$000$000$000$000%Total revenue 712,088 841,285898,420850,9221,093,15428%Earnings before interest and tax2Building Products Australia79,653 57,690 39,513 47,768152,869220%Building Products North America– 6,180 10,061 8,52524,932192%Property 93,979 157,806 129,437 252,679643,689155%Investments 123,498 103,725 50,77196,946180,71286%Head office and other expenses (13,664) (15,026)(16,849)(19,417)(19,803)(2%)Total EBIT283,466 310,375 212,933 386,501982,399154%Total EBITDA 308,465 343,945 283,699 454,2901,057,924133%Finance costs(14,456)(23,883)(25,964)(18,735)(20,154)(8%)Income tax(42,415)(51,920)(35,218)(80,090)(216,101)(170%)Underlying net profit after tax2226,595 234,572 151,751 287,676746,144159%Significant items net of tax(46,230) (37,086)175,495(44,892)123,592N/ADiscontinued operations net of tax (including significant items) (4,923) (42,844)(29,168)(3,621)(15,345)N/ANet profit after tax (including significant items and discontinued operations) 175,442 154,642 298,078239,163854,391257%Per share earnings and dividendsStatutory earnings per share (cents) 117.5 103.3 198.8158.3563.0256%Underlying earnings per share (cents)2 151.7 156.7 101.2190.4491.7158%Final dividend per share (cents)36.038.039.040.041.03%Total dividends per share (cents) 54.0 57.059.061.063.03%RatiosNet tangible assets per share ($) 12.42 13.28 14.0813.7818.3433%Statutory return on shareholders’ equity8.5%7.1%12.4%9.6%26.2%172%Underlying return on shareholders’ equity210.9%10.8%6.3%11.6%22.9%97%Interest cover ratio (underlying)18.2 17.9 8.417.835.298%Gearing (net debt to equity)14.7%11.7%18.9%20.9%15.1%(28%) Hey House
GB Masonry GB Honed in Porcelain
Gold Coast, QLD
04 p Brickworks Annual Report 2022
/ 04 / Brickworks Limited / Annual Report 2022
$854m
Statutory NPAT
i257%
$746m
Underlying NPAT*
i159%
563.0¢
Statutory earnings
per share
i256%
491.7¢
Underlying earnings
per share*
i158%
41¢
Final dividend
per share
i3%
63¢
Total full year dividend
per share
i3%
* This is an alternative measure of earnings
that excludes significant items, which are
separately disclosed in the consolidated
financial statements.
41¢Final dividend per sharei3%63¢Total full year dividend per sharei3%$854mStatutory NPATi257%$746mUnderlying NPAT*i159%563.0¢Statutory earnings per share i256%491.7¢Underlying earnings per share* i158% Chairman's
Letter3
On behalf of your Board of Directors, it gives me great pleasure to present Brickworks’ Annual
Report for the 2022 financial year. It has been a landmark year for the Company, with record
earnings achieved across our diversified and stable portfolio of attractive assets.
Review of 2022
Brickworks has delivered an outstanding result in FY2022,
achieving record earnings, amidst the backdrop of continued
volatile economic conditions.
Meanwhile, the continued growth of online shopping and
subsequent demand for well-located logistics facilities, has
increased the value of our industrial property assets.
In addition to the record earnings, we have made strong
progress on delivering our strategy. This is illustrated by
initiatives such as the launch of the Brickworks Manufacturing
Trust, the purchase of strategic land assets in western Sydney,
the completion of the first facilities at the new Oakdale West
Estate, the commissioning of our new masonry plant in Sydney,
and the completion of further bolt-on acquisitions in North
America.
In July, I was pleased to spend a week in the United States with
the rest of the Board. During this trip we were able to visit many
of our facilities and meet with staff and customers. The trip
highlighted the enormous progress our team has made towards
achieving our goal of establishing a market leading brick
business in North America, since our initial investment just four
years ago.
During the year, demand for our building products was strong,
with housing markets in both Australia and the United States
supported by government stimulus packages implemented in
the aftermath of the COVID-19 pandemic.
Whilst conditions have been broadly supportive for our
business, the year has also been highlighted by several unique
challenges. In the first half, our building products businesses
in Australia and North America were still being significantly
impacted by COVID related issues – including restrictions on
building activity and workforce absenteeism.
Then in the second half, unprecedented wet weather along the
east coast of Australia, and severe labour shortages, impacted
our operations in many ways. In addition to reducing building
activity, the inclement weather caused significant delays to
development activity within the Industrial JV Trust and to the
construction of our new brick plant in Sydney.
Late in the financial year, high inflation and rising interest rates
in both Australia and the United States have resulted in reduced
levels of consumer sentiment. Whilst this threatens to impact
the economy over the next 12–24 months, I am confident that
the Company is well placed to meet these challenges and
continue to deliver strong returns for shareholders.
3
All revenue and earnings measures throughout this report exclude significant items and discontinued operations unless otherwise stated.
Brickworks Annual Report 2022 p 05
Chairman’s Letter
Record Earnings
Brickworks reported record statutory Net Profit After Tax
(NPAT) of $854 million, up 257% on the prior year. The statutory
result was boosted by a significant one-off profit in relation
to the deemed disposal of Washington H Soul Pattinson
(“WHSP”) shares upon its merger with Milton during the first
half. Excluding this impact, and other significant items and
discontinued operations, the underlying NPAT was $746 million,
up 159%.
Underlying earnings before interest, tax and depreciation
(EBITDA) from continuing operations was $1,058 million,
up 133% on the prior year, and after depreciation, EBIT was
$982 million, up 154%.
The strength of the Company’s diversification strategy
underpinned the result, with increased underlying earnings
across all divisions.
Another outstanding contribution from Property was the
highlight of the year. This was driven by a significant increase
in the value of our industrial property portfolio, and strong
development activity within the Industrial JV Trust.
Earnings across Building Products operations in Australia and
the United States were also higher, as was the contribution from
our investment in WHSP.
Building our Assets
Brickworks’ business model is also focussed on building a
diversified portfolio of assets with increasing asset value.
At the end of the financial year, Brickworks was backed by
inferred net assets worth $5.03 billion4. This includes our 26%
stake in WHSP, our share of net Property Trust assets, the net
tangible assets held within our Building Products operations in
Australia and North America and the market value of selected
parcels of development land (above book value), partially offset
by net debt.
This translates to an inferred asset backing of $33.15 per share,
providing solid backing for our current share price.
Dividends and Capital Management
The Directors have declared a fully franked final dividend of
41 cents per share, up 3% on the prior year. This brings total
dividends for the year to 63 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 46 years. This is
a testament to our strong financial position, prudent capital
management and our diversified business model.
Despite our significant investment program over the past few
years, our borrowing level remains conservative. Net debt
declined by $25 million during FY2022 to finish the year at
$493 million, with gearing of 15%.
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.
As we announced last year, Robert Webster 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, the Company has engaged
external consultants to assist with the appointment of one or
more new independent non-executive directors to replace
Robert and Michael.
4
Inferred net assets comprise: Investments based on the market value of Brickworks’ shareholding in WHSP (ASX: SOL) at 31 Jul 2022, Property
based on Brickworks’ share of net property trust assets, Building Products based on net tangible assets, selected parcels of development land at
current “as is” valuation, partially offset by net debt.
06 p Brickworks Annual Report 2022
D Residence
Austral Bricks Indulgence, French Brie
Austral Bricks Metallix, Carbide
Perth, WA
In Conclusion
We believe Brickworks diversified portfolio of attractive assets
and our robust balance sheet offers shareholders compelling
value, stability, and good prospects for long term growth.
We are investing to meet the growing demand for prime
industrial property, and we will continue to support our Building
Products businesses in Australia and North America with
selective investment to improve our competitive position.
Our investment in WHSP continues to deliver strong returns
and asset growth. The merger of WHSP with Milton Corporation
that was implemented during FY2022 provides exciting new
opportunities, with increased scale and liquidity.
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.
I would also like to thank my fellow directors and our
shareholders for your continued support.
Robert Millner
Chairman
Brickworks Annual Report 2022 p 07
52 Reservoir Street
Austral Bricks San Selmo Custom Glazed
Sydney, NSW
$1,058m
Total EBITDA*
i133%
LTIFR
Lost Time Injury
Frequency Rate
1.1
s62%
TRIFR 11.7
Total Recordable Injury
Frequency Rate
s18%
2,119
Total Employees
i8.1%
* 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 2022
08 p Brickworks Annual Report 2022
LTIFR 1.1Lost Time Injury Frequency Rates62%TRIFR 11.7Total Recordable Injury Frequency Rates18%$1,058mTotal EBITDA*i133%2,119Total Employeesi8.1% Managing Director’s
Overview
2022 has been a standout year for Brickworks, with all four divisions improving performance
to deliver record underlying Group earnings. Importantly, we have also made significant progress
on the implementation of a range of strategic initiatives to position the Company for continued
long-term growth.
Safety
Sustainability
Before outlining the financial results in more detail, I will take
some time to reflect on our workplace safety performance and
sustainability initiatives.
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.
Pleasingly, we continue to make steady progress on improving
safety in our operations. The total recordable injury rate (injuries
per million hours worked) has decreased to 11.7 in FY2022,
down from 14.3 in the prior year. At the same time the lost time
injury frequency rate decreased to 1.1 in FY2022, from 2.9 in the
previous year.
Across our operations there were five lost time injuries during
the year – four in North America and just one in Australia.
A sustained decrease in injuries has been achieved over
the past decade, through disciplined implementation of
safety management systems and procedures, together with
behavioural leadership and safety training programs.
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 and often recycled. 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.
We are on track to meet the sustainability targets within our
“Build for Living: Towards 2025” strategy. 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 following pillars: Our
People, Environment, Responsible Business and Community.
Across our Australian operations, carbon emissions have
followed a general downward trend, with a 42% decrease
compared to FY2006 (Scope 1 and 2).
Our progress in this area is supported by product redesign, use
of recycled material and on-board fuels, firing our kilns with
green fuels such as landfill gas, and capital investments into
modern, fuel-efficient production processes. For example, at
Horsley Park we are currently building the most energy efficient
brick plant in the country. Once complete, it will replace two
plants that are both more than 45 years old.
We continue to evaluate the feasibility of other plant upgrades
across the fleet, with carbon reduction and fuel efficiency being
key considerations in evaluating these potential projects.
Brickworks Annual Report 2022 p 09
Springvale Community Hub
Austral Bricks 65mm Clay Paver
Melbourne, VIC
We have also made steady progress in North America. Since
our entry into this market in 2018, we have achieved a 9%
improvement in energy efficiency, primarily through our plant
rationalisation and upgrade program.
During the year, we announced a collaboration agreement with
Delorean (ASX: DEL) to investigate the feasibility of developing
biogas facilities at our brick plants. The initial study is focussed
on our new brick plant at Horsley Park, and if successful, has
the potential to displace over 200,000 gigajoules per annum
of fossil fuel gas with renewable biomethane. The project is
progressing well and has advanced to the development stage,
following an initial concept study.
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.
A highlight for the year was the completion of the state-of-the-
art Amazon distribution centre, the first facility at Oakdale West
(Sydney). This follows many years of planning and investment
in site preparation and infrastructure at this Estate. With further
facilities now close to completion, Oakdale West is well on the
way to becoming one of the most prestigious industrial property
precincts in the southern hemisphere.
Other Estates at Oakdale South (Sydney) and Rochedale
(Brisbane) have now been fully built out, following the
completion of final developments at these precincts during the
second half.
The revaluations and developments during the year have
resulted in total gross assets within the Industrial JV Trust
increasing by around $1.5 billion to $4.2 billion. After including
debt, Brickworks 50% share of net asset value held within the
trust was $1,543 million at the end of the financial year.
Property
It has been a landmark year for Property, generating record EBIT
of $644 million, up 155% on the prior year.
Earnings from the Industrial JV Trust were again the key
driver of the result. All assets were revalued during the year,
and this resulted in a strong revaluation profit of $227 million
(representing Brickworks’ 50% share of the overall valuation gain).
Significant development profits were also recorded, and this
included the completion of several new facilities.
Launch of Brickworks Manufacturing Trust
In July, we announced the launch of the Brickworks
Manufacturing Trust, a new Joint Venture manufacturing
property trust with Goodman Group (“Goodman”). This trust will
initially house a portfolio of 15 manufacturing plants, tenanted
by our Building Products Australia businesses such as Austral
Bricks, Bristile Roofing and Austral Masonry.
The market value of assets sold into the Trust of $416 million
represents a premium of $280 million to the book value prior to
the sale (after including transaction costs and provisions).
10 p Brickworks Annual Report 2022
A pre-tax profit of $89 million was recorded by Building
Products Australia in FY2022, with the remaining benefit to be
recognised through reduced right-of-use asset depreciation
over the life of each lease.
Gross cash proceeds of $207 million, representing 49.9% of the
asset value, were used to pay down Group debt.
The partial sale and lease back of these properties allows
Brickworks to realise value for shareholders and capitalise on the
strong growth in industrial land values over the past few years.
Importantly, the lease terms have been structured to ensure
minimal impact to the operational flexibility of our Building
Products businesses during the lease period.
Together with Goodman we plan to actively manage the new
Brickworks Manufacturing Trust, in which there are several
properties that have the potential for additional development
and greater utilisation.
At the end of the financial year, our equity accounted value of
the Brickworks Manufacturing Trust was $211 million, including
capitalised stamp duty costs.
Building Products Australia
Building Products Australia recorded an EBITDA from
continuing operations of $205 million in FY2022. After including
depreciation and amortisation, EBIT was $153 million.
As I mentioned, this includes a profit of $89 million from the sale
of operational land into the Brickworks Manufacturing Trust.
Excluding this impact, EBITDA from continuing operations was
$116 million, up 19%, and EBIT was $64 million, up 34%.
Whilst the underlying performance and financial results from
Building Products Australia are pleasing, in many ways it was a
frustrating year for the business.
Demand has been strong, with a large volume of detached
housing construction projects under construction.
However, sales momentum was repeatedly stifled throughout
the year, resulting in the business not reaching its full potential.
Most notably, this includes COVID-related building restrictions
imposed in the early months of the financial year, supply chain
pressures that have slowed the speed of construction across
the industry, and unprecedented wet weather events in key east
coast markets during the second half.
It is testament to the effort of our team, that despite these many
challenges, a number of our state operating divisions delivered
record earnings during the year.
The performance of Austral Bricks was particularly strong,
where there was a broad-based improvement in earnings across
all regions, due to higher sales and improved margins.
The margin expansion achieved by Austral Bricks was
particularly pleasing, in light of the high inflation environment.
This was underpinned by a pro-active price rise strategy to fully
recover the impact of increasing costs.
Fortunately, we have not been significantly impacted by
the extreme gas and electricity prices that have hit many
manufacturers in the second half. Brickworks is well placed in
this regard, with a fixed price wholesale gas contract with Santos
on the East Coast, extending until December 2024.
Our major investment program continues to progress, despite
being significantly impacted by the same challenges faced by
our operating divisions. Construction of the new brick plant at
Horsley Park has suffered multiple flooding events, shipping
delays, a lack of critical parts and significant cost increases of
steel and other materials.
On a more positive note, construction of the Oakdale East
Masonry Plant was completed and commissioned during the
year. However, the associated value-added plant remains under
construction, following lengthy delays.
Brickworks made a strategic investment in FBR Limited (ASX:
FBR) in July. FBR has developed a bricklaying robot that has the
potential to build walls faster than traditional methods, and with
much reduced labour. With an ongoing shortage of bricklayers,
exacerbated by the current tight labour market, we see a strong
market opportunity for this technology and as the largest
brickmaker in the country, we have much to benefit from its
successful commercialisation.
Building Products North America
Building Products North America delivered EBITDA of
$48 million and EBIT of $25 million.
This result includes a contribution of $13 million from the
sale of several surplus land holdings – predominantly quarry
lands associated with closed brick plants. Land sales profit of
$10 million was recorded in the prior year.
Excluding the impact of land sales, EBITDA of $35 million was
more than double the prior year. This was achieved despite
the lingering impacts of the pandemic, with the first half beset
by repeated disruption to manufacturing operations and sales
activity across the country, as COVID’s Delta and Omicron
strains impacted workforce availability.
Whilst pandemic-related impacts eased in the second half, new
challenges emerged with surging inflation impacting costs all
across the supply chain. In particular, labour constraints have
resulted in higher wage rates to attract and retain staff. Like in
Australia, we have long-term fixed price gas contracts across
the majority of our plants, sheltering us from the impact of
soaring energy costs.
The business has made strong progress on key strategic
priorities over the year, including the completion of two
acquisitions to bolster the Company’s retail distribution network.
This vertical integration strategy provides Glen-Gery with
enhanced customer relationships and underpins sales volume
to support our manufacturing operations.
The plant rationalisation strategy has also continued, with the
closure of two more plants during the year. We commenced this
program back in 2019, and since that time have reduced the
Brickworks Annual Report 2022 p 11
Managing Director’s Overview
number of operating plants from 16 to 9. We are now confident
that the plant network is right-sized for our forecast production,
with each plant operating at much higher utilisation resulting in
improved efficiency and reduced total carbon emissions.
Another key benefit of our plant rationalisation program is that
capital spend can be more targeted. In FY2022 we completed
extensive upgrades to the Hanley plant in Pennsylvania and the
Lawrenceville Plant in Virginia, to reduce manufacturing costs
and expand the production capability.
In November, the “G21” launch event was held, with the release
of an expansive catalogue of new products, including several
exciting new ranges from both the Hanley and Lawrenceville
plants.
In March, I was proud to attend the launch of our new flagship
design studio on 5th Avenue, New York City. This store sets a
new benchmark for the building products industry globally,
offering an unparalleled opportunity for product promotion,
customer engagement and industry collaboration.
Investments
Our investment in WHSP provides a cash flow stream via
dividends that provides stability and allows long term strategic
decision making. In total, cash dividends of $61 million were
received during the year, up 5% on the prior year. EBIT from
Investments was up 86% to $181 million.
In the first half of the year, WHSP completed a merger with
Milton, another large ASX listed investment company. The
larger WHSP has increased scale, diversification and liquidity to
pursue additional investment opportunities.
Brickworks retains 94.3 million shares in WHSP, but due to the
addition of new shareholders to the register, our ownership
stake has reduced to 26.1% (previously 39.4%).
Group Outlook
The outlook varies across each of our divisions.
Within Property, activity in the Industrial JV Trust remains
strong, with developments at Oakdale West expected to drive
growth in rent and asset value over the next few years.
Four facilities at Oakdale West are expected to be completed
in the first half of FY2023, including a 66,000m2 facility to be
tenanted by Coles. Following the completion of these facilities,
the Oakdale West Estate will be 62% developed. Demand for
the remaining 144,000m2 of gross lettable area is strong and we
expect construction to commence on additional facilities during
FY2023.
The completion of the new brick plant at the Horsley Park Plant
2 site in early calendar 2023 will allow the release of additional
land at Oakdale East, where Plant 3 is currently located. This
land, with a current “as is” market value of around $300 million,
is likely to be sold into the Industrial JV Trust during FY2023.
5
Assumes GLA of 280,000m2, rent of $160/m2 and cap rate of 4.25%.
12 p Brickworks Annual Report 2022
As such, it is expected to generate a significant profit on sale
and then allow further development to meet the growing
demand from tenants.
Once fully developed, this additional parcel of land is expected
to add over $1 billion of leased assets to the Industrial JV Trust5.
As always, Property earnings will depend on the timing of
development activity and land sale transactions, and the extent
of any revaluations.
Turning to Building Products Australia, there remains a
significant amount of detached house construction work in the
pipeline. This healthy pipeline of work is expected to translate to
strong sales for at least the first half of FY2023.
In some areas, sales volume is being limited by the availability of
trades, with roof tilers in Victoria in particularly short supply.
Once the current backlog of stimulus-induced housing work
is completed, a period of softer demand is expected, with the
rapid increase in interest rates set to provide challenges for the
housing industry in the medium term. This is already evident in
declining building approvals and our home builder customers
reporting significantly reduced foot traffic through display
homes.
In North America, market conditions are similar to Australia,
with a strong order book providing confidence in the short-
term sales trajectory, but rapidly rising interest rates driving
a reduced level of new housing starts and a more cautious
medium-term outlook.
On the strength of the first six weeks trading and the existing
order book, we anticipate increased sales across both the
residential and higher margin commercial segments in the first
half of FY2023.
Manufacturing costs will benefit from the extensive plant
rationalisation activities and upgrades already undertaken.
Over the long term, North American operations are expected
to deliver increased earnings, with Brickworks continuing to
implement our proven market strategy centred around style and
premium product positioning.
We expect our investment in WHSP to continue to deliver
superior long-term returns and dividend growth well into the
future.
In relation to the Brickworks Manufacturing Trust, there will be
a range of divisional reporting implications, however the overall
impact on Brickworks Group underlying NPAT and cashflow
is expected to be less than $2 million, excluding any potential
revaluations or development profits/losses. For example, from
a cash flow perspective, Building Products Australia will incur
additional rent of around $18 million, with this cash cost being
broadly offset by net rental income within Property (based on
our 50.1% ownership stake), and reduced bank interest charges
following the repayment of debt with the proceeds from the sale.
Forsyth Barr Building
Terracade TN Smooth
in Sandy and Simpson
Dunedin, New Zealand
Looking more broadly, it is clear that we are facing an
increasingly uncertain global economic and political outlook.
This uncertainty will create both risk and opportunity for
Brickworks.
For example, supply chain risks are emerging that have the
potential to impact the availability of critical spare parts to
maintain our operations. In addition, the European energy crisis
has directly impacted several of our valued suppliers who have
been forced to curtail brick and roof tile operations due to the
extreme gas and electricity prices.
Whilst this situation is devastating for our partners, it also
provides opportunity for Brickworks, in that it has become cost-
effective to supply bricks into Europe from both our Australian
and North American operations. As such, we are actively
exploring this opportunity.
I have already mentioned the risk of rising interest rates in
relation to the dampening effect on demand for building
products. Rising rates will also increase the risk of capitalisation
rate expansion across our property portfolio.
Despite the increasing uncertainty, Brickworks’ diversified
portfolio of assets remains very well-placed to meet any
future challenges and continue to deliver strong results for
shareholders.
Our People
Finally, I’d like to thank our people. We now have more than
2,100 employees, and it is their energy and dedication that will
continue to drive our success.
The world has changed significantly over the past few years, and
like all companies, we have had to make changes to the way we
work and interact as a team. I am very proud that at Brickworks
we have been able to maintain a stable and highly experienced
leadership team and a committed workforce. I believe this gives
us a competitive edge.
Last month we announced that Grant Douglas has replaced
Robert Bakewell as Chief Financial Officer. Grant joined
Brickworks in 2011 and has held several senior positions within
the Company since that time, including playing a key role in the
establishment and growth of our operations in North America.
I would like to formally congratulate Grant on his appointment,
and also acknowledge the contribution of Robert, who was a
valuable member of the leadership team during his six years in
the role.
I would also like to congratulate Mark Ellenor, who has been
promoted to the role of Executive General Manager, Building
Products. Mark has been with Brickworks for more than 20 years
in various roles, most recently as President, North America. In
this new role, his responsibility will expand to include operations
in Australia, and I look forward to working closely with him in this
new capacity.
Finally, I would also like to take this opportunity to thank the
Board of Directors and the executive team. As you can see, we
have achieved a lot during the past 12 months, and none of this
would be possible without their support and commitment.
Lindsay Partridge AM
Managing Director
Brickworks Annual Report 2022 p 13
Brickworks Design Studio
Austral Bricks Venetian Glass Bricks
New York City, USA
14 p Brickworks Annual Report 2022
$493m
Net debt
s5%
15%
Gearing
(net debt/equity)
s28%
$1,058m
Total EBITDA1
i133%
$982m
Total EBIT1
i154%
$130m
Cashflow from
operating activities
s7%
1
This is an alternative measure of earnings
that excludes significant items, which are
separately disclosed in the consolidated
financial statements.
Financial
Overview
Highlights
◗ Statutory NPAT including significant items and discontinued operations, up 257% to $854 million
◗ Underlying NPAT from continuing operations before significant items, up 159% to $746 million
◗ Underlying EBIT from continuing operations before significant items, up 154% to $982 million. EBITDA up 133% to $1,058 million
◗ Property EBIT up 155% to $644 million, net Property Trust assets $1.754 billion (including Brickworks Manufacturing Trust)
◗ Building Products Australia EBIT up 220% to $153 million and EBITDA up 110% to $205 million, including an $89 million profit
associated with the sale of 15 properties into the new Brickworks Manufacturing Trust
◗ Building Products North America EBIT up 192% to $25 million and EBITDA up 84% to $48 million
◗
Investments EBIT up 86% to $181 million, Brickworks share of WHSP market value $2.423 billion
◗ Operating cashflow down 7% to $130 million
◗ Final dividend of 41 cents fully franked, up 1 cent or 3% (Record date 2 November 2022, payment date 23 November 2022)
◗ Total full-year dividend of 63 cents fully franked, up 2 cents or 3%
Earnings
Brickworks posted a statutory Net Profit After Tax (NPAT)
of $854 million for the year ended 31 July 2022, up 257% on
the prior year. Excluding significant items and discontinued
operations, the underlying NPAT was $746 million, up 159%.
Underlying earnings before interest, tax and depreciation
(EBITDA) from continuing operations was $1,058 million, up
133% on the prior year. After depreciation and amortisation,
EBIT was $982 million, up 154%.
Property EBIT was a record $644 million, driven by another
strong performance from the 50/50 joint venture industrial
property trust with the Goodman Group (“Industrial JV Trust”).
Strong revaluation and development profits were recorded
during the period. This resulted in Brickworks’ share of the
net asset value within the Industrial JV Trust increasing by
$632 million to $1,543 million.
The highlight of the year was the completion of the state-of-the-
art Amazon warehouse at Oakdale West – the first facility at this
Estate.
On revenue of $694 million, Building Products Australia EBIT
was $153 million (EBITDA was $205 million). This includes an
$89 million profit associated with the sale of 15 operational
properties into the new Brickworks Manufacturing Trust,
completed in July. Excluding this impact, EBIT from continuing
operations was $64 million, up 34% and EBITDA was
$116 million, up 19%.
The higher earnings were due primarily to a strong performance
from Austral Bricks across all east coast states, where increased
demand supported improved production efficiencies.
On revenue of $399 million, Building Products North America
contributed EBIT of $25 million and EBITDA of $48 million.
This result includes the sale of a number of surplus quarry
sites, generating a profit of $13 million. Excluding the impact of
land sales in both FY2021 and FY2022, EBITDA was up 113% to
$35 million.
Brickworks Annual Report 2022 p 15
Financial Overview
The uplift in revenue and earnings was supported by the
acquisition of IBC in August 2021, and a modest recovery in
commercial building activity in key markets during the
second half.
Investments EBIT was up 86% to $181 million, primarily due to
a higher contribution from New Hope Corporation to WHSP
earnings. During the first half, WHSP completed a merger
with ASX listed investment company, Milton Corporation
(“Milton”, formerly ASX: MLT). The market value of Brickworks’
shareholding in WHSP was $2.423 billion at 31 July 2022, down
$656 million for the year.
Total borrowing costs were up 8% to $20 million, with underlying
interest cover finishing the year at a conservative 35 times.
Underlying income tax from continuing operations was
$216 million, up from $80 million in the prior year, due to the
higher earnings.
Significant items increased NPAT by $124 million for the year.
This comprised:
◗ A net profit of $271 million following WHSP’s merger with
Milton. This includes a $452 million profit on the deemed
disposal of WHSP shares, partially offset by Brickworks share
of a goodwill impairment incurred by WHSP, upon the merger.
◗ A $40 million post-tax gain from other WHSP significant
items, primarily related to the de-consolidation of New
Hope Corporation.
◗ A $17 million expense 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.
◗ A non-cash impairment in Building Products Australia of
$117 million (post-tax), in accordance with AASB 136. This
comprises a goodwill impairment of $80 million within
Austral Bricks and impairments to plant and equipment and
right-of-use assets within Bristile Roofing ($13 million) and
Austral Masonry ($24 million). The impairment charges are
based on management’s assessment of more conservative
forecasts for building activity over the medium term (in light
of increasing inflation and interest rates, and pressure on
global supply chains), an increased leased asset base and a
higher discount rate applied.
◗ A $28 million cost (net of tax), associated with plant
relocation and commissioning costs. This is primarily
attributable to a non-cash impairment of buildings, plant
and equipment and clay in relation to the closure of
Plant 3 at Horsley Park in Sydney. This cost also includes
commissioning expenses at the new Oakdale East masonry
plant, Plant 2 at Horsley Park and Hanley in North America.
◗ Restructuring costs of $10 million (net of tax), primarily
relating to the planned shutdown of the Bellevue plant in
Western Australia. In North America, costs were incurred
in relation to the closure of several retail outlets and the
staged decommissioning of production at the York and
Caledonia plants.
16 p Brickworks Annual Report 2022
◗ COVID-19 related costs of $8 million (net of tax), reflecting
primarily the unabsorbed fixed costs in relation to
manufacturing plant slowdowns as a result of COVID-19
absenteeism in North America and incremental costs such
as test kits and construction delays on major projects.
◗ Acquisition costs of $3 million (net of tax), primarily in
relation to the purchase of IBC.
◗ Other costs of $4 million (net of tax), primarily in relation to
the implementation of a new enterprise resource planning
system and the impacts of flooding on the east coast of
Australia in the second half.
Significant Items
Gross
$m
Tax
$m
Net
$m
Net impact of WHSP merger
with Milton
Other WHSP significant items
Income tax from the carrying
value of WHSP
Building Products Australia
impairment
Plant relocation and
commissioning costs
Restructuring activities
COVID-19 costs
Acquisition costs
Other costs
464
57
(193)
(17)
271
40
–
(17)
(17)
(132)
15
(117)
(40)
(14)
(11)
(4)
(6)
11
4
3
1
2
(28)
(10)
(8)
(3)
(4)
Total (Continuing Operations)
315
(191)
124
Cash Flow
Total cash flow from operating activities was $130 million, down
7% on the prior year, with cash generation impacted by increased
inventory within Building Products operations and higher
interest payments (including interest payments on leases).
Capital expenditure and land acquisitions was $134 million
during the year, with the Company midway through a significant
investment program across a range of major projects. Project
spend included a new brick plant at Horsley Park (NSW), a
new masonry plant at Oakdale East (NSW) and deployment
of a new enterprise resource planning system. In North
America, extensive upgrades were completed at the Hanley
(Pennsylvania) and Lawrenceville (Virginia) plants.
In March 2022 Brickworks completed the purchase of 121
hectares of land at Bringelly, in Southwest Sydney.
In addition, spending on business acquisitions amounted to
$75 million, primarily related to the IBC purchase, completed in
August 2021.
Gross cash proceeds of $207 million were received in July 2022,
in relation to the sale of properties to establish the Brickworks
Manufacturing Trust.
Balance Sheet
During the year total shareholders’ equity was up $780 million to
$3.260 billion.
Net tangible assets (‘NTA’) per share was $18.34 at 31 July 2022,
up from $13.78 at 31 July 2021. The uplift primarily reflects the
increase in value of the Industrial JV Trust, and the launch of the
Brickworks Manufacturing Trust (with these operational land
assets previously held at cost).
Total interest-bearing debt was $599 million at 31 July 2022.
After including cash on hand, net debt at the end of the year was
$493 million, a decrease of $25 million for the 12-month period.
Gearing (net debt to equity) was 15% at 31 July 2022, down from
21% at 31 July 2021.
Net working capital was $316 million at 31 July 2022, including
finished goods inventory of $267 million, up by $41 million on
the prior year. The increase in inventory was due to the extreme
wet weather along the east coast of Australia in July, resulting in
reduced product despatches at the end of the financial year, and
the IBC acquisition in North America.
Dividends
Directors declared a fully franked final dividend of 41 cents per
share for the year ended 31 July 2022, up 3% from 40 cents.
Together with the interim dividend of 22 cents per share, this
brings the total dividends paid for the year to 63 cents per share,
up 2 cents or 3% on the prior year.
Carpenter's Square House
Bowral Bricks in Murray Grey and Bowral Hamlet pavers in Ash
Melbourne, VIC
Discontinued Operations – Austral Precast
Following the annual strategic review process, Brickworks has
determined that further investment in Austral Precast is not
justified, given other capital priorities across the Group.
Brickworks is now focussed on realising the maximum value
possible from these assets, through an orderly exit, including the
initiation of a sale process. As a result, Austral Precast has been
reclassified as held for sale and is not reported in underlying
continuing operations.
To ensure consistency, FY2021 financials have been restated on
the same basis.
On the reclassification, an after-tax impairment of $13 million to
Austral Precast was recorded, predominantly related to a write
down to the carrying value of plant and equipment.
In FY2022, Austral Precast contributed an EBIT loss of $3
million, broadly in line with the prior year. An improvement in
the underlying performance of the business, driven by a range
of cost reduction programs, was offset by the impact of severe
wet weather in Sydney during the second half, which caused
significant delays and disruption to many projects.
Brickworks Annual Report 2022 p 17
18 p Brickworks Annual Report 2022
Park Sydney Apartments
Austral Precast Permaform Concrete Panels
Sydney, NSW
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:
Property
Building Products
Australia
Building Products
North America
Investments
Brickworks Annual Report 2022 p 19
Group Structure
Property
The Property division was originally established to maximise the
value of land that is surplus to the Building Products business.
Over time, the Property division has evolved and now consists
of two Joint Venture Property Trusts with Goodman Group,
plus 100%-owned land holdings, both operational and for
development.
Brickworks holds a 50% interest in the Industrial JV Trust. This
was established in 2005, for the specific purpose of capturing
the initial valuation uplift from re-zoning and then benefitting
from the long-term value appreciation and the stable, growing
annuity-style income stream derived from the developed assets.
This Trust has grown significantly since its inception, and now has
total assets of $4.2 billion. After including debt, Brickworks 50%
share of the Property Trust has an equity value of $1,543 million.
In July 2022, Brickworks launched the Brickworks Manufacturing
Trust. This comprises a portfolio of 15 manufacturing plants,
tenanted by the Company’s Australian Building Products
businesses. Brickworks holds 50.1% ownership of this Trust, with
the remaining 49.9% interest sold to Goodman Group.
The creation of this new Trust allows Brickworks to realise the
underlying value of operational land assets and will be actively
managed to improve site utilisation and enhance the value of
these properties.
The Brickworks Manufacturing Trust has total assets of
$416 million and no debt. Brickworks 50.1% ownership had an
equity value of $211 million as at 31 July 2022.
Along with its interest in the Industrial JV Trust and the
Brickworks Manufacturing Trust, Brickworks retains around
5,300 hectares of 100%-owned operational and development
land across Australia and North America. This includes a
number of sites earmarked for future development.
Building Products Australia
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.
20 p Brickworks Annual Report 2022
Jolyn Place
Austral Bricks San Selmo Smoked in Cloudy
Silver, Grey Cashmere and Opaque Slate
Sydney, NSW
In total, Building Products Australia comprises 29 manufacturing
sites, 37 company-owned design centres and studios and a vast
network of resellers across the country.
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: Includes Austral Masonry and a 33%
interest in the Southern Cross Cement joint venture
Building Products North America
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, Redland Brick assets in February 2020 and Illinois Brick Co
(“IBC”) assets in August 2021.
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 8 brick manufacturing sites and one manufactured stone
plant. This is complemented by a network of 25 company-
operated distribution outlets, three design studios (New York,
Philadelphia and Baltimore) and a vast reseller network.
Investments
Investments consists primarily of a 26.1% interest in ASX-listed
Washington H. Soul Pattinson (‘WHSP’) (ASX: SOL), which had
a market capitalisation of $9.273 billion as at 31 July 2022. The
market value of Brickworks stake in WHSP was $2.423 billion as
at 31 July 2022.
WHSP is a diversified investment house with a portfolio
encompassing strategic investments in major listed companies,
a large cap equity portfolio, private equity investments, interests
in a wide range of emerging companies and a structured yield
portfolio.
The investment in WHSP dates back to 1968 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.
Brickworks Annual Report 2022 p 21
Property
FY2022 was another great year for Property, with record earnings and continued strong growth
in the value of our Property Trust assets.
Property Overview
The year was also highlighted by the launch of the Brickworks
Manufacturing Trust. Following the launch of this Trust, the
Property division now comprises:
◗ A 50% share of the Industrial JV Trust
◗ A 50.1% share of the Brickworks Manufacturing Trust
In addition, the Property division actively manages an extensive
portfolio of 100%-owned operational and surplus land (currently
held within Building Products).
Brickworks share of net asset value across the two property
trusts was $1.754 billion at 31 July 2022, up by $843 million.
Continued capitalisation rate compression over many years has
crystallised the value that the Industrial JV Trust was specifically
established to capture. Since its inception, Brickworks net
asset value within this trust has increased at 21% per annum,
generating significant value for shareholders.
22 p Brickworks Annual Report 2022
Brickworks Net Property Trust Assets ($ 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
$1,75 4 m
1
1
2
Brickworks Manufacturing Trust
Industrial JV Trust
9
5
2
9
9
2
7
3
3
2
3
3
0
8
4
8
3
5
3
3
6
7
2
7
7
0
l
u
J
8
0
l
u
J
9
0
l
u
J
0
1
l
u
J
1
1
l
u
J
2
1
l
u
J
3
1
l
u
J
4
1
l
u
J
5
1
l
u
J
6
1
l
u
J
7
1
l
u
J
8
1
l
u
J
9
1
l
u
J
0
2
l
u
J
3
4
5
,
1
2
2
l
u
J
1
1
9
1
2
l
u
J
Oakdale East Masonry Plant
Horsley Park, NSW
Property Earnings
Year Ended July
Net Trust Income
Revaluation of properties
Development Profit
Industrial JV Trust
Land Sales
Property Admin and Other
2021
$m
31
149
24
204
52
(4)
2022
$m
Change
%
36
227
387
651
17%
53%
>500%
219%
(3)
(4)
(106%)
–
Total
253
644
155%
Record Property EBIT of $644 million for the 2022 financial year
was up 155% on the prior year.
The Industrial JV Trust delivered an EBIT contribution of
$651 million, up 219% on the prior period.
Net trust income was up 17% to $36 million for the year. This
reflects annual rent increases across the leased portfolio, plus
the additional contribution from newly tenanted facilities at
Oakdale South (one new facility) and Oakdale West (6 months’
rent from Amazon, the first tenant at this Estate).
Industrial JV Trust assets were revalued during the year, resulting
in a profit of $227 million, up 53% on the FY2021 result. The vast
majority of revaluations were completed during the first half and
resulted in an average 50-basis point compression across the
portfolio, driven by strong demand for industrial assets.
The revaluation includes a $42 million profit associated with fully
serviced land held within the Industrial JV Trust that is awaiting
development.
Development profit of $387 million was recorded for FY2022.
This included:
◗ A $74 million profit at Oakdale South, following the
completion of the final two facilities at this Estate;
◗ A $20 million profit at Rochedale, following the completion
of the final 30,200m2 facility; and
◗ A $293 million profit at Oakdale West, due to the
completion of 3 facilities (Amazon, Xylem and Site 1C/1B),
plus fair value assessments on an additional four facilities
deemed to be greater than 80% complete.
No property sales were completed in FY2022, however an
expense of $3 million has been recorded. This relates to costs
incurred to prepare land for sale adjacent to the Austral Bricks
Plant 3 site at Horsley Park (to be known as Oakdale East). This
cost included earthworks and expenses relating to securing
development approvals for this site.
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.
Earnings recorded by the Brickworks Manufacturing Trust were
immaterial in FY2022, with the Trust being launched in the final
days of the financial year.
Brickworks Annual Report 2022 p 23
Property
Industrial JV Trust Asset Value
Industrial JV Trust – Development Pipeline
As at 31 July 2022, the total value of leased assets held within
the Industrial JV Trust was $3.341 billion. The annualised gross
rent generated from the Trust is $127 million, and the average
capitalisation rate is 3.6%. There are currently no vacancies in
the portfolio.
Leased
Facilities
M7 Hub
Interlink
Oak Central
Oak South
Rochedale
Oak East
Oak West
Asset
Value
$m
Gross
Lettable
Area
‘000m2
Gross
Rental
$m/year
WALE6
years
Cap.
Rate
%
225
581
869
603
376
169
518
64
192
245
177
126
36
78
918
9
26
32
21
16
6
17
3.0
5.0
3.7
6.6
10.1
10.5
17.0
3.8%
3.7%
3.5%
3.6%
4.0%
3.4%
3.3%
127
7.3
3.6%
Total
3,341
During the year, the Estates at Oakdale South and Rochedale
were fully built out.
The Industrial JV Trust also holds a further $867 million in
assets for development, all within the Oakdale West Estate.
This comprises $744 million worth of facilities already under
construction and $123 million of land awaiting development.
Including the assets for development at Oakdale West, the total
value of assets held within the Industrial JV Trust was $4.208
billion at the end of the year, up 58% from $2.668 billion at the
end of the prior year.
Borrowings of $1.123 billion are held within the Industrial JV
Trust, giving a total net asset value of $3.085 billion. Brickworks’
50% share of net asset value was $1.543 billion at 31 July 2022,
up $631 million during the year.
Gearing on leased assets within the Industrial JV Trust reduced
to 26% during the year.
Year Ended July
2021
$m
2022
$m
Change
%
Leased properties
Land to be developed7
1,982
686
3,341
867
Total Property Trust assets
2,668
4,208
69%
26%
58%
Borrowings
(845)
(1,123)
33%
Net Property Trust assets
1,822
3,085
69%
Brickworks 50% share
911
1,543
69%
Gearing on leased asset8
32%
26%
(19%)
24 p Brickworks Annual Report 2022
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.
The Industrial JV Trust is ideally placed to take advantage of these
trends, with well-located prime industrial land on large lot sizes.
The development of Oakdale West in New South Wales will
drive growth in rent and asset value over both the short and
medium-term.
In total, there is 158,000m2 of pre-committed gross lettable
area (“GLA”) currently under construction at Oakdale West and
due to be completed in the first half of financial year 2023. This
includes a 66,000m2 distribution warehouse for Coles.
In addition to the pre-committed facilities, a further 144,000m2
of GLA remains available for development within the Oakdale
West Trust and will provide further opportunity for growth in the
years ahead.
Longer term growth is anticipated through the sale of additional
Brickworks owned surplus land into the Industrial Property
Trust, subject to approvals.
Brickworks Manufacturing Trust
The Brickworks Manufacturing Trust comprises 15 sites. The
sites are predominantly zoned industrial and are well diversified
across the country.
As at 31 July 2022, the total asset value was $416 million and
the trust has no debt. Including capitalised stamp duty costs,
Brickworks 50.1% ownership has an equity value of $211 million.
Each of the sites is tenanted by Brickworks’ operating
businesses, such as Austral Bricks, Bristile Roofing, Austral
Masonry and Austral Precast, with long duration leases of 5–20
years, which have options to extend. The weighted average
lease expiry (WALE) is 16 years.
6 Weighted average lease expiry by income.
Includes facilities under development.
7
Borrowings on leased assets / total leased assets.
8
Leased Facilities
Wetherill Park Plant
Rochedale Plant
Wacol Plant
Gympie Plant
Cairns Plant
Yatala – surplus
Yatala Plant
Rockhampton Plant
Ayr Plant
Golden Grove Plant
Longford Plant
Wollert Plant
Dandenong Plant
Armadale Plant
Bellevue Plant
Asset
Value
$m
Area
Ha
Gross
Rental
$m/year
Initial
Lease
term
years
27
118
13
4
7
5
7
4
2
19
4
132
16
42
17
2
62
2
38
1
8
4
2
1
49
11
276
3
23
15
1.2
5.0
0.6
0.2
0.4
–
0.3
0.2
0.1
0.8
0.2
5.3
0.7
2.0
0.8
5
20
10
15
15
–
20
10
10
20
15
20
10
10
5
16
Total
416
496
17.8
Together with Goodman Group, Brickworks will actively manage
the new Brickworks Manufacturing Trust, with several properties
having the potential for additional development and greater
utilisation.
Oakdale East Masonry Plant
Horsley Park, NSW
Operational and Development Land
Along with its interest in the Industrial JV Trust and the
Brickworks Manufacturing Trust, Brickworks retains around
5,300 hectares of 100%-owned operational and development
land across Australia and North America.
This includes four significant land holdings that may be suitable
for sale into the property trusts over the coming years. Based
on independent market valuations, these sites have a combined
current “as is” value of $0.761 billion and a “rezoned” value of
$1.266 billion.
These development sites include:
◗ A 75-hectare parcel of land at Oakdale East in New South
Wales, earmarked for sale into the Industrial JV Trust in
FY2023.
◗ 332 hectares of surplus land at Craigieburn, in Victoria, also
with potential for future sale into the Industrial JV Trust,
subject to approvals.
◗ An 83-hectare property at Horsley Park in Sydney, where
a new brick plant is currently being built (known as “Plant
2”). This property also comprises another well-established
brick plant (“Plant 1”), a quarry and additional surplus land.
Subject to rezoning, this site may be suitable for future sale
into the Brickworks Manufacturing Trust.
◗ A large parcel of land in Pennsylvania, North America,
surrounding the Mid-Atlantic brick plant. This site has
development potential, and the Company has recently
executed a non-binding Heads of Agreement with
Goodman to investigate the feasibility of industrial
development at this site.
Brickworks Annual Report 2022 p 25
AUSTRALIA
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Building Products
Australia
Market conditions
Building activity in Australia was mixed in FY2022, with each
state facing unique circumstances in the post pandemic and
HomeBuilder environment.
Although detached house commencements were down 9%
nationally to around 128,300 for the twelve months to June
2022, this level of activity remains elevated compared to
historical averages.
Despite concluding well over a year ago, the HomeBuilder
program continues to underpin detached housing building
activity across Australia. Whilst the vast majority of this work
has commenced, a significant pipeline of projects remain under
construction. During the current upturn, building timelines
have extended as a result of supply chain delays and labour
constraints. As a result, the usage of bricks and roof tiles on-site
is now typically lagging commencements by 6 months or more.
Annualised multi-residential commencements across the
country were 75,400 at June 2022. This represents a slight uplift
from the prior year and follows an extended period of declining
activity. The weakness of this segment in recent years has been
partly due to the pandemic resulting in a shift in consumer
preference towards lower density living.
Non-residential building has rebounded in most states (except
New South Wales and South Australia), with private investment
in offices, accommodation and retail, having previously been
scaled back in the first year following the pandemic.
26 p Brickworks Annual Report 2022
St Margaret's Anglican Girls School
Austral Bricks La Paloma Miro
Ascot, QLD
AUSTRALIA
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Brickworks Annual Report 2022 p 27
Building Products
Australia
Change in Commencements
(FY2022 v FY2021)9
18 %
6 %
9 %
5 %
1%
-4 %
-4 %
-4 %
20
10
0
-10
-20
-2 %
-7 %
-8 %
-12 %
19 0 %
Detached
Multi-Residential
Non-Residential
17 %
1%
2 %
1%
-9 %
-14 %
-18 %
-27 %
NSW
VIC
QLD
SA
WA
TAS
AUS
Overview of FY2022 Result
Year Ended July
Revenue
EBITDA
EBIT
EBITDA
(ex-Property Sale)
EBIT
(ex-Property Sale)
EBITDA margin
(ex-Property Sale)
EBIT margin
(ex-Property Sale)
2021
$m
648
98
48
98
48
15%
7%
2022
$m
694
205
153
116
64
17%
9%
Change
%
7%
110%
220%
19%
34%
11%
25%
Revenue from continuing operations for the year ended 31 July
2022 was up 7% to $694 million. An increase in revenue in
Austral Bricks and Concrete Products was offset by a reduction
in Bristile Roofing.
EBIT from continuing operations was $153 million and EBITDA
was $205 million. This includes a one-off profit associated
with the sale of 15 operational properties into the Brickworks
Manufacturing Trust, completed in July.
House Style 2022 Campaign
Crimson Colour Palette
9
Source: BIS Oxford Economics Australian Building Forecasts, July 2022. Figures shown are for the 12 months ended in June.
28 p Brickworks Annual Report 2022
Building Products
Australia
Revenue by State and location map
Export
$13m
WA
$57m
SA
$34m
Total
$694m
Brick Plant
Masonry Plant
Roofing Plant
Precast Plant
Cement Terminal (JV)
Design Studio
QLD
$96m
NSW (incl. ACT)
$269m
VIC
$210m
TAS
$15m
Brickworks Annual Report 2022 p 29
Building Products
Australia
The gross value of the Brickworks Manufacturing Trust assets of
$416 million represented a premium of $280 million to the book
value of those assets (after allowing for various transaction-
related costs and provisions).
A pre-tax profit of $89 million was recorded by Building
Products Australia in FY2022, with the remaining benefit to be
recognised through reduced right-of-use asset depreciation
over the life of each lease.
Excluding this impact, EBIT from continuing operations was
$64 million, up 34% and EBITDA was $116 million, up 19%.
EBIT of $37 million was achieved in the second half, significantly
higher than the first half. At the start of the financial year, sales
activity was impacted by the tail end of construction lockdowns
that continued to persist in Sydney and Melbourne.
The year has been characterised by strong underlying demand,
underpinned by the long backlog of HomeBuilder work, which
has not been fully met, due to a range of supply side challenges.
Notable supply side challenges have included a tight labour
market that has limited the availability of trades, supply chain
disruptions that have slowed construction timelines and
extended periods of wet weather in key east coast markets.
Unit margins increased, supported by price rises across most
business units, offsetting the impact of supply chain difficulties
and inflationary pressures in many areas. Increased plant
utilisation resulted in improved production efficiencies, with
all manufacturing plants operating at close to capacity for the
period (aside from pandemic related enforced shutdowns).
Adelaide Festival Plaza
UrbanStone Commercial Natural Stone Pavers
Adelaide, SA
30 p Brickworks Annual Report 2022
Building Products
Australia
Highlights
$694m
Revenue
i7%
1,187
Full Time Employees
i2%
LTIFR 0.4
Safety
p
Revenue by division
Austral Bricks
$466m
i12%
Concrete Products
$121m
s24%
Bristile Roofing
$106m
s5%
Revenue by State
NSW
QLD
VIC
SA
TAS
WA
Export
39%
14%
30%
5%
2%
8%
2%
Commencements by State
NSW
QLD
VIC
SA
TAS
WA
31%
19%
32%
6%
2%
10%
Brickworks Annual Report 2022 p 31
Brickworks Annual Report 2022 p 31
Building Products
Australia
AUSTRALIA
Austral Bricks
Austral Bricks’ earnings increased 32% for the twelve months
ended 31 July 2022, with sales volume up 4% to 567 million
bricks and revenue up 12% to $466 million.
Increased revenue was recorded in every state, and operations in Queensland,
Victoria, South Australia and Tasmania all achieved record earnings.
Revenue
$466m
i12%
Despite the significant cost pressures across the industry, Austral Bricks achieved
improved margins. General price increases were implemented early in the year,
with additional increases or levies selectively applied as necessary to recoup
extreme inflationary impacts in some areas of the business.
Strong operational performance at Rochedale in Queensland followed prior
period plant upgrades and a sustained focus on operational excellence, resulting
in lower unit costs, improved product quality and a broader range.
NORTH AMERICA
$39 6 m
$ 428 m
$ 4 47 m
$ 417 m
$ 4 6 6 m
New South Wales also delivered a strong uplift in earnings, despite a number of
challenges faced during the year. In the first half, production was heavily disrupted
due to a range of pandemic related issues, including temporary shutdowns
at Plant 3 and Punchbowl. Then, operations in the second half were adversely
impacted by wet weather, with Sydney recording the highest running annual
rainfall rate on record rate up to the end of July.
This rainfall significantly impacted construction progress of the new brick plant
at Horsley Park in Sydney. This facility, which will have capacity to produce
130 million bricks per year, is now due to be completed early in calendar 2023.
Once completed, brick operations in western Sydney will be consolidated at the
Horsley Park Plant 1 and 2 site, and 75 hectares of land will be released at Oakdale
East, where Plant 3 is located.
In January, 121 hectares of land at Bringelly, in southwest Sydney, was purchased.
Subject to approvals, this land will be used as a clay resource to support Austral
Bricks operations in Sydney, effectively replacing the existing clay resource at
Oakdale East and ensuring that brick operations are not adversely impacted by
the release of land for property development.
In Western Australia, the sharp recovery in housing activity has resulted in a
strong increase in demand. This has necessitated a ramp-up in production, due to
tight industry supply.
In this state pricing is significantly below the rest of the country, and as a result
operations remain loss-making and continue to be a drag on overall performance.
32 p Brickworks Annual Report 2022
EXCLUSIVE DISTRIBUTION
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Adela Apartments
Austral Bricks Hamptons Whitehaven
Sydney, NSW
Brickworks Annual Report 2022 p 33
AUSTRALIA
Building Products
Australia
AUSTRALIA
Concrete
Products
Following the reclassification of Austral Precast as held for sale, Concrete Products now comprises
Austral Masonry and Brickworks’ 33% share of the Southern Cross Cement joint venture.
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Concrete Products earnings declined on the prior year, on
relatively steady revenue of $121 million for the twelve months to
31 July 2022.
NORTH AMERICA
Within Austral Masonry, construction of the new Oakdale East
plant in Sydney reached practical completion in July, and the
commissioning process has now been completed. This new
facility, with a capacity of around 300,000 tonnes per year,
incorporates the latest block-making technology, and will deliver
lower costs and a broader product range.
This project also includes an associated value-added facility, to
create products such as polished pavers and split face retaining
walls. Construction of this facility was delayed due to the
restricted mobility of engineering crews and overseas-based
suppliers, and then subsequent poor weather. This value-added
facility is now under construction and expected to be completed
in the first half of the current financial year.
EXCLUSIVE DISTRIBUTION
In April, Austral Masonry completed the acquisition of a
masonry plant in Mackay, Queensland, from National Masonry.
As the only masonry plant in Mackay, this will allow Austral
Masonry to grow sales in a region where it previously had
minimal presence.
Southern Cross Cement continues to provide quality, cost-
effective cement to Austral Masonry and Bristile Roofing
operations in Brisbane, as well as to other Joint Venture
shareholders. However, high energy and shipping costs have
impacted cement supply and resulted in reduced earnings for
the year.
Due to the high shipping cost, a significant volume of cement
was sourced locally during the year.
Whilst there has been some disruption and increased costs
during the transition phase, the new plant places the business in
a very strong competitive position in this key market.
Competition in southeast Queensland remains intense, resulting
in low pricing and tight margins in this region.
Sleeper sales grew strongly during the year, with Austral
Masonry utilising its sales and distribution presence to boost
sales into New South Wales and Victoria. When this Brisbane
based business was acquired in 2019, sales were predominantly
focussed on the local market.
The premium Urbanstone paving range remains a popular
choice for architects, with a number of significant project wins
during the year including the Martin Place and Barangaroo
metro stations in Sydney, Murdoch University in Perth and
Subiaco East urban renewal in Perth.
34 p Brickworks Annual Report 2022
Bay House
GB Masonry GB Honed Porcelain
Kyle Bay, NSW
Revenue
$121m
s24%
$183 m
$19 6 m
$175 m
$159 m
$121 m
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Brickworks Annual Report 2022 p 35
AUSTRALIA
Building Products
Australia
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Bristile Roofing
Bristile Roofing earnings were lower than the prior
year, on a 5% reduction in revenue to $106 million. This
includes sales from the Fyshwick roof tile batten mill.
The decline in revenue was primarily attributable to lower sales volume in
Victoria, the largest roof tile market in the country. In this region, demand was
not fully met, due to trade shortages that remain a significant issue for both
tile and metal roof installations. Across other states, revenue was broadly in
line with the prior year. The supply chain constraints across the country are
expected to effectively cap industry installation capacity and therefore sales
volume.
In July, Bristile Roofing completed the acquisition of Alice Roof Tiles, based in
Melbourne. The additional sales volume it delivers will be rolled into Bristile’s
Dandenong plant, increasing utilisation and reducing unit tile costs.
Capital Battens recorded increased revenue and earnings, with the Fyshwick
mill operating at near capacity for the entire year.
36 p Brickworks Annual Report 2022
Revenue
$106m
s5%
$14 5 m
$131 m
$113 m
$111 m
$10 6 m
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Bristile Roofing
Concrete Roof Tile Collection
Brickworks Annual Report 2022 p 37
AUSTRALIA
NORTH AMERICA
Building Products
North America
EXCLUSIVE DISTRIBUTION
Market Conditions
Like in Australia, building activity has been mixed during FY2022, with activity varying significantly by
region and segment.
Across the country, the total value of building activity
commenced for the 12 months to June 2022 was up 10%
compared to the prior year. A 23% increase in multi-residential
commencements and 13% increase in non-residential activity
was offset by a 4% reduction in single-family commencements.
Building activity, particularly in the non-residential segment,
was heavily impacted in the early stages of the pandemic, with
many major projects delayed or cancelled by state authorities.
Since then, there has been a steady improvement in activity, in
response to government stimulus programs and a general re-
opening of the economy.
The single-family segment, which rebounded strongly in the
aftermath of the pandemic, has softened slightly in more recent
months, but remains relatively strong in the key southern region,
which makes up over 50% of total single-family starts in the USA.
Change in Commencements
(FY2022 v FY2021)10
40
20
0
23 %
9 %
3 8 %
37 %
2 4 %
Single Family
Multi-Residential
Non-Residential
2 6 %
18 %
23 %
13 %
-11%
-13 %
-20
-5 %
-3 %
-1%
-11%
-1%
-6 %
-4 %
Midwest
Northeast
Mid-Atlantic
South
Other
USA
10 Source: Dodge Analytics USA Building Starts Forecast – June 2022. Figures shown are for the 12 months ended in June..
38 p Brickworks Annual Report 2022
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Location map
Brick Plants
Landmark
Stone Plant
Design Studio
Masonry
Supply Centre
Brickworks Annual Report 2022 p 39
MENYVAWVPAMIOHINWIMNNDSDNEIAMOKYTNNCSCKSOKARTXLAMSALGAFLVTNHMARICTNJMDDCDEIL Building Products
North America
Brickworks Design Studio
Austral Bricks Venetian Glass Bricks
New York City, USA
The recent acquisition of IBC, together with a strategy to grow
sales into the large southern housing market (predominantly
Texas), has increased Glen-Gery’s exposure to the single-family
segment. This segment now makes up almost 50% of Glen-Gery
sales.
The IBC acquisition has also increased Glen-Gery’s exposure
to the Midwest, with this region now making up almost 60% of
total sales. The Midwest includes major states such as Indiana,
Illinois, Iowa, Ohio, Minnesota and Michigan.
Compared to other regions across the country, building activity
in the Midwest was relatively soft during the year, with single
family starts down 11%, multi-residential starts up 9% and non-
residential activity down by 13% (compared to the prior year)
Overview of FY2022 Result
Year Ended July
Revenue
EBITDA
EBIT
EBITDA
(ex-Property Sale)
EBIT
(ex-Property Sale)
EBITDA margin
(ex-Property Sale)
EBIT margin
(ex-Property Sale)
2021
A$m11
202
26
9
17
(1)
8%
0%
2022
A$m11
Change
%
399
48
25
35
12
9%
3%
97%
84%
192%
113%
NA
8%
N/A
11 An average exchange rate for each half year period is used to convert from US$ to A$.
The conversion rates used are: 1H22 US$0.73; 2H22 US$0.71; 1H21 US$0.73; 2H21 US$0.77
40 p Brickworks Annual Report 2022
Building Products
North America
Highlights
$399m
Revenue
i97%
932
Full Time Employees
i16%
LTIFR 1.9
Safety
s69%
Revenue by Region
North East
Mid Atlantic
Mid West
South
Other
21%
10%
58%
9%
2%
Revenue by End Market
Single Family
Multi Residential
Non Residential
46%
15%
39%
Brickworks Annual Report 2022 p 41
Building Products
North America
New York State Equal Rights Heritage Centre
Glen-Gery Sioux City Brick Collection
in Winter Rose
Auburn, USA
On sales of 389 million bricks, Building Products North America
generated $399 million revenue for the twelve months to 31 July
2022, 97% above the prior year. In local currency, revenue was
up 90% to US$289 million.
EBITDA for the year was up 84% to $48 million and EBIT was up
192% to $25 million.
This result includes a $13 million contribution from the sale of a
number of quarry sites in the second half. Excluding the impact
of land sales in both FY2021 and FY2022, EBITDA was up 113%
to $35 million, and EBIT was $12 million.
The impact of exchange rate movements had a positive impact
of $2 million on EBIT in FY2022, compared to the prior year.
The significant increase in sales revenue was driven by the
acquisition of IBC in August 2021 and increased sales to the
Texas and southern residential market. The key commercial
construction market along the eastern seaboard began a
modest recovery in the second half, following an extended
pandemic related downturn.
The EBITDA margin was impacted by cost pressures across the
supply chain, including a significant increase in transportation
costs, amid driver shortages and truck availability issues.
Market gas costs are also increasing, but fortunately the impact
of this was limited, with most plants having long term supply
agreements in place, at fixed prices. More broadly, labour
constraints across the industry are resulting in higher wage
rates to attract and retain staff.
The significantly higher proportion of sales to the residential
segment in Texas, typically base range products at lower prices,
also had an adverse impact on the average sales margin.
The business made strong progress on key strategic priorities
over the year. Plant rationalisation and upgrades have
continued, with the closure of the York and Caledonia plants,
both of which had reached the end of their useful life, and
completion of extensive upgrades at Hanley and Lawrenceville.
The Hanley plant in Pennsylvania is focussed on premium
architectural products, with the upgrades to the clay preparation
area, the extruder and the setting line to deliver much improved
manufacturing efficiency, product quality and a broader product
range, including thin bricks.
42 p Brickworks Annual Report 2022
Carmel Place
Klaycoat Collection – Barely Grey,
Light Grey, Steel Grey, Charcoal
New York Ciy, USA
With rationalisation activities now largely complete, Brickworks
North America now operates a fleet of nine modern plants.
The majority of plant and equipment is less than 20 years old,
has much improved energy efficiency and minimal manual
handling requirements. These rationalisation initiatives have
taken more than three years to complete, with the business now
well positioned to service the expected demand at much higher
plant utilisation and lower cost. Among the fleet of plants, a
number of idle kilns are available to meet increasing demand,
if required.
The new global flagship design studio on 5th Avenue, New
York City, was officially opened in March. Together with the
Philadelphia and Baltimore studios, these facilities will further
enhance Glen-Gery’s strong reputation for premium products
and its competitive position in the high value architectural
segment.
The integration of 17 new masonry supply centres (MSCs), as
part of the IBC acquisition has been very smooth. In addition to
sales of around 70 million bricks per annum, these MSCs offer 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 contribution from these stores has exceeded first year
expectations.
Capital Brick, a leading distributor of architectural brick and
masonry products, with a single outlet in the Washington D.C.
metropolitan area, was acquired in February and immediately
integrated. This acquisition expands Glen-Gery’s company
owned MSC network to 25.
Brickworks Annual Report 2022 p 43
Investments
The EBIT from total investments (including interest income)
was up 86% to $181 million in the year ended 31 July 2022.
Washington H. Soul Pattinson Limited
(WHSP) ASX Code: SOL
Brickworks is the major shareholder in WHSP, with our initial
investment dating back to 1968. 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.
During the first half of FY2022, WHSP completed a merger with
Milton, another large ASX listed investment company. The larger
WHSP has net assets of around $9 billion post the merger, with
increased scale, diversification and liquidity to pursue additional
investment opportunities.
Brickworks retains 94.3 million shares in WHSP, but due to the
addition of new shareholders to the register, the ownership
stake has reduced to 26.1% (previously 39.4%).
The market value of Brickworks shareholding in WHSP was
$2.423 billion at 31 July 2022, down $656 million for the year.
WHSP has delivered strong returns to Brickworks, with 20-year
total shareholder return of 12.2% per annum (to 31 Jul 2022),
3.4% per annum ahead of the All-Ordinaries Accumulation
Index. Shareholder returns comfortably exceed the benchmark
over five, ten and fifteen years periods.
The investment in WHSP returned an underlying contribution
of $180 million for the year ended 31 July 2022, up 87% from
$97 million in the prior year. The increase was due in part to a
significantly higher contribution from New Hope Corporation.
During the year cash dividends of $61 million were received, up
5% on the prior year.
44 p Brickworks Annual Report 2022
Investment Assets
Strategic
Large caps
Private equity
Emerging companies
Structured Yield
Property
45%
36%
7%
6%
4%
2%
WHSP Assets
WHSP holds a diversified portfolio of investments. A break-
down of WHSP assets as at 31 January 2022 is shown in the
chart above.
Strategic investments include significant stakes in a number
of listed companies including Brickworks, TPG Telecom, New
Hope Corporation and TUAS.
Other assets include a portfolio of ASX listed large cap
companies, private equity investments, a portfolio of listed
and unlisted emerging companies, structured yield and direct
ownership of property.
Melbourne Connect
Austral Bricks Venetian Glass Bricks and Nubrik Traditional
Melbourne, VIC
Strategic portfolio
ASX listed large cap companies
Private equity
Emerging companies
$181m
EBIT from
Total Investments
i86%
Brickworks Annual Report 2022 p 45
Brickworks Annual Report 2022 p 45
1.1
LTIFR
Lost Time Injury
Frequency Rate
s62%
TRIFR 11.7
Total Recordable Injury
Frequency Rate
s18%
46 p Brickworks Annual Report 2022
Brickworks Staff
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.
Capable Safety Leadership plays a key role in achieving this at
Brickworks, fostering a robust safety culture and a framework
for identifying and effectively managing health and safety risks.
Continual improvement in health and safety is underpinned
by Brickworks Health and Safety Management System, which
clearly defines roles, responsibilities, accountabilities, and
targets to achieve its health and safety policy commitment.
This management system is mature and aligned to ISO 45001.
The welfare of people on Brickworks sites continues to be of
paramount importance. Brickworks health and safety strategy
encompasses a number of activities which include; assigned
safety training for all employees and company contractors,
diligently controlled contractor management, with mandatory
permit to work, pre-screening and induction processes,
Random Alcohol drug and other substance fit for work testing,
employee psychosocial health program supported by qualified
Mental health first aiders, emergency preparedness procedures
reducing safety risks for unplanned events, the presence of
safety lead indicator program building safety capacity within
Brickworks and a scheduled external safety system audit
program to validate the effective application of these safety
activities within the business.
Our 2025 strategy target is for continued reductions in injury
rates for company employees, contractors, and others.
Brickworks
Total Recordable
Injury Frequency
Rate (TRIFR)
Lost Time Injury
Frequency Rate
(LTIFR)
21.1
16.3
14.3
11.7
3.2
1.5
2.9
1.1
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
/
I
R
T
25
20
15
10
5
0
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
/
I
T
L
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
SAFETY
Continued reductions in injury rates
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
Brickworks Annual Report 2022 p 47
Health and Safety
Brickworks Staff
Performance (Group)
Brickworks consolidated total recordable injury frequency rate
has improved year on year since the acquisition of the North
American operation in December 2018.
The total recordable injury frequency rate decreased to 11.7 in
FY2022 from 14.3 the previous year. This improvement is largely
attributable to the implementation of successful Australian
health and safety technology and programs into the North
American operations.
The lost time injury frequency rate also decreased to 1.1 in
FY2022 from 2.9 the previous year.
Currently contractors are excluded from reported injury
frequency rates. Contractor injury frequency rates are in
development with a focus on quality and accurate data.
Performance (Australia)
The lost time injury frequency rate for Australian operations
FY2022 remained in line with the previous year’s results. The
LTIFR was 0.4. The total recordable injury frequency rate TRIFR
was 11.1. This increased marginally from FY2021 results.
Brickworks continues with its presence of safety strategy, using
lead indicators, targets, and management accountability to
drive improved health and safety outcomes.
48 p Brickworks Annual Report 2022
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
11.1
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
/
I
R
T
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
2
2
/
1
2
0
2
There were over 20,189 eLearning Safety courses completed
by company employees and contractors, 474 random alcohol
drugs and other substance tests, maintained 197 qualified
mental health first aiders and 1,889 workplace inspections
undertaken in FY2022. Brickworks framework for identifying
and effectively managing health and safety risks controlled over
2,126 identified hazards FY2022. In addition to this Brickworks
has a near miss reporting culture, having a near miss frequency
rate NMFR of 20.05 for FY2022.
Injury severity for recordable injuries is now categorised
into three classes for Brickworks workers; Class 1 being an
injury that is permanently life altering, Class 2 temporarily life
altering, Class 3 an injury that is not life altering. For Brickworks
employees in FY2022, there were no class 1 injuries, 23 percent
of the total recordable injuries were class 2 with 77 percent
being recordable injuries that were not life altering.
Respirable Dust and Silica
Brickworks has strict controls to manage the risk of respirable
dusts and fibres. Worker health monitoring exceeds 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 focus on silica
dust controls includes the purchase and use of specialised state
of the art respirator fit testing equipment to ensure effective
worker respiratory protection.
Key Highlights FY2022
◗ No employee, contractor or bystander fatalities have been
recorded over the last 3 years.
◗ Executive and middle management Health and Safety
training and legal briefings
◗ Computerisation and reporting of health and safety
management system Data in Australian and North
American operations
◗ Brickworks building a core competency – Silica and
hygiene management
◗ The growth of the presence of safety program driving
safety capacity in Brickworks through visible lead safety
indicators
Presence of safety awards
Brickworks has introduced a new safety award that
recognises the workplace with the best presence of
safety indicators based on our online platform statistics.
This encourages our teams to focus on improving their
leading safety indicators such as hazard identification and
control, safety device checks, safety training, contacts and
workplace inspections.
Brickworks Australia
Lost Time Injury
Frequency
Rate (LTIFR)
3.2
2.0
1.6
1.3
1.7 1.7
0.4
0.4
0.4
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
/
I
T
L
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
2
2
/
1
2
0
2
WHS Cloud Based Software
Brickworks’ SHEMS system has now been digitised to
three-dimensional online modules, using a cloud based
WHS software platform. This moves away from a paper
based system that isolates data at a plant level and allows a
centralised health and safety risk database.
This central database facilitates advanced data analytics
and reporting capabilities, increases record collection
including photo attachments and automates action
management.
The system has allowed Brickworks to adopt new safety
management strategies such as the presence of safety
program and knowledge sharing between its Australian
and North American operations.
Brickworks Annual Report 2022 p 49
Health and Safety
Austral Bricks Plant 3
Horsley Park, NSW
Brickworks North America
Total Recordable
Injury Frequency
Rate (TRIFR)
Lost Time Injury
Frequency Rate
(LTIFR)
26.6
24.3
21.1
12.3
8.9
3.5
6.2
1.9
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
/
I
R
T
30
25
20
15
10
5
0
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
/
I
T
L
10
8
6
4
2
0
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
Performance (North America)
The lost time injury frequency rate for North America operations
FY2022 improved from the previous year’s results. The LTIFR was
1.9. The total recordable injury frequency rate TRIFR was 12.3. This
was a 69% and 41% improvement on FY2021 rates, respectively.
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.
Significant progress was achieved on the safety roadmap
during FY2022. The continued rollout of key elements of
the Health and Safety Management System resulted in the
implementation of the health and safety policy, performance
reporting, communication boards, workplace safety committees
and programs for health and safety auditing and assessment,
orientation, toolbox talks and safety interactions.
We continued a focus on training in FY2022 with our Safety
Skills E learning platform launched in February. This allows
compliance training to be completed online with courses
50 p Brickworks Annual Report 2022
automatically assigned throughout the year. Our new safety
orientation program was also rolled out providing a safety
training program for the first five days on the job including
assigned mentors and weekly training checks. Safety leadership
training was conducted in FY2022 and trained 41 new leaders
and provided refresher training for 27 leaders.
The Pennsylvania Department of Labour and Industry approved
the Application for Certification of the Workplace Safety
Committee effective 30 July 2022. The certification of the
Pennsylvania safety committee entitles the Company to receive
a 5% discount in workers’ compensation rates for Pennsylvania
factories.
Respirable Dust and Silica
We continue to use a third party contractor to conduct silica
sampling and we continue to look into controls to reduce silica
exposure.
Key Highlights
◗ No employee or contractor fatalities recorded FY2022
◗ Continued focus on harmonizing Brickworks Australia’s
successful Health and Safety management systems into
North America to reduce injury rates
◗ Significant progress was achieved on the safety roadmap
during FY2022
◗ Launched eLearning platform
◗ Continuation of management and employee behavioral
safety training
◗ Commercial driver compliance
OSHA Voluntary Protection Program
The Glen-Gery Shoemakersville Plant was approved for
continued site-based participation in the Occupational
Safety and Health Administration’s (OSHA) VPP (Voluntary
Protection Program) as a STAR participant after undergoing
recertification in July 2021. Participants of VPP serve as
a role model for other employers, workers, and unions
by operating excellent safety and health management
programs. Achieving a level of worker protection that
goes above and beyond compliance with government
regulations is commendable. There are currently only
2,200 work sites in over 400 industries that participate in
VPP. The Mid-Atlantic Plant is currently the only Brick Plant
holding the VPP Star Status.
Safe + Sound Week
All our North American locations participated in Safe +
Sound Week commencing 9 August 2021. Safe + Sound
Week is an OSHA nationwide event held each August that
recognizes the successes of workplace health and safety
programs and offers information and ideas on how to keep
America's workers safe.
Employees participated in toolbox talks, hazard hunts,
signed a commitment to working safely, were “caught
working safely” and enjoyed a lunch at week’s end where
a presentation was given reviewing the FY2021 incident
statistics as well as the path moving forward to reduce
injuries.
Oakdale East Masonry Plant
Horsley Park, NSW
Brickworks Annual Report 2022 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 2022 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 2022
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 2022
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.
$250,000 committed to new thermal research with
University of Newcastle.
Life Cycle Education
We will support design tools, guidance, and information
to incorporate life cycle thinking into building design.
Provided 67 continuous professional development
sessions resulting in over 808 in person attendees and
18,000 online views.
Sustainable Products
By 2025 we will double our volume of products sold in
Australia that hold leading sustainable qualities.
Over 6% of product volume in Australia was verified as
sustainable by third party labels, expected to increase
to 11% this calendar year.
Supply Chain
Continuing to reduce supply chain risks.
Modern Slavery Roadmap completed.
Status
Governance
Business Ethics and Whistle-blower Programs.
Governance programs formalised. Continued annual
training.
Safety
Continue reductions in injury rates.
Engagement
Existing target of 100 community engagement
activities annually.
Injury rates reduced by 43% in Australia and 53% in
North America since FY2019. Clear safety roadmap for
U.S. business.
100 community engagement activities, meeting our
target of 100.
Community Support
Supporting charities like the Children’s Cancer
Institute.
$282,217 contributed to Children’s Cancer institute in
2021 calendar year and over $4.4 million contributions
since 2002.
Diversity and Inclusion
Stretch target: 35% female senior executives. Develop
and implement a Diversity and Inclusion Strategy.
24% female senior executive in Australia, introduced
new company value “Inclusive – connected by
diversity.”
Carbon
Invest in the transition to the hydrogen fuel economy.
Hydrogen feasibility preliminary desktop study
completed by Murdoch University. Partnership with
Delorean exploring renewable gas options.
Water
Reduce potable water use in water stressed areas.
7.5% less mains water usage in Australia v FY2021.
Rehabilitation
Drive progressive rehabilitation.
270,173m2 land rehabilitated in Australia in FY2022.
Circular Economy
Year on year increase in recycled material use.
47% increase in recycled material use from FY2021,
17% recycled content in raw materials in Australia.
Emission Control
Over $2 million investment in emission abatement.
Over $3 million 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 4.2% and natural gas efficiency has
improved by 7.0% since 2018.
KEY: Achieved Materially Progressed Progressed
Brickworks Annual Report 2022 p 53
Environment
Brickworks is committed to managing our operations in an environmentally sustainable manner,
whilst considering economic and social influences.
Compliance12
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.
FY2022
FY2021
AUS
USA
AUS
USA
Prosecutions
Penalty Notices
0
1
0
1
0
0
0
2
Brickworks Compliance Statistics
Incident reporting procedures and training are a central part
of the EMS, raising awareness and identifying corrective and
preventative actions.
The Australian business received one penalty notice during
FY2022. Golden Grove Plant received a penalty notice for stack
emissions exceeding the post-emission abatement hydrogen
fluoride limit in June 2022 resulting in a $1,094 penalty. This was
due to a temporary issue with the hydrogen fluoride pollution
abatement scrubber that is now corrected. Focus on pollution
control equipment checklists will continue during FY2023 and
the target remains at zero environmental fines and continued risk
reduction.
The North American business received one penalty notice during
FY2022. Pittsburgh Plant Quarry received a penalty notice
for water discharge exceeding the aluminium limit in the third
quarter of 2021 as a result of pond capacity and design issues
that were not addressed by the previous site owner. The sediment
pond cleanout and redesign were required to remedy the issue
(refer also to the Water Environmental Program below). These
corrective actions were immediately instituted under guidance
from the Pennsylvania State Agency and the penalty was reduced
from $2,150 to $1,850 (USD) and issued in January 2022. The
FY2023 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-
FY2021, over $5.6 million (AUD) was invested in emissions
abatement scrubber equipment installed at Horsley Park Plant
23 and being constructed at Plant 2. This expenditure exceeds
the 2025 goal over $2 million (AUD) additional investment in
emissions abatement. 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.
12 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 2022
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 FY2022, 117 ML of potable mains
water use was recorded at sites in Australia, a 7.5% decrease
compared to the previous year and a 15% decrease since 2020.
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
FY2022
Water Risk Area
Low
Medium-High
Extremely High
Low-Medium
High
The Golden Grove plant has scheduled scrubber refurbishments
during a December 2022 shutdown which will also see
the scrubber stack extended to improve dispersion of kiln
gasses and reduce odour at ground level as required by the
Environment Protection Authority.
An investment of $1.0 million (USD) in upgrades to the North
American Pittsburgh Plant kiln pollution control equipment
was completed in April 2022. The upgrades have improved the
general condition, reliability, and overall operation of the existing
pollution control device.
Resources and Waste
Brickworks is progressing towards a circular economy by closing
the loop, thus minimising production waste and reusing and
recovering resources in the value chain. Opportunities for the
reuse of waste are a key focus area for the brick and concrete
businesses to decrease material costs, increase resource
efficiency and drive a circular economy. Brickworks’ 2025 target
is for a year-on-year increase in recycled material use.
CIRCULAR ECONOMY
Year on year increase in recycled material use
Measured recycled content of Australian building products was
47% higher than the previous year. A total of 377,286 tonnes
of recycled material was used in place of raw materials, such
as clay and cement. This is approximately 17% of Australian
building products total production by weight. A further 13,899
tonnes of sawdust was used in place of natural gas.
Building Products Australia
Recycled content (tonnes)
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
FY2020
FY2021
FY2022
Brickworks Annual Report 2022 p 55
Environment
Energy
Brickworks Building Products – Australia
Brickworks continues to reduce energy intensity across the
business. Since FY2013, energy intensity (energy consumption
vs revenue) has improved by 17.6% in BBP Australia to 6.4 TJ per
million dollars ($AUD) of revenue. Energy intensity increased by
6.4% from FY2021, reflecting revenue fluctuations in between
FY2021 and FY2022 due to factors such as product mix.
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
6.4
8
7
6
5
4
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
2
2
/
1
2
0
2
In FY2022, Brickworks Building Products Australia’s (BBP) total
energy usage was 4.4PJ, a 7% increase from 4.1PJ the previous
year, reflecting increased production volumes.
The majority (74%, 3.3 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.
In FY2022, alternative biofuels made up 12% of Brickworks’
Australian energy mix, similar to FY2021. Biofuel sources include
landfill gas and sawdust. Austral Bricks Horsley Park Plant 1
and 23 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. We continue to
investigate ways to increase our biofuels content.
56 p Brickworks Annual Report 2022
Building Products Australia
Total Energy Consumption
(PJ)
4.4
4.6
5.1
5.8
5.2
5.2
4.9
4.4
4.1
4.4
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
2
2
/
1
2
0
2
Building Products Australia
FY2022 Energy Mix
Natural Gas
74.2%
Biofuels
11.9%
Electricity
7.7%
Liquid Fossil
Fuels
5.6%
Coal
0.5%
Brickworks Building Products – North American
During FY2022, energy usage was 2.02PJ across 10 clay
brick factories owned by Brickworks were in operation in
North America with two factories being retired (York and
Caledonia). All North American factories are fuelled by natural
gas and contributes to 89% (1.79PJ) of the operation’s energy
consumption.
Carbon
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 are for the reporting
period 1 July 2020 to 30 June 2021. In FY2022, our Australian
operations emissions were 206,043 tonne CO2e (Scope 1) and
72,022 tonne CO2e (Scope 2), a 5.7% increase on the previous
year due to an increase in production.
Our North American emissions were 120,675 tonne CO2e (Scope
1) and 18,040 tonne CO2e (Scope 2). Site consolidations has
led to a 12% decrease in reported Scope 2 emissions. During
FY2023 greenhouse gas reporting will be expanded to also
include all fleet fuels.
Building Products Australia
Total Carbon Emissions
ktCO2-e
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
72
2 0 6
400
300
200
100
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
2
2
/
1
2
0
2
Scope 1
Scope 2
Brickworks continues to reduce energy intensity across the
business. Since FY2013, greenhouse gas intensity (greenhouse
gas emissions vs revenue) has improved by 28% in BBP
Australia to 0.40 ktonne CO2e per million dollars ($AUD) of
revenue. Carbon intensity for Australia was slightly higher (4.6%)
than the previous year, reflecting revenue fluctuations due to
factors such as product mix.
Building Products Australia
Carbon Intensity
(ktCO2-e / $ million revenue)
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
2
2
/
1
2
0
2
Carbon emissions have followed a general downward trend
in Australia, with a 42% decrease compared to the base
year FY2006 (Scope 1 and 2). The decrease is attributed
to efficiencies gained from alternate fuels, manufacturing
consolidation, equipment upgrades and operational
improvements.
Scope 3 carbon emissions
Brickworks is currently in the process of building a Scope 3
inventory of its material sources including cement. Life-cycle
emissions data is currently available for all Australian made clay
bricks on request through the Climate Active Carbon Neutral
Certification. We have recently published an EPD for Austral
Masonry Gympie and we are developing an expanded library of
EPD's for our products.
Brickworks Annual Report 2022 p 57
National Greenhouse and Energy Reporting Data from FY10.
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 4.18% since FY2018. Natural gas efficiency has
improved by 7.05% 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
2
2
/
1
2
0
2
Total Gas Efficiency
Natural Gas Efficiency
Continued investment into energy efficiency and recovery has
improved many Austral Bricks kilns to exceed international
leading energy efficiency benchmarks. Strategic focus areas
include opportunities to upgrade remaining kilns.
Site consolidations in North America moves production to more
efficient factories. Pre-rationalisation, Glen-Gery, Redland and
Sioux City operated 15 factories at less than 50% of capacity
with an average kiln age of 42 years.
Closure and consolidations of the much older and less fuel-
efficient factories has resulted in eight factories operating at
84% of capacity with an average kiln age of approximately 24
years. This has led to an 8.6% improvement in gas efficiency
from the 2019 calendar year to FY2022.
Environment
Building Products Australia
Carbon Emissions since 2005/06
(ktCO2-e)
500
400
300
200
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
2
2
/
1
2
0
2
Climate related strategy
Understanding Carbon Risks and Opportunities
We are incrementally adopting the recommendations of the
leading carbon risk framework, Task Force on Climate-Related
Financial Disclosures (TCFD), such as using climate scenarios
to identifying risks and developing climate-related strategy and
programs. Our first TCFD Statement was externally validated
then published on our website in February 2022 and we will
continue to report on progress updates.
During FY2022, we continued our approach to a low carbon
future as set out in a Low Emission Technology Statement,
which can be downloaded from www.brickworks.com.au/
sustainability
Investing in Energy Efficiency Towards 2030
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 FY2018
58 p Brickworks Annual Report 2022
Jacaranda House
Bowral Bricks in Chillingham White
Brisbane, QLD
Brickworks Annual Report 2022 p 59
Environment
Building Products North America
Natural Gas Efficiency 12-month rolling average
(GJ / '000 Standard Brick Equivalent)
6.5
6.0
5.5
5.0
4.5
4.0
9
1
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e
D
0
2
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A
0
2
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A
0
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2
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A
2
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A
Alternative Energy and Biofuels Strategy
Brickworks has long-since used biogas and sawdust for
renewable energy generation. The Alternative Fuels Program
saw Brickworks Australia achieve 12% energy use composition
of biofuels in FY2022.
We continue to investigate ways to increase our biofuels
content. Austral Bricks has partnered with Western Sydney
University, Macquarie University and Global renewables to
repurpose recovered organic materials as alternative raw
materials for brick production.
Brickworks is also assessing the feasibility of a renewable
bioenergy facility to be located next to a brick plant in Horsley
Park NSW. We have partnered with Delorean Corporation to
undertake a comprehensive feasibility assessment on the
development of an anaerobic digestion facility that converts
organic waste into renewable gas.
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.
CARBON
Invest in the transition to the hydrogen
fuel economy
60 p Brickworks Annual Report 2022
Brickworks is investing in the transition to a hydrogen fuel
economy through desktop and lab-scale trials, in partnership
with Murdoch University. In FY2022 a preliminary desktop study
was completed by Murdoch University to understand the effect
of and ability to use hydrogen in the brickmaking process.
This study identified plant infrastructure considerations under
multiple scenarios for hydrogen use.
Brickworks has joined with AGL Energy and other South
Australian and major natural gas buyers such to examine a
potential green hydrogen plant in South Australia that could
serve domestic and export markets with clean fuel. The study is
one of several early-stage proposals AGL Energy are completing
for large-scale green hydrogen production around Australia.
Renewable Electricity
Our Rockhampton and Sydney Oakdale East masonry sites now
have solar generation capacity. 55.5kV of solar was installed
and commissioned at our Rockhampton plant in February 2022,
reducing our scope 2 emissions for this site by 14%. The 113kV
and 240kV solar systems for Oakdale East were installed prior
to commencing manufacturing, reducing our scope 2 emissions
by 16% from the outset.
In Victoria, we are now progressing with surveys and preparation
for 1.7MW solar power generation capacity at our major Wollert
brick facility.
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.
The area of progressive rehabilitation completed in Australia
in FY2022 was 50,173m2. Progressive rehabilitation is driven
across the business by adding available land reviews to annual
rehabilitation planning.
End of life rehabilitation in the form of recontouring and
redevelopment was also completed over an area of 220,000m2
at the Horsley Park Plant 3 quarry in New South Wales to create
the new Oakdale East industrial site.
We have significant experience in rehabilitating our sites.
Many of our quarries are located in centralised urban areas
and are often transferred into the Property Trust Joint Venture
with Goodman at end of life for final rehabilitation into
industrial estates. Where possible, we aim to enhance the local
environment through initiatives such as land rehabilitation,
water sensitive urban design, green corridors and using native
species in landscaping.
REHABILITATION
Drive progressive rehabilitation
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
FY2022, we completed 100 recorded community activities.
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
Customer focused sustainable product
portfolio
As enablers of safe, resilient and sustainable buildings,
at Brickworks, we see a strong future for bricks, masonry,
rooftiles and precast. Our bricks and concrete products are
manufactured to provide resilience. They are durable, fire-proof,
contain thermal mass for energy efficient design, excellent
acoustic properties, and no indoor air emissions (VOCs); and our
clay bricks hold a 100-year guarantee.
During FY2022, 6% of product volume in Australia was verified
as sustainable by third party labels and is expected to increase
to 11% this calendar year. We are continuing to verify our
sustainable products and have identified 57% of the product
volume in our Australian portfolio have environmental or social
benefits. There is also a range of opportunities across our North
American products. Further information of the environmental or
social benefits of these products is provided in the Sustainability
Report.
Measured recycled content of Australian building products was
47% higher than the previous year. This is approximately 17% of
Australian building products total production by weight.
Brickworks Annual Report 2022 p 61
62 p Brickworks Annual Report 2022
62 p Brickworks Annual Report 2022
Multi-Arts Pavilion Mima
Austral Masonry Architec Honed in Alabaster
Speers Point, 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, so that they can reach their
ultimate goal of one day curing every child of 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 $4.4 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 2021 calendar
year and the team at Brickworks raised $282, 217, helping CCI
move closer to achieving the vision of curing all children with
cancer.
One of the highlights for early 2022, was the ‘86K for a Cure’
campaign that had teams in every state and 55 staff focussing
on their wellbeing and getting active by walking or running
86km in March and also fundraising an incredible $50,044.
COMMUNITY SUPPORT
Supporting charities like
Children’s Cancer Institute
Brickworks staff offer their time and efforts to drive a range of
fundraising activities for CCI, including the Diamond Ball, CEO
Dare to Cure 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 during the COVID-19 pandemic.
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. 2021 saw the
Brickworks staff contribute an amazing $53,232 through
the Casual Friday program with Brickworks matching this
doubling the donation and impact.
Brickworks Annual Report 2022 p 63
Brickworks Culture Campaign
64 p Brickworks Annual Report 2022
Our
People
COVID-19 Response
Brickworks has monitored the coronavirus disease (COVID-19)
since January 2020, acting with caution and following stringent
health advice from company doctors and government health
orders. 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 upmost importance to the company. Brickworks has been
prepared since 2014, with fully equipped biological kits in place
at all operational sites, enabling the company to act swiftly to
manage this pandemic threat.
Remote working in response to COVID-19 has been effective
across the business. Work from home risk assessments were
undertaken to ensure the safety of remote working employees.
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.
Further COVID-19 Response Australia
During FY2022, 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
implemented at all Brickworks sites providing an additional level
of worker safety.
During FY2022, positive COVID-19 cases were identified and
controlled on Australian Brickworks sites.
Further COVID-19 Response North America
In North America, COVID-19 has affected staff, with 1,037 staff
absences recording 402 positive employee COVID-19 cases
since the start of the pandemic. We continue to complete daily
temperature checks and remain current with Centers for Disease
Control and Prevention guidelines for isolation and quarantine.
Our Workplace Australia and North America
Key Employment Data
Australia
North America
Total Workforce
1187
932
Total female breakdown
Female Senior Executives
Average age of employees
Employees aged 50 and over
25% (up
from 23% in
FY2021)**
22%
(up from 20%
in FY2021)
26.5% (down
from 28% in
FY2021)**
43.5
35%
21%
45.9
42.3%
Average length of service
9.4 years
11.3 years
Workplace Profile
Total**
Female* **
Total
Female*
Australia
North America
Management
Professionals
Tech/Trades
Administration
Sales
21%
7%
17%
14%
9%
Operators/Labourers
32%
23%
37%
6%
75%
52%
3%
21%
3%
1%
16%
6%
53%
27%
31%
0%
66%
18%
8%
*
**
Female % is a fraction of each profile type.
from WGEA data 2022
Brickworks Annual Report 2022 p 65
Our People
labour market competition drove higher than normal voluntary
turnover in employees with less than one month of hire and one
year of hire. In addition, the plant closures of York and Caledonia
were contributing factors to the increase in overall turnover.
The North American business has developed a strategy to
address retention concerns in FY2023. The strategy includes:
market competitive compensation and incentives adjustments;
financial support for education in the skilled trades; flexible
work schedules where appropriate; and employee culture and
engagement survey launch.
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.
North America launched its second cohort of the Graduate
Program, The Brew Crew, designed to encourage company
awareness, support professional and personal skill
development, and promote organisational engagement. The
first cohort entered the second phase of the program, Brew
Masters, to continue their professional development with
the company. The Brew Crew and Brew Masters consist of
emerging professionals, under the age of 25, who are 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.
Rapid Antigen Testing Oakdale East, NSW
Culture and Engagement
At Brickworks, we continue to focus on the culture of our people
with the “We are Brickworks” Values and behaviours. During
FY2022, our values were refreshed with new employees from
a variety of backgrounds and divisions. We introduced a new
value of Inclusive – connected by diversity and North America
launched the ‘WE ARE BRICKWORKS’ Values and Behaviours
across our sites in the United States.
Fostering our culture by embracing our uniqueness, and creating
an environment where everyone feels welcomed, heard and
respected, is important to us. In turn, our globally inclusive
culture inspires and empowers all of us to unite, belong and grow.
Inclusion cultivates and preserves the bond between our
colleagues, customers and partners and recognises the strength
in our differences. We believe diversity of thought provides us
with the opportunity to transform and accelerate change within
our company, industry and the communities we serve.
Employee Retention
Employee retention continues to be a strong focus across
the company. A tough labour market has seen an increase in
demand in talent across all industries. Our renewed focus on
our employee value proposition has inspired us to commence
implementation of an employee engagement survey platform to
promote an open feedback culture.
Real time survey results will be available for managers to view,
and respond to individual comments. Results are obtained
across a number of key metrics to holistically measure our
employees’ engagement.
Australia
North America
Brickworks Staff
Employee Turnover
FY2021
FY2022
FY2021
FY2022
Voluntary
Total
13%
17%
16%
18%
32%
42%
33.5%
46%
Brickworks Australia FY2022 employee voluntary turnover
(resignations and retirement) was 16%, with a total turnover of
18%. Brickworks monitors employee retention numbers and exit
survey data is regularly reviewed to ensure our employee value
proposition is aligned with the feedback from our employees.
Brickworks North America employee voluntary turnover was
33.5%, with a total turnover of 46%. The FY2022 employee
turnover increase was driven by two factors. In the first quarter,
66 p Brickworks Annual Report 2022
Brickworks Colour Consultation Service
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.
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
Brickworks Annual Report 2022 p 67
Our People
Brickworks Staff
Horsley Park Design Centre
◗ Engage employees by providing an open, fair and diverse
work environment.
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 is provided on the
policy. The Board is notified of complaints and non-compliances
against the policy including incidence of sexist behaviour.
Advancing our inclusive culture
Brickworks recognises that sustaining a strong culture, driven
by the diversity and inclusion of our people, is critical to our
long-term success. For that reason, the Diversity Council, led
by the Managing Director, sets our strategic approach and
overseeing our Diversity targets towards our stretch target of
35% female senior executives in Australia by 2025.
Unfortunately, in FY2022 we saw a decrease in female senior
executive representation from 28.1% to 24%, and 21% in North
America, which was influenced in part by interruptions relating
to the COVID pandemic. Our continued our focus on attracting
more women into the business saw an increase of 2% in
Australia and North America, building a critical future pipeline.
Our Diversity and Inclusion 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.
International Women’s Day 2022
Brickworks celebrated International Women’s Day on
8 March with guest speaker Lisa McInnes-Smith. Lisa
is in the top echelon of corporate speakers and has
presented to more than one million people across twenty-
two countries and authored seven bestselling books.
Brickworks honoured this year’s theme of #BreakTheBias
by encouraging participation from all employees, men and
women, in support of our newest value, Inclusive. Lisa drew
from her own personal experience and delivered universal
take away messages for all to model in day-to-day life, both
at work and in the home. A diverse group of management
and staff across the organisation were invited to reflect on
what International Women’s Day meant to them.
Photos: International Women’s Day
68 p Brickworks Annual Report 2022
Brickworks Staff
North America
Collective Bargaining Agreements (CBAs)
A total of 74 % of wages employees in Australia are covered by
a collective bargaining agreement and 35 % of agreements are
union based. There has been a shift over the last few years of
employees seeking non-union agreements with the Company.
Employees at the Brickworks North America Sergeant Bluff,
plant voted to decertify the union reducing the number of union
plants to 5. The number of non-union plants remained at 4
due to the closure of the Caledonia plant. During FY2022, one
collective bargaining agreement was successfully negotiated
and executed at the Mid-Atlantic Plant.
With the purchase of the IBC/Southfield distribution business,
North America assumed 6 CBA’s, covering 9 yard locations,
consisting of 40 truck drivers and yard workers. During FY2022,
two CBA’s were successfully negotiated and executed at the
Naperville and Chicago locations.
There are 486 labour and distribution employees in the North
American manufacturing plants and distribution yards. Of
those, 62% 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
Collective Bargaining Agreement
No Agreement
Australia*
74 %
26 %
North
America**
62%
38%
Composition of Collective Bargaining Agreements
Union Based
Non-Union Based
Australia*
35%
65%
North
America**
100%
0%
* Wages Employees Australia
**
Labour/Distribution Employees North America
Compliance
A number of Fair Work conciliations have resulted in
settlements, with no fines or non-monetary sanctions received
in FY2022.
Brickworks Annual Report 2022 p 69
70 p Brickworks Annual Report 2022
Brickworks Design Studio
Venetian Glass Bricks – Arctic Crystal
Brisbane, QLD
Board of
Directors
Robert D. Millner
FAICD
Chairman
Director since 1997 (25 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
◗ Aeris Resources Limited
◗ Apex Healthcare Berhad
◗ New Hope Corporation Ltd
◗ TPG Telecom Ltd
◗ BKI Investment Company Ltd
◗ Tuas Limited
During the last 3 years, Mr Millner also held listed company
directorships in:
◗ Milton Corporation Limited (resigning October 2021)
◗ Australian Pharmaceutical Industries Ltd
(resigning July 2020)
◗ TPG Corporation Limited (resigning July 2020)
Lindsay R. Partridge AM
BSc. Hons. Ceramic Eng, FAICD, Dip CD
Managing Director
Since 2000 (22 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. 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 2022 p 71
Board of Directors
Fire Pits Collection
by Austral Masonry
Michael J. Millner
MAICD
Deputy Chairman
Director since 1998 (24 years)
The Hon. Robert J. Webster
MAICD
Non-executive Director
Director since 2001 (21 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 3 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 and the Audit and Risk Committee.
Mr Webster has no other listed company directorships and has
held no other listed company directorships in the last three
years.
72 p Brickworks Annual Report 2022
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 and a member of
the Nomination Committee and the Audit and Risk Committee.
Mr Bundey has no current listed company directorships and has
held no other listed company directorships in the last three years.
Robyn N. Stubbs
B.Bus, M.Sc., GAICD
Non-executive Director
Director since 2020 (2.5 years)
Ms Stubbs was appointed to the Board in 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 and the Audit & Risk Committee.
Ms Stubbs holds a listed company directorship in Inghams
Group Limited. She is also currently a director of HMC Funds
Management Limited (as the responsible entity of the HomeCo
Daily Needs REIT).
During the last 3 years, Ms Stubbs also held listed company
directorships in:
◗ InvoCare Limited (resigning in February 2021)
◗ Aventus Group (which merged with HomeCo Daily Needs
REIT in March 2022).
Deborah R. Page AM
B.Ec, FCA, FAICD
Non-executive Director
Director since 2014 (8 years)
Mrs Page was appointed to the Board in July 2014.
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 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 and was
appointed as a member of the Takeovers Panel in March 2022.
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 Limited (resigning in 2019).
Malcolm P. Bundey
B.Bus (Accounting), GAICD
Non-executive Director
Director since 2019 (3 years)
Mr Bundey was appointed to the Board in October 2019.
Mr Bundey has valuable experience as a CEO & 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.
Brickworks Annual Report 2022 p 73
Teracota Apartments
GB Masonry Breeze Blocks Pottery and
Austral Bricks Symmetry Terracotta
Alexandria, NSW
74 p Brickworks Annual Report 2022
74 p Brickworks Annual Report 2022
Executive
Management
Lindsay R. Partridge AM
BSc. Hons. Ceramic Eng, FAICD, Dip CD
Managing Director
Since 2000 (22 years), joined the Company in 1985
Refer to Board of Directors, page 71.
Grant Douglas
Hons BCompt, CA, GAICD
Chief Financial Officer
Mr Douglas was appointed on 29 August 2022 to replace Robert
Bakewell as Chief Financial Officer.
Mr Douglas is a Chartered Accountant with extensive
international experience in both professional services and
senior finance leadership roles focused on listed Australian and
international companies. Grant joined Brickworks in 2011 and
has worked across multiple senior finance roles in Australia and
as Executive Vice President – Finance for Brickworks Building
Products – North America from 2018 to 2022, where he was
integral in the establishment and growth of the North American
business. He is responsible for all financial operations of the
business including group accounting and taxation, treasury,
banking and finance and investor relations.
Robert Bakewell
B.Comm, CA
Chief Financial Officer
Mr Bakewell will leave Brickworks on 28 February 2023 after 6
months’ notice.
Mr Bakewell was appointed Chief Financial Officer in June 2016.
He is a chartered accountant with more than 37 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.
Megan has over 25 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.
Brickworks Annual Report 2022 p 75
Executive Management
83 Pirie Street
Bowral Bricks Bowral Custom Shape Hereford Bronze
Adelaide, SA
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.
Mark Ellenor
B.Bus
Executive General Manager Building Products
Mr Ellenor was appointed to the position of Executive General
Manager, Building Products in August 2022.
Mark started with Austral Bricks in the graduate program in
1999 and progressed to hold various General Manager roles in
Australia including Group General Manager Austral Bricks and
Bristle Roofing.
In 2018, Mr Ellenor was appointed President – Brickworks
Building Products North America and relocated to the United
States following the acquisition of Glen Gery. Mark was
instrumental in the leadership and successful integration and
growth of Brickworks in North America.
Now based in Philadelphia, Mark has operational responsibility
across Brickworks Building Products Australia and USA.
Mark has completed the Stanford Executive Program.
76 p Brickworks Annual Report 2022
Brickworks Annual Report 2022 p 77
Loyalty Business Park
Precast Facade by Austral Precast
Sydney, NSW
78 p Brickworks Annual Report 2022
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
◗ Financial reporting, internal and
◗ Board and Committee membership
◗ Remuneration policies, practices and
external audit
◗ Risk management framework and
strategy, risk appetite and risk profile
◗ Oversight of sustainability and
climate related risks and
opportunities
and renewal
related disclosure
◗ Delegated limits of authority to manage the Company other than matters reserved
to the Board or as otherwise delegated to a Board Committee
Brickworks Annual Report 2022 p 79
Brickworks BoardBrickworks Managing Director & Chief Financial OfficerBrickworks senior managementNomination CommitteeRemunerationCommitteeAudit & RiskCommittee 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 Deloitte.
◗ 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 2022,
there were 12 full meetings of the Board.
Board Committees
The Board has established three permanent Committees
to assist in the execution of its responsibilities. The current
permanent Committees are the Audit & Risk Committee, the
Nomination Committee and the Remuneration 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.
80 p Brickworks Annual Report 2022
Brickworks Design Centre
Horsley Park, NSW
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 2022 p 81
Dogwoodtrot House
Glen-Gery Vintage Black
Fayetteville, USA
82 p Brickworks Annual Report 2022
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 2022.
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
Michael J. Millner
◗ Ruralco Holdings Ltd
Deborah R. Page AM
◗ GBST Holdings Ltd
◗ Pendal Group Ltd
◗ Service Stream Ltd
◗ Growthpoint Properties Australia Ltd
Each Director’s experience and special responsibilities are set out
on pages 71 to 73 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:
Robyn N. Stubbs
◗ Inghams Group Limited
◗ Invocare Limited
Robert D. Millner
◗ Washington H. Soul Pattinson and Co. Ltd
◗ Aeris Resources Ltd
◗ Apex Healthcare Berhad
◗ New Hope Corporation Ltd
◗ TPG Telecom Ltd
◗ BKI Investment Company Ltd
◗ Milton Corporation Limited
◗ Tuas Limited
◗ Australian Pharmaceutical Industries Ltd
since 1984
Appointed July 2022
since 2000
since 1995
since 2000
since 2003
since 1998
since 2020
Appointed 2000
Resigned 2020
◗ Aventus Group
(merged with HomeCo Daily Needs REIT)
Company Secretary
◗ Susan L. Leppinus B.Ec; Llb; Grad Dip App Fin
Appointed 2007
Resigned 2019
Appointed 2016
Resigned 2019
since 2014
since 2010
Appointed 2021
since 2021
Appointed 2017
Resigned 2021
Appointed 2015
Ceased 2022
Brickworks Annual Report 2022 p 83
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.
Consolidated Result of Operations
The consolidated net profit for the year ended 31 July 2022 of
the Brickworks Group after income tax expense, amounted to
$854,391,000 compared with $239,163,000 for the previous year.
Dividends
The Directors recommend that the following final dividend be
declared:
Ordinary shareholders – 41 cents per share (fully franked)
The record date for the final ordinary dividend will be 2 November
2022, with payment being made on 23 November 2022.
Dividends paid during the financial year ended 31 July 2022 were:
(a) Final 2021 ordinary dividend of 40 cents per share (fully
franked) paid on 24 November 2021 (2020: 39 cents).
(b)
Interim 2022 ordinary dividend of 22 cents per share (fully
franked) paid on 3 May 2022 (2021: 21 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
No 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.
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.
84 p Brickworks Annual Report 2022
Sustainability
We continue to improve our sustainability performance, delivering a
positive impact for our stakeholders. In FY2020, 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 2022 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), publishing a TCFD Statement in early 2022,
available at www.brickworks.com.au.
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.
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 61.
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:
Shift in housing
trend
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.
Risk
Mitigation
New competitor Whilst barriers to entry are significant the
Energy Supply–
reliability and
cost of gas and
electricity
Serious Safety
Incidents
Environmental
incident
Energy requirements are managed through
retail energy agreements. For the east coast
Australian operations, Santos supplies gas
under a long-term agreement, and the
energy division manages the day-to-day
wholesale market risks. The North American
operations have long-term gas contracts in
place. Insurance coverage mitigates the risk of
interruption to electricity and gas supply.
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
16 percent of total employees qualified in
Mental Health First Aid.
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”).
Products –
alternative
products and
product failure
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.
Production
capacity
Business
Interruption –
plant failure or
underutilisation
and raw material
supply
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.
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.
Brickworks Annual Report 2022 p 85
Directors’ Report
Asbestos and
other respirable
dust risk
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.
Brickworks employs its own occupational
hygienists (two hygienists, situated in
Melbourne and Brisbane covering Brickworks
nationally) to manage this important area. A
rigorous monitoring and testing program has
been implemented following government
regulations.
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.
86 p Brickworks Annual Report 2022
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
COVID-19
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 9 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.
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.
Climate related
risk
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, our first TCFD Statement was
released.
The Group has established a gas efficiency
target and an alternate fuels program that
considers emerging energy sources such
as biogas and hydrogen. 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
Natural Resources 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
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e
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12
3
2
4
1
12
12
12
12
12
12
12
N/A
N/A
N/A
3
3
3
3
2
2
N/A
2
2
2
2
3
4
N/A
4
4
4
3
N/A
N/A
1
1
1
1
1
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
Directors Interests
As at 31 July 2022, 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
4,797,141
194,711*
17,400
15,922
1,170
1,000
*
In addition, Lindsay Partridge has been allocated 115,449 ERP awards on
terms subject to performance criteria outlined in the remuneration report.
As at 31 July 2022, 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 2022 p 87
Chairman of the
Remuneration Committee
Letter
On behalf of the Board of Directors, I am pleased to provide you with the FY2022 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 11.7 at 31 July 2022 from 14.3 at 31 July 2021 as we continue to target a
reduction of injury rates year on year.
The COVID-19 pandemic continued creating 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.
Operational and Financial Performance
Brickworks had another year of strong performance in FY2022 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:
◗ a successful integration of the Illinois Brick Company (“IBC”) acquired in North America in August 2021
◗ commissioning of the Austral Masonry Oakdale East grey block plant in New South Wales
◗ a finalisation of the new ERP implementation in Australia
◗ completion of new facilities within the Property Trust, including the state-of-the-art Amazon warehouse at Oakdale West in December
2021. A substantial progress was achieved in respect of other developments at Oakdale West (including the Coles facility) which were
deemed to be greater than 80% complete at 31 July 2022.
◗ establishment of Brickworks Manufacturing Trust, a new Joint Venture manufacturing property trust with Goodman Group involving a
portfolio of 15 manufacturing plants, tenanted by the Group’s Australian Building Products businesses. A successful completion of this
transaction allowed the Group to realise value for shareholders and capitalise on the strong growth in industrial land values in recent
years.
88 p Brickworks Annual Report 2022
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 $47.8 million in FY2021 to $152.9 million in FY2022. The annual FY2022 EBIT from continuing operations included an
amount of $89.1 million representing a gain on sale of assets to the Brickworks Manufacturing Trust.
◗ The annual EBIT (before significant items) generated by the Property division in Australia has significantly increased from $252.7 million
in FY2021 to $643.7 million in FY2022. This included a development profit of $387.0 million and revaluation gains of $227.4 million.
◗ The annual EBIT (before significant items) generated by Brickworks North America has increased from $8.5 million in FY2021 to
$24.9 million in FY2022. This included an EBIT of $13.2 million arising in respect of Property transactions (2021: $9.9 million).
◗ The Underlying Shareholder Return on NTA – excluding equity accounting investment in WHSP – demonstrates an increase from
FY2021 to FY2022 from 20.3% to 47.1%
◗ Statutory Group NPAT (after significant items) in FY2022 amounted to $854.4 million compared to $239.2 million in FY2021. The current
year NPAT included a net one-off gain of $271.1 million arising in respect of the WHSP-Milton merger and the resulting gain on deemed
disposal for Brickworks.
Capital Management
◗ The Group operating cash flow for the year ended 31 July 2022 amounted to $130.5 million compared to the prior year operating cash
flow of $139.8 million. A successful establishment of Brickworks Manufacturing Trust resulted in cash proceeds of $198.3 million (net of
stamp and transfer duties payable). Property sales in North America contributed $18.1 million.
◗ 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
2022 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 12.1%, Leverage Ratio at 1.66x and Interest Cover at 12.97x. During the financial year
ended 31 July 2022 Brickworks increased its dividend from 61.0 to 63.0 cents per share (3.3% 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 FY2022
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 2022 financial year included:
Executive fixed remuneration
The Managing Director and CFO fixed remuneration remained unchanged for FY2022, for all but the final month in FY2022.
Executive Incentives
◗ Short Term Incentives (STI): Recognising the Company’s strong operational, strategic M&A and financial performance and leadership
during a challenging 2022, 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 160.2% of the
target annual STI opportunity. With the STI cash incentive capped at 50% of total fixed remuneration the remaining amount of $137,301
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 FY2022 after approval from shareholders the Board awarded an LTI of 75%
of fixed remuneration to the Managing Director and 60% of fixed remuneration to the CFO to be tested against absolute and relative TSR
measures between 1 August 2021 to 31 July 2024.
◗ 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 was tested on 31 July 2022.
◗ The Absolute TSR Performance over a 3-year period (for testing historical allocations) was 11.1% p.a. As this rate of return was higher than
a threshold of 8% p.a. required for 100% vesting, all awards tested under the Absolute TSR test have vested.
◗ Relative TSR Performance over this period (for testing of historical allocations) placed Brickworks at the 71st percentile of the S&P ASX
200 constituents. As this ranking is higher than the 60th percentile threshold for 100% vesting, all awards under the Relative TSR test
have vested.
◗ Long term incentives (Historical LTI Plan): Independent assessment of the historical performance of share allocations made to the MD
and CFO in 2017 and 2018 which were eligible for testing at 31 July 2022 established the following:
◗ The Absolute TSR Performance (for testing of historical allocations) was 14.5%. Relative TSR Performance (for testing of historical
allocations) was at 138% 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 2022 vesting.
Brickworks Annual Report 2022 p 89
Directors’ Report
Remuneration in FY2022 and FY2023
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.
MD and CFO
Remuneration Structure
Total Fixed Remuneration (TFR) (including car allowance and superannuation and other
non-monetary benefits)
Short Term Incentive
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 2022 AGM).
MD
FY2022
CFO
FY2022
$1,577,185
$830,428
75% of TFR at target
60% of TFR at target
90% of TFR at
maximum
72% of TFR at
maximum
75% of TFR
60% of TFR
For the Managing Director and CFO, a 5% salary increase (inclusive of 0.5% increase in superannuation guarantee levy) came into effect from
1 July 2022.
Other Executives
For other executives, salary increases by an overall average of 5% (inclusive of the 0.5% increase in the superannuation guarantee levy) will
apply for FY2023 with effect from 1 July 2022.
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 resolved to increase non-executive director fees by 5% (inclusive of the 0.5% increase in the superannuation
guarantee levy) in FY2022. Together with a $5,000 increase in the fees for each of the Remuneration Committee Chair and the Audit & Risk
Committee Chair this represents a total increase of $63,238 in non-executive director fees compared to the fees paid to current directors
in FY2022. The current shareholder approved non-executive director fee pool is $1,300,000 per annum. The Company proposes to seek
shareholder approval at the 2022 AGM to increase the maximum aggregate amount of fees that may be paid to all non-executive directors by
$200,000 per annum to $1,500,000 per annum. The increase in the non-executive Directors’ fees will also allow for reasonable increases in
fees over future years without requiring ongoing shareholder approval.
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
90 p Brickworks Annual Report 2022
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 2021 AGM with 97.3% of votes in favour of the
Remuneration Report.
During FY2022 Brickworks reviewed the reports of proxy advisors and engaged with major shareholders and proxy advisors in relation to
remuneration matters.
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 AM
Executive Director (Managing Director)
Mrs D. Page AM
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 Officer1
Executive General Manager – Property & Development
1
On 29 August 2022 it was announced that Mr Robert Bakewell will leave Brickworks on 28 February 2023. He will be replaced by Mr Grant Douglas
who was appointed the Chief Financial Officer on 29 August 2022 and is considered a KMP from the date.
Brickworks Annual Report 2022 p 91
Remuneration Report
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.
92 p Brickworks Annual Report 2022
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 provided by Aon was $11,000.
◗ 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. Building Products Australia (Austral Bricks, Austral Masonry, Bristile Roofing, Austral Precast2) and Building Products North America;
2. The Property Group – exists to maximise the value of surplus land created by the Building Products business, and
3. Investments – includes primarily 26.1% 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 15 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.
2
The Austral Precast FY2022 result is classified as losses on discontinued operations with FY2021 comparatives restated on the same basis.
Brickworks Annual Report 2022 p 93
Remuneration Report
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 graph 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
2018
2019
2020
2021
2022
Revenue and EBIT measures exclude discontinued operations
$1,200
$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 FY2022 amounted to $854.4 million compared to $239.2 million in FY2021. The current year
NPAT included significant property revaluation gains and development profits of $614.4 million and a net one-off after-tax gain of $271.1 million
arising primarily in respect of the WHSP-Milton merger and the resulting gain on deemed disposal.
The above graph shows the alignment of LTI outcome with medium to long term financial performance.
94 p Brickworks Annual Report 2022
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
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Total Shareholder Returns (TSR)
Our diversified portfolio of assets has translated into consistently strong absolute shareholder returns, including a return of 11.3% for the
3-year period to 31 July 2022 compared to a 4.9% 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
(11.0%)
(2.6%)
(8.4%)
3 years
11.3%
4.9%
6.4%
5 years
13.4%
8.4%
5.0%
10 years
15 years
20 years
11.2%
9.6%
1.6%
6.5%
5.3%
1.2%
9.9%
8.8%
1.1%
Brickworks Annual Report 2022 p 95
Remuneration Report
Total Shareholder Return (Cumulative)
3-year comparison
200%
150%
100%
50%
0%
-50%
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
1
2
0
2
t
c
O
2
2
0
2
n
a
J
2
2
0
2
r
p
A
2
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 accompanying graph shows historical revenue per employee.
Despite having grown substantially employee productivity has not
been compromised in the process.
United States
In North America, a significant improvement in productivity
measures was observed with Building Products revenue per
employee increasing from US$189,563 in FY2021 to US$308,612 in
FY2022. This was driven by additional revenue and synergies related
to the IBC acquisition in August 2021, continued rationalisation of
manufacturing and retail operations and an increase in participation
in the detached residential market.
2.3 Potential Remuneration Mix
Total remuneration for the MD and the other executives comprises
both fixed remuneration and an at-risk component (STI and LTI).
The mix shown in the graph on the following page is the potential
remuneration based on the current remuneration at 31 July 2022
with STI and LTI based on maximum opportunities.
This structure is designed to retain and pay executives
competitively based on their performance.
96 p Brickworks Annual Report 2022
Building Products Australia
Revenue per Employee
($'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
2
2
0
2
Potential MD Remuneration Mix
Potential CFO Remuneration Mix
Fixed Remuneration
43.1%
LTI
25.9%
STI – Cash
15.5%
STI – Shares
(deferred for 1 year)
15.5%
Fixed Remuneration
37.7%
LTI
28.3%
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 FY2022 year.
A benchmarking exercise was undertaken during FY2022 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
$5.0m
$4.0m
$3.0m
$2.0m
$1.0m
$0
Brickworks MD
Peer Group*
Total Fixed
Remuneration (TFR)
Target STI
Maximum STI
Opportunity
Maximum LTI
Opportunity
Maximum Total
Remuneration
* The industry peer group includes 13 organisations engaged in property, manufacturing of construction materials, building products generally within
50% to 200% of BKW’s one-year average market capitalisation as follows: Abacus, ADBRI, Boral, Charter Hall, Cromwell, CSR, Fletcher Building,
Growthpoint Properties, Incitec Pivot, Nufarm, Orica, Orora and Reliance Worldwide Corporation.
Brickworks Annual Report 2022 p 97
Remuneration Report
By way of summary:
◗ Brickworks MD’s TFR is positioned within the market with 6% above median and 8% below 75th percentile.
◗ With the increase of the at-risk component of the MD’s remuneration, the MD’s Target STI opportunity is 15% above market median
whilst the Maximum STI opportunity is between market 25th percentile and market median, similar positioning applies to the LTI of the
MD, where the Maximum LTI sit reasonably between market median and market 25th percentile.
◗ Consequently, Brickworks MD’s Target Total Remuneration is positioned at market median, and Maximum Total Remuneration is
positioned within the market with 9% below market median of the 2022 comparator group.
Total Shareholder Return
20-year comparison
Brickworks
9.9% p.a. growth (since July 2002)
All Ords Accumulation Index
8.8% p.a. growth (since July 2002)
700%
600%
500%
400%
300%
200%
100%
0%
2
0
0
2
4
0
0
2
6
0
0
2
8
0
0
2
0
1
0
2
2
1
0
2
4
1
0
2
6
1
0
2
8
1
0
2
0
2
0
2
2
2
0
2
2.5.
Remuneration Component – Short-Term Incentives (STI)
The information below outlines the Company’s STI Plan for FY2022:
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.
What is the
target and
maximum STI
opportunity?
MD and CFO
The target STI opportunity for the MD is 75% of total fixed remuneration (including base salary, superannuation and car
allowance) and maximum opportunity at 90% of fixed remuneration.
The STI opportunity for the CFO is 60% of total fixed remuneration at target and 72% of total fixed remuneration at
maximum.
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.
98 p Brickworks Annual Report 2022
Is any part of
the STI awarded
deferred into
equity?
What is the
target and
maximum STI
opportunity?
How are STI
performance
measures
determined?
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:
MD
CFO
Target STI
opportunity
75% of total fixed remuneration
(including base salary, car allowance
and superannuation)
Maximum STI
opportunity (cash)*
90% of total fixed remuneration
60% of total fixed remuneration (inc. base
salary, car allowance and superannuation)
72% of total fixed remuneration
Other Executives** ***
Between 10% and 50% of fixed
remuneration (inc. base salary and
superannuation)
50% of total fixed remuneration
(including base salary, car allowance
and superannuation)
*
**
For the MD/CFO maximum STI 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 changes.
The impact and the Company’s response to COVID-19 was also a key consideration this year, however no KPIs for
FY2022 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:
Brickworks Annual Report 2022 p 99
Remuneration Report
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 FY2022 incentive
amounts payable.
100 p Brickworks Annual Report 2022
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
Below base cash flow
STI Award
0%
Between base cash flow and target cash flow Pro rata award on a straight-line basis between 60% and 100%
Setting the Target for Cash Performance
In setting the target for cash performance consideration is given to the prior year’s cash 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 Budget Cash Flow is greater than last year’s Cash Flow, 80% of last year becomes the base cash flow and Budget
becomes the target cash flow. Where Budget Cash Flow is less than the prior year, 80% of Budget Cash Flow becomes
the base cash flow and last year’s Cash Flow becomes the target cash flow.
Cash flow is the Operating cash flow plus Investing cash flows generated from the sale of property assets including
through the sale of land via the subscription of units in a trust.
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 Cash Flow
0%
Between Base Cash Flow
and Target Cash Flow.
Straight line between 50% and 100%
The Cash Base and Target is set in the same manner as for the MD and CFO.
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.
Brickworks Annual Report 2022 p 101
Remuneration Report
2.6. STI outcomes
The table below outlines the weighting of financial and non-financial KPIs in relation to each executive for financial year 2022 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)
The Group NPAT (before significant items and excluding
property revaluation gains and equity accounted profit from
associates) was $404.4 million which translated into a fully
achieved maximum STI target and was significantly higher
compared to $84.4 million in the prior financial year.
Cash flow
EGM Property &
Development
Divisional profit against target for
Property
The Group Cash Flow for the year ended 31 July 2022 was
$346.9 million compared to $139.8 million in the prior
year. FY2022 Cash Flow measure includes net proceeds
of $198.3 million from the establishment of Brickworks
Manufacturing Trust and the sale of other property assets
across the Group. This translated into a fully achieved
maximum STI target.
Property divisional profit (excluding property revaluation
gains) amounted to $416.2 million which was significantly
above the performance target and the prior year profit of
$103.8 million.
Outcome
100%
achieved
100%
achieved
100%
achieved
Divisional cash generation against
target
The cash flows generated by the Property division amounted
to $234.4 million which was significantly above 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 47.1%
which translated into a fully achieved maximum STI
target.
Safety
Key lag target metrics across the
Group:
◗ A reduction in the number of LTIs
and TRIs compared to the prior
year
◗ An improvement in LTIFR and
TRIFR compared to the prior year
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
◗ A substantial improvement in the number of Lost-time
injuries (LTI’s) compared to the prior year. In FY2022
there were 5 LTIs across the Group compared to 11 in
FY2021. This reduction was driven by enhanced safety
performance in North America. The number of LTI’s in
Australia remained low (1 LTI in both FY2022 and FY2021).
◗ An improvement in injury frequency rates with the Group
Long-term injury frequency rate (LTIFR) of 1.1 compared
to 2.9. Total recordable injury frequency rate (TRIFR)
reduced from 14.3 to 11.7.
◗ Other 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
102 p Brickworks Annual Report 2022
Executive
Measure(s)
Performance
Outcome
Non-financial 25%
MD & CFO
Succession Planning and
Gender Diversity
Key Metrics:
◗ Regular talent and succession
reviews
◗ Mentoring program for emerging
leaders 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
◗ Successful appointment of Mark Ellenor to an expanded
role of Executive General Manager Building Products
◗ Successful completion of bi-annual succession strategy
sessions
◗ Brickworks North America included into Group gender
diversity and succession planning programs
◗ Values and culture program embedded throughout the
organisation in performance management processes
100%
achievement
of succession
planning KPIs
EGM Property &
Development
Property Trust Return on net assets/
quality of earnings considerations
Return on Net Tangible Assets for the Property division of
41.7% which 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 or less
Strong safety performance as measured by the number of
safety events in the financial year ended 31 July 2022:
◗ Category 1 events (FY2022: nil)
◗ Category 2 events (FY2022: two)
Mixture of Strategic and Operational
relevant to the executive
◗ Successfully managed Trust property leases to achieve
high occupancy rates (>99%) at 31 July 2022
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 2022 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 2022.
Target STI
Opportunity
$
Max STI
Opportunity
$
Weighting
%
Achieved*
%
Forfeited
%
Weighting
%
Achieved*
%
Forfeited
%
FINANCIAL
NON-FINANCIAL
1,174,780
1,409,736
482,924
579,509
75%
75%
120%
120%
265,000
287,250
75%
180%
0%
0%
0%
25%
25%
120%
120%
25%
100%
0%
0%
0%
STI
awarded
$
1,409,736**
579,509**
STI over
performance
subject to LTI
$
–
–
287,250
137,301
Executive
MD
CFO
EGM Property
& Development
*
**
Calculated as % of Target STI opportunity.
50% of MD and CFO’s STI awards deferred into equity for one year being $704,868 for the MD and $289,754 for the CFO.
Brickworks Annual Report 2022 p 103
Remuneration Report
2.7. Remuneration Component – Long Term incentives (LTI) for FY2022
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?
The LTI includes:
◗ a broad-based employee share plan with 579 employees participating as at 31 July 2022 via 1,082,233 shares
on allocation of which 31.17% remain unvested (and 68.83% vested). In addition, 37,258 shares in the plan were
forfeited during the year to 31 July 2022; and
◗ an Executive Rights Plan with 32 participants as at 31 July 2022 via 545,064 rights on allocation of which 73.44%
remain unvested (and 26.56% vested). 0 rights were forfeited during the year to 31 July 2022.
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).
What is the LTI
Opportunity
for the MD and
CFO?
The value of shares or performance rights granted to the MD was a fixed 75% of total fixed remuneration (including
superannuation and car allowance) and to the CFO 60% of total fixed remuneration. This fixed allocation is subject
to Brickworks meeting the absolute and relative TSR performance criteria set out below over the ensuing three-year
period.
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 opportunity being 75% for the MD is below market peers. Standard practice is for the LTI opportunity to be equal
to 100% of fixed remuneration.
For all other executives, the LTI base entitlement is up to 50% of total fixed remuneration (excluding car allowance) at
target. 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.
104 p Brickworks Annual Report 2022
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
Performance Period
3-year performance period
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 2022, 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 2022
1 Year to
31 July 2021
1 Year to
31 July 2020
(5.9%)
1.1%
9.1%
(10.0%)
29.0%
40.1%
64.9%
58.3%
(9.9%)
(5.4%)
5.1%
(9.4%)
We note the difficulty with delivering TSR results in excess of 9.1% % in the current macroeconomic climate.
More appropriately, Brickworks has adopted the 60th percentile, which requires a very challenging hurdle for 100%
vesting. Average annual return of return over a 3-year period ended 31 July 2022 was 11.3%.
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
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?
Brickworks Annual Report 2022 p 105
Remuneration Report
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 (25%) and
property (30%), the Company
has exposure to other companies
in telecommunications, finance,
energy and health through its
investment in WHSP.
*
Based on 31 January 2022 asset
values reported by WHSP.
Brickworks Asset Exposure
Strategic
Investments
Large caps
Property
BP North America
Private Equity
BP Australia
Structured Yield
16%
20%
30%
9%
4%
16%
2%
Emerging companies 3%
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.
106 p Brickworks Annual Report 2022
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 FY2022 MD and CFO
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 2022 are:
Year TSR
1-year TSR
2-year TSR
3-year TSR
4-year TSR
5-year TSR
Average TSR
Target Criteria
Outcome
Test period from
Test period to
TSR Performance
1-Aug-2021
1-Aug-2020
1-Aug-2019
1-Aug-2018
1-Aug-2017
31 July 2022
(1.4%)
28.7%
14.0%
14.5%
16.6%
14.5%
8%
100% vested
MD – 7,567 shares
CFO – 3,998 shares
Brickworks’ Average TSR of 14.5% 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 2022 (including all unvested shares carried forward from the prior financial year).
Absolute TSR performance (rights allocation made under the new Executive Rights LTI Plan implemented in 2019)
Brickworks’ 3-year TSR of 37.2% for the period from 1 August 2019 to 31 July 2022 is equal to an annual TSR of 11.1%. As this is higher than the
threshold of 8% p.a. for 100% vesting, all awards under the Absolute TSR test will vest (MD – 16,700 shares to vest, CFO – 8,593 shares to vest).
Relative TSR performance (for historical allocations)
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
3.6%
18.1%
8.6%
10.6%
11.5%
10.5%
(1.4%)
28.7%
14.0%
14.5%
16.6%
14.5%
138.0%
Relative vesting in FY2022
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 – 4,080 shares
CFO – 2,177 shares
100%
MD – 3,487 shares
CFO – 1,820 shares
Brickworks’ relative TSR performance of 138.0% 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 2022.
Brickworks Annual Report 2022 p 107
Remuneration Report
Relative TSR performance (rights allocation made under the new Executive Rights LTI Plan implemented in 2019)
During the 3-year period from 1 August 2019 to 31 July 2022, Brickworks generated a TSR of 37.2%, which would place BKW at the 71st
percentile of the S&P/ASX200 constituents. As this ranking is higher than the 60th percentile threshold for 100% vesting, all awards under the
Relative TSR test will vest (MD – 16,700 shares to vest, CFO – 8,593 shares to vest).
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 2022, there were 775 employees participating in the Brickworks Deferred Employee Share Plan and the Brickworks Exempt
Employee Share Plan, holding 1,193,247 shares (0.79% 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.
108 p Brickworks Annual Report 2022
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.
The Directors Fees, inclusive of superannuation guarantee charge, for FY2022 and FY2023 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
FY2022
$269,100
$134,550
$8,280
$6,210
$4,140
$21,735
$21,735
$13,196
FY2023
$282,555
$141,278
$8,694
$6,521
$4,347
$27,822
$27,882
$13,856
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
Brickworks Annual Report 2022 p 109
–
–
–
–
–
270,221
260,099
145,504
140,053
–
–
46,677
–
–
–
–
–
–
167,746
161,061
162,912
156,810
169,825
157,810
–
170,055
–
–
–
–
136,052
3,827,127
3,467,490
4,913,390
Remuneration Report
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 2022 are disclosed
in the following table.
Base fees/
salary
Non-
monetary
benefits
Post
Employment
(Super)
Total fixed
remuneration
Short Term
Incentive
Long Term
Incentive*
Retirement
benefit
Total
Directors
RD Millner
MJ Millner
BP Crotty
DR Page
RJ Webster
MP Bundey
RN Stubbs
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
245,559
237,443
132,224
127,854
–
42,627
167,746
161,061
148,043
143,151
154,324
144,064
154,540
135,017
–
–
–
–
–
–
–
–
–
–
–
–
–
24,662
270,221
22,656
260,099
13,280
145,504
12,199
140,053
–
–
4,050
46,677
–
–
167,746
161,061
14,869
162,912
13,659
156,810
15,501
169,825
13,746
157,810
15,515
170,055
1,035
136,052
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
LR Partridge
2022
1,548,923
2021
1,542,650
4,550
4,946
23,712
1,577,185
1,409,736
840,206
21,850
1,569,446
1,126,440
771,604
Total
2022
2,551,359
4,550
107,539
2,663,448
1,409,736
840,206
2021
2,533,867
4,946
89,195
2,628,008
1,126,440
771,604
–
4,526,052
Other Key Management Personnel
RC Bakewell
2022
784,339
22,377
23,712
830,428
579,509
435,358
M Kublins
2021
2022
2021
775,525
21,606
21,850
818,981
578,160
258,622
553,288
535,306
7,719
7,219
23,712
584,719
287,500
340,122
21,694
564,219
278,500
330,672
Total
2022
1,337,627
30,096
47,424
1,415,147
867,009
775,480
2021
1,310,831
28,825
43,544
1,383,200
856,660
589,294
–
–
–
–
–
–
1,845,295
1,655,763
1,212,341
1,173,391
3,057,636
2,829,154
*
Reflects the grant date fair value of the shares/executive rights vested during the financial year.
Notes: In addition to the total benefits above, these KMPs accrued leave entitlements during the year as follows:
◗ L R Partridge: net increase of $12,047 in accrued leave entitlements (2021: $27,072 increase)
◗ R C Bakewell: net increase of $41,569 in accrued leave entitlements (2021: $15,693 increase)
◗ M Kublins: net decrease of $20,364 accrued leave entitlements (2021: $14,922 decrease)
110 p Brickworks Annual Report 2022
5.2 Director and Key Management Personnel shareholdings
Directors
RD Millner
MJ Millner
DR Page
RJ Webster
MP Bundey
RN Stubbs
FPO Held
31 July 2021
Granted as
Remuneration Purchases
Shares
Disposed
FPO Held
31 July 2022
4,817,967
4,787,141
17,400
15,922
1,020
1,000
–
–
–
–
–
–
–
10,000
–
–
150
–
–
–
–
–
–
–
4,817,967
4,797,141
17,400
15,922
1,170
1,000
FPO
DESP
EEP
ERP STI Def
ERP STI Def
FPO
DESP
EEP
ERP STI Def
L R Partridge
112,896
74,283
–
64,843
26,917
50,606
21,604
(40,989)
151,000
22,107
– 115,449
21,604
Other Key Management Personnel
R C Bakewell
8,201
28,564
111
33,324
14,137
20,803
11,088
45
31,064
8,201
11,637
156
54,127
11,088
M Kublins
23,509
35,342
–
45,247
–
11,754*
–
(5,202) 23,509 35,342
–
51,799
–
*
Includes 479 shares allocated in FY2022 with reference to the number of rights vested on 31 July 2021 in lieu of dividends paid during the
vesting period.
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
Brickworks Annual Report 2022 p 111
Directors' Report
Auditor’s Independence Declaration
Following a mandatory partner rotation, the financial year ended 31 July 2022 is the second year with Jodie Inglis as audit partner.
The Directors received an independence declaration from the auditor, EY. A copy has been included on page 115 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 $475,071. The non-audit services were for the
provision for tax advisory services, as well as advisory services in relation to Taskforce on Climate-related financial disclosures (TCFD).
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:
21 September 2022
R.D. Millner
L.R. Partridge AM
Director
Director
112 p Brickworks Annual Report 2022
Rhodes House
UrbanStone Australian Marble in
Pilbara Red and Pilbara Green
Perth, WA
Brickworks Annual Report 2022 p 113
D Residence
Austral Bricks Indulgence, French Brie
Austral Bricks Metallix, Carbide
Perth, WA
114 p Brickworks Annual Report 2022
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 2022,
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; and
c) No non-audit services provided that contravene 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
21 September 2022
Brickworks Annual Report 2022 p 115
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
117
118
119
120
121
122
122
124
132
141
144
153
165
116 p Brickworks Annual Report 2022
116 p Brickworks Annual Report 2022
Consolidated Income Statement
Continuing operations
Revenue
Cost of sales
Gross profit
Gain on deemed disposal of associate
Other income
Distribution expenses
Administration expenses
Selling expenses
Impairment of non-current assets
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
Note
2.2
6.3
2.2
3.2
2.3
2.2
4.1
2022
$000
Restated1
2021
$000
1,093,154
(752,251)
850,922
(599,881)
340,903
251,041
722,179
111,233
(85,915)
(65,987)
(130,081)
(145,352)
(27,737)
(4,965)
(36,240)
630,408
1,308,446
(31,699)
1,276,747
(407,011)
–
12,105
(65,927)
(51,181)
(93,191)
(1,954)
(13,052)
(3,301)
(24,555)
340,746
350,731
(21,837)
328,894
(86,110)
Profit from continuing operations after tax
869,736
242,784
Discontinued operations
Loss from discontinued operations, net of income tax benefit
6.6
(15,345)
(3,621)
Profit after tax
854,391
239,163
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.
854,391
239,163
Cents
Cents1
563.0
561.2
573.2
571.2
158.3
157.9
160.7
160.3
1
The comparative numbers of the Group have been restated to present the discontinued operations separately from the continuing operations.
Brickworks Annual Report 2022 p 117
Consolidated Statement of
Other Comprehensive Income
Profit after tax
854,391
239,163
Note
2022
$000
2021
$000
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
4.1
4.1
258
1,528
(77)
1,709
(760)
920
228
388
5,196
(139,222)
2,351
(2,264)
(478)
41,910
Net other comprehensive income/(loss) not to be reclassified to Income Statement
5,283
(97,790)
Other comprehensive income/(loss), net of tax
Total comprehensive income
Total comprehensive income, attributable to:
Shareholders of Brickworks Limited
6,992
(97,402)
861,383
141,761
861,383
141,761
The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying notes.
118 p Brickworks Annual Report 2022
Consolidated Balance Sheet
Cash and cash equivalents
Receivables
Inventories
Prepayments
Contract assets
Current income tax asset
Assets classified as held for sale
Derivative financial assets
Total current assets
Inventories
Financial assets at fair value through other comprehensive income
Investments accounted for using the equity method
Derivative financial assets
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
Liabilities directly associated with assets classified as held for sale
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
6.6
5.8
3.1
5.3
6.3
5.4
3.2
3.3
3.2
3.1
5.4
5.4
4.2
3.5
3.1
3.3
5.5
6.6
3.4
5.4
5.4
3.5
3.3
5.5
3.4
4.2
5.6
5.7
2022
$000
106,083
152,693
327,202
11,452
2,228
2,348
24,224
28
2021
$000
139,825
132,447
285,392
9,525
3,956
8,618
–
101
626,258
579,864
6,901
5,876
3,822,570
1,031
636,013
332,516
141,510
5,849
1,314
2,345,908
–
705,525
191,073
196,300
4,946,417
3,445,969
5,572,675
4,025,833
149,249
15,250
41
6,315
826
9,367
39,559
1,427
16,701
86,953
124,766
40,891
–
417
1,199
5,160
27,344
1,355
–
67,150
325,688
268,282
579,407
–
15,984
504,213
10,955
35,498
840,935
614,514
6,866
17,569
173,551
12,423
11,408
441,472
1,986,992
1,277,803
2,312,680
1,546,085
3,259,995
2,479,748
392,263
183,616
2,684,116
386,887
197,917
1,894,944
3,259,995
2,479,748
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Brickworks Annual Report 2022 p 119
Consolidated Statement of Changes in Equity
Notes
Issued capital
$000
Reserves
$000
Retained
profits
$000
Total
$000
For the year ended 31 July 2022
Balance at 1 August 2021
Profit after tax
Other comprehensive income/(loss) – net of tax
Net dividends paid
Share issue costs
Change in ownership interest in the associate
Issue of shares through employee share plan
Shares vested to employees
Shares purchased under STI scheme
Shares vested under STI scheme
Share of associates other movements in retained earnings
Share based payments expense
Balance at 31 July 2022
For the year ended 31 July 2021
Balance at 1 August 2020
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
5.6
5.7
5.7
5.6
5.6
5.6
5.7
7.1
2.5
5.6
5.7
5.6
5.6
5.7
7.1
386,887
197,917
1,894,944
2,479,748
–
–
–
(13)
–
1,229
4,209
(852)
803
–
–
–
6,992
–
–
(22,862)
(1,229)
(4,209)
852
(803)
–
6,958
854,391
–
(79,983)
–
22,268
–
–
–
–
(7,504)
–
854,391
6,992
(79,983)
(13)
(594)
–
–
–
–
(7,504)
6,958
392,263
183,616
2,684,116
3,259,995
356,015
293,344
1,753,848
2,403,207
–
–
–
(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
1,894,944
2,479,748
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
120 p Brickworks Annual Report 2022
Consolidated Statement of Cash Flows
Note
2022
$000
2021
$000
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
Proceeds from sale of subsidiary
Purchase of controlled entities, net of cash acquired1
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
1,149,350
(1,100,139)
236
(29,727)
97,487
13,279
130,486
(134,030)
227,494
(5,314)
(7,724)
–
(74,962)
5,464
368,885
(419,960)
(29,023)
–
(13)
(94,101)
(174,212)
(38,262)
4,520
139,825
106,083
955,357
(892,961)
299
(22,723)
89,709
10,114
139,795
(111,542)
14,419
(8,366)
(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
5.2
Reconciliation of net profit attributable to shareholders of Brickworks Limited to
net cash from operating activities
Profit after tax
854,391
239,163
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 and assets held for sale
Gain on deemed disposal of associate
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
Movement in right of use assets and lease liabilities
(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
44,232
33,961
(1,588)
(523)
(7,782)
164,079
(722,179)
(114,548)
6,958
(532,922)
(275,921)
(22,907)
(22,912)
245
3,420
(932)
20,051
19,741
(2,960)
(687)
413,348
130,486
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
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
1
Includes a deferred consideration payment of $1.4 million in the current year (2021: $1.4 million). Refer Note 5.5.
Brickworks Annual Report 2022 p 121
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 2021;
◗ 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 21 September 2022.
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.
122 p Brickworks Annual Report 2022
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)
3.3
3.4
6.3(b)
6.6
Judgement/Estimate
Property, plant and equipment
Non-current assets impairment assessment
Right-of-use assets and lease liabilities
Provisions
Fair value – investment property
Discontinued Operations
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. 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.
1.5 Notes to the Consolidated financial statements
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 2022 p 123
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 and supply of vitrified clay, concrete used in the building industry. Major product lines include bricks,
masonry blocks, pavers, roof tiles, floor tiles, fibre cement walling panels and roof battens used in the building
industry.
Building Products
North America
Manufacture and supply of vitrified clay and concrete products used in the building industry. Major product lines
include bricks, masonry blocks and accessories 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).
124 p Brickworks Annual Report 2022
31 July 2022
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
620,596
397,663
64,904
–
30
8,079
–
–
139
1,403
Property
$’000
Investments
$’000
Continuing
operations
$’000
Discontinued
operations2
$’000
Consolidated
$’000
–
–
–
46
58
–
1,018,259
7,733
1,025,992
–
236
–
–
64,904
236
215
9,540
27,844
–
–
87
92,748
236
215
9,627
Revenue
693,609
399,205
104
236
1,093,154
35,664
1,128,818
RESULT
Segment EBITDA
Amortisation of right-of-use assets
Depreciation and amortisation
Segment EBIT (before gain on sale
of land and buildings)
Gain/(Loss) on sale of land
and buildings
115,775
(26,204)
(25,778)
35,290
(6,719)
(16,824)
643,689
–
–
180,712
–
–
975,466
(32,923)
(42,602)
(15)
(1,038)
(1,630)
975,451
(33,961)
(44,232)
63,793
11,747
643,689
180,712
899,941
(2,683)
897,258
89,076
13,185
–
–
102,261
–
102,261
Total segment EBIT
152,869
24,932
643,689
180,712
1,002,202
(2,683)
999,519
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
1,158,164
538,249
1,754,134
2,094,527
708,581
138,160
2,888
466,341
314,502
(20,154)
(19,803)
(19,314)
–
–
295,188
(20,154)
(19,803)
1,276,747
(407,011)
(21,997)
6,652
1,254,750
(400,359)
869,736
(15,345)
854,391
5,545,074
3,377
24,224
–
5,569,298
3,377
5,548,451
24,224
5,572,675
1,315,970
594,657
385,352
16,701
–
–
1,332,671
594,657
385,352
2,295,979
16,701
2,312,680
42
–
650,579
(20,213)
630,408
–
630,408
17,430
–
1,754,134
2,051,006
3,822,570
112,048
101,145
2,150
186,886
37,062
–
–
–
215,343
223,948
18,727
242,675
–
–
3,822,570
215,343
1
2
3
Included in the income tax expense is tax expense related to
significant items amounting to $185,116,000.
Refer to Discontinued operations – Note 6.6.
Recognised at a point in time.
4
5
Recognised over time.
Borrowing costs are presented net of fair value change on
derivatives ($7,782,000) and exclude items disclosed in the
“Significant items” line.
Brickworks Annual Report 2022 p 125
Notes to the Consolidated Financial Statement
2.1
Segment reporting (continued)
31 July 2021 (restated)
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
574,380
201,331
73,512
–
98
117
–
–
–
1,036
Property
$’000
Investments
$’000
Continuing
operations
$’000
Discontinued
operations2
$’000
Consolidated
$’000
–
–
–
74
75
–
775,711
9,724
785,435
–
299
–
–
73,512
299
172
1,228
29,034
–
278
355
102,546
299
450
1,583
Revenue
648,107
202,367
149
299
850,922
39,391
890,313
RESULT
Segment EBITDA
Amortisation of right-of-use assets
Depreciation and amortisation
Segment EBIT (before gain on sale
of land and buildings)
Gain/(Loss) on sale of land and
buildings
97,668
(23,951)
(25,949)
16,544
(4,787)
(13,102)
252,679
–
–
96,946
–
–
463,837
(28,738)
(39,051)
(815)
(850)
(1,719)
463,022
(29,588)
(40,770)
47,768
(1,345)
252,679
96,946
396,048
(3,384)
392,664
–
9,870
–
–
9,870
–
9,870
Total segment EBIT
47,768
8,525
252,679
96,946
405,918
(3,384)
402,534
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
(38,872)
(18,735)
(19,417)
(1,576)
–
–
(40,448)
(18,735)
(19,417)
328,894
(86,110)
(4,960)
1,339
323,934
(84,771)
242,784
(3,621)
239,163
1,187,937
463,764
911,170
1,454,242
326,793
108,221
1,599
243,861
4,017,113
8,720
4,025,833
680,474
655,404
210,207
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
–
–
–
–
–
–
–
–
–
–
–
4,017,113
8,720
4,025,833
680,474
655,404
210,207
1,546,085
340,746
2,345,908
125,231
75,445
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 $5,623,000.
2 Refer to Discontinued operations – Note 6.6.
3 Recognised at a point in time.
4 Recognised over time.
5 Borrowing costs are presented net of fair value change on
derivatives ($3,003,000) and exclude items disclosed in the
“Significant items” line.
126 p Brickworks Annual Report 2022
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
Impairment of non-current assets1
Plant relocation and commissioning costs2
COVID-19 – incremental and unabsorbed costs3
Other restructuring activities and site closure costs – Australia4
Other restructuring activities and site closure costs – North America5
Acquisition costs6
ERP implementation costs7
Australian East Coast floods7
Change in accounting policy – Software as a Service (SaaS)
Note
3.2
2022
$000
(132,223)
(39,788)
(11,061)
(8,482)
(5,250)
(4,271)
(3,060)
(2,853)
–
Restated
2021
$000
–
(4,514)
(5,325)
(4,977)
(5,588)
(3,659)
(3,128)
–
(948)
Significant items from continuing operations before income tax (excluding associates)
(206,988)
(28,139)
Income tax benefit on other significant items (excluding associates)8
36,567
11,798
Significant items from continuing operations after income tax (excluding associates)
(170,421)
(16,341)
Gain on deemed disposal of associate
Income tax expense arising on deemed disposal8
Gain on deemed disposal of associate after income tax
Significant one-off transactions of associate9
Income tax expense arising from the carrying value of the investment in the associates (WHSP) 8
6.3
722,179
(270,609)
451,570
(200,689)
43,132
–
–
–
(10,733)
(17,818)
Significant items after income tax (associates)
(157,557)
(28,551)
Significant items from continuing operations after income tax (including associates)
123,592
(44,892)
Impairment of assets held for sale10
Other significant items10
Significant items from discontinued operations before income tax
Income tax (expense)/benefit10
6.6
(18,727)
(587)
(19,314)
5,794
–
(1,576)
(1,576)
397
Significant items from discontinued operations after income tax
(13,520)
(1,179)
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 2022 p 127
Notes to the Consolidated Financial Statement
2.1
Segment reporting (continued)
1
2
3
4
Disclosed in ‘Impairment of non-current assets’ line on the Income
Statement. An impairment assessment was conducted in line with
the value-in-use methodology at 31 July 2022. Refer Note 3.2. (c).
Disclosed in 'Cost of Sales' ($9.4 million), 'Finance Costs' ($3.4
million), 'Impairment of non-current assets' ($11.6 million) and
'Restructuring costs' ($15.4 million) lines on the Income Statement.
Unabsorbed production costs disclosed in 'Cost of Sales' ($2.8
million) and incremental costs disclosed in 'Other Expenses' ($8.3
million) lines on the Income Statement.
Disclosed in 'Restructuring costs' ($8.1 million) and 'Impairment of
non-current assets' ($0.4 million) lines on the Income Statement.
5
6
7
8
9
Disclosed in 'Restructuring costs' ($4.2 million) and 'Impairment of
non-current assets' ($1.1 million) lines on the Income Statement.
Disclosed in 'Business acquisition costs' ($5.0 million), 'Finance
Costs' ($0.3 million) and offset by ‘Other Income’ ($1.0 million) lines
on the Income Statement
Disclosed in 'Other Expenses' line on the Income statement.
Disclosed in 'Income tax expense' line on the Income statement.
Disclosed in 'Share of net profits of associates and joint ventures'
line on the Income Statement.
10 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 contracts1
Other operating revenue
Sale of surplus gas
Interest received
Rental revenue
Other
2022
$000
Restated
2021
$000
1,018,259
64,904
775,711
73,512
1,083,163
849,223
6,842
236
215
2,698
–
299
172
1,228
Total operating revenue from continuing operations
1,093,154
850,922
OTHER INCOME
Net gain on disposal of property, plant and equipment
Net fair value change on derivatives
Property development profits
Other items
102,414
7,782
–
1,037
7,298
3,003
1,751
53
Total other income from continuing operations
111,233
12,105
In July 2022 the Group entered into a sale and leaseback transaction involving a portfolio of 15 sites representing selected Building Products
Australia manufacturing locations.
The operating sites in total comprise 496 hectares in land area and have a market value of $416 million. The sites were sold into a newly
established Brickworks Goodman Manufacturing Trust. Brickworks has retained 50.1% ownership of the new trust, with the remaining 49.9%
interest sold to Goodman Group. The trust represents a joint control arrangement. Further information on Group’s interests in joint ventures is
disclosed in Note 6.3 (b).
A net gain on sale of $89.6 million was recognised in the current year and included in Other Income (net of environmental remediation
provisions of $10.0 million and transaction costs of $2.1 million). The gain was separately reported as part of the Building Products Australia
operating segment.
Cash proceeds of $204.0 million (net of stamp and transfer duties paid in the current financial year) were received during the period.
A right-of-use asset of $104.4 million was recognised along with a $268.1 million lease liability in respect of this transaction (refer Note 3.3.)
A lease make good provision of $26.1 million was recognised in relation to make good obligation under each lease (refer Note 3.4).
1
All remaining performance obligations related to supply and install contracts are expected to be recognised within one year.
128 p Brickworks Annual Report 2022
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 – North America
Share based payments expense
Other
2022
$000
241,948
14,900
11,291
6,958
13,344
Restated
2021
$000
198,880
12,359
9,444
6,679
8,008
Employee benefits expense from continuing operations
288,441
235,370
Depreciation of property, plant and equipment
Amortisation of right-of-use assets
Amortisation of intangible assets
Depreciation and amortisation from continuing operations
Interest and finance charges paid/payable
Interest on lease liabilities
Unwind of discounting on deferred consideration – Redland Brick acquisition
Total finance costs from continuing operations
42,036
32,923
566
75,525
22,053
9,303
343
31,699
39,005
28,738
46
67,789
17,810
3,669
358
21,837
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.
Brickworks Annual Report 2022 p 129
Notes to the Consolidated Financial Statement
2.3 Share of net profits of associates and joint ventures
Share of net of profits/(losses) of associates
Share of net profits of joint ventures
Notes
6.3 (a)
6.3 (b)
2022
$000
(20,213)
650,621
2021
$000
85,914
254,832
630,408
340,746
Recognition and measurement
Share of net profits of associates and joint ventures is accounted for using the equity method. The consolidated income statement
reflects the Group’s share of the results of associates and joint ventures.
Accounting policies applied with respect to the Group’s investments in associates and joint ventures are further outlined in Note 6.3.
2.4 Earnings per share (EPS)
Profit after tax attributable to shareholders of Brickworks Limited ($’000)
Profit from continuing operations after tax ($’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
2022
854,391
869,736
151,744
152,251
563.0
561.2
573.2
571.2
Restated
2021
239,163
242,784
151,098
151,455
158.3
157.9
160.7
160.3
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.
130 p Brickworks Annual Report 2022
2.5 Dividends and franking credits
Type of dividend (fully franked)
Cents per share
2020 Final
2021 Interim
2021 Final
2022 Interim
2022 Final1
39.0
21.0
40.0
22.0
41.0
Dividends declared in each financial year
cents per share
Total amount
$’000
58,563
31,835
60,639
33,931
62,228
Date paid/payable
25-Nov-20
28-Apr-21
24-Nov-21
3-May-22
23-Nov-22
70
60
50
40
30
20
10
0
36.0
18.0
2018
38.0
39.0
40.0
41.0
19.0
20.0
21.0
22.0
2019
2020
2021
2022
Interim ordinary dividend
Final ordinary dividend
2021 Final ordinary dividend (PY: 2020)
2022 Interim ordinary dividend (PY: 2021)
Group’s share of dividend received by associated company
Franking account balance on a tax paid basis
2022
$000
60,170
33,931
(14,118)
79,983
160,371
2021
$000
58,563
31,835
(15,517)
74,881
181,801
The impact on the franking account of dividends resolved to be paid after 31 July 2022, but not recognised as a liability,
will be a reduction in the franking account of $26.7 million (2021: $26.0 million).
1
The final dividend for the 2022 financial year has not been recognised as a liability in this financial report because it was resolved to be paid after
31 July 2022. The amounts disclosed as recognised in 2022 are the final dividend in respect of the 2021 financial year and the interim dividend in
respect of the 2022 financial year.
Brickworks Annual Report 2022 p 131
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
2022
$000
2021
$000
(b) Inventories
2022
$000
2021
$000
Current
Raw materials and stores
Work in progress
Finished goods
54,402
5,699
267,101
54,180
4,942
226,270
Total
327,202
285,392
Non-current
Raw materials
6,901
5,849
Write-down of inventories recognised as an expense for the 2022
financial year amounted to $11.8 million (2021: $6.7million).
(c) Current payables
Trade payables and
accruals
149,249
124,766
Average terms on trade payables are 30 days from statement.
Trade receivables
Allowance for expected
credit losses
149,973
128,289
(2,548)
(2,134)
Net trade receivables
Other debtors
147,425
5,268
126,155
6,292
Total
152,693
132,447
Movement in allowance
for expected credit
losses
Opening balance
Trade debts provided
Trade debts written-off
Transferred to assets
held for sale
Foreign currency
exchange difference
2,134
1,938
(635)
(913)
24
2,063
1,490
(1,401)
–
(18)
Closing balance
2,548
2,134
Receivables past due
Past due 0–30 days
Past due 30+ days
12,857
10,595
23,452
10,116
9,775
19,891
As at 31 July 2022 the contract assets amounted to $2.2 million (2021: $4.0 million) and contract liabilities to $9.4 million (2021: $5.2 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.
132 p Brickworks Annual Report 2022
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
2022
$000
2021
$000
2022
$000
2021
$000
2022
$000
2021
$000
Cost
Accumulated depreciation
and impairment losses
342,541
389,715
817,474
799,334
1,160,015
1,189,049
(50,878)
(74,473)
(473,124)
(409,051)
(524,002)
(483,524)
Net carrying amount 31 July
291,663
315,242
344,350
390,283
636,013
705,525
Net carrying amount at 1 August
Additions1
Acquisitions through business
combinations
Disposals
Transfer to assets held for sale
Impairment losses
Foreign currency exchange difference
Depreciation expense
315,242
67,536
320,789
12,206
390,283
67,020
325,531
100,194
705,525
134,556
646,320
112,400
6.5
6.6
28,327
(115,809)
–
(758)
6,523
(9,398)
–
(5,947)
–
(399)
(2,334)
(9,073)
7,386
(41,236)
(18,727)
(31,341)
5,233
(34,268)
–
(1,174)
–
(1,555)
(1,062)
(31,651)
35,713
(157,045)
(18,727)
(32,099)
11,756
(43,666)
–
(7,121)
–
(1,954)
(3,396)
(40,724)
Net carrying amount 31 July
291,663
315,242
344,350
390,283
636,013
705,525
As at 31 July 2022 capital works in progress, disclosed as part of plant and equipment, amounted to $135.3 million (2021: $154.7 million).
Impairment losses of $32.1 million include:
◗ $19.0 million of impairment losses recognised based on an assessment of CGU asset carrying amounts in line with value-in-use
methodology (Note 3.2(c))
◗ $11.6 million of impairment losses recognised following a review of carrying amounts of assets impacted by plant relocations (Note 2.1).
◗ $1.5 million of impairment losses recognised following a review of carrying amounts of assets impacted by site closures undertaken as
part of restructure activities (Note 2.1).
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 $0.5 million (2021: $0.9 million) of capitalised borrowing costs in the current year.
Brickworks Annual Report 2022 p 133
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.
Management is required to make significant estimates and judgements in assessing the carrying amount of property, plant and
equipment for impairment. This assessment is performed in consideration of impairment indicators at an individual asset level (eg. site
closures or plant relocations) or with reference to valuations supporting the carrying amounts at the Cash Generating Unit (CGU) level –
refer to Note 3.2 (c).
(b)
Intangible assets
Cost
Accumulated amortisation and impairment losses
Notes
Goodwill
$’000
285,936
(185,684)
Brand
names
$’000
19,632
–
Other
$’000
Total
$’000
22,709
(1,083)
328,277
(186,767)
Net carrying amount 31 July 2022
100,252
19,632
21,626
141,510
Net carrying amount 1 August 2021
Additions
Acquisitions through business combinations
Impairment losses
Foreign currency exchange difference
Amortisation expense
6.5
160,997
–
20,164
(82,000)
1,091
–
17,129
2,031
–
–
472
–
18,174
4,018
–
–
–
(566)
196,300
6,049
20,164
(82,000)
1,563
(566)
Net carrying amount 31 July 2022
100,252
19,632
21,626
141,510
Cost
Accumulated amortisation and impairment losses
264,682
(103,685)
17,129
–
18,691
(517)
300,502
(104,202)
Net carrying amount 31 July 2021
160,997
17,129
18,174
196,300
Net carrying amount 1 August 2020
Additions
Foreign currency exchange difference
Amortisation expense
161,205
–
(208)
–
17,318
–
(189)
–
9,854
8,366
–
(46)
188,377
8,366
(397)
(46)
Net carrying amount 31 July 2021
160,997
17,129
18,174
196,300
Recognition and measurement
Goodwill represents the excess of the cost of acquisition over the fair value of the identifiable assets and liabilities acquired. Goodwill is
not amortised, but tested annually and whenever there is an indicator of impairment.
Brand names obtained through acquiring businesses are measured at fair value at the date of acquisition. The brand names have been
assessed as having an indefinite useful life, as the brands have been part of the building products industry for a long time and the Group
intends to continue trading under these brands.
Other intangible assets are valued at cost on acquisition. If the intangible is considered to have an indefinite useful life, it is carried at cost
less any impairment write-downs. If the intangible has a definite life, it is amortised on a straight-line basis over the expected future life of
that right. Other intangible assets include a newly implemented ERP system which is amortised over an estimated useful life of 20 years
on a straight-line basis.
Intangible assets with definite useful life 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.
Goodwill and intangible assets with indefinite useful lives are tested for impairment annually and whenever there is an indicator of
impairment. For impairment testing purposes, these assets are allocated to the Group’s Cash Generating Units (‘CGUs’). Impairment is
determined by assessing the recoverable amount of the CGU to which the goodwill relates.
134 p Brickworks Annual Report 2022
(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 2022 the following CGUs representing business operations had allocations of goodwill tested for impairment:
◗ Austral Bricks: $152.0 million (2021: $152.0 million);
◗ Bristile Roofing $2.0 million (2021: $nil);
◗ Building Products North America: $28.2 million (2021: $9.0 million).
For the purpose of impairment assessment outlined below brand names with indefinite useful lives with a carrying value of $19.6 million (2021:
$17.1 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 (2021: $9.0 million);
◗ Building Products North America: $10.6 million (2021: $8.1 million).
Each CGU tested for impairment has been valued based on value-in-use methodology, using the assumptions outlined in point (ii) below.
Results of impairment assessment
(ii)
The current year has seen increasing inflation, tightening labour markets, rapidly rising interest rates and pressure on both energy costs and
global supply chains. The result of this has been a general moderation in the market outlook for the Australian economy and building sector
relative to 31 July 2021. These factors, together with the increased leased asset base within Building Products Australia and an increase in
discount rates, have been reflected in the impairment assessment conducted in respect of the Austral Bricks, Austral Masonry and Bristle
Roofing CGUs at 31 July 2022.
An impairment assessment was conducted in line with the value-in-use methodology at 31 July 2022. Based on the assessment, the Group
recognised an impairment loss of $132.2 million (2021: nil). The loss was allocated as follows:
◗ Austral Bricks: $80.0 million fully allocated to goodwill;
◗ Austral Masonry: $35.0 million – ($23.5 million allocated to Right-of-Use assets and $11.5 million allocated to Property, Plant & Equipment);
◗ Bristile Roofing: $17.2 million – ($2.0 million allocated to goodwill, $7.7 million allocated to Right-of-Use assets and $7.5 allocated to
Property, Plant & Equipment);
The impairment loss was recognised within ‘Impairment of non-current assets’ in the consolidated income statement.
(iii)
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.
The valuations used to support the carrying amounts of the intangible assets are based on forward looking key assumptions that are, by
nature, uncertain. Any changes in the assumptions can lead to significant changes in the recoverable amounts of the CGUs. The Group
has based its impairment testing upon conditions existing as at 31 July 2022 and what the Management and the Directors believe can
reasonably be expected at that date.
Brickworks Annual Report 2022 p 135
Notes to the Consolidated Financial Statement
3.2 Property, plant and equipment and intangible assets (continued)
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. Management further
assesses sales mix and market share of the relevant CGU.
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. Management takes into consideration actual historic price
growth achieved when forecasting price growth in the forecast period.
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
3 final years of the forecast period.
Long-term growth rates used in cash flow valuation reflect 2.5% (2021: 2.5%).
Management uses an independent external advisor to calculate the appropriate discount rate applied
consistently across all CGUs. For 2022, the post-tax discount rate calculated including the impact of AASB 16 –
Leases for the Australian CGUs was 9.23% (2021: 9.17%) and 8.96% (2021: 8.96%) for the North American CGU.
Sensitivity to changes in assumptions
(iv)
In respect of Austral Bricks, Bristile Roofing and Austral Masonry, given an impairment was recognised in the year, the carrying value of the
CGU’s are held at their recoverable amount. Therefore, any negative change in a key assumption will result in an impairment charge being
recognised.
The impairment testing described above and performed at 31 July 2022 did not result in any impairment being recognised for the North
America CGU. However, due to the impact of the COVID-19 pandemic and the uncertainties around economic conditions, headroom is
USD$100.8 million and sensitive to changes in key assumptions. If any of the following changes occur, the headroom would reduce to nil:
◗ If the post-tax discount rate applied to the cash flow projections of this CGU had been 2.26 percentage points higher than the discount
rate determined by an independent external advisor (11.22% instead of 8.96%);
◗ If the forecast compound annual EBIT growth rate over the forecast period is reduced by 8.34 percentage points per annum compared
to the Board approved financial projections.
No reasonable possible change in the terminal value growth rate would lead to an impairment being required.
136 p Brickworks Annual Report 2022
3.3 Right-of-use assets and lease liabilities
Right-of-use assets
Property
Equipment
Note
$’000
$’000
As at 1 August 2021
New and modified leases2
Leases terminated
Depreciation expense
Impairment losses
Payment of principal portion of lease liability
Transferred to liabilities held for sale
Foreign exchange difference
3.2
6.6
120,063
126,359
(672)
(16,347)
(28,850)
–
(4,395)
1,301
68,139
83,764
(174)
(16,005)
(2,139)
–
(283)
183
Vehicles
$’000
2,871
629
(38)
(1,609)
(264)
–
(71)
54
Total
$’000
Liabilities
$’000
191,073
210,752
(884)
(33,961)
(31,253)
–
(4,749)
1,538
(200,895)
(377,679)
1,002
–
–
29,023
6,472
(1,695)
As at 31 July 2022
197,459
133,485
1,572
332,516
(543,772) 1
As at 1 August 2020
New and modified leases
Leases terminated
Depreciation expense
Payment of principal portion of lease liability
Foreign exchange difference
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)
During the year, the Group recognised rent expense of $5.2 million (2021: $4.3 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. Where an obligation exists to dismantle, remove, or restore a leased asset or the
site it is located on and a provision has been raised, the right of-use asset also includes these restoration costs. 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.
1
2
$39.6 million (2021: $27.3 million) included in current liabilities and $504.2 million (2021: $173.6 million) in non-current liabilities.
The difference between additions to right-of-use assets and lease liabilities relates to sale and leaseback accounting in the current year. Additions
include $104.4 million of right-of-use assets and $268.1 million of lease liabilities recognised in relation to the sale and leaseback transaction
completed during the current financial year. Refer note 2.2(a).
Brickworks Annual Report 2022 p 137
Notes to the Consolidated Financial Statement
3.3 Right-of-use assets and lease liabilities (continued)
Sale and leaseback transactions
When the Group sells and leases back the same asset, the accounting treatment depends on whether the control of the asset has been
transferred to the buyer:
◗ If yes, the Group measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of
the asset that relates to the rights retained by us as a seller lessee. Accordingly, the Group recognises only the amount of any gain or
loss that related to the rights transferred to the buyer-lessor.
◗ If not, as a seller-lessee the Group continues to recognise the transferred asset and recognises a financial liability equal to the
transfer proceeds.
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.
3.4 Provisions
Employee
benefits
Remediation
and make
good1
Workers
compensation
Notes
$’000
$’000
$’000
Opening balance 1 August 2021
Recognised / (reversed)
Business combinations
Transferred to liabilities held for sale
Foreign currency exchange difference
Settled
6.5
54,607
73,378
607
(1,233)
376
(68,938)
9,322
36,458
214
(1,903)
180
(1,350)
4,046
4,728
–
(433)
–
(4,053)
Site
Closures
$’000
7,289
11,060
23
–
323
(4,405)
Other
$’000
Total
$’000
3,294
1,100
457
–
32
(2,728)
78,558
126,724
1,301
(3,569)
911
(81,474)
Closing balance 31 July 2022
58,797
42,921
4,288
14,290
2,155
122,451
Current
Non-current
Total
Opening balance 1 August 2020
Recognised / (reversed)
Foreign currency exchange difference
Settled
Closing balance 31 July 2021
Current
Non-current
Total
55,078
3,719
11,142
31,779
4,288
14,290
–
–
2,155
–
86,953
35,498
58,797
42,921
4,288
14,290
2,155
122,451
51,255
64,361
(172)
(60,837)
54,607
51,097
3,510
54,607
11,013
(838)
(99)
(754)
9,322
1,424
7,898
9,322
3,230
2,994
–
(2,178)
8,028
3,393
(116)
(4,016)
6,996
2,758
(31)
(6,429)
80,522
72,668
(418)
(74,214)
4,046
7,289
3,294
78,558
4,046
–
4,046
7,289
–
7,289
3,294
–
67,150
11,408
3,294
78,558
1
Includes $26.1 million of make good provision and $10.0 million of environmental remediation provision recognised in relation to the sale and
leaseback transaction completed during the current financial year. Refer note 2.2(a).
138 p Brickworks Annual Report 2022
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 and make good leases is recognised for the estimated costs of restoring operational and quarry sites to their
original state in accordance with relevant approvals. Where an obligation exists to dismantle, remove, or restore a leased asset or the
site it is located on and a provision has been raised. 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 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.
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 2022 of $18.2 million (2021: $17.6 million). 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 $16.8 million (2021: $18.8 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 2023, amount to $1.4 million (2021: $1.2 million).
Brickworks Annual Report 2022 p 139
Notes to the Consolidated Financial Statement
3.5 Post-employment liabilities (continued)
Opening balance 1 August 2021
Recognised/(reversed)
Settled
Foreign currency exchange difference
Closing balance 31 July 2022
Current
Non-current
Total
Opening balance 1 August 2020
Recognised
Settled
Foreign currency exchange difference
Closing balance 31 July 2021
Current
Non-current
Total
Post-employment
liabilities
$’000
18,768
(2,405)
(497)
944
16,810
826
15,984
16,810
19,302
687
(759)
(462)
18,768
1,199
17,569
18,768
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.
140 p Brickworks Annual Report 2022
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 the 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:
Gain on deemed disposal of associate
Goodwill and impairment losses
Share of net profits of associates
Franked dividend income
Utilisation of carried forward capital losses
Disposal of land
(Under)/overprovided in prior years
R&D tax incentive
Business acquisition costs
Tax rate difference in overseas entities
Other non-allowable items
Income tax expense attributable to profit
Notes
6.6
2022
$000
1,276,747
(21,997)
Restated
2021
$000
328,894
(4,960)
1,254,750
323,934
376,425
97,180
53,955
24,600
(18,676)
(18,391)
(11,246)
(7,854)
2,344
(1,076)
690
(502)
90
400,359
25,616
383,645
2,344
(11,246)
–
–
9,303
(17,260)
(606)
–
(3,104)
(1,708)
–
815
151
84,771
(1,030)
89,511
(3,104)
(606)
Current tax benefit/(expense)
Deferred tax expense relating to movements in deferred tax balances
Overprovided in prior years
Utilisation of carried forward capital losses
4.2
Total income tax expense on profit
400,359
84,771
Brickworks Annual Report 2022 p 141
Notes to the Consolidated Financial Statement
4.1
Income tax expense (continued)
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 share of associates other movements in retained earnings
Notes
6.6
2022
$000
Restated
2021
$000
407,011
(6,652)
86,110
(1,339)
400,359
84,771
1,636
705
2,341
(129)
(41,995)
(143)
(42,138)
(9,937)
Total income tax expense/(benefit) recognised directly in equity
2,212
(52,075)
4.2
Income tax assets and liabilities
(a) Current income tax liability/(asset)
Current income tax liability
Current income tax asset
2022
$000
6,315
(2,348)
2021
$000
417
(8,618)
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).
142 p Brickworks Annual Report 2022
(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
2022
$000
2021
$000
2022
$000
2021
$000
882,235
8,767
(37,150)
(12,551)
1,922
(2,288)
468,288
18,238
(29,731)
(12,010)
1,343
(4,656)
413,778
(22,464)
(6,253)
(2,252)
579
257
87,232
(5,345)
3,259
(1,731)
250
5,846
Net deferred income tax liability
840,935
441,472
383,645
89,511
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 2022 p 143
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
2022
$000
2021
$000
5.2
3.1(a)
5.3
5.4(c), 5.8(a)
106,083
152,693
5,876
1,059
139,825
132,447
1,314
101
3.1(c)
5.4(a)
3.3
5.5
5.4(c)
265,711
273,687
149,249
599,182
543,772
12,382
41
124,766
658,341
200,895
13,778
6,866
1,304,626
1,004,646
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.
144 p Brickworks Annual Report 2022
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 5.6),
reserves (note 5.7) 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 5.6), reserves (note 5.7) 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 (2021: 40%).
Net debt
Total equity
Capital employed
Net debt to capital employed
5.2 Cash and cash equivalents
Cash on hand
2022
$000
2021
$000
493,099
3,259,995
518,516
2,479,748
3,753,094
2,998,264
13.1%
17.3%
2022
$000
2021
$000
106,083
139,825
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
2022
$000
5,876
5,876
2021
$000
1,314
1,314
Brickworks Annual Report 2022 p 145
Notes to the Consolidated Financial Statement
5.4
Borrowings
(a) Available loan facilities
Current
Interest-bearing loans
Non-current
Interest-bearing loans
Unamortised borrowing costs
2022
$000
2021
$000
15,250
15,250
40,891
40,891
583,932
(4,525)
617,450
(2,936)
579,407
614,514
In December 2021 the Group completed a partial refinancing of its debt, which consisted of the following changes:
◗ Syndicated loan facility (Tranche C): the facility limit was increased to $103.9 million (2021: $80 million) with the maturity date extended
until December 2026 (2021: August 2022);
◗ Syndicated loan facility (Tranche D): a new variable interest rate tranche was established with a limit of USD 55.0 million and the maturity
date in June 2028;
◗ Syndicated ITL facility (Tranche D): a new fixed interest rate tranche was established with a limit of USD 60.0 million and the maturity date
in December 2031; and
◗ Working capital facility: the facility limit was reduced to $75.0 million (2021: $100.0 million) with the maturity date extended until
December 2023 (2021: December 2022).
In prior years 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. In the current year, 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 December 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, B and D 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 2022 approximated their carrying amount (2021: 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.
1
2
The Bank Bill Swap Bid Rate (BBSY) is a benchmark interest rate quoted by Reuters Information Service.
US Libor is benchmark interest as referenced by the London Inter-bank Offered Rate (LIBOR).
146 p Brickworks Annual Report 2022
(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 2022
the Group had AUD 324.0 million and USD 67.0 million of unused bank facilities (2021: AUD 185.0 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 maturity profile of the Group’s loan facilities at 31 July 2022 is outlined below.
Facility
Tranche A
Tranche B
Tranche C
Syndicated multicurrency loan facility
Tranche A1
Tranche B1
Tranche D
Syndicated loan facility
Facility A – ITL
Facility B – ITL
Facility C – ITL
Syndicated ITL facility
Facility D – ITL (USD)
Syndicated ITL facility
Working capital facility
Construction facility agreement
Currency
AUD
AUD
AUD
AUD
USD
USD
USD
USD
AUD
AUD
AUD
AUD
USD
USD
AUD
AUD
Limit
($m)
100
175
104
379
100
100
55
255
25
35
40
100
60
60
75
20
Drawn
($m)
Available
($m)
25
19
26
70
100
33
55
188
25
35
40
100
60
60
60
15
75
156
78
309
–
67
–
67
–
–
–
–
–
–
15
5
Maturity date
August 2023
August 2024
December 2026
August 2023
August 2024
June 2028
February 2028
February 2026
February 2026
December 2031
December 2023
December 2022
Brickworks Annual Report 2022 p 147
Notes to the Consolidated Financial Statement
5.4 Borrowings (continued)
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 2022
Trade and other payables
Borrowings
Lease liabilities
Other financial liabilities
Derivatives
31 July 2021
Trade and other payables
Borrowings
Lease liabilities
Other financial liabilities
Derivatives
1 year or less
$’000
1 to 5 years
$’000
5 to 10 years
$’000
Total
$’000
149,249
36,755
50,465
1,427
41
–
555,068
196,560
7,136
(1,059)
–
99,847
333,497
6,422
–
149,249
691,670
580,522
14,985
(1,018)
237,937
757,705
439,766
1,435,408
124,766
55,932
31,329
1,355
–
–
622,234
76,444
6,097
6,866
–
25,844
83,793
8,129
–
124,766
704,010
191,566
15,581
6,866
213,382
711,641
117,766
1,042,789
(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 2.51%
(2021: 2.76%). 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 2022 the Group entered into one new interest
rate swap arrangement to the value of $25.0 million.
Notional Principal Amount
Average Interest Rate
Fair value
Less than 1 year
1 to 3 years
3 to 5 years
2022
$000
2021
$000
25,000
100,000
–
–
100,000
–
Total asset / (liability)
125,000
100,000
2022
%
2.54
2.48
–
2.51
2021
%
–
2.76
–
2.76
2022
$000
(41)
1,031
–
2021
$000
–
(6,866)
–
990
(6,866)
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.
148 p Brickworks Annual Report 2022
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 2022, 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 $3.7 million higher/lower respectively (2021: $3.4 million higher/lower). There would not have been
any other significant impacts on equity.
5.5. Other financial liabilities
Deferred consideration related to the Redland Brick acquisition in the previous year
Current
Non-current
Total
2022
$’000
1,427
10,955
12,382
2021
$’000
1,355
12,423
13,778
Recognition and measurement
Deferred consideration resulting from business combinations, is valued at fair value at the acquisition date as part of the business
combination. The deferred consideration liability represents present value of future payments.
Brickworks Annual Report 2022 p 149
Notes to the Consolidated Financial Statement
5.6 Contributed equity
Contributed equity
Ordinary shares, fully paid
Treasury shares
2022
2021
Number of shares
Number of shares
2022
$’000
2021
$’000
151,775,663
151,596,520
(445,339)
(576,426)
401,090
(8,827)
397,060
(10,173)
Movement in ordinary issued capital
Opening balance 1 August
151,596,520
149,937,589
Issue of shares through employee share plan
179,143
223,060
Dividend Reinvestment Plan (DRP) underwriting
agreement
Dividend Reinvestment Plan (DRP)
Share issue costs
–
–
1,080,001
355,870
392,263
386,887
397,060
4,043
–
–
(13)
366,455
4,283
20,000
6,466
(144)
Closing balance 31 July
151,775,663
151,596,520
401,090
397,060
Movement in treasury shares
Opening balance 1 August
Bonus shares through employee share plan
Shares purchased under Short-term incentive (STI)
scheme
Shares vested under STI scheme
Shares vested to employees
(576,426)
(110,905)
(32,692)
41,054
233,630
(660,758)
(190,403)
(41,054)
–
315,789
(10,173)
(2,814)
(852)
803
4,209
(10,440)
(3,712)
(803)
–
4,782
Closing balance 31 July
(445,339)
(576,426)
(8,827)
(10,173)
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.
150 p Brickworks Annual Report 2022
5.7
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 2021
88,102
26,920
36,125
(211)
8,611
1,314
37,056
197,917
Other comprehensive
income for the year
Change in ownership
interest in the associate
Issue of shares through
employee share plan
Shares purchased under
Short-term incentive
(STI) scheme
Shares vested under
Short-term incentive
(STI) scheme
Shares vested to
employees
Share based payments
expense
7.1
7.1
–
–
–
–
–
–
–
(2,341)
(6,981)
–
–
–
–
–
–
–
–
–
–
–
–
1,528
–
–
–
–
–
–
–
–
(1,229)
852
(803)
(4,209)
6,958
2,351
5,454
6,992
–
–
–
–
–
–
(15,881)
(22,862)
–
(1,229)
–
–
–
–
852
(803)
(4,209)
6,958
Balance at 31 July 2022
88,102
17,598
36,125
1,317
10,180
3,665
26,629
183,616
Balance at 1 August 2020
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
88,102
(15,284)
36,125
(1,131)
6,482
1,792
177,258
293,344
–
–
–
–
–
–
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
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.
Brickworks Annual Report 2022 p 151
Notes to the Consolidated Financial Statement
5.8 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 2022 the net investment
in the US subsidiaries of the Group of USD 290.8 million (2021: USD 258.9 million) was hedged with USD denominated borrowings of
USD 248.0 million (2021: USD 238.0 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
2022
$000
–
28
28
2021
$000
20
81
101
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 2022 or subsequently.
152 p Brickworks Annual Report 2022
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
43.25%
26.13%
100%
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
50.1%
50%
50%
Jointly controlled entities
Note 6.3(b)
Manufacturing
Property Trust
Industrial
Property Trusts
NZ Brick
Distributors
49.9%
50%
50%
33.33%
Southern Cross
Cement
66.66%
JV Partners
2022
$000
2021
$000
37,825
2,079,663
(24,236)
(1,048,040)
36,698
1,486,457
(40,719)
(906,117)
1,045,212
576,319
392,263
100,837
552,112
386,887
114,934
74,498
1,045,212
576,319
556,061
556,061
69,248
69,248
The parent entity’s contingent liabilities of $25.9 million (2021: $25.2 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 (2021: nil).
Brickworks Annual Report 2022 p 153
Notes to the Consolidated Financial Statement
6.2 Controlled entities
Details of wholly owned entities within the Brickworks Group of companies are as follows.
Entity
2022
2021
Entity
% Group’s interest
% Group’s interest
2022
2021
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 Building Products North America
Pty Ltd1
Brickworks Cement Pty Limited1
Brickworks Construction Materials Pty
Limited1
Brickworks Finance Pty Ltd1
Brickworks Supercentres Pty Ltd1
Brickworks Head Holding Co Pty Ltd1
Building Products Head Tenant 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
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. 4 Pty Ltd1
Brickworks Sub Holding Co No. 5 Pty Ltd1
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 Ltd1
Christies Sands Pty Ltd1
Clifton Brick Holdings Pty Ltd1
Clifton Brick Manufacturers Pty Ltd1
Daniel Robertson Australia Pty Ltd1
Davman Builders 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
Brickworks Eddie Acquisition Corporation
Brickworks Supply LLC
Glen-Gery Corporation
Landmark Stone Products, LLC
Sioux City Brick & Tile Company
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
The entity is part of a deed of cross guarantee (refer note 6.4.).
154 p Brickworks Annual Report 2022
6.3
Investments accounted for using the equity method
Associated companies
Joint ventures
Notes
6.3(a)
6.3(b)
2022
$000
2021
$000
2,051,006
1,771,564
1,416,547
929,361
Total investments accounted for using the equity method
3,822,570
2,345,908
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
2022
%
2021
%
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
Washington H. Soul
Pattinson and Company
Limited
26.13
39.40
(20,213)
85,914
2,051,006
1,416,547
2,422,949
3,079,380
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
On 5 October 2021 Washington H Soul Pattinson (WHSP) completed an acquisition of 100% of the share capital in Milton Corporation Limited
(“Milton”). The Milton shareholders (other than WHSP) were issued new WHSP shares in exchange for their Milton shares.
Following the issue of new WHSP shares, the Group owns 26.13% of issued ordinary shares of WHSP, compared to 39.40% at 31 July 2021. The
Group maintained significant influence over the associate and continued applying the equity method to account for its investment in WHSP.
On completion of the Milton/WHSP transaction, the change in ownership stake resulted in a non-cash gain on deemed disposal for the
Brickworks Group. The gain was recognised during the year ended 31 July 2022 and amounted to $451.6 million after tax ($722.2 million
before tax). This amount was determined with reference to the equity accounted value of the Group’s investment in WHSP as of completion
date and the Group’s share in the fair value of newly issued WHSP shares, net of deferred income tax expense.
In addition to the Group owning 26.13% (2021: 39.40%) of issued ordinary shares of WHSP, at 31 July 2022, WHSP owned 43.25% (2021: 43.30%)
of issued ordinary shares of Brickworks Limited.
Brickworks Annual Report 2022 p 155
Notes to the Consolidated Financial Statement
6.3
Investments accounted for using the equity method (continued)
(a)
Associated company (continued)
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.
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
2022
$000
2021
$000
1,592,873
7,549,125
(402,320)
(879,926)
(10,512)
1,335,986
5,566,309
(547,119)
(1,699,458)
(1,060,148)
7,849,240
3,595,570
2,051,006
1,416,547
2,784,562
1,501,778
(124,509)
(42,212)
(166,721)
61,305
218,073
(227,056)
(8,983)
57,532
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 (2021: $182,000 and $95 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 associates 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.
156 p Brickworks Annual Report 2022
(b)
Joint ventures
Information relating to joint ventures is outlined below.
Group’s interest
Contribution to Group
profit before tax
Carrying value
Principal activity
2022
%
–
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.1
–
2021
%
2022
$’000
2021
$’000
2022
$’000
2021
$’000
–
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
–
–
–
425
–
–
40,691
39,080
207,993
163,778
4,877
5,178
20,354
16,621
14,479
12,076
60,185
48,092
91,321
67,715
321,207
242,133
15,607
17,910
66,486
53,050
101,723
33,729
230,232
134,058
3,062
3,760
14,934
12,581
19,370
24,050
93,352
77,904
19,604
339,845
–
–
27,416
8,112
500,463
154,841
–
–
211,512
–
50,066
–
–
–
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
Brickworks Goodman
Manufacturing Trust
(BGMT)1
Gain recognised on
recognition as investment
property and sale to third
parties
Property development,
management and
leasing
Property trusts
650,579
253,989
1,754,134
911,170
Southern Cross Cement
33.33
33.33
(608)
3
10,446
11,053
Import of cement
Domiciled in New Zealand
NZ Brick Distributors
50.00
50.00
650
840
6,984
7,138
Import and distribution
of building products
Total
650,621
254,832
1,771,564
929,361
Property Trusts and Southern Cross Cement have balance dates of 30 June. The balance date for NZ Brick Distributors is 31 March.
1
The Group entered into a sale and leaseback transaction for certain manufacturing sites in Australia, by creating a new Joint Venture
manufacturing property trust with Goodman Group (“Goodman”) to manage a portfolio of manufacturing plants, tenanted by a wholly owned
subsidiary of the Group’s Australian Building Products business (Refer Note 2.2).
Brickworks Annual Report 2022 p 157
Notes to the Consolidated Financial Statement
6.3
Investments accounted for using the equity method (continued)
(b)
Joint ventures (continued)
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
2022
$000
614,470
36,109
–
2021
$000
172,478
31,445
50,066
Total equity accounted profit from Property Trusts
650,579
253,989
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 prior 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.
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
2022
$000
2021
$000
54,781
4,712,395
(87,360)
(1,133,019)
62,600
2,744,884
(211,459)
(726,430)
3,546,797
1,869,595
1,771,564
929,361
19,792
(65,989)
(1,129,822)
148,224
(3,951)
26
(33,692)
1,300,635
–
30,240
(64,777)
(851,274)
141,188
(3,853)
–
(14,157)
508,817
–
1,300,635
508,817
Distributions received by Brickworks Limited from the joint ventures
36,182
32,177
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.
210,360
382,191
–
–
158 p Brickworks Annual Report 2022
Recognition and measurement
A joint 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. There were no unrealised
eliminated profits as at 31 July 2022 (2021: nil).
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.
The assessment of fair value of each development property that meets the definition of an investment property, takes into account
the expected costs to complete, the stage of completion and associated profit and risk adjustments, capitalisation rates, expected
rental income, letting up periods and incentives. External valuations are typically performed when the development property reaches
practical completion. From time to time, an independent valuation of the development property may be commissioned. In the current
year an external valuation of the Oakdale West sites under development was commissioned on an “as if complete” basis. A profit and risk
adjustment to the external valuation was reflected by the Group to derive an adjusted end value which is then compared to the forecast
costs to complete to determine the fair value increase in the period. The profit and risk adjustment is dependent on the location, size and
status of the development at the valuation date and ranges from 15% to 20%.
Brickworks Annual Report 2022 p 159
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
Other assets
Contract assets
Assets classified as held for sale
Total current assets
Non-current assets
Receivables
Inventories
Other financial assets
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
Income tax payable
Contract liabilities
Liabilities directly associated with assets classified as held for sale
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
160 p Brickworks Annual Report 2022
2022
$000
2021
$000
67,337
99,756
188,311
6,425
1,968
24,224
55,135
108,789
174,890
5,679
3,956
–
388,021
348,449
613,653
6,901
345,503
2,068,436
397,926
300,077
102,669
249,361
5,849
275,721
1,434,738
536,512
160,465
163,723
3,835,165
2,826,369
4,223,186
3,174,818
313,750
15,250
41
32,708
12,851
1,557
16,701
69,886
101,644
40,891
–
21,817
–
4,156
–
53,200
462,744
221,708
579,407
–
473,080
33,069
415,672
614,513
6,866
142,913
7,850
212,139
1,501,228
984,281
1,963,972
1,205,989
2,259,214
1,968,829
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
2022
$000
2021
$000
392,263
168,319
1,698,632
386,887
209,894
1,372,048
2,259,214
1,968,829
591,312
(199,508)
391,804
1,372,048
391,804
(79,983)
14,763
92,996
(14,205)
78,791
1,391,323
78,791
(74,881)
(23,185)
Retained profits at the end of the year
1,698,632
1,372,048
Brickworks Annual Report 2022 p 161
Notes to the Consolidated Financial Statement
6.5 Business combinations
Acquisition of IIlinois Brick Company
On 2 August 2021, the Group acquired certain assets of Southfield Corporation, including Illinois Brick Company (“IBC”). IBC is the largest
independently owned and operated brick distributor in the United States.
From the date of the acquisition, IBC contributed $169,930,000 of revenue and $12,940,000 to profit before tax from continuing operations of
the Group.
The final acquisition purchase price allocation is presented below.
Other acquisitions
Other than the acquisition above, the Group also acquired several building products businesses in the United States and Australia in the
year ended 31 July 2022. The summarised amounts for these other business combinations are shown below and have been determined on a
provisional basis only.
From the date of the acquisition, the other acquisitions contributed $6,409,000 of revenue and $889,000 to profit before tax from continuing
operations of the Group.
The purchase considerations were fully paid in cash and have been allocated as follows:
Business acquired
Consideration
Cash paid ($’000)
Assets acquired
Inventories ($’000)
Receivables ($’000)
Prepayments ($’000)
Property, plant and equipment ($’000)
Right-of-use assets ($'000)
Deferred tax assets ($’000)
Liabilities assumed
Trade and other payables ($’000)
Lease liabilities ($'000)
Provisions ($’000)
Fair value of net assets ($’000)
Goodwill arising on acquisition ($’000)
Direct costs relating to acquisition ($’000)
Illinois Brick
Company
Others
(provisional)
Total
64,188
9,400
73,588
20,238
–
1,024
34,298
1,371
477
(4,146)
(1,371)
(964)
50,927
13,261
5,743
642
1,801
–
1,415
–
20
(1,044)
–
(337)
2,497
6,903
864
20,880
1,801
1,024
35,713
1,371
497
(5,190)
(1,371)
(1,301)
53,424
20,164
6,607
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.
162 p Brickworks Annual Report 2022
6.6 Discontinued operations
During the current year, following a strategic review, the Group decided to exit the concrete precast panels operations and initiated an active
program to locate a buyer for its Austral Precast division.
As a result, as at 31 July 2022 the assets and liabilities associated with the operations of Austral Precast have been classified as held for sale.
The results for the year ended 31 July 2022 and the prior year have been presented as discontinued operations (net of tax).
Financial performance and cashflow information
Results of discontinued operations
Revenue
Expenses
Operating loss
Loss on disposal of subsidiary
Impairment loss recognised on the measurement to fair value less costs to sell
Other significant items
Finance income/(expense)
Loss before tax
Income tax benefit/(expense)
Loss after tax
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
2022
$000
2021
$000
35,664
(38,939)
39,391
(42,518)
(3,275)
(3,127)
–
(18,727)
(587)
592
(21,997)
6,652
(1,334)
–
(242)
(257)
(4,960)
1,339
(15,345)
(3,621)
(7,759)
(343)
(751)
262
(683)
(1,023)
(8,853)
(1,444)
(10.1)
(10.1)
(2.4)
(2.4)
Brickworks Annual Report 2022 p 163
Notes to the Consolidated Financial Statement
6.6 Discontinued operations (continued)
Financial performance and cashflow information (continued)
Assets and liabilities classified as held for sale
Receivables
Inventories
Contract assets
Right-of-use assets
Other assets
Assets classified as held for sale
Payables
Provisions
Contract liabilities
Lease liabilities
Liabilities held for sale
Net assets held for sale
2022
$000
5,745
7,802
5,637
4,749
291
24,224
2,961
3,569
3,699
6,472
16,701
7,523
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.
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a
sale transaction rather than through continuing use and sales is considered highly probable. They are measured at the lower of the their
carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from the employee benefits
and financial assets.
An impairment loss is recognised for any initial or subsequent write down of the asset (or disposal group) to fair value less costs to sell.
A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in the excess of
any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-
current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets classified as held for sale (including those that are part of a disposal group) are not depreciated or amortised while
they are classified as held for sale.
Non-current assets classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a
disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.
Significant accounting judgements, estimates and assumptions
Management is required to make significant estimates and judgements in assessing the fair value of assets held for sale. The fair value
of these assets is determined based on management’s assessment on the values that would be recovered through a sale rather than
through continuing use of assets.
164 p Brickworks Annual Report 2022
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 2022, there were 775 employees participating in the Brickworks Deferred Employee Share Plan and the Brickworks Exempt
Employee Share Plan, holding 1,193,247 shares (0.79% of issued capital). 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
461,269
141,172
(233,630)
(19,759)
813,014
–
233,630
(237,438)
1,274,283
141,172
–
(257,197)
349,052
809,206
1,158,258
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 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.
217,538 rights were allocated in the current year (2021: 222,573). 144,774 rights vested on 31 July 2022 (2021: 64,972). There were no rights
forfeited in the current year (2021: 5,874).
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.
Grant date
Valuation method
Performance period
Grant date share price
Estimated volatility
Risk free rate (2.69-yr rate)
2022
23-Nov-21
Monte-Carlo simulation
3 years
$23.74
27.98%
0.93%
Brickworks Annual Report 2022 p 165
Notes to the Consolidated Financial Statement
7.1
Share based payments (continued)
(b)
Equity-based compensation plans (continued)
2022
$000
2021
$000
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
6,958,114
17,017,602
3,582,055
4,748,973
6,679,267
19,715,590
4,022,617
4,358,927
More information regarding the Brickworks Employee Share Plans is outlined in the Remuneration Report included in the Directors’ Report.
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 5.6).
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 (2021: Nil). 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 (2021: 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 (Climate change and sustainability services)
Fees for other services
Total fees
2022
$
1,361,777
–
–
–
420,601
54,470
2021
$
961,799
–
–
93,188
422,700
–
475,071
515,888
1,836,848
1,477,687
The financial statements of the Group are audited by EY. Details of non-audit services provided by EY are outlined in the Directors’ Report.
166 p Brickworks Annual Report 2022
7.4 Commitments and contingencies
(a) Commitments
Contracted capital expenditure
Within one year
2022
$000
2021
$000
38,048
34,021
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
2022
$000
2021
$000
60,454
57,783
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
There have been no 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.
(b) New accounting standards, interpretations and amendments adopted by the Group
In June 2021, the International Financial Reporting Standards (IFRS) Interpretations Committee (“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 AASB 102 Inventories. In the current period, the Group assessed the impact the agenda decision and concluded no
adjustment to inventory is required.
There were no other new accounting standards, interpretations and amendments significantly impacting the Group in the year ended
31 July 2022.
(c)
New standard not yet applicable
Certain new accounting standards, amendments and interpretations have been issued that are not effective for the financial year ended 31
July 2022. 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
◗ Definition of Accounting Estimates – Amendments to IAS 8
◗ Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
Brickworks Annual Report 2022 p 167
Grand Mulberry
Glen Gery – 55-DD Custom Shape
New York, USA
168 p Brickworks Annual Report 2022
168 p Brickworks Annual Report 2022
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 117 to 167, 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 2022 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 2022.
This declaration is made in accordance with a resolution of the Board of Directors.
Dated:
21 September 2022
R.D. Millner
Director
L.R. Partridge AM
Director
Brickworks Annual Report 2022 p 169
170 p Brickworks Annual Report 2022
Stokes Avenue
Austral Bricks La Paloma Azul
Alexandria, NSW
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 2022, 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 2022 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 2022 p 171
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 independent property valuations
obtained during the year.
As disclosed in Note 6.3(b) to the financial report, the Group
recognised a gain of $650.6 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) to the financial report, the
valuation of investment properties is inherently judgemental.
The valuations are highly sensitive to small changes in key
inputs such as the profit and risk adjustment, 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 impacts the share of profits
recognised from the joint venture property trusts.
Our audit procedures included the following:
◗ 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.
◗ Performed the following procedures on the independent
valuations of selected properties:
◗ Assessed the reasonableness of key valuation assumptions
and inputs adopted, including profit and risk adjustments,
capitalisation rates, net operating income, discount rates,
lease terms, budgeted capital expenditure and other
valuation adjustments;
◗
Involved our real estate valuation specialists to assist
with the assessment of the valuation assumptions and
methodologies;
◗ Recalculated property valuations calculated using the
Capitalisation Approach; and
◗ Assessed the qualifications, competence, and objectivity
of the Group’s external independent property valuation
specialists.
◗ 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.
◗ Assessed the adequacy of the disclosures in the Notes to the
financial report.
172 p Brickworks Annual Report 2022
Accounting for sale and leaseback transaction
Why significant
How our audit addressed the key audit matter
As disclosed in Note 2.2(a) to the financial report, in July
2022 the Group entered into sale and leaseback transactions
involving a portfolio of 15 Building Products Australia
manufacturing locations into a newly established Brickworks
Goodman Manufacturing Trust.
As a result of this transaction, the Group:
◗ derecognized property, plant and equipment of
$124.6 million (as disclosed in Note 3.2)
◗ recognised a right-of-use asset of $104.4 million
(Note 2.2(a))
◗ recognised lease liabilities of $268.1 million (Note 2.2(a))
◗ recognised additional equity accounted investments in
joint ventures of $211.5 million (Note 6.3(b))
The sale and leaseback transaction resulted in a before tax
gain of $89.2 million being recognised as Other Income in
Note 2.2(a) to the financial report.
This was considered a key audit matter due to the significance
of the transaction on the Group operations.
Our audit procedures included the following:
◗ Assessed the accounting for Project Build as a sale and
leaseback transaction in accordance with the Australian
Accounting Standards.
◗ Assessed appropriateness of the property, plant and
equipment derecognized.
◗ Reviewed the sales agreements and recalculated the gain on
disposal recognised.
◗ Recalculated the right of use asset and lease liabilities
recognised, including agreeing the accuracy of lease details
to lease agreements, assessing appropriateness of the
Incremental Borrowing Rate and treatment of lease option
periods.
◗ Reviewed the Brickworks Goodman Manufacturing Trust
agreement and assessed appropriateness of the trust being
treated as a joint venture under Australian Accounting
Standards.
◗ Assessed the appropriateness of environmental provisions
arising from the transaction.
◗ Reviewed the independent tax advice obtained by the
company and assessed appropriateness of the tax treatment of
the transaction.
◗ Assessed the adequacy of the disclosures in the Notes to the
financial report.
Impairment assessment of goodwill and other non-current assets
Why significant
How our audit addressed the key audit matter
At 31 July 2022, the Group’s consolidated balance sheet
includes goodwill and other intangible assets of $141.5 million,
and other non-current assets of $4,816.1 million.
The Directors have assessed goodwill and other intangible and
tangible assets for impairment at 31 July 2022 and recognised
an impairment charge of $132.2 million. As disclosed in Note
3.2(c) to the financial report, the impairment assessment
incorporated significant judgments and estimates, based upon
conditions existing as at 31 July 2022, specifically concerning
factors such as forecast cashflows, discount rates and terminal
growth rates. The estimates and assumptions relate to future
performance, market and economic conditions.
This was considered a key audit matter due to the level
of judgment and estimation exercised in the impairment
assessment.
Our audit procedures included the following:
◗ Assessed the Group’s determination of the CGUs used in the
impairment models, based on our understanding of the Group’s
businesses and cash inflows.
◗ Assessed whether the impairment testing methodology used
by the Group met the requirements of Australian Accounting
Standards.
◗ Assessed the mathematical accuracy of the value in use
cash flow models including the consistency of the cashflow
forecasts with Board approved business forecasts.
◗ Assessed the reasonableness of future cash flow forecasts
used by the Group by considering our knowledge of the
business, historical forecasting accuracy and corroborating
data with external information where possible.
◗ Evaluated the appropriateness of discount and terminal growth
rates applied with involvement from our valuation specialist.
◗ Performed sensitivity analysis on key assumptions including
discount rates and terminal value growth rates.
◗ Assessed the adequacy of the disclosures in the notes to
the financial report including those made with respect to
judgments and estimates.
Brickworks Annual Report 2022 p 173
Independent Auditor's Report
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 2022
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.
174 p Brickworks Annual Report 2022
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.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 91 to 111 of the directors' report for the year ended 31 July 2022.
In our opinion, the Remuneration Report of Brickworks Limited for the year ended 31 July 2022, 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
21 September 2022
Sydney
Brickworks Annual Report 2022 p 175
176 p Brickworks Annual Report 2022
176 p Brickworks Annual Report 2022
Mt Eliza House
GB Masonry GB Smooth in Nickel
Mount Eliza, VIC
Brickworks Annual Report 2022 p 177
Park Sydney Apartments
Austral Precast Permaform Concrete Panels
Sydney, NSW
178 p Brickworks Annual Report 2022
178 p Brickworks Annual Report 2022
Statement of
Shareholders
Ordinary Shares
as at 31 August 2022
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
25,208
69.75%
17,373
6,333
876
571
55
25,208
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
Holdings of less than marketable parcel of
25 shares
10 WILDESMEADOW PTY LTD
1,112
11
T G MILLNER HOLDINGS PTY LIMITED
20 Largest Shareholders
as disclosed on the Share Register as at 31 August 2022
1 WASHINGTON H SOUL PATTINSON &
61,045,140
40.22
Number of
Shares
%
COMPANY LIMITED
2 HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
3
4
J P MORGAN NOMINEES AUSTRALIA
PTY LIMITED
CITICORP NOMINEES PTY LIMITED
5 NATIONAL NOMINEES LIMITED
J S MILLNER HOLDINGS PTY LIMITED
3,018,836
6
7
BNP PARIBAS NOMS PTY LTD
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