ANNUAL REPORT 2023 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 Support
Our Global Workforce
i p Brickworks Annual Report 2023
02
05
09
15
19
22
26
38
44
47
53
57
70
73
Board of Directors
Executive Management
Corporate Governance
Directors’ Report
Chairman of the Remuneration and
Nomination Committee Letter
Remuneration Report
Auditor’s Independence Declaration
Consolidated Financial Statements
Consolidated Income Statement
Consolidated Statement of
Other Comprehensive Income
83
87
91
95
101
104
129
130
131
132
Bondi Pavilion
Bristile Roofing La Escandella Curvado Glazed
Bondi Beach, NSW
$395m
Statutory NPAT
s54%
$508m
Underlying NPAT*
s32%
65¢
Total full year dividend
per share
i3%
11.3%
10-year Total Shareholder
Return (TSR)
Versus All Ordinaries
Accumulation Index
2.8%
* This is an alternative measure of earnings that
excludes significant items, which are separately
disclosed in the consolidated financial statements.
Brickworks Annual Report 2023 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
133
134
135
136
183
185
191
192
Five Year
Summary
Total revenue
Total EBITDA1
Underlying net
profit after tax1
Dividends
$8 41 m
$8 9 8 m
$851 m
$1,0 95 m
$1,181 m
$34 4 m
$28 4 m
$ 4 54 m
$1,0 58 m
$78 4 m
$235 m
$152 m
$28 8 m
$74 6 m
$ 5 0 8 m
57.0¢
59.0¢
61.0¢
63.0¢
6 5.0 ¢
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
All revenue and earnings measures exclude significant items and discontinued operations unless otherwise stated.
1
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 2023
All revenue and earnings measures exclude significant items and discontinued operations unless otherwise stated.
1
2
This is an alternative measure of earnings that excludes significant items, which are separately disclosed in the consolidated financial statements.
Includes $89.076 million profit from sale of land into the BKW Manufacturing Trust (FY2022).
Brickworks Annual Report 2023 p 03
20192020202120222023Growth$000$000$000$000$000%Total revenue 841,285898,420850,9221,095,3531,181,1788%Earnings before interest and tax1Building Products Australia57,690 39,513 47,768152,869252,809(65%)Building Products North America6,180 10,061 8,52524,93212,795(49%)Property 157,806 129,437 252,679643,689505,517(21%)Investments 103,725 50,77196,946180,712158,707(12%)Head office and other expenses (15,026)(16,849)(19,417)(19,803)(20,433)(3%)Total EBIT310,375 212,933 386,501982,399709,395(28%)Total EBITDA 343,945 283,699 454,2901,057,924784,138(26%)Finance costs(23,883)(25,964)(18,735)(20,154)(53,100)(163%)Income tax(51,920)(35,218)(80,090)(216,101)(148,066)31%Underlying net profit after tax1234,572 151,751 287,676746,144508,229(32%)Significant items net of tax (37,086)175,495(44,892)123,592(102,965)NADiscontinued operations net of tax (including significant items) (42,844)(29,168)(3,621)(15,345)(10,570)NANet profit after tax (including significant items and discontinued operations)154,642 298,078239,163854,391394,694(54%)Per share earnings and dividendsBasic earnings per share (cents)103.3 198.8158.3563.0259.4(54%)Underlying earnings per share (cents)1156.7 101.2190.4491.7334.0(32%)Final dividend per share (cents)38.039.040.041.042.02%Total dividends per share (cents)57.059.061.063.065.03%RatiosNet tangible assets per share ($) 13.28 14.0813.7818.3419.969%Statutory return on shareholders’ equity7.1%12.4%9.6%26.2%11.1%(58%)Underlying return on shareholders’ equity110.8%6.3%11.6%22.9%14.3%(38%)Interest cover ratio (underlying)17.9 8.417.835.213.0(63%)Gearing (net debt to equity)11.7%18.9%20.9%15.1%18.3%(21%) HA HA HAUS
Austral Bricks La Paloma Miro
Alphington, VIC
04 p Brickworks Annual Report 2023
/ 04 / Brickworks Limited / Annual Report 2022
42¢
Final dividend
per share
i2%
65¢
Total full year dividend
per share
i3%
259.4¢
Statutory earnings
per share
s54%
334.0¢
Underlying earnings
per share*
s32%
$395m
Statutory NPAT
s54%
$508m
Underlying NPAT*
s32%
* This is an alternative measure of earnings
that excludes significant items, which are
separately disclosed in the consolidated
financial statements.
Chairman's
Letter3
On behalf of your Board of Directors, it gives me great pleasure to present Brickworks’ Annual
Report for the 2023 financial year (FY2023). It has been another successful year for the
Company, with strong earnings achieved across our diversified portfolio of businesses.
Review of FY2023
Brickworks FY2023 result again demonstrates the resilience of
our diversified business model, and the ability to deliver strong
earnings across all parts of the business cycle.
This year, we have witnessed a dramatic shift towards restrictive
monetary policy from central banks across the world, with a
sharp increase in interest rates. Since I wrote in last year’s report,
the cash rate in Australia has increased from 1.35% to 4.10%.
Throughout the year, we have also navigated a range of
other challenges, such as significant inflationary pressures,
widespread labour shortages and raw materials supply issues.
Against this backdrop, we have continued our focus on
disciplined execution of our strategy, to deliver long-term value
for shareholders.
Brickworks reported statutory Net Profit After Tax (NPAT) of
$395 million. Although this was down 54%, last year’s record
result was boosted by a significant one-off profit in relation to
the deemed disposal of Washington H Soul Pattinson (ASX: SOL,
“WHSP”) shares upon its merger with Milton in 2021. Excluding
significant items and discontinued operations, the underlying
NPAT in FY2023 was $508 million, down 32%.
Underlying earnings before interest, tax and depreciation
(EBITDA) from continuing operations was $784 million, down
26%, and after depreciation and amortisation, EBIT was $709
million, down 28%. The decrease was primarily due to lower
revaluation and development profits within the Industrial JV
Trust with Goodman Group (ASX: GMG).
Although revaluations and development profits were lower,
Property still produced a standout result, with the highlight for
the year being the sale of Oakdale East into the Industrial JV
Trust. This sale provides additional capacity within the Trust
for further developments to meet the strong demand from our
customers.
Despite the challenging macro conditions, structural drivers
for well-located logistics facilities remain sound, driven by
the continued growth of online shopping, the need for more
productive and sustainable assets, and limited supply. These
factors have driven a significant increase in rent for prime
industrial facilities in Western Sydney, and this has underpinned
the value of our property assets, despite the impact of
expanding. These industry trends also resulted in lower
capitalisation rate expansion across our portfolio, compared to
most other property asset classes.
Investments had another strong year, despite a lower earnings
contribution, with higher dividend payments and a significant
uplift in market value of WHSP.
3
All revenue and earnings measures throughout this report exclude significant items and discontinued operations unless otherwise stated.
Brickworks Annual Report 2023 p 05
Chairman’s Letter
Within Building Products, sales remained resilient, despite
the impact of lower building activity across Australia and
North America. In both countries, we have been impacted by
significant labour and raw materials cost increases, and this has
placed pressure on margins.
This has re-enforced the importance of improving our
operational efficiency, a fundamental pillar of our strategy.
In relation to this, we have faced short-term disruption, for
long-term gain. In Australia, we have now completed the
construction of our new brick plant at Horsley Park and masonry
plant at Oakdale East. Both of these projects have involved
transitioning to new sites and this has adversely impacted our
operations over the past few years. In North America, we have
now completed our multi-year plant rationalisation program to
improve network utilisation and efficiency.
With these significant milestones achieved, we are now
focussed on executing our business plans and maximising the
return on these investments.
Portfolio Evolution
Brickworks has undergone a significant transformation over
the past five years, underpinned by a considerable investment
program (including acquisitions and capital projects), a range of
market factors and portfolio rationalisation.
brick business is by far our largest and most profitable business
unit. Within these operations, we enjoy full vertical integration,
through quarry ownership and control of our raw materials
supply, and direct sales to our major customers.
Our brick factories are typically located on vast tracts of land on
the outskirts of the major cities. As the urban sprawl expands,
our land become increasingly valuable, and it is this land that
feeds the development pipeline for our property business.
Whilst this process may take decades, we see this “virtuous
circle” between bricks and property as a unique competitive
advantage.
Whilst Building Products remains very much at the heart of our
company and continues to represent the day-to-day focus for
operational activities, the evolution of our portfolio over the past
five years means that we now have significantly more assets
invested in Property and Investments.
Today, more than ever before, we have a diverse portfolio of
strong assets, well positioned to deliver long-term growth.
Our diversity is a strength and provides us with opportunities
to invest capital in the most attractive and highest growth
opportunities. This will continue to result in portfolio evolution
over time.
Dividends and Capital Management
At the end of FY2018 our gross assets, as recognised on the
balance sheet were $2.9 billion. This has since increased by $3.2
billion, and now stands at over $6.1 billion.
The Directors have declared a fully franked final dividend of
42 cents per share, up 2% on the prior year. This brings total
dividends for the year to 65 cents per share, up 2 cents or 3%.
The increase in asset backing has been driven by growth
across all of our key divisions: Property, Building Products and
Investments.
The growth in Property has been the most significant. The net
asset value of our Property Trust assets was $0.5 billion at the
end of FY2018. This value has increased by $1.7 billion to $2.3
billion at the end of FY2023. This has been driven by:
◗ the continued sale of surplus Building Products land into
the Industrial JV Trust, and their subsequent development;
◗ the strong growth in value of prime industrial property, in
response to structural trends; and
We are proud of our long history of increasing dividends.
FY2023 marks the tenth year in succession we have increased
our dividend and we have not reduced the dividend for 47 years.
This is a testament to our strong financial position, prudent
capital management and our diversified business model.
Net debt increased by $159 million during FY2023 to finish
the year at $652 million, with gearing of 18%. With our major
investment program now largely complete, we expect an
increase in cash generation over the coming years.
Board and Governance
◗ the launch of the Brickworks Manufacturing Trust
(which houses many of our Australian Building Products
operational sites).
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 value of Investments has also grown significantly over the
past five years. The equity accounted value of our investment
in WHSP, as held on the balance sheet, is currently $2.1 billion.
Our balance sheet does not fully recognise the market value of
our shareholding, which currently stands at $3.1 billion. This is
an increase of $0.9 billion since 2018, even after the sale of 7.9
million shares in late 2018 for $208 million in gross proceeds.
During the same period, we have invested significantly in our
Building Products business. This investment has focussed
primarily on growing our exposure to bricks, through
international expansion into North America. In Australia, the
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.
At last year’s Annual General Meeting, Robert Webster retired
from the Board, following 21 years of service. I would like to
thank Robert for his invaluable contribution to the Company
during that time.
Following a comprehensive search process, we were pleased
to announce the appointment of Joel Fitzgibbon, as an
independent non-executive Director, effective from January
2023. Joel brings to our Board considerable expertise in
06 p Brickworks Annual Report 2023
Ponds
Bowral Bricks in Gertrudis Brown, Bowral Brown,
Limousin Gold and Hereford Bronze
Moonee Ponds, VIC
public policy, social and environmental issues and is an
ideal appointment for Brickworks in managing its multiple
stakeholders and regulatory expectations.
The Board now comprises seven directors, including four
independent non-executive Directors.
As we announced last year, Michael Millner intends to retire at
the 2023 Annual General Meeting, following 25 years of service.
In Conclusion
We believe Brickworks diversified portfolio of attractive assets
offers shareholders compelling value, stability, and good
prospects for long term growth.
Despite the headwinds across the property sector, our
industrial assets are resilient and in high demand. Within
Building Products, our major investment program is largely
complete, and we now turn to maximising the return from those
investments. Our investment in WHSP continues to deliver
strong returns and asset growth.
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 AO
Chairman
Brickworks Annual Report 2023 p 07
The Grand Mulberry
56-DD, Special Shapes
Brooklyn, New York City
08 p Brickworks Annual Report 2023
08 p Brickworks Annual Report 2023
TRIFR 9.98
Total Recordable Injury
Frequency Rate
s18%
2,027
Total Employees
s4.3%
$784m
Total EBITDA*
s26%
* This is an alternative measure of earnings that
excludes significant items, which are separately
disclosed in the consolidated financial statements.
Managing Director’s
Overview
Despite challenging macro conditions, the financial performance of the Company has been resilient in
FY2023. Our teams have also remained focussed on disciplined execution of our strategy, in order to
deliver sustainable earnings growth and long-term value to shareholders.
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.
The health and safety of our people is our number one priority.
During the year, our safety performance improved, with fewer
injuries being recorded across the organisation. The total
recordable injury rate (injuries per million hours worked) has
decreased to 10.0 in FY2023, down from 12.24 in the prior year.
However, these statistics are overshadowed by a fatal accident
that occurred in July, when an employee of a contractor
operating at our Austral Masonry plant in Cairns lost his life.
The incident occurred during the processing of waste products
under the management of a reputable concrete recycling
company.
As we look back on the year at Brickworks, our thoughts turn to
his family, and this tragic accident reinforces our ultimate goal of
zero harm across all of our operations.
We continue to strive towards this goal, 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 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.
In Australia, carbon emissions have followed a general
downward trend, with a 46% decrease compared to FY2006
(Scope 1 and 2). Our progress in this area is supported by
product redesign, increased use of recycled materials,
utilisation of green fuels such as landfill gas in some of our kilns,
and capital investments into modern, fuel-efficient production
processes. For example, at Horsley Park we have built the most
energy efficient brick plant in the country, and replaced two
kilns that were both more than 40 years old.
We have also made steady progress in North America. Since
our entry into this market in 2018, we have achieved an 18%
energy efficiency improvement, primarily through our plant
rationalisation and upgrade program.
Whilst we have made significant progress already, we are
committed to achieving more. As such we have published a
new carbon reduction target as part of our 2023 Sustainability
Report: to achieve a 15% reduction in Scope 1 and Scope 2
4
The FY22 TRIFR has been restated to reflect the date of injuries being incurred (rather than the treatment date).
Brickworks Annual Report 2023 p 09
10 Years Certified
Carbon Neutral Bricks
Longford Operation
Tasmania
greenhouse gas emissions by 2030, from a 2022 baseline, across
our combined Australian and North American operations.
For hard-to-abate sectors such as brick manufacturing,
effective regulation (such as a whole of life-cycle approach to
emissions intensity), along with investment and innovation, is
critical to ensure the optimal outcomes.
Brickworks is enhancing our commitment to investing in
renewable biomethane and landfill gas opportunities. The
Brickworks Bioenergy Transformation Initiative promises to lead
the market in carbon reduction innovation within the Australian
brick and building products sector. More information about this
initiative is contained in our 2023 Sustainability Report.
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 almost $5 million
since 2002.
Property
It has been another strong year for Property, generating EBIT
of $506 million. Although this is 21% down on last year’s record
earnings, the result is the second highest we have ever achieved.
In December, we completed the sale of Oakdale East Stage 2
into the Industrial JV Trust, for $301 million. This site, adjacent
to our existing Trust properties in Western Sydney, has around
50 hectares of net developable area.
With the Oakdale East Stage 1 site fully built out in FY2022,
the sale of the adjacent and much larger Stage 2 site will
significantly increase the scale of the Estate.
Consistent with our other sales into the Industrial JV Trust, our
Joint Venture partner Goodman will contribute funds equal to
the sale value of the site, for infrastructure and construction
costs. As such, the development of this Estate is expected to
be fully completed over the next five years, without any further
capital requirement from Brickworks.
Within the Property Trusts (including the Industrial JV Trust and
the Brickworks Manufacturing Trust), all assets were revalued
during the year, and this resulted in a revaluation profit of
$112 million (representing Brickworks’ 50% share of the overall
valuation gain). The significant growth in assessed market rent
for the portfolio more than offset an increase in the average
capitalisation rate.
The development focus during FY2023 was at the Oakdale
West Estate where four facilities were completed, including
a major distribution facility for Coles. Completion of these
facilities, and substantial progress on the remaining sites within
the Estate, resulted in significant development profits during
the period.
The completion of new facilities continues to drive strong rental
growth.
The revaluations and developments during the year have
resulted in total gross assets within the Property Trusts
increasing by around $1.1 billion to $5.8 billion. This includes
$4.9 billion of leased properties and $0.9 billion in land under
development. After including debt, Brickworks 50% share of net
asset value held within the Trusts was $2,274 million at the end
of the financial year.
10 p Brickworks Annual Report 2023
Building Products Australia
Building Products North America
Building Products Australia recorded an EBITDA from
continuing operations of $100 million in FY2023. After including
depreciation and amortisation, EBIT was $53 million. Excluding
the impact of land sales in the prior year, EBIT was down 17%.
Despite a significant decrease in new residential construction
projects being commenced, demand was resilient throughout
the year, with a large backlog of work under construction. This
is due to supply chain issues across the sector over the past few
years, with significant labour shortages and trade availability
issues extending project timelines.
Margins were adversely impacted by inflationary pressures
across key cost categories such as raw materials, labour and
electricity. These impacts were most severe in our concrete
products businesses. Fortunately, our brick operations are
protected from raw material input cost increases, through our
direct ownership of clay quarries.
During the second half, we made the difficult decision to cease
the operations of Austral Bricks Western Australia, following
many years of sustained losses. With the last brick being
produced at the Cardup plant in April, the exit will be fully
completed following the sell down of inventory within the next
6–12 months.
Our Western Australian brick operations were acquired as part
of the Bristile takeover in 2003, and the history of plants such as
Cardup dates back to the mid 1960’s. We thank the many long
serving staff that have left the business as part of this closure.
The exit of brick manufacturing in Western Australia follows
the closure of Austral Precast and sale of Auswest Timbers
in recent years. The increased scale of Brickworks, and the
range of investment opportunities available, has brought sharp
focus on our Building Products portfolio. We have rationalised
our operations to focus in areas where we have the greatest
competitive advantage and long-term prospects.
Construction of the new brick plant at Horsley Park is now
substantially complete. This project started just prior to the
onset of the COVID-19 pandemic, and has suffered significant
disruption, delays and cost escalation. The completion of
the project is testament to the perseverance of our team of
employees and contractors, who have remained steadfast
in their dedication, despite these issues. With the final
commissioning process now well underway, we expect this plant
to be operating at design capacity of 130 million bricks per year
by the end of the first half of FY2024.
The completion of the new plant has allowed the closure of Plant
3 at Oakdale East and consolidation to the Horsley Park site.
Plant 3 has been operational since 1975, and over its life has
produced more than 4 billion bricks, enough to build around
450,000 homes.
Building Products North America sales revenue of $447 million
in FY2023 was up 12% on the prior year. Removing the impact of
the weaker Australian dollar, revenue in local currency was up by
a more modest 4%. The increase was primarily driven by price
increases and sales growth through the vertically integrated
retail division.
EBITDA of $40 million and EBIT of $13 million was recorded. This
includes a contribution of $7 million from the sale and leaseback
of a retail outlet.
Excluding the impact of land sales, (in both FY2022 and
FY2023), EBITDA was $33 million, 5% below the prior year.
Like in Australia, margins were impacted by cost pressures.
Our three largest cost items – labour, maintenance and raw
material additives – were up 7%, 13% and 11% respectively on a
per unit basis. If not for our plant rationalisation program and
investments in automation, labour cost increases would have
been significantly higher, with ongoing constraints across the
industry resulting in higher wage rates to attract and retain staff.
Although earnings in North America have not yet reached
our expectations, we continue to make good progress on
key strategic priorities. As I just referred to, one of our most
important initiatives has been an extensive plant rationalisation
program, including the closure of 7 plants, as we have integrated
new bolt-on acquisitions. As part of this process, we have
transferred more than 170 products from these plants to other
manufacturing facilities. While disruptive to the business in the
short-term, the end result of this process is a more efficient
plant network and a more focussed capital investment program.
Following numerous acquisitions, the retail distribution network
now comprises 26 locations. During the year, all stores have
been unified under one brand, “Brickworks Supply”, with
locations, market strategy and product range fully aligned.
Investments
Brickworks holds 94.3 million shares in WHSP, representing a
26.1% ownership interest. This investment provides a cash flow
stream via dividends that provides stability and allows long-
term strategic decision making. Including a special dividend,
total dividends payments of $89 million were received during
the year, up 46% on the prior year.
EBIT from Investments was down 12% to $159 million.
Brickworks Annual Report 2023 p 11
Managing Director’s Overview
Group Outlook and Priorities
The outlook varies across each of our divisions.
Despite increasing interest rates, we are continuing to
experience strong demand for medium and large sized prime
industrial property. Structural trends are driving our customers
to seek well-located industrial facilities and sophisticated supply
chain solutions, with consumers increasingly demanding faster
and more flexible delivery of goods.
In addition, supply of suitable land is scarce, particularly in
Western Sydney. Sydney has the tightest logistics property
market of any major city in the world, with a vacancy rate of just
0.2%. The tightness in the Sydney market is also reflected in a
0% vacancy rate across our portfolio.
Supply challenges across the industry are also being
exacerbated by increasing construction and financing costs,
and a range of planning and approvals issues.
All these factors have driven up rent for prime industrial
property in Western Sydney by 48% in the past year5. We
estimate that the current passing rent within the Industrial JV
Trust of $148/m2 is now 34% below the market rent of $225/m2.
An uplift in rent to market rates will progressively be realised as
existing leases are renewed, with current lease expiries ranging
from less than 1 year to 19 years. The average lease expiry within
the JV Industrial Trust is 7.9 years.
We have a large pipeline of new developments to meet the
strong demand and benefit from the higher market rents. In
the short term, the development focus is on the completion of
Oakdale West within the next 12 months. In addition, work is well
underway at Oakdale East Stage 2, and this parcel of land will
provide a further pipeline of around five years.
With the completion of the two development parcels at Oakdale,
and the mark-to-market rental uplift on currently leased assets,
the total rent potential of existing Property Trust assets is
around $350 million (100% share), almost double the current
passing rent of $178 million.
This rental growth will require no further capital from
Brickworks, with the value of our land contribution at Oakdale
East being matched by development funding by Goodman. In
addition, the low gearing levels within the Industrial JV Trust will
allow debt funding as required.
We believe the long-term prospects of the Property Trust are
very strong, with future market rent to continue to be supported
by the significant increase in construction costs, strong demand
and tight supply. This step-change increase in rent should
eventually be fully reflected in valuations.
As always, short-term Property earnings will depend on the
timing of development activity and land sale transactions, and
the extent of any revaluations.
5
12 months to June 2023. Source: Colliers Research.
12 p Brickworks Annual Report 2023
In FY2024, we expect development profits to be lower than
FY2023 due to the development schedule at Oakdale West and
East, and we expect the portfolio valuation to be underpinned
by the strong rental growth, even if capitalisation rates expand
further.
Within Building Products Australia, order intake is now
softening, and we are anticipating a decline in demand in the
months ahead.
In this context, our focus will primarily be on manufacturing
efficiency, cost discipline and achieving the price rises necessary
to improve margins. As sales soften, we will also be focussed on
matching production with demand across our network of plants,
in order to optimise the level of working capital.
The impact of the slowdown in sales will also be offset by the
portfolio rationalisation activities already completed, such as
the exit of the loss-making Austral Bricks Western Australia
business.
The completion of our new Sydney brick plant will round out a
period of major capital investment over the past five years, that
has also included a new masonry plant in Sydney, upgrades to
our brick plants in Brisbane and Adelaide and the construction of
the Southern Cross Cement terminal in Brisbane. Our teams are
now working hard to maximise the returns from these projects.
In North America, market conditions across the residential
segment are similar to Australia, with lower home construction
activity expected in FY2024. In this market, we have greater
exposure to the more buoyant non-residential segment, and this
should provide some support for overall brick sales.
The severe labour shortages and inflationary pressures felt over
the past three years appear to be easing. Manufacturing costs
will also benefit from a more stabilised plant footprint, following
the completion of the plant rationalisation plan.
Late last year, we executed a supply agreement with Brickability
PLC, for the export sale of bricks into the UK market. We are
looking forward to ramping up our supply into this market in
FY2024. Product will initially be supplied from the Hanley and
Pittsburgh plants in Pennsylvania. By late FY2024 we also
expect to be supplying from the previously mothballed Rocky
Ridge plant in Maryland, following the completion of an upgrade
to this facility.
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.
Looking more broadly, it is clear that we are entering an
increasingly challenging period. Over the past 18 months we
have witnessed the fastest interest rate rises in history across
Australia and North America.
Multi Arts Pavilion Lake Macquarie
Austral Masonry Architec Honed in Alabaster
Speers Point, NSW
These rising interest rates will inevitably have a dampening
effect on demand for building products and will also increase
the risk of further capitalisation rate expansion across our
property portfolio.
Despite these challenges, we are very well placed to continue to
deliver strong performance and returns for our shareholders.
Having modernised our manufacturing fleet and expanded
scale over the past five years through our significant investment
program, our priority has now turned to maximising the returns
delivered by the enlarged asset base and improving cash
generation.
Our People
Finally, I would like to thank our people. We are a diverse
business with 28 manufacturing sites currently operating across
Australia and North America.
Over the past five years we have streamlined our operations in
Australia and North America, resulting in overall staff reductions
of around 26%. Through this process, I am very proud that we
have been able to maintain a stable and highly experienced
leadership team and a committed workforce.
With just over 2,000 employees, we are more productive
than ever, with production output and revenue per employee
continuing to increase year on year.
I believe it is our people that give us a competitive edge, and
it is their energy and dedication that will continue to drive our
success.
In January, we were pleased to appoint JP Blanchard as
President Brickworks North America. He will be focussed on
continuing the momentum and progress the North American
team has made on our strategy and to strengthen operational
performance. He joins, having previously held leadership
positions at a number of global companies.
We also recently announced the appointment of Mark Ellenor
to the role of Chief Operating Officer. Mark has been with
Brickworks for more than 20 years in various roles, most
recently as Executive General Manager Building Products and
President North America. In this new role, his responsibility
will expand to include oversight of all our operations, including
Property, 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 2023 p 13
Huntington
San Selmo Smoked Custom Blend
Newcastle, NSW
$652m
i32%
Net debt
18%
Gearing
(net debt/equity)
i20%
$784m
s26%
Total EBITDA1
$709m
s28%
Total EBIT1
$97m
Cashflow from
operating activities
s26%
14 p Brickworks Annual Report 2023
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, down 54% to $395 million
◗ Underlying NPAT from continuing operations before significant items, down 32% to $508 million
◗ Underlying EBITDA from continuing operations before significant items, down 26% to $784 million
(underlying EBIT down 28% to $709 million).
◗ Property EBITDA down 21% to $506 million.
◗
◗ Building Products Australia EBITDA down 51% to $100 million. Excluding the profit associated with the sale of properties into the
Investments EBITDA down 12% to $159 million.
Brickworks Manufacturing Trust (in the prior year), EBITDA was down 13%
◗ Building Products North America EBITDA down 18% to $40 million
◗ Operating cashflow down 26% to $97 million
◗ Net tangible assets per share up 9% to $19.96
◗ Share of net assets held within Property Trusts up $520 million, to $2.274 billion
◗ Share of WHSP market value up $685 million, to $3.108 billion
◗ Final dividend of 42 cents fully franked, up 1 cent or 2% (Record date 1 November 2023, payment date 22 November 2023)
◗ Total full-year dividend of 65 cents fully franked, up 2 cents or 3%
Earnings
Brickworks (ASX: BKW, the “Company”) posted a statutory Net
Profit After Tax (NPAT) of $395 million for the year ended 31 July
2023, down 54% on the prior year. The prior year was boosted
by a significant one-off profit in relation to the deemed disposal
of WHSP shares upon its merger with Milton.
Underlying NPAT from continuing operations was $508 million,
down 32%.
Property Earnings Before Interest, Tax, Depreciation and
Amortisation from continuing operations (EBITDA) was
$506 million, driven by the sale of Oakdale East Stage 2 into
the Industrial JV Trust6. In addition, earnings were supported by
revaluation profits, development profits and net rental income.
During the period, Brickworks’ share of the net asset value
within its Property Trusts increased by a further $520 million,
and now stands at $2.274 billion. This includes the Company’s
50.1% interest in the Brickworks Manufacturing Trust7.
6
7
The Industrial JV Trust is a 50/50% partnership between Brickworks and Goodman (ASX: GMG).
The Brickworks Manufacturing Trust is a 50.1/49.9% partnership between Brickworks and Goodman and comprises operational properties
tenanted by Building Products Australia.
Brickworks Annual Report 2023 p 15
Financial Overview
Investments EBITDA was $159 million, down 12%, with a reduced
contribution from WHSP’s Strategic and Private Equity portfolio.
The market value of Brickworks’ shareholding in WHSP was
$3.108 billion at 31 July 2023, up by $685 million compared to
31 July 2022.
On revenue of $734 million (up 6%), Building Products Australia
EBITDA was $100 million, down 51% on the prior year. Last year’s
result includes an $89 million profit associated with the sale of
operational properties into the Brickworks Manufacturing Trust.
Excluding this impact, EBITDA from continuing operations was
down 13%. The decrease in earnings was primarily due to a decline
in Bristile Roofing, together with broad-based inflationary cost
pressures that impacted unit margins.
Building Products North America delivered a 12% increase in
revenue, to $447 million, driven by strong price increases and
the continued growth of retail operations. EBITDA was down
18% to $40 million, with margins adversely impacted by ongoing
cost inflation and labour constraints across many operations.
Total borrowing costs were up 163% to $53 million, due to a
higher average interest rate on debt and additional leases,
including leases on properties held within the Brickworks
Manufacturing Trust. Despite the higher borrowing costs,
underlying interest cover remains conservative and finished the
year at 13 times.
Underlying income tax from continuing operations was
$148 million, down from $216 million in the prior year, due to the
lower earnings.
Significant items decreased NPAT by $103 million for the year.
This comprised:
◗ A non-cash impairment of $34 million (net of tax) based on
AASB 136. This primarily relates to the Austral Bricks WA
impairment recognised in January 2023 in consideration
of the loss of market share in the first half and poor market
outlook).
◗ $23 million in costs (net of tax) associated with the exit from
the Western Australian brick market in the second half of
FY2023. This includes non-cash inventory write-downs,
redundancy payments and other liabilities.
◗ Plant relocation and commissioning costs of $18 million
(net of tax), including the new Oakdale East masonry plant
and costs associated with the new Horsley Park brick plant.
◗ Restructuring costs of $14 million (net of tax), primarily
relating to plant closures in North America and associated
redundancy payments. This includes an impairment to non-
current assets at the Marseilles plant (Illinois).
◗ A $1 million benefit 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.
◗ An $8 million cost in relation to significant items from
Investments (SOL and FBR). This includes a loss of $11 million,
upon the derecognition of FBR Limited as an associate.
16 p Brickworks Annual Report 2023
◗ Other costs of $7 million (net of tax), primarily in relation to
acquisition, legal and IT costs.
Significant Items
Impairment of non-current assets
Austral Bricks WA exit costs
Plant relocation and
commissioning costs
Restructuring
Income tax from the carrying
value of SOL
Significant items relating to
Investments (SOL and FBR)
Other costs
Gross
$m
(49)
(32)
(25)
(19)
–
(10)
(8)
Tax
$m
15
10
7
5
1
2
1
Net
$m
(34)
(23)
(18)
(14)
1
(8)
(7)
Total (Continuing Operations)
(144)
41
(103)
Cash Flow
Total cash flow from operating activities was $97 million, down
26% on the prior year, with cash generation adversely impacted
by significant plant commissioning costs and higher borrowing
costs.
Capital expenditure was $114 million during the year, with the
Company nearing the end of a significant investment program.
The majority of major project spend was the construction of a
new brick plant at Horsley Park in New South Wales.
Balance Sheet
During the year total shareholders’ equity was up $301 million to
$3.561 billion.
Net tangible assets (‘NTA’) per share was $19.96 at 31 July 2023,
up from $18.34 at 31 July 2022.
Total interest-bearing debt was $722 million at 31 July 2023.
After including cash on hand, net debt at the end of the year was
$652 million, an increase of $159 million for the 12-month period.
Gearing (net debt to equity) increased to 18% at 31 July 2023,
up from 15% at 31 July 2022, with the higher debt level partially
offset by the increased asset base.
Net working capital was $260 million at 31 July 2023. This
includes finished goods inventory of $264 million, down by
$3 million on the prior year.
Dividends
Directors declared a fully franked final dividend of 42 cents
per share for the year ended 31 July 2023, up 2% from 41 cents.
Together with the interim dividend of 23 cents per share, this
brings the total dividends paid for the year to 65 cents per share
(fully franked), up 2 cents or 3% on the prior year.
Anglican Church Grammar School
Austral Bricks Symmetry Paprika,
Bowral Bricks Hereford Bronze,
Bowral Bricks Renovations Gertrudis
Brown Shapes
East Brisbane, QLD
Discontinued Operations – Austral Precast
Subsequent Events
Austral Precast was reclassified as held for sale in FY2022 and is
not reported in underlying continuing operations.
In FY2023, Austral Precast contributed an EBIT loss of
$11 million. The operational focus throughout the year has been
on the completion of committed projects and selling down
finished goods inventory. Manufacturing operations ceased in
June 2023, and despatch of last remaining panels is now almost
complete.
A sale of the remaining automated plant at Wetherill Park is
continuing to be pursued.
On 1 September 2023 the Company filed proceedings in the
Federal Court of Australia against BGC (Australia) Pty Limited
and Midland Brick Pty Ltd seeking unspecified damages for
various alleged contraventions of sections 46 and 50 of the
Competition and Consumer Act. The claim is now before the
Federal Court and a further update will be provided in due
course.
Brickworks Annual Report 2023 p 17
Ace Hotel
UrbanStone Bruce Rock Coffee,
Balmoral Green, Bruce Rock Juparana
Surry Hills, NSW
18 p Brickworks Annual Report 2023
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 2023 p 19
Group Structure
Bermagui Beach House
GB Masonry Smooth in Porcelain
Bermagui, NSW
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 $5.4 billion. After including debt, Brickworks
50% share of the Industrial JV Trust has an equity value of
$2,058 million.
In July 2022, Brickworks launched the Brickworks
Manufacturing Trust. This comprises a portfolio of 15
manufacturing plants, tenanted by the Group’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 $431
million and no debt. Brickworks 50.1% ownership had an equity
value of $216million as at 31 July 2023.
Along with its interest in the Industrial JV Trust and the
Brickworks Manufacturing Trust, Brickworks retains around
5,000 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.
In total, Building Products Australia comprises 20 manufacturing
sites (currently operating), 33 company-owned design centres
and studios and a vast network of resellers across the country.
20 p Brickworks Annual Report 2023
The portfolio includes:
Investments
◗ Austral Bricks: Australia’s largest clay brick manufacturer
◗ 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 seven currently operating brick manufacturing sites
and one manufactured stone plant. This is complemented by
a network of 26 company-operated distribution outlets, three
design studios (New York, Philadelphia and Baltimore) and a
vast reseller network.
Investments consists primarily of a 26.1% interest in ASX-listed
Washington H. Soul Pattinson (‘WHSP’) (ASX: SOL), which had
a market capitalisation of $11.894 billion as at 31 July 2023. The
market value of Brickworks stake in WHSP was $3.108 billion at
this date.
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.
Investments also includes a 17.6% stake in FBR Limited
(‘FBR’) (ASX: FBR). At the end of the year, the market value of
Brickworks stake in FBR was $13 million.
Brickworks Annual Report 2023 p 21
Property
Property delivered EBIT of $506 million in FY2023, down 21% on the prior year.
Property Earnings
Year Ended July
Net Trust Income
Revaluation of properties
Development Profit
Property Trusts
Land Sales
Property Admin and Other
2022
$m
36
227
387
651
(3)
(4)
2023
$m
Change
%
50
112
78
240
269
(4)
37%
(51%)
(80%)
(63%)
NA
–
Total
644
506
(21%)
Property delivered EBIT of $506 million in FY2023, down 21% on
the prior year.
The highlight of the year was the sale of Oakdale East Stage 2
into the Industrial JV Trust, for $301 million. The 75-hectare site,
located in Western Sydney, has an estimated 50 hectares of
net development area and was previously the site of an Austral
Bricks operated brick plant and quarry. The brick making
operations have been consolidated to the nearby Horsley Park
site, following the completion of a new plant in the second half
of the year.
The sale delivered a profit of $263 million after taking
into account the book value, rehabilitation provisions and
transaction costs.
The Property Trusts, comprising the Industrial JV Trust and the
Brickworks Manufacturing Trust, delivered an EBIT contribution
of $240 million, down 63% on the prior period.
Net trust income was up 37% to $50 million for the year.
This includes a $9 million contribution from the Brickworks
Manufacturing Trust, launched in July 2022. Excluding this
impact, net trust income from the Industrial JV Trust was up 12%
to $40 million for the year. The increased rent reflects annual
rent increases across the leased portfolio, plus the additional
contribution from newly tenanted facilities at Oakdale West.
Independent revaluations were completed for Property Trust
assets in December 2022 and in June 2023. A revaluation
gain of $112 million within the Industrial JV Trust was
partially offset by a revaluation loss of $3 million within the
Brickworks Manufacturing Trust. Within the Industrial JV Trust,
capitalisation rate expansion across the portfolio was more than
offset by significant increase in the assessed average market
rent for the leased assets within the Trust. Independent research
reports indicate a 48% increase in rent for prime industrial
property in Western Sydney over the last 12 months, due to
strong competition for limited available space8 .
8
Colliers Research. Increase for the 12 months to June 2023.
22 p Brickworks Annual Report 2023
Oakdale West Industrial Estate
Western Sydney, NSW
During the year, development activity within the Industrial JV
Trust was focussed on the Oakdale West Estate. Construction
of the 66,000m2 Coles Distribution facility reached practical
completion in January 2023. Other facilities for Australia Post,
Telstra and Woolworths were also completed. Substantial
progress was also made on construction of the remaining sites
at this Estate. In total, a development profit of $78 million was
recorded for the period.
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.
Property Trusts Asset Value
As at 31 July 2023, the total value of leased assets held within
the two Property Trusts was $4.9 billion. The annualised rent
generated from these assets is $178 million and the weighted
average lease expiry is 8.6 years (7.9 years for the Industrial JV
Trust). The average capitalisation rate across the portfolio is
4.1%, and there are currently no vacancies in the portfolio.
9 Weighted average lease expiry (by income)
Asset
Value
$m $m/year
Rent WALE9
years
271
642
920
691
369
176
1,409
10
26
33
23
16
6
48
4,477
160
2.9
3.6
3.0
5.6
9.1
9.3
15.1
7.9
Cap.
Rate
%
Gross
Lettable
Area
‘000m2
4.0
4.1
4.0
4.0
4.3
3.8
3.8
64.2
192.2
245.2
177.3
126.5
37.1
235.5
4.0
1,077.9
431
18
15.1
5.0
NA
Leased Facilities
M7 Hub
Interlink
Oak Central
Oak South
Rochedale
Oak East
Oak West
Industrial
JV Trust
Manufacturing
JV Trust
Total
4,907
178
8.6
4.1
Brickworks Annual Report 2023 p 23
Property
Including $878 million worth of land to be developed, the
total value of assets held within both Property Trusts was
$5.8 billion at the end of the year. Borrowings of $1.2 billion
are held within the Industrial JV Trust, giving a total net asset
value of $4.5 billion. Brickworks’ 50% share of net asset value is
$2.3 billion, up by $520 million during the year.
Gearing within the trusts was 21% at the end of the year, down
from 24% at 31 July 2022. This comprises gearing of 23% within
the Industrial JV Trust (well below the covenant of 60%), and
no debt within the Brickworks Manufacturing Trust. At the end
of the year the Interest Cover Ratio for leased assets within the
Industrial JV Trust was 3.1 (vs a covenant of 1.5), the effective
interest rate was 4.9% and interest rate hedges were in place
over 75% of the loan book.
Year Ended July
2022
$m
2023
$m
Change
%
Leased properties
Land to be developed10
3,763
4,908
867
878
Total Property Trust assets
4,630
5,786
30%
1%
25%
Borrowings
(1,123)
(1,239)
(10%)
Net Property Trust assets
3,507
4,547
30%
Brickworks 50% share
1,754
2,274
30%
Gearing on leased asset11
24%
21%
(13%)
Property Trusts – Development Pipeline
Despite challenging conditions across the broader commercial
property sector, there is continuing strong demand for industrial
land, particularly in Western Sydney, where supply is scarce.
This dynamic reflects the ongoing structural changes across
the economy, as companies modernise their supply chains in
response to consumer preferences, such as online shopping
and rapid delivery.
The Industrial JV Trust is ideally placed to take advantage of
these trends, with a strong development pipeline in place.
At Oakdale West, an additional 140,000m2 of gross lettable
area (“GLA”) remains available. This includes 47,000m2 facilities
already pre-committed to tenants Maersk, EBOS and Luxottica.
Development of these facilities is underway and expected to be
completed by March 2024.
To meet the strong customer demand, speculative units will be
developed across the remaining available space at the estate. Of
these, construction has already commenced on 23,000m2, with
a further 70,000m2 to be commenced in the coming months.
Strong enquiry for this space is being received, with Heads of
Agreement for leasing of 33,000m2 already in place.
10
11
Includes facilities under development.
Borrowings/total assets.
24 p Brickworks Annual Report 2023
The Oakdale West Estate is expected to be fully built out by July
2024, at which time it is expected to generate $80 million in rent
(100% share).
The addition of Oakdale East Stage 2 into the Industrial JV Trust
during the first half of 2023 provides a significant new parcel of
land to accommodate the strong customer demand for well-
located sites, with large land footprints. Work is well underway
on the rehabilitation of the former quarry area, which has a
longer lead time than other sections of the site. It is expected
that the first parcel of land within the estate will be fully serviced
and ready for construction to commence by early calendar
2024. Strong enquiry is already being received from customers
looking to secure facilities at this Estate.
Oakdale West Industrial Estate
Western Sydney, NSW
Over 260,000m2 of GLA will be delivered at Oakdale East Stage
2 over the medium term, and once completed, is expected to
add $59 million in gross rent to the Trust (100% share).
Operational and Development Land
Outside of the Trusts, Brickworks retains a 100% interest in over
5,000 hectares of land across both Australia and North America.
This includes properties that have been identified for potential
sale into the Trusts over the coming years, subject to receiving
the necessary development approvals.
The largest additional parcel of land for potential development
is at Craigieburn in Victoria, directly south of the Wollert factory
site. Industrial development may be possible at this site over
the medium term, subject to approvals. With an expected yield
of around 600,000m2 of GLA, if sold into the Industrial JV Trust,
this site will extend the development pipeline well beyond the
next five years.
In conjunction with Goodman Group, due diligence has been
ongoing into the industrial development of 77 hectares of
land at the Mid-Atlantic site in Pennsylvania. The site, located
close to the I-78 motorway linking New York to Washington
D.C., is currently zoned industrial. Applications to facilitate the
development of a 185,000m2 estate have been lodged with local
authorities, with approvals expected by mid-2024.
Brickworks Annual Report 2023 p 25
AUSTRALIA
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Building Products
Australia
Market conditions
Residential commencements declined significantly during the
2023 financial year, in response to rising interest rates and a
reducing backlog of work from the HomeBuilder program.
Nationally, detached house commencements were down 18%,
with relatively consistent declines across all states. Although the
decline in commencements has been significant, there has been
a healthy pipeline of projects under construction throughout
the year. Over the past two years, building timelines have been
extended due to supply chain delays and labour constraints. As
a result, the usage of bricks and roof tiles on-site is now typically
lagging commencements by six months or more.
Multi-residential commencements were also lower during the
period, with supply constraints delaying many new projects.
Current activity levels in this sector are around the weakest
since 2012.
Looking across the states, residential housing activity has been
weakest in Western Australia, with detached house and multi
residential commencements down 31% and 43% respectively.
The major east coast states have typically seen detached
housing declines in the range 10–20%. One positive for the
year was an increase in multi-residential commencements in
Queensland, up by 10%.
Non-residential building is also weaker across major states,
with New South Wales down 22%, Victoria down 20% and
Queensland down 5%.
26 p Brickworks Annual Report 2023
AUSTRALIA
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Residence
Austral Bricks
La Paloma Miro
Brisbane, QLD
Brickworks Annual Report 2023 p 27
Building Products
Australia
Change in Commencements
(FY2023 v FY2022)12
20
10
0
-10
-20
-30
-40
10 %
-5 %
-14 %
-22 %
-2 9 %
-15 %
-2 9 %
-2 0 %
-21%
-14 %
-22 %
-23 %
NSW
VIC
QLD
SA
Detached
Multi-Residential
Non-Residential
-11%
-2 4 %
-33 %
-18 %
-23 % -19 %
TAS
AUS
-31%
-3 6 %
-4 3 %
WA
Overview of FY2023 Result
Year Ended July
Revenue
EBITDA
EBIT
EBITDA
(ex-Property Sale13)
EBIT
(ex-Property Sale)
EBITDA margin
(ex-Property Sale)
EBIT margin
(ex-Property Sale)
2022
$m
694
205
153
116
64
2023
$m
Change
%
734
100
53
100
53
6%
(51%)
(65%)
(13%)
(17%)
16.7%
13.7%
(18%)
9.2%
7.2%
(22%)
Revenue from continuing operations for the year ended 31 July
2023 was up 6% to $734 million. The higher revenue was
driven by strong price increases being achieved across most
businesses, with higher revenue in Austral Bricks and Concrete
Products being partially offset by a reduction in Bristile Roofing.
EBIT from continuing operations was $53 million, down 17% on
the prior year, excluding the one-off impact of the sale of land
into the Brickworks Manufacturing Trust in the prior year. The
launch of the Trust resulted in an adverse impact of $5 million to
B23 New Arrivals
Austral Bricks Pottery Range
12 Source: BIS Oxford Economics Australian Building Forecasts, June 2023. Figures shown are for the 12 months ended in June.
13 Excludes $89.076 million profit from sale of land into the BKW Manufacturing Trust in FY2022.
28 p Brickworks Annual Report 2023
Building Products
Australia
Revenue by State and location map
Export
$22m
WA
$47m
SA
$33m
Brick Plant
Masonry Plant
Roofing Plant
Cement Terminal (JV)
Design Studio
Total
$734m
QLD
$96m
NSW (incl. ACT)
$303m
VIC
$219m
TAS
$14m
Brickworks Annual Report 2023 p 29
Building Products
Australia
EBIT in FY2023, compared to the prior period. This relates to the
additional right-of-use asset depreciation in respect of the new
property leases.
of supply side challenges over the past 12–24 months. Most
notably, this has included a tight labour market that has limited
the availability of trades across the sector.
EBITDA (ex-property sales) was down 13% to $100 million,
resulting in an EBITDA margin of 14%. The weakness was due to
a decline in Austral Bricks and Bristile Roofing, partially offset by
an improvement in Concrete Products.
Demand remained resilient in FY2023, despite the decline in
housing commencements. This has been underpinned by the
significant backlog work under construction, due to a range
Unit margins decreased as a result of cost pressures across the
supply chain. Raw materials cost increases across Concrete
Products and Bristile Roofing were particularly severe.
The implementation of price rises and productivity
improvement initiatives partially offset the impact of cost
increases. Additional price increases were implemented late in
the year to restore margins to prior levels.
Nightingale Leftfield Village
Nubrik Chapel Red (Carbon Neutral)
Brunswick, VIC
30 p Brickworks Annual Report 2023
Building Products
Australia
Highlights
$734m
i6%
Revenue
1,093
s8%
Full Time Employees
TRIFR 6.4
s49%
Safety
Revenue by division
Austral Bricks
$486m
i4%
Concrete Products
$145m
i20%
Bristile Roofing
$102m
s3%
Revenue by State
NSW
QLD
VIC
SA
TAS
WA
Export
42%
13%
30%
4%
2%
6%
3%
Revenue by End Market
Detached
Multi-Residential
Non-Residential
68%
19%
13%
Brickworks Annual Report 2023 p 31
Brickworks Annual Report 2023 p 31
Building Products
Australia
AUSTRALIA
Austral Bricks
On a 3% reduction in sales volume, Austral Bricks revenue increased
by 4% to $486 million, with strong price increases achieved across
most states.
Price increases were unable to fully offset significant cost pressures. Across Austral
Bricks, unit electricity costs were up 28% year on year, labour was up 13% and
maintenance was up 12%.
As a result, margins were lower, and EBIT declined by 3% on the prior year. Looking
across the states, earnings were relatively steady in New South Wales and Victoria.
In Queensland, where sales activity was softer, earnings were down on the prior year.
Meanwhile, performance in South Australia was impacted by an unplanned shut down
at the Golden Grove plant in the first half, to undertake critical kiln repairs.
Revenue
$486m
i4%
The construction of the new $205 million brick plant at Horsley Park in Sydney was
substantially completed in the second half, with commissioning now well underway.
The completion of the project resulted in the permanent closure of the Plant 3 site at
Oakdale East, and the consolidation of operations in Western Sydney to the Horsley
Park site. Commissioning of the new plant is expected to be completed during the first
half of FY2024.
NORTH AMERICA
$39 6 m
$ 417 m
$ 428 m
$ 4 6 6 m
$ 4 8 6 m
In the first half of FY2023, sales in Western Australia declined further, primarily as
a result of the loss of key customer accounts in response to an attempt to increase
prices. This followed many years of sustained operating losses in this state.
Following a detailed review of the outlook and strategic options, in the second half
of FY2023 it was decided in that further investment in Western Australia could not
be justified. As such, manufacturing operations have ceased, and a controlled exit
of Austal Bricks Western Australia operations is underway. Following the closure of
Bellevue plant in November, the Cardup plant was subsequently closed in April. Sales
teams are now focussed on realising the maximum value from the controlled sell-down
of finished goods inventory, and this process is expected to continue for another 6–12
months.
EXCLUSIVE DISTRIBUTION
In total, significant item costs of $55 million (post-tax) were incurred in relation to
Austral Bricks Western Australia in FY2023. This includes an impairment of $32 million
recognised in the first half, and a further $23 million in exit costs, predominantly non-
cash write-downs of inventory and raw materials, incurred in the second half.
Advanced Cladding Systems, a new business unit within Austral Bricks, was launched
during the year. This business will focus on commercialising thin brick cladding
systems, a product category that is experiencing growing demand, particularly in high
rise commercial and multi-residential segments. The response from customers has
been positive, with initial sales being delivered in the second half, and a high level of
enquiries.
9
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32 p Brickworks Annual Report 2023
Clifton and Central Developments
Austral Bricks
Mt Lawley, WA
Brickworks Annual Report 2023 p 33
AUSTRALIA
Building Products
Australia
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
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.
Concrete Products earnings increased compared to the prior year, on a 20% uplift in
sales revenue to $145 million.
Within Austral Masonry, earnings were relatively steady, with a strong increase in
sales offset by lower margins. The decline in margins was primarily attributable to a
sharp increase in unit manufacturing costs, including raw materials prices up 19% and
packaging costs up 18%.
Whilst price rises were not able to fully offset the impact of cost pressures during
FY2023, additional price increases implemented in July are expected to restore
margins to previous levels.
NORTH AMERICA
Commissioning of the Oakdale East plant in Sydney was completed during the first
half. This new facility incorporates the latest block-making technology, and includes an
associated value-added facility, to create products such as polished pavers and split
face retaining walls. In order to take full advantage of the new plant capabilities, product
development efforts have been ramped up, with a number of exciting new products
expected to be launched in the coming years.
Austral Masonry’s strategy to expand beyond traditional commodity block products,
into a range of premium product categories continues to gain traction. This includes
products such as premium coloured block produced at Gympie (Queensland),
premium stone and granite pavers, and concrete sleepers for residential and
EXCLUSIVE DISTRIBUTION
commercial applications.
Southern Cross Cement delivered a significantly improved result, and continues
to provide quality, cost-effective cement to Austral Masonry and Bristile Roofing
operations in Brisbane, as well as to other joint venture shareholders. A new cement
supply contract was secured in December.
34 p Brickworks Annual Report 2023
Revenue
$145m
i20%
$19 6 m
$175 m
$159 m
$121 m
$14 5 m
9
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0
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0
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1
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2
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2
Shellabears
GB Masonry Architec Smooth Vertico in Harvest
Cottesloe, WA
Brickworks Annual Report 2023 p 35
AUSTRALIA
Building Products
Australia
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Bristile Roofing
Bristile Roofing earnings (including Capital Battens) were lower than
the previous corresponding period, on a 4% decrease in revenue
to $102 million. The decline in revenue was primarily attributable to
lower sales volume in Victoria and New South Wales. This was offset
by an increase in sales revenue from Capital Battens.
Margins were adversely impacted by a significant increase in raw materials prices.
In addition, trade shortages remain a significant issue for both tile and metal roof
installations. This resulted in higher labour rates being necessary to secure installation
crews for fixed price installation contracts.
Labour constraints also impacted tile production at Wacol (Queensland) and
Dandenong (Victoria), due to a loss of skilled employees at both sites.
In the first half, severe wet weather in Queensland impacted the availability and quality
of sand supply to the Wacol plant. Sand is a critical input material in the production of
tiles, and the flow-on effect caused manufacturing inefficiencies and product quality
issues.
Capital Battens recorded higher revenue and earnings, despite the impact of a log
supply shortage that necessitated the procurement of alternative, lower quality
feedstock.
36 p Brickworks Annual Report 2023
Revenue
$102m
s4%
$131 m
$113 m
$111 m
$10 6 m
$10 2 m
9
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2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
Bondi Pavilion
Bristile Roofing La Escandella Curvado Glazed
Bondi Beach, NSW
Brickworks Annual Report 2023 p 37
AUSTRALIA
NORTH AMERICA
Building Products
North America
EXCLUSIVE DISTRIBUTION
Market Conditions
Building activity in the United States has been mixed during the year, varying significantly by region
and segment.
Building activity in the United States has been mixed during the
year, varying significantly by region and segment.
Across the country, the total value of building activity
commenced for the 12 months to June 2023 was up 2%
compared to the prior period. A 25% increase in non-residential
was offset by a 26% reduction in single-family and a 7% decline
in multi-residential commencements.
Building activity in the non-residential segment was heavily
impacted following the pandemic, with many major projects
delayed or cancelled by state authorities. Since then, there has
been an uplift in activity, and this has gathered momentum in
the past 12 months.
Change in Commencements
(FY2023 v FY2022)14
5 4 %
57 %
2 8 %
0 %
10 %
60
40
20
0
-20
-40
-9 %
-23 %
-18 %
-23 %
-22 %
-2 %
-2 4 %
Midwest
Northeast
Mid-Atlantic
South
-14 %
-2 6 %
-7 %
-2 6 %
Other
USA
-33 %
Single Family
Multi-Residential
Non-Residential
25 %
14 Source: Dodge Analytics USA Building Starts Forecast – June 2023. Figures shown are for the 12 months ended in June.
38 p Brickworks Annual Report 2023
AUSTRALIA
NORTH AMERICA
EXCLUSIVE DISTRIBUTION
Location map
Brick Plants
Landmark
Stone Plant
Design Studio
Brickworks
Supply Centre
Brickworks Annual Report 2023 p 39
MENYVAWVPAMIOHINWIMNNDSDNEIAMOKYTNNCSCKSOKARTXLAMSALGAFLVTNHMARICTNJMDDCDEIL Building Products
North America
44 Union Square,
Glen-Gery Molded Bricks Cambridge & Georgian
Manhattan, New York City
By contrast, following two years of strong activity, the single-
family segment has softened significantly across the country,
with consistent declines across all regions. Multi-residential
commencements were also lower. However, there has been a
general trend back towards this segment, due to the relative
affordability (vs single-family homes), particularly in the
Northeast (including states such as New York, New Jersey and
Pennsylvania) and southern regions (such as Texas and Florida).
Building Products North America’s key regional exposure is
in the Midwest, Mid-Atlantic and Northeast. Combined, these
three regions make up around 90% of total sales revenue.
Building activity in these regions was relatively consistent with
the rest of the country, with increased activity in non-residential
building offset by weakness in the single-family segment.
The largest regional exposure is the Midwest, making up 59% of
sales revenue, driven by a strong retail presence in this area.
Increases in institutional spending and affordable housing
initiatives resulted in a 22% increase in sales in Canada during
the year, albeit from a relatively low base.
Overview of FY2023 Result
Year Ended July15
Revenue
EBITDA
EBIT
EBITDA
(ex-Property Sales)
EBIT
(ex-Property Sales)
EBITDA margin
(ex-Property Sales)
EBIT margin
(ex-Property Sales)
2022
A$m
399
48
25
35
12
8.8%
2.9%
2023
A$m
Change
%
447
40
13
33
6
12%
(18%)
(49%)
(5%)
(47%)
7.5%
(15%)
1.4%
(52%)
15 An average exchange rate for each half year period is used to convert from US$ to AU$.
The conversion rates used are: 1H23 US$0.67; 2H23 US$0.67; 1H22 US$0.73; 2H22 US$0.71.
40 p Brickworks Annual Report 2023
Building Products
North America
Highlights
$447m
i12%
Revenue
934
Full Time Employees
p
TRIFR 13.8
i17%
Safety
Revenue by Region
North East
Mid Atlantic
Mid West
South
Other
21%
10%
59%
7%
3%
Revenue by End Market
Single Family
Multi Residential
Non Residential
43%
20%
37%
Brickworks Annual Report 2023 p 41
Building Products
North America
Front + York
Glen-Gery Emporium+ Series in Belgian
Gray Wirecut and Silver City Wirecut.
Manhattan, New York City
On sales of 368 million bricks, Building Products North America
generated $447 million revenue for the twelve months to 31 July
2023, 12% above the prior year. In local currency, revenue was up
4% to US$301 million.
Despite a 5% decrease in brick sales volume (by units), the
uplift in revenue was achieved due to a combination of price
increases, a mix shift towards higher value products and strong
sales growth through the vertically integrated retail division.
Retail sales were supported by the full year contribution from
Washington D.C. brick distributor, Capital Brick, acquired in
February 2022.
Sales volume to the core commercial sector was higher, as
it continues to steadily recover following the impact of the
pandemic.
EBITDA for the year was down 18% to $40 million and EBIT was
down 49% to $13 million.
This result includes a $7 million contribution from the sale and
leaseback of a retail outlet in the second half. Excluding the
impact of land sales in both FY2022 and FY2023, EBITDA was
down 5% to $33 million, and EBIT was $6 million.
Margins were adversely impacted by a range of inflationary
pressures. Operations continue to be impacted by labour
constraints across the industry, resulting in higher wage rates to
attract and retain staff. In North America, labour costs represent
43% of total brick manufacturing costs – much higher than 28%
in Australia. As such, the higher labour rates have a significant
impact on overall manufacturing costs.
Excluding the impact in relation to labour, manufacturing costs
were held relatively steady, with increases in maintenance
and additives offset by savings across a range of other cost
items. Fortunately, favourable long-term natural gas supply
agreements, at fixed prices, provide insulation against the
current volatility in energy markets.
The business made strong progress on key strategic priorities
over the period. Extensive upgrades to the Sergeant Bluff and
Adel plants (both in Iowa) were completed during the year.
These upgrades were focussed on providing additional output
to meet growing market demand and included works to expand
kiln capacity and upgrades to the kiln car fleet and dryers.
At Adel, the second kiln was activated, including the conversion
of the kiln to use natural gas.
In addition, production of handmade and thin bricks was
consolidated to the Mid-Atlantic and Pittsburgh plants,
respectively (both in Pennsylvania). This will provide more
efficient and sustainable production methods to support
improved quality and higher production output to meet the
growing demand for these products.
The plant rationalisation program continued during the year,
with the closure of Caledonia (Ohio) in the first half and then
Marseilles (Illinois) in the second half. Following these closures,
the plant rationalisation program is now largely complete and
42 p Brickworks Annual Report 2023
The Light House
Silverbrook, Sandcastle
Baltimore, Maryland
has resulted in a reduction in operating brick plants to 7 (from
16), an increase in plant utilisation to 72% (from 46%) and a more
modern and fuel-efficient fleet, with the average age of kilns
reduced to about 20 years (from more than 40 years). It has also
supported a total headcount reduction of around 27% across
Brickworks North America16.
The rationalisation program has caused some short-term
disruption and inefficiencies, with many popular products from
closed plants being retained and transferred to new plants. To
ensure consistency, this process has necessitated a stringent
product development and approval process.
Longer term, the rationalisation program, together with plant
upgrades, will result in improved efficiency across the plant
network and lower unit manufacturing costs.
Following numerous acquisitions, the retail distribution network
now comprises 26 locations. All stores have been unified under
one brand, “Brickworks Supply”, with locations, market strategy
and product range fully aligned. During the year, a key outlet
in the Washington D.C. area was re-located to an upgraded
site, with increased under-cover storage and an expanded
showroom, to capitalise on the strong growth in this region.
During the year, the North American business implemented an
ERP software upgrade, migrating to a version that is consistent
with Australian operations. This version has improved software
support and is more aligned with business processes.
UK Supply and Rocky Ridge Upgrade
In October 2022, Brickworks executed a supply agreement with
Brickability PLC, a market leading building products company in
the UK, for the export sale of bricks into the UK market. The ten-
year supply agreement includes a minimum purchase quantity
of 10 million bricks per year.
The UK supply agreement marks a significant growth
opportunity for Brickworks North America. Bricks command
85% share in external walling in UK housing and the total market
demand is estimated at around 3 billion bricks per year. Of this,
around 10-20% of UK supply is sourced from imports due to
a shortfall in domestic production capacity and demand for
premium, differentiated product lines.
Initially, product will be supplied from the Hanley and Pittsburgh
plants in Pennsylvania. In addition, the Rocky Ridge plant in
Maryland is currently being re-commissioned and will produce
a range of bricks specifically tailored for the UK market. In
addition, the plant will produce US modular brick, which will
support an increase in demand for this product on the east
coast, as well as a premium long format brick, which is also
growing in popularity.
16 Measured by the current headcount vs total headcount of all acquired operations.
Brickworks Annual Report 2023 p 43
Investments
Investments consists of Brickworks shareholdings
in WHSP (ASX: SOL) and FBR (ASX: FBR), in addition
to interest income on cash holdings. The EBIT from
Investments was down 12% to $159 million for the year
ended 31 July 2023.
Washington H. Soul Pattinson Limited
(WHSP) ASX Code: SOL
Brickworks holds 94.3 million shares in WHSP (representing a
26.1% ownership stake), with the initial investment dating back
to 1968. This shareholding 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 five
decades.
The market value of Brickworks shareholding in WHSP was
$3.108 billion at 31 July 2023, up $685 million for the year.
WHSP has delivered strong returns to Brickworks, with 25-year
total shareholder return of 13.6% per annum (to 31 Jul 2023),
5.0% per annum ahead of the All-Ordinaries Accumulation
Index. Shareholder returns comfortably exceed the benchmark
over most time periods.
The investment in WHSP returned an underlying contribution
of $160 million for the year ended 31 July 2023, down 11% from
$180 million in the prior year. The decrease was primarily due
to a lower contribution from the Strategic and Private Equity
portfolios.
During the period cash dividends of $89 million were received,
up 46% on the prior year. This includes $14 million in special
dividends.
WHSP holds a diversified portfolio of investments. A break-
down of WHSP assets as at 31 July 2023 is shown in the chart
below.
44 p Brickworks Annual Report 2023
WHSP Investment Assets
Strategic
Large caps
Private equity
Emerging companies
Structured Yield
Property
Net Working Capital
48%
21%
11%
6%
6%
1%
7%
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.
$159m
EBIT from
Total Investments
s12%
FBR Limited (‘FBR’) ASX Code: FBR
Brickworks made an initial seed investment in FBR Limited in
2006. During the first half of FY2023, Brickworks significantly
increased its stake, and now holds 655.4 million shares. At the
end of the year this represented a 17.6% shareholding.
FBR has commenced the commercialisation process for 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, there is a strong market opportunity for
this technology. As the largest brick maker in the country,
Brickworks has much to benefit from the success of FBR.
52 Reservoir Street
Austral Bricks San Selmo Custom Colour
Surry Hills, NSW
During the period between November 2022 and March 2023,
Brickworks held a 19.6% stake in FBR. Based on AASB 128,
Brickworks held significant influence in this entity during this
period. As a result, the investment in FBR was classified as
an associate, with the Group’s share of FBR earnings being
consolidated, using the equity method of accounting. During
this period, an EBIT loss of $2 million was recorded, recognised
within Investments.
In March 2023, FBR completed an equity raise which led to
dilution of Brickworks shareholding. Consequently, the Group no
longer held significant influence and the investment in FBR was
derecognised as an associate. Upon derecognition, a post-tax
loss of $10 million was incurred, as a significant item. This loss
reflects the recent decline in the share price of FBR.
At the end of the period, the market value of Brickworks stake in
FBR was $13 million.
Brickworks Annual Report 2023 p 45
TRIFR 9.98
Total Recordable Injury
Frequency Rate
s18%
46 p Brickworks Annual Report 2023
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 mitigating health and safety risks
for its employees, contractors, and the wider public. Central to
this commitment is Capable Safety Leadership, a cornerstone
in nurturing a robust safety culture and establishing a
comprehensive framework for identifying and managing health
and safety risks.
An important part of this framework is Brickworks computerised
health and safety database, with advanced data analytics,
expanded record compilation and automated workflow
processes to assist managers to reduce workplace risks.
The Company's pursuit of improved safety standards is
supported by the Brickworks Health and Safety Management
System. This system not only outlines explicit roles,
responsibilities, and accountabilities but also sets ambitious
targets to realise its health and safety policy commitment.
With a mature management system aligned with ISO 45001
standards, Brickworks is commitment to maintaining a
safe environment and safeguarding the well-being of all
stakeholders.
Brickworks demonstrates commitment to contractor safety
through clear objectives, stringent pre-screening and induction
procedures, meticulous permit-to-work focus, and integrated
safety protocols. Regular evaluations and risk management
strategies endeavour to establish a secure contractor work
environment. The Company's strict adherence to safety
guidelines within contractual agreements further emphasises its
commitment to safety.
Key initiatives in FY2023 were the expanding presence of
safety program focused on the measurement and reporting of
safety lead indicator activities, nurturing safety competence,
and fostering a culture of safety behaviours. In line with this
effort, Brickworks carry out random fit-for-work assessments
to identify any workers under the influence of alcohol, drugs, or
other substances in the workplace. Additionally, the Company
has instituted a psychosocial health program, reinforced by a
team of over 150 qualified Mental Health First Aiders, which
contributes to augmenting employee well-being.
Ongoing health and safety training for employees is ensured
through a training framework, supported by an online training
platform, and external courses, equipping employees with
the knowledge and skills to mitigate risks. Yearly employee
appraisals emphasise development, reflecting the Company's
dedication to health and safety and the professional growth
of their employees which is important as Brickworks strives to
nurture a generative safety culture.
Brickworks also enforces comprehensive emergency
preparedness procedures, addressing diverse scenarios from
natural disasters to man-made crises, safeguarding personnel,
facilities, and communities. Frequent drills and training
empower the workforce to adeptly respond to emergencies,
demonstrating dedication to operational security and
community welfare. Additionally, regular external safety system
audits are conducted to ensure the effective implementation of
these safety measures throughout the organisation.
Brickworks Annual Report 2023 p 47
Health and Safety
Brickworks Staff
Regrettably a fatal accident occurred in July when an employee
of a contractor operating at our Austral Masonry Cairns site
lost his life. The incident occurred during the processing of
waste products managed by a reputable concrete recycling
Company. Notably, this fatality is excluded from our statistics as
Brickworks had no direct operational control or management
over this incident.
Our 2025 strategy target is for continued reductions in injury
rates for company employees, contractors, and others.
SAFETY
Continue reductions in injury rates.
9
1
Y
F
21.1
2
2
Y
F
3
2
Y
F
5
2
Y
F
12.2
9.98
Brickworks
Brickworks Australia
Total Recordable Injury Frequency Rate
(TRIFR)1
Total Recordable Injury Frequency Rate
(TRIFR)
21.07
16.33
14.25
12.17
9.9 8
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
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
1
FY2022 restated to include injuries that occurred in FY2022 but were reclassified during FY2023. Previously stated figures for FY2022 –
Consolidated 5 LTI, 46 MTI, LTIFR (1.8), TRIFR (11.7).
48 p Brickworks Annual Report 2023
Performance (Group)
Since the acquisition of the North American operation in
December 2018, Brickworks has continuously improved its
consolidated total recordable injury frequency rate. Notably,
in FY2023, this rate decreased from 12.17 to 9.98, showcasing
further progress.
This achievement can be largely attributed to the successful
integration of Australian health and safety technologies
and initiatives into the North American operations. What’s
particularly encouraging is the enthusiastic adoption of these
new safety management systems by the US team.
It's worth noting that the reported frequency rate data currently
does not encompass contractor injuries. Nevertheless, robust
endeavours are in progress to formulate these rates, with an
emphasis on upholding data precision and quality. In FY2023,
the Company documented a total of 7 recordable contractor
injuries, which marked a decrease from the prior year's figures.
Notably, there were 15 such injuries reported FY2022. In terms of
the severity of contractor injuries, one recordable injury resulted
in a temporarily life-altering outcome, alongside six class three
injuries, which were non-life-altering injuries.
Performance (Australia)
The Total Recordable Injury Frequency Rate (TRIFR) stood at
6.41, marking a decrease from the TRIFR of 12.48 recorded in the
prior year.
Brickworks remains committed to its safety strategy, focussing
on the presence of safety, lead indicators, targets, training, and
management accountability to foster enhanced health and
safety outcomes. During FY2023, significant milestones were
achieved, including the completion of over 23,636 eLearning
Safety courses by both company employees and contractors.
Additionally, 800 random tests for alcohol, drugs, and other
substances were conducted, while maintaining a roster of over
150 qualified mental health first aiders. The year also saw the
undertaking of 2,491 workplace inspections, all contributing to
the comprehensive safety framework.
Brickworks' rigorous approach to identifying and effectively
managing health and safety risks resulted in the control of
over 1,887 identified hazards during FY2023. Furthermore, the
organisation maintains a robust near-miss reporting culture,
evident by the near-miss frequency rate (NMFR) of 14.66 for
FY2023.
In relation to recordable injuries at Brickworks, the severity is
classified into three categories for workers: Class 1 signifies
injuries resulting in permanent life alteration, Class 2
denotes injuries that are temporarily life altering, and Class 3
encompasses injuries that do not cause life alteration. In the
context of Brickworks employees during FY2023, no Class 1
injuries were reported. Among the total recordable injuries, 23
percent fell under Class 2, while the remaining 77 percent were
classified as Class 3 injuries that did not result in life alteration.
Brickworks Australia
Brickworks Australia
Total Recordable Injury Frequency Rate
Total Recordable Injury Frequency Rate
(TRIFR)2
(TRIFR)
33.6 0
22.2 0
19.2 0
17.10
2 0.4 0
19.57
11.82
9.3 4
12.4 8
6.41
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
/
I
R
T
40
30
20
10
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
3
2
/
2
2
0
2
For contractors, there were no Class 1 injuries. Within the total
recordable injuries, 14 percent were categorised as Class 2, and
the remaining 86 percent were designated as Class 3 injuries
that did not lead to life alteration.
Respirable Dust and Silica
At Brickworks, we have implemented stringent measures to
effectively mitigate the risks associated with respirable dusts
and fibres. Our commitment to worker health extends beyond
governmental regulations, encompassing a comprehensive
program maintained across all Brickworks sites. This program
includes both static and worker exposure monitoring, as well
as engineering controls to minimise risks. This nationwide
monitoring initiative is closely supervised by two highly qualified
in-house occupational hygienists who ensure its effectiveness.
Brickworks places a particular emphasis on managing silica
dust, actively taking measures to reduce emissions and prevent
the transmission of dust from various sources. Additionally,
we prioritise worker health protection through the utilisation
of advanced, specialised respirator fit testing equipment. This
initiative aims to attain the highest level of respiratory protection
for our workforce.
2
FY2022 restated to include injuries that occurred in FY2022 but
were reclassified during FY2023. Previously stated figures for
FY2022 – Aus 1 LTI, 24 MTI, LTIFR (0.4), TRIFR (11.1).
Brickworks Annual Report 2023 p 49
Health and Safety
Brickworks Staff
Key Highlights FY2023 – Australia
Performance (North America)
◗ No employee 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.
◗ A psychosocial health program, supported by a team of
over 150 qualified Mental Health First Aiders.
◗ 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, safety
contacts and workplace inspections.
50 p Brickworks Annual Report 2023
The Total Recordable Injury Frequency Rate (TRIFR) in FY2023
was 13.83, reflecting a 16.9 percent increase from the prior year
frequency rate of 11.84. The substantial turnover observed at
Brickworks North America, leading to frequent recruitment of
new employees, has clearly contributed to this pattern, with
40 percent of recordable incidents involving individuals with
less than one year of onsite experience. In response to this, a
strategy to manage this risk has been implemented.
The introduction of the North America Safety Health
Environment Management System in November 2022 marked
a significant milestone in our safety strategy. This system
utilised lead indicators, specific targets, and management
accountability to shape the safety culture and set clear safety
expectations.
Throughout the year, we achieved notable milestones in our
safety efforts, including:
◗ Completion of 37,052 eLearning safety training sessions
by our dedicated employees.
◗ Execution of 1,806 safety interactions led by our vigilant
supervision and leadership teams.
◗ Conducting 198 workplace inspections across our
9 manufacturing facilities to ensure safety compliance.
◗ Performing peer audits at 8 manufacturing locations
to assess the presence of safety lead indicators and
adherence to SHEMS programs and OSHA regulations.
Brickworks North America
Brickworks North America
Total Recordable Injury Frequency Rate
(TRIFR)3
Total Recordable Injury Frequency Rate
(TRIFR)
26.59
24.27
21.11
11.8 4
13.8 3
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
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
Remarkably, we identified and successfully controlled a total of
3,680 hazards across Brickworks North America locations, with
3,476 hazards effectively mitigated. These accomplishments
underscore our commitment to fostering a safer and more
secure environment for our employees and stakeholders.
The ongoing deployment of the Safety Health and Environment
Management System (SHEMS) has yielded several important
initiatives. These include the introduction of a Management of
Change program, the implementation of Bloodborne Pathogens
safety measures, Heat Stress Prevention and Management
protocols, a Silica Management Program, Non-Conformance
Reporting procedures, and enhanced Contractor Management
and Forklift Safety guidelines. It's important to emphasize that
all related program documents are readily accessible in both
English and Spanish. This commitment ensures that our diverse
workforce can easily access and comprehend these materials,
promoting inclusivity and effective communication in matters of
safety and environmental management.
Furthermore, we are pleased to announce that the Pennsylvania
Department of Labor and Industry has approved the renewal of
our Certification for the Workplace Safety Committee, effective
as of 30 July 2023.
3
FY2022 restated to include injuries that occurred in FY2022 but
were reclassified during FY2023. Previously stated figures for
FY2022 – US 4 LTI, 22 MTI, LTIFR (1.9), TRIFR (12.3).
Contractor Management
Brickworks North America initiated a comprehensive process,
aligned with Australia's contractor management safety program,
to oversee the well-being of our contracting partners. This
process encompassed several crucial steps, including:
◗ Establishing criteria for preferred, qualified contractors.
◗ Creating a comprehensive contractor safety orientation
program.
◗ Implementing a requirement for contractors to provide
a safe work method statement (SWMS) for their planned
tasks.
◗ Establishing dedicated contractor sign-in stations within
all our manufacturing facilities.
These measures were carefully designed to ensure that
contractors are well prepared and informed about safety
protocols and procedures before they are granted a permit
to commence their work. This approach is instrumental in
enhancing safety, promoting good health, and fostering an
environment of overall well-being throughout our operations.
Brickworks Staff
Brickworks Annual Report 2023 p 51
Health and Safety
Forklift Safety
We have implemented a comprehensive Forklift Safety Program
with the primary goal of reducing the risks of physical injuries
and property damage in areas where forklifts are utilised.
This program also prioritises the protection of our employees
from potential hazards that may arise due to the improper or
unauthorised use of forklifts. In our commitment to ensuring
the safe and proficient operation of all forklift equipment, we
proactively organised comprehensive training sessions. These
training programs were skilfully executed by a well-regarded
third-party vendor, and importantly we conducted them not
only within our manufacturing facilities but also at our supply
centre locations. By engaging external experts, we diligently
worked toward certifying our forklift operators to meet the most
stringent safety standards.
Respirable Dust and Silica
We continue to utilise a third-party contractor for silica
sampling. We have implemented multiple measures to
minimise silica exposure, including issuing Powered Air-
Purifying Respirators (PAPRs) to all employees exposed to
silica at or above the permissible exposure limit. Additionally,
we are actively exploring other controls to further reduce silica
exposure.
Key Highlights FY2023 – North America
◗ Zero employee or contractor fatalities reported in FY2023.
◗ No contractor or labour hire MTIs/LTIs (Medical Treatment
Injuries/Lost Time Injuries) for FY2023.
◗ Successful launch of the Safety Health and Environment
Management System.
◗ Computerisation and reporting of health and safety
management system data.
Safe + Sound week
All our North American locations participated in Safe
+ Sound Week the week of 15 August 2022. Safe +
Sound Week is an Occupational Safety and Health
Administration (OSHA) nationwide event held each
August that recognises the successes of workplace
health and safety programs and offers information and
ideas on how to keep America's workers safe.
Employees received rapid cards each day with subject
information on ladder safety, heat stress awareness,
and pedestrian safety and were asked to sign a
Commitment to Safety poster. The week ended with a
celebratory lunch.
52 p Brickworks Annual Report 2023
Brickworks Staff
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.
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.
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
Since releasing our strategy Brickworks completed several
acquisitions in North America. During FY2023, we have
completed a mid-strategy target enhancement to include our
North American business in our sustainability targets. These
target enhancements are discussed below.
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
are integrated into product design to create greater energy and
resource efficiency over the operational lifetime of a building.
Brickworks 2023 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 2023
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
Brickworks Annual Report 2023 p 53
Overview of Sustainability
Target
Since releasing our strategy Brickworks completed several acquisitions in North America. During
FY2023, we have completed a mid-strategy target enhancement to include our North American
business in our sustainability targets.
New Carbon Target
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.
Through this process, we have developed a new carbon target:
to achieve a 15% reduction in Scope 1 and 2 greenhouse gas
emissions by 2030, from a 2022 baseline, across our combined
Australian and North American operations.
CARBON
15% reduction in Scope 1 and 2 greenhouse
gas emissions by 2030, from a 2022 baseline,
across our combined Australian and North
American operations
Enhanced Carbon Transition Target
Brickworks has been delivering progress against our existing
carbon transition target, to invest in the transition to the
hydrogen fuel economy. Brickworks is enhancing this target, to
also include the target for continued investment into developing
feasible renewable biomethane opportunities.
CARBON TRANSITION
Continued investment into developing feasible
renewable biomethane opportunities and invest
in the transition to the hydrogen fuel economy
Clarification of Air Quality
Emission Control target has been updated to clarify that
Brickworks is investing in emission abatement equipment to
improve air quality emission control. Brickworks is investing
over $2 million in air quality emission control by 2025.
AIR QUALITY EMISSION CONTROL
Over $2 million investment in
air quality emission control
Increased Sustainable Product Target
In FY2022, over 6% of product volume in Australia was verified
as sustainable by third party labels, which has now increased
to 20% of volume. Verified sustainable products allow our
customers to qualify for credits in sustainable building design
and construction certification. This has exceeded our target
54 p Brickworks Annual Report 2023
to double our volume of products manufactured in Australia
that hold leading sustainable qualities from a FY2019 baseline
of 1% volume. Brickworks also sees significant opportunities to
increase verified sustainable products in our North American
business. Brickworks’ new sustainable product target is to
increase the volume of verified sustainable products to 25% by
2025 across Australia and North America.
SUSTAINABLE PRODUCTS
Increase the volume of verified
sustainable products to 25%.
New Product Innovation Target
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
warranty.
Brickworks will use our product strengths to develop the next
generation clay brick and concrete block wall systems. By
continuously innovating, we can create a more sustainable
future for generations to come.
Our sustainable product innovation strategy focus is to provide
a wide range of thermal mass product options with high
recycled content and lower embodied carbon across roofing
and walling products.
Brickworks’ commitment to innovation into manufacturing
excellence and raw material optimisation means our products
are produced in some of the world’s leading energy efficient
kilns. In FY2022, Brickworks invested $3 million into research
and development for kiln efficiencies, light weight products and
different fuel types.
Brickworks’ new product innovation target is a year-on-year
increase in investment into research and development into the
next generation of clay brick and concrete block wall systems.
By 2030, Brickworks and our partners will invest over
$22.6 million into research and development into our
sustainable innovation focus areas including: the thermal mass
benefit of products, light-weighting, raw material optimisation
to reduce embodied carbon and increase recycled content,
sustainable design elements and product innovation.
PRODUCT INNOVATION
Year on year increase in R&D investment
into the next generation of clay brick and
concrete block wall systems.
TOWARDS2025
Significant annual progress against our 2025 targets1 including our enhanced targets
Target
Our Progress
Product Innovation
Year on year increase in R&D investment
in the next generation of clay brick and
concrete block wall systems.
$3 million R&D spend since FY2022.
24 R&D projects completed in FY2023.
$1.6 million grant awarded in
collaboration with Queensland
University of Technology.
Life Cycle and Thermal Design
and Education
We will support design tools, guidance
and information to incorporate thermal
design and life cycle thinking into
building design.
42 continuous professional
development sessions completed in
FY2023.
Modelling of 7-star thermal design
continuing with University of Newcastle.
Sustainable Products
Increase the volume of verified
sustainable products
to 25%.
Supply Chain
Continuing to reduce supply
chain risks.
19% of product volume was verified
as sustainable by third party labels.
Modern Slavery Roadmap completed.
Governance
Business Ethics and Whistle-blower
Programs.
Governance programs formalised.
Continued annual training.
Safety
Continue reductions in injury rates.
Total Recordable Injury Frequency
Rates reduced by 53% since FY2019.
Engagement
Existing target of 100 community
engagement activities annually.
109 community engagement activities,
meeting our target of 100 in Australia.
Community Support
Supporting charities like the Children’s
Cancer Institute.
$260,815 contributed to Children’s
Cancer institute in 2022 calendar
year and over $4.8 million contributed
since 2002.
Diversity and Inclusion
Stretch target: 35% female senior
executives. Develop and implement
a Diversity and Inclusion Strategy.
31.4% female senior executives
in Australia, Further training on
advancing diversity rolled out in
FY2023.
Status
2
2
Y
F
3
2
Y
F
$3m
9
1
Y
F
2
2
Y
F
0
3
Y
F
$22.6m
2
2
Y
F
3
2
Y
F
+67
+42
3
2
Y
F
5
2
Y
F
5
2
Y
F
4.5%
19%
25%
9
1
Y
F
9
1
Y
F
9
1
Y
F
21.1
9
1
Y
F
9
1
Y
F
ROADMAP COMPLETE
PROGRAM COMPLETE
2
2
Y
F
3
2
Y
F
12.2
9.98
2
2
Y
F
3
2
Y
F
5
2
Y
F
100%
5
2
Y
F
100%
5
2
Y
F
5
2
Y
F
+100
+109
(Aus.)
1
2
0
2
2
2
0
2
5
2
Y
F
$ 3.5m
$4.4m
$4.8m
(Aus.)
9
1
Y
F
2
2
Y
F
3
2
Y
F
5
2
Y
F
27%
26.5%
31.4%
(Aus. 35%)
1 Moving the Sustainability Strategy towards combined Australia and North America targets
The sustainability targets noted above for Safety, Lifecycle and Design, Sustainable Products and Carbon relate to our combined Australian and
North American operations. We continue to work towards incorporation of our North American operations into the remainder of our targets as
part of our future updates to our strategy.
Brickworks Annual Report 2023 p 55
Overview of Sustainability
TOWARDS2025
Significant annual progress against our 2025 targets1 including our enhanced targets
Target
Our Progress
Status
Carbon
15% reduction in Scope 1 and 2
greenhouse gas emissions by 2030 from
a 2022 baseline, across our combined
Australian and North American
operations.
Carbon Transition
Continued investment into
developing feasible renewable
biomethane opportunities and
investment in the transition to
the hydrogen fuel economy.
Water
Reduce potable water use in water
stressed areas.
Rehabilitation
Drive progressive rehabilitation.
5% reduction from FY2022 baseline
across Australia and North America.
Hydrogen feasibility preliminary
laboratory trials commenced by
Murdoch University.
Bioenergy transformation project
launched.
11% less mains water usage in Australia
compared to FY2022.
Commenced tracking potable water
use in North America.
49,500 m2 land progressively
rehabilitated and 443,100 m2 of land
relinquished in Australia and 168,875
m2 of land progressively rehabilitated
in North America in FY2023.
Circular Economy
Year on year increase in recycled
material use.
Recycled raw materials increased from
17% in FY2022 to 20% recycled content
in FY2023 in Australia.
Air Quality Emission Control
Over $2 million investment in
emission abatement.
Over $6 million invested in air
quality emission abatement in
Australia in FY2023.
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 6.5% and
natural gas efficiency has improved
by 6.7% since 2018.
2
2
Y
F
9
1
Y
F
9
1
Y
F
9
1
Y
F
9
1
Y
F
9
1
Y
F
8
1
Y
F
3
2
Y
F
-5%
2
2
Y
F
3
2
Y
F
Desktop study
Lab trials
2
2
Y
F
3
2
Y
F
0
3
Y
F
-15%
5
2
Y
F
5
2
Y
F
-8%
-11%
(Aus.)
2
2
Y
F
3
2
Y
F
5
2
Y
F
+27ha +5ha
(Aus.)
2
2
Y
F
3
2
Y
F
5
2
Y
F
17%
20%
(Aus.)
5
2
Y
F
2
2
Y
F
3
2
Y
F
$3m+
$6m+
3
2
Y
F
2
2
Y
F
0
3
Y
F
6.7%
7.0%
(Aus. 10%)
COMPLETE
1 Moving the Sustainability Strategy towards combined Australia and North America targets
The sustainability targets noted above for Safety, Lifecycle and Design, Sustainable Products and Carbon relate to our combined Australian and
North American operations. We continue to work towards incorporation of our North American operations into the remainder of our targets as
part of our future updates to our strategy.
56 p Brickworks Annual Report 2023
ONGOING Environment
Brickworks is committed to managing our operations in an environmentally sustainable manner, whilst
considering economic and social influences.
Compliance
During FY2023, Brickworks did not receive any fines, penalties,
or directive notices related to the environment or mining2.
Since 31 July 2023, Glen-Gery was fined $7,800 USD in
September 2023 relating to unauthorised stormwater discharge
as disclosed to the regulator for which full corrective action has
been taken.
We are reinforcing our commitment to zero environmental fines
and continued risk reduction across our operations.
Brickworks treats all instances of legal and regulatory non-
compliance with the utmost importance. Details of incidents,
notices and complaints are raised at the weekly General
Managers’ meeting, attended by the Managing Director. Each
non-compliance incident is investigated and tracked to ensure
corrective actions are undertaken within deadlines. Incident
reporting procedures and training are a central part of the
SHEMS, raising awareness and identifying corrective and
preventative actions.
Prosecutions
Penalty Notices
Directive Notices
FY2023
AUS
USA
0
0
0
0
0
0
Environmental Improvement Strategy
After significant investments in Air and Water Pollution
Control Equipment (PCE), our next step is to strengthen PCE
maintenance, enhance procedures and training to boost
environmental capabilities. In FY2023, we conducted 1,943 PCE
checks, a key indicator of our environmental commitment. Our
environmental improvement strategy is now being shared with
our North American business.
Under our environmental improvement strategy, Brickworks
implements systematic risk management programs that identify
and control impacts to the environment in line with legislation
and authorised Brickworks environmental policies.
Key risk areas receive specific focus including our ongoing air
and water management programs.
AIR QUALITY EMISSION CONTROL
Over $2 million investment in
air quality emission control
9
1
Y
F
5
2
Y
F
2
2
Y
F
3
2
Y
F
COMPLETE
$3m+
$6m+
2
Reported environmental fines and penalties include those received and paid during the reporting year (ending 31 July). Penalties received
regarding property notices are excluded.
Brickworks Annual Report 2023 p 57
ONGOING Environment
Investments are made in upgrading kilns, plant control systems,
and emission control technologies. In FY2023, limestone
scrubbers were installed at Austral Bricks Horsley Park Plant 1
and Plant 2, with a scrubber relocated to Plant 1 after the closure
of Plant 3.
The Golden Grove plant completed scrubber refurbishments
during a December 2022 shutdown which also saw the scrubber
stack extended to improve dispersion of kiln gases and reduce
odour at ground level as required by the Environment Protection
Authority.
These investments into air pollution abatement equipment
represent over $6 million invested in air quality emission
controls in Australia since FY2019.
An investment of US$3.6 million in upgrades to convert and
retrofit the existing North American Adel plant in Iowa from
petcoke fuel to natural gas was completed in April 2023. The
main fuel conversion was completed to allow the kiln to be re-
introduced into the production process utilising a much more
efficient and reliable fuel source. The project also included an
investment of US$129k to upgrade and re-permit the existing
Dry Injection Fabric Filter (DIFF) scrubber.
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.
Building Products Australia
Recycled content
Brickworks Australia
(tonnes)
Recycled content of Building Products
(tonnes)
)
s
e
n
n
o
t
(
t
n
e
t
n
o
c
d
e
c
y
c
e
R
l
500,000
400,000
300,000
200,000
100,000
0
FY2021
FY2022
FY2023
Water
Brickworks’ 2025 target is to reduce potable water usage in
water stressed areas.
CIRCULAR ECONOMY
Year on year increase in recycled material use
WATER
Reduced potable water use
in water stressed areas
9
1
Y
F
2
2
Y
F
3
2
Y
F
5
2
Y
F
9
1
Y
F
2
2
Y
F
3
2
Y
F
5
2
Y
F
17%
20%
(Aus.)
-8%
-11%
(Aus.)
A total of 474,600 raw tonnes of recycled materials were used,
which is equivalent to 20% of the total weight of Australian
building products produced. This has increased from 17%
recycled content in FY2022, mainly due to improved record
keeping of waste clay material from construction sites. Further
work is being completed to quantify total recycled content in
North America.
Water resource management is most important in water
stressed areas. During FY2023, Brickworks used a total of
163 ML of potable mains water in FY2023 globally. Of this,
103ML of potable mains water was used at sites in Australia, a
17% reduction in potable mains water use compared to FY2022
and a 17% decrease since the release of our strategy in FY2020.
Our North American operations consumed 60ML of potable
mains water in FY2023. This is the first year that data has been
collected for our North American operations.
58 p Brickworks Annual Report 2023
Brickworks Australia
Brickworks Australia
Total Potable Water Use by Water Risk
Total Potable Water Use by Water Risk Area
(kL)
(kL)
150,000
100,000
50,000
0
FY2021
FY2021
FY2021
FY2023
Water Risk Area
Low
Low-Medium
Medium-High
High
Climate related strategy
We have a long-term strategic focus in driving our global kiln
refurbishment program to improve energy efficiency beyond
international benchmarks. This is underpinned by our stretch
target for a 10 per cent increase in gas efficiency at Austral Brick
plants by 2030 from FY2018.
In Australia, carbon emissions have followed a general
downward trend, with a 46% decrease compared to the base
year 2005/06 (Scope 1 and 2).
The decrease is attributed to efficiencies gained from alternate
fuels, manufacturing consolidation, equipment upgrades
and operational improvements. Brickworks invested over
$400 million dollars since 2006 in equipment upgrades,
operational improvements and carbon reduction strategies.
Our climate-related strategy, targets and programs build
on these achievements, focusing on 5 key areas, including
efficiency, lower carbon energy sources, innovation, the
appropriate use of offsets and improving the energy efficiency
of homes over lifetime operations. Each focus area has
deliverables to drive performance.
As an industry leader using 11% bioenergy in manufacturing in
Australia, we understand the critical role renewable bioenergy
can have in producing low-carbon products. We are assessing
the feasibility of renewable bioenergy generation at our brick
plants with leading technology providers. If successful, each
facility has the potential to provide a significant source of
renewable energy.
Renewable bioenergy generation also offers the potential
to generate carbon offsets on-site, from emission reduction
activities such as the diversion of organic waste from landfill.
Brickworks has 10 years of experience in providing carbon
neutral products from our Longford Tasmania facility. We seek
to replicate the success of this low brick carbon manufacturing
process across Brickworks sites through the Brickworks
Bioenergy Transformation strategy.
Brickworks sees a range of opportunities to replicate the
success of this low brick carbon manufacturing through the
Brickworks Bioenergy Transformation strategy. According
to estimates by the Australian Renewable Energy Agency,
bioenergy could account for 33% of the industrial heat
processing needs by 2030. We are actively advancing
various feasibility studies for a series of projects designed
to significantly boost the utilisation of bioenergy. These
opportunities encompass harnessing additional landfill gas
resources, integrating alternative organic raw materials, and
generating on-site bioenergy through anaerobic digestion.
Understanding Carbon Risks and
Opportunities
We are incrementally adopting the recommendations of the
leading climate-related risk framework, Task Force on Climate-
Related Financial Disclosures (TCFD), such as using climate
scenarios to identify risks and developing climate-related
strategy and programs. Our second TCFD Statement was
published on our website in May 2023, setting out our roadmap
to improve our TCFD disclosure. We will continue to monitor and
report on management of climate risks.
Energy
A key strategic focus area is to achieve global leadership in
leading manufacturing excellence and efficiency. To achieve
this, Brickworks is investing in energy efficiency.
In FY2023, Brickworks Building Products total energy
consumption was 6.14PJ, a 6% decrease from FY2022. This is
further broken down by region below.
Building Products – Australia
Brickworks continues to reduce energy intensity across the
business. Since FY2013, energy intensity by revenue has
improved by 28% in Building Products Australia to 5.6 TJ per
million dollars (AUD) of revenue. Energy intensity decreased
by 6.7% from FY2022, reflecting increase in revenue between
FY2022 and FY2023 and the reduction in energy consumption
due to the closure of Horsley Park Plant 3 in NSW and our
Western Australian brick plants.
Brickworks Annual Report 2023 p 59
Environment
Building Products Australia
Energy Intensity
(TJ/$m Revenue)
Building Products Australia
Energy Intensity
(TJ / $m Revenue)
8.5
7.5
6.5
5.5
4.5
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
3
2
/
2
2
0
2
In FY2023, Building Products Australia’s total energy usage was
4.1PJ, a 7% decrease from 4.4PJ the previous year, reflecting the
closure of three plants during FY2023.
The majority (74%, 3.0 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.
Brickworks has used biogas and sawdust for renewable and
alternative energy generation for many years. Biofuel sources
include landfill gas and sawdust. The alternative fuels program
saw Building Products Australia achieve 11% energy use
composition of biofuels in FY2023, slightly lower than FY2022
mainly due to the closure of Horsley Park Plant 3. We continue
to investigate ways to increase our biofuels content.
Building Products Australia
Building Products Australia
Total Energy Consumption
Total Energy Consumption
(PJ)
(PJ)
4.4
4.6
5.1
5.8
5.2
5.2
4.9
4.4
4.1
4.4
4.1
8.0
6.0
4.0
2.0
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
3
2
/
2
2
0
2
Building Products Australia
FY2023 Energy Mix
Natural Gas
74%
Biofuels
11%
Electricity
8%
Liquid Fossil
Fuels
6%
Coal
1%
60 p Brickworks Annual Report 2023
Energy Efficiency
Building Products North America
Since its inception, Brickworks 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 a stretch target 10%, based
on FY2018 levels.
Since FY2020, energy intensity by revenue has improved by
36% in Building Products North America to 4.5 TJ per million
dollars (AUD) of revenue. Energy intensity decreased by
9.7% from FY2022, reflecting improved revenue and reduced
energy consumption due to the planned consolidation of
manufacturing sites including the closure of Marseilles plant
this year and York and Caledonia in FY2022.
Building Products North America
ENERGY EFFICIENCY
10% increase in gas efficiency
at Austral Bricks plant by 2030
Baseline FY18
Energy Intensity
Building Products North America
(TJ/$m Revenue)
Energy Intensity
(TJ / $m Revenue)
8
1
Y
F
3
2
Y
F
2
2
Y
F
0
3
Y
F
6.7%
7.0%
(Aus. 10%)
Continued investment into energy efficiency and recovery has
improved many Austral Bricks kilns to exceed international
leading energy efficiency benchmarks.
Natural gas efficiency has improved by 6.7% since FY2018.
There was slightly poorer performance in the natural gas
efficiency in FY2023 compared to FY2022 due to closure and
opening of various brick manufacturing sites across Australia.
Building Products Australia
Natural Gas Efficiency
Building Products Australia
GJ/’000 Standard brick equivalent)
Natural Gas Efficiency (GJ/’000 Standard brick
compared to FY2018 base line
equivalent) compared to FY2018 baseline
100%
95%
90%
85%
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
3
2
/
2
2
0
2
15.0
10.0
5.0
0
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
During FY2023, energy usage was 2.02PJ across 7 operating
clay brick factories owned by Building Products North America
with one factory being retired (Marseilles). All North American
brick factories are fuelled by natural gas and contribute to 88%
(1.76PJ) of the operation’s energy consumption.
Brickworks Annual Report 2023 p 61
Environment
Building Products North America
Building Products North America
Total Energy Consumption
Total Energy Consumption
(PJ)3
(PJ)
1.6
2.0
2.1
2.0
2.5
2.0
1.5
1.0
0.5
0
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
Building Products North America
FY2023 Energy Mix
Natural Gas
88%
Liquid Fossil
Fuels
2%
Electricity
10%
Energy Efficiency
The plant rationalisation program continued during FY2023,
with the closure of the Caledonia (Ohio) plant in the first half and
then Marseilles (Illinois) plant in the second half. Following these
closures, the plant rationalisation is now largely complete and
has resulted in a reduction in operating brick plants to 7 (from
16), an increase in plant utilisation to 72% (from 46%) and a more
modern and fuel-efficient fleet, with the average age of kilns
reduced to about 20 years (from more than 40 years).
This has led to an 18.1% improvement in gas efficiency from
the 2019 calendar year to FY2023 and a 7.9% improvement
compared to FY2022.
Building Products North America
Building Products North America
Natural Gas Efficiency
Natural Gas Efficiency
GJ/’000 Standard brick equivalent)
(GJ/’000 Standard brick equivalent)
compared to 2019 calendar year baseline16
compared to 2019 calendar year baseline4
100%
90%
80%
70%
60%
9
1
0
2
Y
C
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
Carbon
Brickworks continues to reduce greenhouse gas intensity
across the business. In 2018 Brickworks acquired businesses
within North America and have been working towards reporting
full greenhouse gas inventory globally. During FY2023
Brickworks completed the greenhouse gas calculations for the
North American operations for historical years from FY2020
through to FY2022 (including fleet emissions) covering
all material Scope 1 and Scope 2 greenhouse gas sources.
Brickworks has also announced a greenhouse gas emissions
target which is described further in Climate Strategy.
3
Restated from FY2022 report to include retail and fleet energy
consumption.
4
Energy improvement for the 2019 calendar year to FY2022 adjusted
from 8.6% to 10.4%.
62 p Brickworks Annual Report 2023
Performance against Carbon Target
As described in the Climate Strategy section of this report,
Brickworks has announced a new carbon target: to achieve a
15% reduction in Scope 1 and 2 greenhouse gas emissions by
2030, from a 2022 baseline, across our combined Australian and
North American operations.
In FY2023, Building Products total Scope 1 and 2 greenhouse
gas emissions was 400 kilotonnes of carbon dioxide equivalent
(ktCO2e) for both Australian and North American operations.
Of these emissions, 97% are attributed to brick manufacturing
operations.
CARBON
15% reduction in Scope 1 and 2 greenhouse
gas emissions by 2030, from a 2022 baseline,
across our combined Australian and North
American operations
2
2
Y
F
3
2
Y
F
-5%
0
3
Y
F
-15%
Greenhouse gas emissions have decreased in FY2023 by 5%
compared to FY2022. This is due to the closure of various plants
across the group, including:
◗ The permanent closure of Horsley Park Plant 3, following
the completion of Horsley Park Plant 2 in New South Wales.
◗ The discontinuation of brick manufacturing operations
in Western Australia, which involved the closure of the
Bellevue plant in November 2022 and the Cardup plant in
March 2023.
◗ The ongoing plant rationalisation program in North
America, which included the closure of the Caledonia (Ohio)
plant in the first half of FY2023 and the subsequent closure
of the Marseilles (Illinois) plant in the second half.
Brickworks
Global Carbon Emissions Since FY2022
(ktCO2-e)
Scope 1
Scope 2
Total
FY2022
FY2023
327
96
5
423
317
83
400
5
Restated for FY2022 from 417 ktCO2-e to 422 ktCO2-e to include all
retail sites and fleet emissions for North America.
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.
Although Brickworks’ North American operations are not
required to report carbon emissions to the U.S. regulator, the
greenhouse gas inventory for our North America operations
was reported and audited for the first time in FY2022 using
the Greenhouse gas protocol and US EPA Emission Factors for
Greenhouse Gas Inventories.
Carbon emissions for our Australian operations have followed a
general downward trend, with a 46% decrease compared to the
base year 2005/06 (Scope 1 and 2). The decrease is attributed
to efficiencies gained from alternate fuels, manufacturing
consolidation, equipment upgrades and operational
improvements.
In FY2023, our Australian operations emissions were 196,002
tonne CO2e (Scope 1) and 60,967 tonne CO2e (Scope 2), an 8%
decrease on the previous year due to closure of the three brick
manufacturing plants in Australia.
In FY2023 our North American operations emissions were
120,825 tonne CO2e (Scope 1) and 22,355 tonne CO2e (Scope 2),
a 1% decrease on the previous year.
Brickworks continues to reduce greenhouse gas intensity
across the business. Since FY2013, greenhouse gas intensity
by revenue has improved by 37% in Building Products Australia
to 0.35 kilotonne CO2-e per million dollars (AUD) of revenue.
Carbon intensity for Australia was lower (8.6%) than the previous
year, reflecting increased revenue from FY2022 to FY2023 and
lower emissions due to plant closures.
Since FY2020, greenhouse gas intensity by revenue has
improved in Building Products North America by 37% to 0.32
kilotonne CO2e per million dollars (AUD) of revenue. Carbon
intensity by revenue for North America was 11% lower than the
previous year, reflecting increased revenue from FY2022 to
FY2023 and lower emissions due to plant closures.
Brickworks Annual Report 2023 p 63
Environment
Building Products Australia
Greenhouse Gas Emissions Since 2005
(ktCO2-e)
Building Products Australia
Greenhouse Gas Emissions Since 2005
(ktCO2-e)
Building Products Australia
Carbon Intensity
(ktCO2-e/$m Revenue)
Building Products Australia
Carbon Intensity
(ktCO2-e/$m Revenue)
600
500
400
300
200
100
0
0.60
0.55
0.50
0.45
0.40
0.35
0.30
6
0
/
5
0
0
2
7
0
/
6
0
0
2
8
0
/
7
0
0
2
9
0
/
8
0
0
2
0
1
/
9
0
0
2
1
1
/
0
1
0
2
2
1
/
1
1
0
2
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
Building Products Australia
Building Products Australia
Total Greenhouse Gas Emissions
Total Greenhouse Gas Emissions
(ktCO2-e)
(ktCO2-e)
Building Products North America
Building Products North America
Total Greenhouse Gas Emissions
Total Greenhouse Gas Emissions
(ktCO2-e)
(ktCO2-e)
400
300
200
100
0
160
120
80
40
0
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
Scope 1
Scope 2
Scope 1
Scope 2
64 p Brickworks Annual Report 2023
Austral Bricks Plant 2
Horsley Park, NSW
Brickworks Annual Report 2023 p 65
Environment
Building Products North America
Carbon Intensity
(ktCO2-e/$m Revenue)
Building Products North America
Carbon Intensity
(ktCO2-e/$m Revenue)
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0
0
2
/
9
1
0
2
1
2
/
0
2
0
2
2
2
/
1
2
0
2
3
2
/
2
2
0
2
CARBON TRANSITION
Continued investment into developing feasible
renewable biomethane opportunities and invest
in the transition to the hydrogen fuel economy
Scope 3 carbon emissions
Brickworks is continuing to build a Scope 3 inventory of its
material sources including cement. Life-cycle emissions
data is currently available for all Australian made clay bricks
through the Climate Active Carbon Neutral Certification
Product Disclosure Statements available on the Climate Active
website (https://www.climateactive.org.au/buy-climate-active/
certified-members/austral-bricks). We have also published an
Environmental Product Disclosure (EPD) for Austral Masonry
Gympie which is available on the EPD Australasia website
(https://epd-australasia.com/). We are continuing to develop an
expanded library of EPDs for our products.
Hydrogen
There remain technical and commercial challenges in the short
to medium term for the conversion to zero-emission fuels such
as hydrogen. However, hydrogen remains a technology that
is a potential future fuel source. Over the long term, being a
substantial consumer of gas, this fuel has the potential to assist
Brickworks in lowering its greenhouse gas emissions.
66 p Brickworks Annual Report 2023
CARBON TRANSITION
Invest in the transition to the Hydrogen
fuel economy
9
1
Y
F
2
2
Y
F
3
2
Y
F
5
2
Y
F
Desktop study
Lab trials
Brickworks is investing in the transition to a hydrogen fuel
economy through desktop and lab-scale trials, in partnership
with Murdoch University. During FY2023, Brickworks supplied
Murdoch University with a range of laboratory equipment for
conducting essential testing on the effect of hydrogen into the
brickmaking process in their laboratories. Anticipated results
from this testing are expected to be received in FY2024 which
will close out this project.
Renewable Electricity
Our Rockhampton (Qld) and Oakdale (NSW) masonry sites
continue to have solar generation capacity. The 113kW and
240kW solar systems for Oakdale were installed prior to
commencing manufacturing, reducing our scope 2 emissions
by 23%. 55.5kW solar system was installed and commissioned
at our Rockhampton plant in February 2022. While the
Rockhampton site was not producing during FY2023, the
solar system reduced scope 2 emissions for the offices by an
estimated 71%.
In Victoria, we are continuing to progress with preparation and
approvals for 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 for FY2023
was 47,400m2 including 6,200 trees planted in Australia and
168,875m2 in North America. Progressive rehabilitation is driven
across the business by adding available land reviews to annual
rehabilitation planning.
An area of 443,100m2 was relinquished at the Horsley Park Plant
3 quarry in New South Wales to facilitate the new Oakdale East
industrial site Stages 2 to 4.
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
Austral Bricks
Land Rehabilitation Project
New Berrima, NSW
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
FY2023, we completed 109 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.
9
1
Y
F
2
2
Y
F
3
2
Y
F
5
2
Y
F
ENGAGEMENT
100 Community activities each year
+27ha +5ha
(Aus.)
9
1
Y
F
2
2
Y
F
3
2
Y
F
5
2
Y
F
+100
+109
(Aus.)
Brickworks Annual Report 2023 p 67
Environment
Customer focused sustainable product
portfolio
Today, the world is changing more rapidly than ever before.
Architects, builders and customers are increasingly working to
address the challenges associated with developing sustainable
buildings, reusing waste products, reducing carbon emissions
and developing smart, resilient cities.
Brickworks’ product development process is customer driven,
responding to consumer preferences. Our deep manufacturing
capabilities and product knowledge combine with strong
architects, builders and customer relationships to identify and
optimise new product development.
As enablers of safe, resilient and sustainable buildings, at
Brickworks, we see a strong future for bricks, masonry and
rooftiles. 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.
Our focus is to provide a wide range of thermal mass product
options with high recycled content and lower embodied carbon
across roofing and walling products. This will be delivered
through our sustainable product innovation strategy and targets.
Customer expectations for sustainable building products are
described through design principles for more sustainable
homes including leading standards such the Greenstar Homes
Guide by Green Building Council of Australia, LEED for Homes
by U.S. Green Building Council, building codes, regulations and
planning measures.
Brickworks’ Sustainable Home Guide outlines how our products
contribute to GreenStar Homes and LEED for Homes. Brickworks
offers a range of products that help designers achieve
sustainable design ratings, including National Home Energy
Rating (NatHERS) used in the NSW Building Sustainability Index
BASIX, Green Star Homes and LEED for Homes.
Brickworks’ commitment to innovation into manufacturing
excellence and raw material optimisation means our products
are produced in some of the world’s leading energy efficient
kilns. In FY2022, Brickworks invested $3 million into research
and development for kiln efficiencies, light weight products and
different fuel types.
PRODUCT INNOVATION
Year on year increase in R&D investment
into the next generation of clay brick and
concrete block wall systems.
2
2
Y
F
3
2
Y
F
$3m
0
3
Y
F
$22.6m
During FY2023, 24 research and development projects were
successfully completed and embedded into production including
new products and efficiency gains. These successful projects
highlight the continued potential for significant advancements
across our five sustainability innovation focus areas:
◗ Thermal mass
◗ Light-weighting, lower cement and higher recycled
◗ Raw material optimisation
◗ Product innovation
◗ Sustainable design elements
In FY2023, 25% of product volume in Australia was verified
as sustainable by third party labels, which is the equivalent to
19% of our products across. 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 are also a range of opportunities across our
North American products including recycled content and
diversified façade options.
Further information of the environmental or social benefits of
these products is provided in the Sustainability Report.
SUSTAINABLE PRODUCTS
Increase the volume of verified
sustainable products to 25%.
2
2
Y
F
4.5%
3
2
Y
F
5
2
Y
F
19%
25%
68 p Brickworks Annual Report 2023
Oakdale East Masonry Plant
Horsley Park, NSW
Brickworks Annual Report 2023 p 69
Community
Support
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 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 $4.8 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 2022
calendar year and the team at Brickworks raised $260,815,
helping CCI move closer to achieving the vision of curing all
children with cancer.
One of the highlights for early 2023, was the ‘86k for a Cure’
campaign where Brickworks became presenting partner for
this national community initiative. This sponsorship, along with
teams in every state and 52 staff, focussed on wellbeing and
getting active by walking or running 86k in March as well as
fundraising, which contributed an incredible $88,857.
Brickworks staff also offer their time and efforts to drive a range
of other fundraising activities for CCI, including the Diamond
Ball, CEO Dare to Cure. State-based Golf Days and Build for a
Cure initiative.
70 p Brickworks Annual Report 2023
70 p Brickworks Annual Report 2023
COMMUNITY SUPPORT
Supporting charities like the Children’s
Cancer Institute
9
1
Y
F
1
2
0
2
2
2
0
2
5
2
Y
F
$ 3.5m
$4.4m
$4.8m
(Aus.)
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. 2022 saw the Brickworks staff contribute an
amazing $53,064 through the Casual Friday program
with Brickworks matching this, thereby doubling the
donation and impact.
“Every week 20 children are diagnosed with cancer
in Australia. At Children’s Cancer Institute, our vision
is to save the lives of these children and improve their
long-term health through research.”
“We don’t just hope to cure all children of cancer. We will
do it. This vision is only possible with commitment from
longstanding partners such as Brickworks. Heartfelt
thanks to the entire Brickworks’ team for its generous
support of our work.”
Anne Johnston, Director Marketing & Fundraising, Children’s Cancer Institute
Stoney Rise Wines Cellar Door
Daniel Robertson Hawthorn in London
and Bowral Bricks in Bowral Blue
Gravelly Beach, TAS
Brickworks Annual Report 2023 p 71
Brickworks Culture Campaign
72 p Brickworks Annual Report 2023
Our Global
Workforce
Culture and Values
Brickworks continues its commitment to cultivating a culture
that aligns with our "We Are Brickworks" values and behaviours.
To enable this, we focus on delivering initiatives that ensure our
people feel respected, recognised, and motivated to excel.
Our formal recognition programs celebrate our employees who
exemplify our company values and demonstrate excellence. Our
quarterly Culture Champion Awards acknowledge the positive
impact our employees make on our workplace culture and
inspire others to follow their lead in living our values. Annually,
we also have the Managing Director's Excellence Awards and
Employee of the Year Awards. These significant award programs
recognise the exceptional contributions of our people to the
success of Brickworks.
From May 2023 we commenced the roll-out of face-to-face
Code of Conduct training, placing a strong emphasis on
promoting respect in the workplace and ensuring that all
employees are fully aware of our company's expectations and
standards. This training also ensures that all our people are
aware of our established channels to report concerns, including
an option to provide this anonymously. Further, a range of
online compulsory e-Learning modules, such as the Code of
Conduct, are updated and released annually to ensure the entire
workforce population understands what is expected of them
and can positively contribute to our workplace culture.
Leveraging the OfficeVibe engagement survey platform, we
released a custom survey to gauge our employee experience
and perceptions of our company's values and culture. Of those
who participated in the survey 88% indicated that they were
proud to work at Brickworks and 83% felt that their personal
values aligned with the Company’s values – this result supports
that our practice of screening for values alignment in our
recruitment and selection processes is proving beneficial.
Overall, the survey outcome was favourable, though we continue
to review the anecdotal feedback to identify opportunities to
improve our culture moving into the next year.
Our Workplace Australia and North America
Key Employment Data
Total Workforce
Australia
1,093
North America
934
Total female breakdown
24.5% (no change from FY2022)
20.9% (down from 22% in FY2022)
Female Senior Executives
31.4% (up from 26.5% in FY2022)
14.3% (down from 21% in FY2022)
Average age of employees
Employees aged 50 and over
Average length of service
43.3
34.3%
8.9 years
Global
2,027
22.8%
25.0%
44.5
38.2%
45.8
42.8%
10.8 years
9.9 years
Brickworks Annual Report 2023 p 73
Our People
Our Workplace Australia and North America
Workplace Profile
Management
Professionals
Tech/Trades
Administration
Sales
Operators/Labourers
Australia
North America
Global
Total**
18.5%
8.8%
15.3%
13.8%
8.8%
34.8%
Female* **
25.8%
39.8%
5.0%
70.4%
53.4%
4.4%
Total
21.4%
3.7%
1.4%
15.6%
5.7%
52.1%
Female*
19.0%
37.1%
0%
60.3%
17.0%
7.8%
Total
19.8%
6.5%
9.2%
14.6%
7.4%
42.5%
Female*
22.5%
39.1%
4.7%
65.6%
41.0%
6.3%
to come together and by sharing these insights, we encourage a
sense of ownership and alignment among our employees, which
contributes to their overall engagement and commitment to our
shared vision.
Creating a sense of community and connection is important at
Brickworks. We continue to bring our people together regularly
for Social Club activities, end of year celebrations, site-based
BBQ lunches and through our monthly newsletter, we celebrate
and honour significant years of service, share staff interviews,
and acknowledge personal and family milestones. By providing
a platform for our employees to be seen and appreciated, we
foster a culture of support, recognition, and genuine care.
Brickworks Staff
*
**
Female % is a fraction of each profile type.
from WGEA data 2023
One year ago, Brickworks North America launched its “We Are
Brickworks” culture campaign that simultaneously introduced
7 Culture Values. The organisation spent the next 12 months
embedding these Values into the performance management
and hiring processes. In January 2023, employees were invited
to complete an Engagement Survey to assess the effectiveness
of this initiative and receive feedback on how to improve the
Company and its culture.
Surveys were completed online by salaried and plant hourly
employees. Over 60% of the 980 Brickworks North American
employees participated in the survey. Overall, salaried
employees provided a more favourable average rating score
than the plant hourly participants (3.9 vs 3.5 on a 5-point scale).
Employee Engagement
At Brickworks we recognise that fostering a positive work
environment and striving to achieve high employee engagement
levels is crucial for ensuring the well-being of our people and
supporting the overall growth and success of the Company.
In February 2023 Brickworks launched OfficeVibe, an
engagement survey platform capturing fortnightly pulse checks
on employee satisfaction and engagement levels. This initiative
has allowed us to gain valuable insights into the experiences
and perceptions of our employees and enabled managers to
review and respond to feedback in real-time whilst the system
maintains employee’s anonymity. The collection of this data is
supporting Brickworks to address key concerns and identify
areas for improvement.
Since its launch, Brickworks has been sustaining a very good
overall engagement rating of 7.4/10 and a positive average
employee net promotor score (12 eNPS). The platform also
provides functionality that enables our people to send cards of
appreciation and/or praise, known as Good Vibes. This informal
recognition channel is actively used with over 1,200 Good Vibes
shared since the launch of OfficeVibe.
To foster transparency and effective communication Brickworks
continues to present two company update nights during the
year. These events provide an opportunity for all staff members
74 p Brickworks Annual Report 2023
Brickworks Staff
In the past 4 years, Brickworks North America has integrated
5 companies, revolutionised the brick market by opening
Design Studios and promoting brick as fashionable and
trending, while consolidating industry manufacturing capacity,
improving production capabilities, and reducing the age of its
factories. With all the change that has occurred, the Company
is encouraged by the level of engagement and alignment of the
feedback received from across the organisation.
There are always areas for improvement. The message from
employees seems clear, for example:
◗ While we have spent millions of dollars each year on
tools and infrastructure, there is more work to be done
to overcome the lack of investment during the years
preceding Brickworks.
◗ At a high level, employees understand the vision and
direction of the Company and how they contribute to
its success. The company may benefit from expanded
cross functional collaboration, increased training and
development, and improved efficiencies to address
concerns regarding communication and work-life balance.
Sharing the feedback with managers to review and discuss the
results for their area has been critically important to ensure the
message is validated, clear and not assumed. Managers have
worked with their teams to share the results and prepare the
appropriate Action Plans to focus on specific areas where they
can begin acting to create positive change.
Brickworks Annual Report 2023 p 75
Our People
Brickworks Staff
Horsley Park Design Centre
Employee Retention
We firmly believe that our employees are our greatest asset,
and their long-term commitment and growth within Brickworks
contributes to our success.
dedicated to supporting and transitioning our people through
this change by offering redeployment options, access to
outplacement support services and fair redundancy packages.
We take pride in our ability to foster long-lasting relationships
with our employees which is reflected in our average tenure of
more than 8 years for this FY period. Furthermore, 41% of our
people have been employed with us for 8 or more years, further
demonstrating the loyalty and dedication our employees have
to Brickworks.
To achieve significant tenure at Brickworks we recognise
the importance of investing in our people and keeping
them engaged through internal mobility and promotional
opportunities. We support multidisciplinary careers that enable
our employees to explore new roles and challenges while
staying within the Company and retaining their knowledge.
This approach strengthens our talent pool, provides growth for
our people, and reinforces a sense of belonging.
During the 2023 WGEA reporting period, 83% of our positions
were filled either through internal appointment or promotions,
supporting our approach to retaining internal talent, where
achievable. Alongside this, we continue our annual practice
of conducting salary reviews, industry benchmarking and
providing short and long-term incentive benefits for our
workforce, ensuring they are remunerated fairly for their
contribution.
Unfortunately, FY2023 saw the gradual closure of our precast
operation and the difficult decision to cease Austral Bricks
Western Australia operations. Through this period, we remained
The decision to enact these business closures, ultimately has
an impact on our overall turnover for the year. However, our
voluntary turnover (resignations and retirements) in Australia
is currently 19.8% which is higher than we would like. Our focus
into the next year will be to improve retention by continuing our
efforts to review data from our exit interviews and engagement
surveys and identifying opportunities to improve employee
satisfaction.
In North America, overall turnover decreased by 8 percentage
points and voluntary turnover decreased by 7.5 percentage
points. The overall turnover would have been more favourable
if not for the closure of the Marseilles manufacturing facility
and salaried workforce reduction. Improvement to voluntary
turnover is attributed to efforts resulting from remuneration
reviews, training investments, and engagement survey and exit
survey actions.
Talent Pipelines
We remain focused on ensuring a strong and steady pipeline of
talent within the business and achieve this through connection
with external secondary and tertiary institutions; via a range of
talent program offerings; and through a continued commitment
to internal promotions.
Brickworks was proud to sponsor the attendance of Australian
high school STEM students at the 2023 International Science
Employee Turnover
FY2022
FY2023
FY2022
FY2023
FY2022
FY2023
Australia
North America
Global
Voluntary
Total
17.9%
19.6%
19.8%
32.7%
33.5%
46.1%
26.0%
38.2%
25.0%
31.7%
22.6%
35.2%
76 p Brickworks Annual Report 2023
Brickworks Design Studio
Manhattan, New York City
and Engineering Fair (ISEF) in Dallas, USA. We also continue to
maintain relationships with universities across the country to
ensure a stream of students into our related talent programs:
◗ Industrial Training Program – a 60-day work placement
opportunity to support students in gaining industry
experience as part of their course requirements. This
short program may feed into the broader Cadet Program.
In the FY2023, 6 students were enrolled in this Australian
program.
◗ Cadet Program – a 1 to 2 year paid employment offering
for those in their penultimate or final year. Working on a
casual basis around university scheduling, students can
gain additional experience in their field of study and will
be involved in both business rotations and project work to
extend their skillset.
◗ Graduate Program – this 2-year structured program and
dedicated period of learning for those students, either via
the Cadet Program or directly after graduation, who wish
to pursue an accelerated pathway into leadership roles.
In FY2023 we have 5 Graduates enrolled, with 3 of them
streaming across from the FY2022 Cadet Program.
We also offer electrical, fitter and roof tiler Apprenticeships,
available to both external applicants and employees seeking a
career change, and currently employ 15 Apprentices.
This past year we started to ramp up our succession planning
activities, following a best-practice model to ensure robust
development plans are in place and reviewed regularly for
potential successors to leadership and other key roles within the
business.
These activities feed into our Leadership Development Program,
another structured yet tailored offering to support a pipeline
of talent moving into three tiers of leadership, accommodating
supervisors, middle management and executive level roles.
Employees are further supported in their development journey
through our structured Mentoring Program – a popular initiative
in place since 2018. This year we were pleased to receive a
record number of applications – 82 in total, comprising of
mentors and mentees. Of these, 11 were female mentors, and
17 female mentees.
In the FY2024, we plan to develop a Transition to Retirement
Program that will allow for a knowledge transfer before
departure, to capture what often equates to a long tenure of
experience in critical roles.
Intake of some of our Cadets and Graduates,
along with senior managers
Brickworks Annual Report 2023 p 77
Our People
express their interest in continuing their education through
course work at accredited trade schools and technical
institutions, and through hands-on application on the job.
Partnerships have been created near each manufacturing
plant location to provide instruction in the areas of Millwright,
Electrical, and PLC Controllers.
Classes begin in September 2023 for the 10 employees offered
to entry into the program out of 17 employees who expressed
interest and participated in an assessment process. The
remaining employees will be provided entry level training to
develop their mechanical and electrical aptitude in preparation
for the next cohort.
Learning and Development
Brickworks continues its strong commitment to employee
growth and development through the provision of regular
performance and development discussions between managers
and their teams; ongoing encouragement for all staff of 2 hours
each week utilised for training; and through our structured
talent programs. Employees engage in a range of externally
facilitated short courses as well as complete certifications
and qualifications aligned with their work. Our employee
development practices have been added to our website to
promote our offering and include staff testimonials.
Employees are invited to monthly ‘Lunch and Learn’ sessions
covering a broad range of topics from webinars on work / life
balance to expert facilitator-led sessions on superannuation and
will and estate planning.
Throughout the year succession planning activities have played
a key role in accelerating high potential employees in readiness
for future roles, securing a strong pipeline of leaders in years to
come.
A dedicated learning and development function was also
established internally in FY2023 to coordinate and strategically
plan training and education initiatives - creating a suite of
content for regular roll-out to employees and ensuring learning
and development remains a key and continued priority for
Brickworks.
Our female roof
tiling apprentice is
raising the roof for
other female trade
apprentices
North America continued its commitment to the Emerging
Professional Development Program, or more popularly called
the “Brew Crew,” which is a graduate development program
that provides employees with building a professional skillset,
reputation, and network in our organisation. These employees
are newer entrants into the workforce, specifically less than 5
years of experience. Ideally, candidates have graduated with a
degree from an accredited institution.
Participants in the program are exposed to training that
develops their professional skills, promote company awareness
as well as encourages organisational engagement. Training
is held online for 1 ½ hours once a month and ranges from
topics such as Emotional Intelligence, Increasing Personal
Accountability and Workload Management.
The program has been expanded to include 3 levels: Brew
Crew, Brew Masters, and Brew Alumni. Each level expands the
development of emerging professionals providing them with
expanded networking, mentoring, and learning opportunities
focused on the business and their careers.
In 2023, North America introduced the Glen-Gery Technical
Academy, which offers employees with the opportunity to
further develop their skills in the trades. Employees could
78 p Brickworks Annual Report 2023
Diversity, Equity and Inclusion
At Brickworks we have continued to extend our diversity, equity
and inclusion (DEI) initiatives, achieving many of our diversity
goals since the inception of our diversity strategy. Training on
how to advance gender diversity was internally developed and
rolled-out to people managers across the group in June. We
are pleased to report an increase in female representation in
the executive and manager cohorts and remain committed to
meeting our stretch targets for gender diversity at all levels in
the coming years.
DIVERSITY AND INCLUSION
Stretch target: 35% female senior
executives. Develop and implement a
Diversity and Inclusion Strategy.
9
1
Y
F
2
2
Y
F
3
2
Y
F
5
2
Y
F
27%
26.5%
31.4%
(Aus. 35%)
Our commitment to flexible work arrangements remains strong
with increased participation across our business supporting
the needs of those with caring responsibilities, disability, and
generally in offering a work/life balance.
We continue our focus on equal employment opportunities,
ensuring fair and equitable recruitment and selection practices,
and are in the process of reviewing all internal policies and
procedures to ensure legislative compliance and alignment
with International Labour Organisation (ILO) conventions
and requirements. Code of Conduct sessions are being
rolled-out nationally to ensure all employees understand
their responsibilities regarding bullying and harassment to
support a respectful and inclusive work environment for all, and
managers are kept abreast of all relevant legislative change. To
further support positive messaging in this regard and reinforce
Brickworks’ commitment to a safe and respectful workplace,
banners and signs have been implemented in offices, retail
spaces and factories around the business.
A diversity and inclusion survey was published in May seeking
input from willing employees (with full anonymity) to gauge the
make up of our population and assist in determining the focus of
future DEI initiatives. As a result of this survey, dedicated quiet
rooms are being created to serve as private spaces for breast-
feeding, meditation and prayer, as required by our staff.
We promote and come together to celebrate and raise
awareness for a calendar of events such as Harmony Week, the
World’s Biggest Morning Tea, Jersey Day in support of organ
and tissue donation awareness, and International Women’s Day
– this year getting behind ‘Dress for Success’, with staff donating
quality work attire to women in the community seeking to enter
or re-enter the workforce. Nationally, Brickworks employees
donated 751 individual pieces to support this important
initiative.
HIA International
Women’s Day Luncheon
Brickworks Annual Report 2023 p 79
Our People
In the coming year we seek to build on our progress, including
the creation of a ‘Return to Work Program’ supporting parents
after a period of parental leave, as well as development of a
Reconciliation Action Plan.
In North America, our culture is a testament to the values that
our employees foster from their own personal experiences. As a
company, we want to tap into the richness of those experiences
to create a collaborative and inclusive environment.
As such, in 2023, we created a Diversity and Inclusion
Committee; whereby, Ambassadors have an opportunity to
provide recommendations on ways to promote awareness and
engagement, and to create a calendar of events to encourage
participation. The committee is dedicated to fostering a culture
of acceptance and belonging for all employees, where diversity
of thought, background, and identity is embraced and leveraged
to drive innovation. The more inclusive we are, the better our
work will be for our employees, customers, and stakeholders.
Employee Wellness
Our Employee Assistance Program (EAP) provider services
have been promoted widely across the business. The services
are available to all employees and their immediate families and
are both free and confidential. The offering includes a manager
support service for people managers, and more broadly for all
employees, support and advice on topics such as relationships,
finances, work, family and health. In addition to counselling, other
channels of information are available including learning modules,
podcasts, and articles. We have also leveraged a monthly series
of webinars supplied by our EAP provider, sharing these with the
employee group via a ‘Lunch and Learn’ platform.
During our annual Sales and Manufacturing Conference,
attendees completed a Mental Health and Well-being Index
and results were reviewed and discussed with action items
determined to uplift awareness and capability in ensuring
employees experience a psychologically safe working
80 p Brickworks Annual Report 2023
environment. One such action item was for key people
managers to complete Mental Health First Aid training which
was initiated immediately after the conference.
In addition, a national calendar of events has been determined
for promotion throughout the year with Mens Health Week and
R U OK? Day key events publicised with active involvement from
the employee group.
To further consult with our staff, a Mental Health and Well-being
survey was developed and issued to measure employee opinion.
Seventy-eight percent of participants reported that the culture
of Brickworks supports mental health and well-being, and 98%
know how to access resources to support their mental health
and well-being.
The healthcare plan in North America includes many preventive
care services, including colorectal cancer screenings, to help
employees live healthy and be well. At risk employees received
free confidential in-home colorectal cancer screening test kits
from our health insurance partner. Colorectal cancer is the
second leading cause of cancer deaths in the United States.
Workplace Relations
Brickworks respects the rights of all our employees to the
Freedom of Association and reaffirms the requirements of the
Fair Work Act 2009 (Cth) which protects freedom of association
in the workplace by ensuring that persons are free to become,
or not become, members of industrial associations, are free to
be represented, or not represented, by industrial associations,
and are free to participate, or not participate, in lawful industrial
activities.
Brickworks has 31% of the manufacturing workforce covered
by union enterprise agreements. The remaining breakdown of
the manufacturing workforce has 35% covered by non-union
enterprise agreements, with the remaining 34% covered by
individual agreements and Awards. Brickworks' approach in
the last 12 months has been to collaboratively work with all the
relevant representatives and employees. This is to ensure the
optimum outcomes are achieved for both the employees and
employers, in the provision of fair and equitable workplace
conditions and wages, that promulgate a sustainable outcome
for the whole business.
North America operates 8 manufacturing plants, 4 union and 4
non-union. During FY2023, one collective bargaining agreement
was successfully negotiated and executed at the Adel plant in
Iowa. The number of union plants decreased from the prior year
due to the closing of the Marseilles plant in Illinois.
Brickworks Supply Centres, the distribution business in North
America, has 6 CBA’s, covering 9-yard locations, consisting of
38 truck drivers and yard workers. During FY2023, two CBAs
were successfully negotiated and executed at the South Bend,
Indiana and Naperville, Illinois locations.
Percentage of Employees Covered by
Collective Bargaining Agreements
Australia1
North
America2
Collective Bargaining
Agreement
No Agreement
77.5%
22.5%
61.0%
39.0%
Global
69.4%
30.6%
Composition of Collective Bargaining Agreements
Union Based
Non-Union Based
Australia1
46.2%
53.8%
North
America2
100%
0%
Global
69.4%
30.6%
1 Wages Employees Australia
2
Labour/Distribution Employees North America
Brickworks Staff
Compliance
A number of Fair Work conciliations have resulted in settlements
with no fines or non-monetary sanctions received in FY2023.
Brickworks Annual Report 2023 p 81
Pennsylvania State Archive
5 Custom Glaze Blend
Harrisburg, Pennsylvania
82 p Brickworks Annual Report 2023
Board of
Directors
Robert D. Millner AO
FAICD
Chairman
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. Mr Millner was awarded an Officer of
the Order of Australia in June 2023 for "distinguished service
to business, to rugby union as an administrator, and to the
community through philanthropic contributions”.
He is a member of the Remuneration and Nomination Committee.
Mr Millner holds directorships in the following listed companies:
◗ Aeris Resources Limited
◗ Apex Healthcare Berhad
◗ BKI Investment Company Limited
◗ New Hope Corporation Limited
◗ TPG Telecom Limited
◗ Tuas Limited
◗ Washington H. Soul Pattinson and Co. Limited
During the last three years, Mr Millner also held listed company
directorships in:
◗ Australian Pharmaceutical Industries Limited
(resigned July 2020)
◗ Milton Corporation Limited (resigned October 2021)
◗ TPG Corporation Limited (resigned July 2020)
Michael J. Millner
MAICD
Deputy Chairman
Mr M. Millner is a non-executive Director who was appointed to
the Board in 1998.
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.
Mr Millner is the Deputy Chairman of the Board, and a member
of the Remuneration and Nomination Committee.
Mr Millner has no current listed company directorships and
has held no other listed company directorships in the last three
years.
Brickworks Annual Report 2023 p 83
Board of Directors
Lindsay R. Partridge AM
BSc. Hons. Ceramic Eng, FAICD, Dip. CD
Managing Director
Deborah R. Page AM
B.Ec, FCA, FAICD
Non-executive Director
Mr Partridge was appointed Managing Director in 2000.
Mrs Page was appointed to the Board in July 2014.
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
he was awarded the esteemed “Sir Phillip Lynch Award”, by the
Housing Industry Association in recognition of his immense
contribution to the Housing Industry.
Mrs Page 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 and 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 and 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:
◗ Growthpoint Properties Australia Limited
◗ Magellan Financial Group Limited (from 3 October 2023)
◗ The Star Entertainment Group Limited
During the last three years, Mrs Page also held listed company
directorships with Pendal Group Limited (retired January 2023)
and Service Stream Limited (retired April 2023).
84 p Brickworks Annual Report 2023
Malcolm P. Bundey
B.Bus (Accounting), GAICD
Non-executive Director
Mr Bundey was appointed to the Board in October 2019.
Mr Bundey has valuable experience as a CEO and Managing
Director with particular expertise in managing complex global
manufacturing operations including as CEO of Pact Group, CEO
of Evergreen Packaging, CEO of Graham Packaging and CEO of
Closure Systems International.
These companies each operated multi-location and geographical
plants across a wide range of regulatory jurisdictions including
Australia, North America, Europe, Asia and South America.
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 and Nomination Committee and
a member of 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.
The Hon. Joel A. Fitzgibbon
GradCertBA, GAICD
Non-executive Director
Mr Fitzgibbon was appointed to the Board in January 2023.
Mr Fitzgibbon has extensive government experience having
served in the House of Representatives from 1996 to 2022,
representing the New South Wales seat of Hunter. He served
as Minister for Defence in 2007–2009, Minister for Agriculture,
Fisheries and Forestry in 2013 and was Chief Government Whip
in the House of Representatives from 2010–2013.
Mr Fitzgibbon has considerable expertise in public policy, social
and environmental issues.
He is a member of the Remuneration and Nomination
Committee and the Audit and Risk Committee.
Aesop, Canberra Centre
Australian Marble in Pilbara Red
Canberra, NSW
Robyn N. Stubbs
B.Bus, M.Sc., GAICD
Non-executive Director
Ms Stubbs was appointed to the Board in January 2020.
Ms Stubbs 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 and Nomination
Committee and the Audit and Risk Committee.
Ms Stubbs is currently a director of HMC Funds Management
Limited (as the responsible entity of the HomeCo Daily Needs
REIT).
During the last three years, Ms Stubbs also held listed company
directorships in:
◗ Aventus Group (which merged with HomeCo Daily Needs
He is a non-executive Director and interim CEO of the Australian
Forest Products Association and retained as Special Counsel by
CMAX Advisory.
REIT in March 2022)
◗ Inghams Group Limited (resigned June 2023)
◗ InvoCare Limited (resigned February 2021)
Mr Fitzgibbon has no current listed company directorships and
has held no other listed company directorships in the last three
years.
Brickworks Annual Report 2023 p 85
Oculus
Bowral Bricks Bowral300 in Bowral Blue
Surry Hills, NSW
86 p Brickworks Annual Report 2023
86 p Brickworks Annual Report 2023
Executive
Management
Lindsay R. Partridge AM
BSc. Hons. Ceramic Eng, FAICD, Dip CD
Megan Kublins
BS (Arch), B Arch
Managing Director
Refer to Board of Directors, page 84.
Grant Douglas
Hons BCompt, CA, GAICD
Chief Financial Officer
Mr Douglas was appointed Chief Financial Officer in
August 2022.
Mr Douglas is a Chartered Accountant with extensive
international experience in both professional services and
senior finance leadership roles focussed 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.
Executive General Manager –
Property & Development
Ms Kublins was appointed General Manager Property in
November 2001 and became Executive General Manager
Property in 2006.
Ms Kublins has over 29 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 1,900 hectares
of land. Her primary focus is to identify value creation
opportunities within this portfolio. She is responsible for the
growth and management of the Goodman/Brickworks JV, which
was established and grown under her direction. Megan has
completed the Stanford Executive Program.
Susan Leppinus
B.Ec, Llb, Grad Dip App Fin
Company Secretary and General Counsel
Ms Leppinus was appointed Company Secretary and General
Counsel in April 2015.
Ms Leppinus is admitted to practice in NSW and has over 18
years’ experience as a company secretary and general counsel.
She has worked closely with boards and senior management in
ASX 200 companies, and has significant experience in mergers
and acquisitions, contract negotiation, corporate governance,
corporate and commercial law. She is responsible for the legal
governance and company secretarial functions of the Group,
including liaising with the ASX, ASIC and other regulatory
bodies.
Brickworks Annual Report 2023 p 87
Executive Management
Garden Room House
Bowral Bricks Chillingham White
Melbourne, VIC
Mark Ellenor
B.Bus
Chief Operating Officer
Mr Ellenor was appointed to the position of Chief Operating
Officer in August 2023.
Mr Ellenor started with Austral Bricks in the graduate program
in 1999, progressed through management, and was promoted to
General Manager Eureka Tiles in 2006, General Manager Austral
Bricks NSW in 2009, General Manager Austral Bricks Australia
in 2017 and Group General Manager Austral Bricks and Bristile
Roofing in 2018.
In 2018, Mr Ellenor was appointed President – Brickworks
Building Products North America, and relocated to the United
States for the Brickworks acquisition of Glen-Gery to take on
this role.
Mark’s leadership for Brickworks first international acquisition
was essential and included another four acquisitions, extensive
plant rationalisation, major capex program, developing an
expansive retail and trade footprint and inventing brick as a
style choice to architects through new Design Studio’s including
the flagship site on 5th Avenue, New York. Mark has ensured
that the North America division of the Company is set up for
continued innovation, growth and success.
In 2022, Mr Ellenor was appointed Executive General
Manager Building Products, managing the overall operational
responsibility across Brickworks Building Products Australia and
North America.
Mark has completed the Stanford Executive Program, the
Wharton Executive Education Program and holds a degree in
Business from the University of Newcastle.
88 p Brickworks Annual Report 2023
Brickworks Annual Report 2023 p 89
University of Rochester, Wegmans Hall
53-DD
Rochester, New York
90 p Brickworks Annual Report 2023
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 external audit
◗ Risk management framework and strategy, risk appetite
◗ Remuneration policies, practices and related disclosure
◗ Board and Committee membership and renewal
and risk profile
◗ Oversight of sustainability and climate related risks and
opportunities
◗ 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 2023 p 91
Ethical and responsible decision making
◗ The Board aims to ensure the Company continually builds
an honest and ethical culture.
◗ Brickworks has an established code of conduct which
centres on the Company and all Directors, senior
management and employees conducting themselves with
integrity in all business dealings. It also has Board policies
and conducts training of employees in relation to these
policies.
◗ Consistent with our commitment to act fairly, with honesty
and integrity Brickworks has a Whistleblower Policy and
has implemented Behonest@Brickworks an anonymous
whistleblower service delivered by Deloittte.
◗ The Company also has an Anti-Bribery and Corruption
Policy, Political Donations Policy, Securities Trading Policy
and Modern Slavery Policy.
Timely and balanced disclosure
◗ Brickworks is committed to keeping its shareholders
informed about the Company’s activities.
◗ The Company aims to provide relevant information to
shareholders in a timely manner which is supported by its
Continuous Disclosure Policy.
Safeguard integrity in financial reporting
◗ Brickworks' process for verifying the integrity of periodic
corporate reports not subject to audit or review by an
external auditor is as follows:
◗
◗
reports are prepared by, or under the supervision of,
subject-matter experts;
reports are reviewed for material accuracy; and
◗
information in a report that relates to financial projections,
statements as to future financial performance or changes
to the policy or strategy of the Company (taken as a
whole) must be approved by the Board.
◗ The Board through the Audit and Risk Committee:
◗ monitors Company performance; and
◗ ensures the proper external reporting of financial
information.
Corporate Governance
Management and oversight
The Board
The Brickworks Board is responsible for the leadership,
oversight, development strategy and long-term success of
the Group. The Board works with management to consider
specific issues relevant to the overall conduct of our businesses
– including strategy, safety, sustainability, annual budget and
major acquisitions and disposals.
There is one executive and six non-executive Directors on the
Brickworks Board, 29% of which are women. The independence
of non-executive Directors is considered annually and the
Board has determined that four non-executive Directors are
independent. We ensure the Board has the appropriate blend
of skills, knowledge and experience, from a wide range of
industries, backgrounds, necessary to lead the Group. In 2023,
there were 10 full meetings of the Board.
Board Committees
The Board has established two permanent Committees to
assist in the execution of its responsibilities. The current
permanent Committees are the Audit and Risk Committee and
the Remuneration and Nomination 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 program.
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.
92 p Brickworks Annual Report 2023
Peppermint Grove Residence
Bristile Roofing La Esandella Visum3 in Russet
Peppermint Grove, WA
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:
◗ determines the risk profile for the Company;
Remunerate fairly and responsibly
◗ The Board through the Remuneration and Nomination
Committee ensures that remuneration and nomination
policies and practices are consistent with strategic goals.
◗ The Company’s remuneration and nomination 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 2023 p 93
Carmel Place Klaycoat Collection
Barely Grey, Light Grey, Steel Grey, Charcoal
Manhattan, New York Ciy
94 p Brickworks Annual Report 2023
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 2023.
Directors
The names of the Directors in office at any time during or since the
end of the year are:
◗ Robert D. Millner AO 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
◗ Malcolm P. Bundey B.Bus (Accounting), GAICD
◗ Robyn N. Stubbs B.Bus, M.Sc., GAICD
◗ The Hon. Joel A. Fitzgibbon GradCertBA, GAICD
(appointed January 2023)
◗ The Hon. Robert J. Webster MAICD
(retired 22 November 2022)
Except for The Hon. Joel A. Fitzgibbon and The Hon Robert J.
Webster, all Directors have been in office for the full financial year.
Each Director’s experience and special responsibilities are set out
on pages 83 to 85 of this Annual Report.
Details for each Director’s directorships of other listed companies
held at any time in the three years before the end of the financial
year and the period of which such directorships are held are:
Robert D. Millner AO
◗ Aeris Resources Limited
◗ Apex Healthcare Berhad
◗ BKI Investment Company Limited
◗ New Hope Corporation Limited
◗ TPG Telecom Limited
◗ Tuas Limited
Appointed 2020
◗ Washington H. Soul Pattinson and Co. Limited Appointed 1984
Appointed 2000
Appointed 2000
Appointed 2003
Appointed 2022
Appointed 1995
◗ Milton Corporation Limited
Appointed 1998
Resigned 2021
◗ Australian Pharmaceutical Industries Limited Appointed 2000
Resigned 2020
◗ TPG Corporation Limited
Appointed 2000
Resigned 2020
Deborah R. Page AM
◗ Growthpoint Properties Australia Limited
◗ Magellan Financial Group Limited
Appointed October 2023
◗ The Star Entertainment Group Limited Appointed March 2023
◗ Pendal Group Limited
Appointed 2014
Resigned January 2023
Appointed 2021
◗ Service Stream Limited
Robyn N. Stubbs
◗ Aventus Group
(merged with HomeCo Daily Needs REIT)
◗ Inghams Group Limited
◗ Invocare Limited
Appointed 2010
Retired April 2023
Appointed 2015
Ceased 2022
Appointed 2021
Resigned June 2023
Appointed 2017
Resigned 2021
Company Secretary
◗ Susan L. Leppinus B.Ec; Llb; Grad Dip App Fin
Brickworks Annual Report 2023 p 95
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 2023 of
the Brickworks Group after income tax expense, amounted to
$394,694,000 compared with $854,391,000 for the previous year.
Dividends
The Directors recommend that the following final dividend be
declared:
Ordinary shareholders – 42 cents per share (fully franked)
The record date for the final ordinary dividend will be 1 November
2023, with payment being made on 22 November 2023.
Dividends paid during the financial year ended 31 July 2023 were:
(a) Final 2022 ordinary dividend of 41 cents per share (fully
franked) paid on 23 November 2022 (2021: 40 cents).
(b)
Interim 2023 ordinary dividend of 23 cents per share (fully
franked) paid on 2 May 2023 (2022: 22 cents).
Review and Results of Operations
A review of Brickworks Group operations and the results for the year
is set out on pages 5 to 45 and forms part of the Directors’ Report.
State of Affairs
There were no significant changes in the state of affairs of the
Brickworks Group during the year, other than those events referred
to in the Review of Operations and Financial Performance and the
Financial Statements.
After Balance Date Events
On 1 September 2023 the Company filed proceedings in the Federal
Court of Australia against BGC (Australia) Pty Limited and Midland
Brick Pty Limited seeking unspecified damages for various alleged
contraventions of sections 46 and 50 of the Competition and
Consumer Act. The claim is now before the Federal Court and a
further update will be provided in due course.
Apart from the above, 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.
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.
During FY2020, Brickworks finalised a plan to meet the
recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD), publishing our first TCFD Statement in
early 2022. An updated statement was published in early
2023 that includes an updated road map for implementing all
recommendations. Brickworks’ TCFD statements are 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.
Since the initial release of our Towards 2025 strategy in 2020,
Brickworks completed several acquisitions in North America. There
has been good progress towards our achieving our targets set in
2020 and we are now increasing our sustainability strategy targets to
encompass our operations in Australia and North America.
Our greenhouse gas reduction strategy roadmap to the recognised
standard of the Task Force on Climate-related Financial Disclosures
(TCFD) recommendations, includes risk management disclosures,
metrics and targets. Through this process, we have developed a
new carbon target: to achieve a 15% reduction in greenhouse gas
emissions by 2030, from a 2022 baseline, across our combined
Australian and North American business.
Our approach to climate change is integrated into our increased
sustainability strategy targets and focuses on:
◗ investment into renewable energy and continued investment
into developing feasible renewable biomethane opportunities,
◗ increased sustainable products target to increase volume of
verified sustainable products volume,
◗ increased investment into research and development into the
next generation clay brick and concrete block wall system.
The 2023 Sustainability Report available at www.brickworks.com.au
provides detailed information about environmental, social and
governance performance over the last financial year including our
US operations and the increased targets.
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.
96 p Brickworks Annual Report 2023
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.
Since 31 July 2023, Glen Gery was fined US$7,800 in September
2023 relating to unauthorised stormwater discharge as disclosed to
the regulator for which full corrective action has been taken.
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 53 to 68.
Risk Management
The Board of Brickworks has adopted a Risk Management
framework that identifies Risk Tolerance and Risk Appetite for the
Group and then considers how each identified risk is placed within
that framework.
That framework involves assessment of the likelihood of an event
occurring, the potential impact of each event and the controls and
processes in place to continually mitigate each risk.
The significant risks that may impact the achievement of the
Group’s business strategies and financial prospects are:
Building Products
The achievement of business objectives in the Building Products
Group may be impacted by the following significant risks:
Risk
Mitigation
Energy Supply–
reliability and
cost of gas and
electricity
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.
Serious Safety
Incidents
Environmental
incident
Products –
alternative
products and
product failure
Shift in housing
trend
The Group has a strong and evolving safety
culture and notwithstanding a well-developed
WHS system (refer further “Health and
Safety”) the Group actively seeks initiatives
to improve and refine health and safety
practices. Safety audits, risk assessments and
networking channels ensure the Group WHS
systems remain up to date and in alignment
with regulator and industry standards.
Health and safety programs in the US
business are being aligned to the Australian
operations establishing a common approach
across the business internationally.
Psychosocial health has emerged as an area
of concern following the COVID-19 pandemic
and Brickworks Australia now has 13 percent
of total employees qualified in Mental Health
First Aid to support employees and others
associated with the business.
The Group has a strong commitment
to environmental protection and a
comprehensive environmental compliance
system. The Group continues to focus
on implementing equivalent systems in
the expanding US business (refer further
“Environmental”).
The Group has a strong focus on research,
development and quality control. The Group
monitors market trends and has strategies to
diversify its range of building products and its
marketing approach.
The Building Products business has
significant exposure to the detached housing
market. Over the past two decades there
has been a trend towards multi-residential
construction. The Group has implemented
initiatives to increase exposure to the
multi-residential segment. This includes
expanding the product range (for example
masonry products, brick facing systems) and
increasing sales and marketing efforts in the
commercial and multi-residential segments.
New competitor Whilst barriers to entry are significant the
Production
capacity
Group monitors its Australian and US markets
for both domestic manufacturing and import
competitors and has adopted a customer
relationship and quality model, supported by
investment in research and development.
In both its Australian and US operations,
the Group manages production capacity by
adroit management of its manufacturing base
to correlate production to cyclical market
conditions as they occur. Production capacity
is underpinned by a long-term strategy of
plant upgrades moving to more efficient
plants. In this way the Group is able to meet
customer demand at the top of the cycle and
pare back capacity to demand levels as the
market cycles.
Brickworks Annual Report 2023 p 97
Directors’ Report
Business
Interruption –
plant failure or
underutilisation
and raw material
supply
Asbestos and
other respirable
dust risk
Market Risk –
deteriorating
market
conditions
Failure to
execute US
bricks strategy
effectively
There are multiple facilities throughout
Australia that can transport products between
locations as and when required and also
multiple plants in the US with no single plant
so large as to represent an existential threat
to the whole operation. The major facilities
have rolling risk reviews and reporting by
outside parties. The business also maintains
significant insurance policies to manage the
physical loss of assets and any loss of income
from an insurable interruption. Raw materials
are generally secured through ownership
of raw material reserves and maintaining
prudent raw material stockpiles.
An asbestos management plan is in place.
Building cladding is regularly removed and
replaced with non-asbestos based materials.
Where any friable asbestos is found, either
within a plant or during rehabilitation, it is
immediately quarantined and removed by
qualified reputable contractors, using the
most diligent safety standards. Respirable
crystalline Silica is deemed carcinogenic and
a crystalline silica management plan is in
place. Inhalable and respirable dust exposure
measurements are occurring at all operational
sites with a health monitoring program.
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.
The Group closely monitors economic
indicators and utilises independent market
forecasts for business planning purposes.
Investments have been made to expand the
product portfolio and geographic exposure,
in order to reduce the risks associated with
declines in any specific market.
During the second half of the current financial
year, the Group made the decision to cease
the Austral Bricks Western Australian
operations.
The Group is currently pursuing growth in the
United States (following an initial entry in 2019
and a number of subsequent acquisitions).
Performance to date is lagging the initial
business case, due in part to COVID-19 related
restrictions that have impacted operations and
sales activity. 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.
98 p Brickworks Annual Report 2023
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
Climate related
risk
The Group maintains conservative gearing
levels in recognition of the industry’s cyclical
nature. Senior debt facilities are maintained
with financial lenders with whom an open
and transparent relationship is maintained.
Multi-currency facilities (AUD and USD) are
maintained over various tenors ranging from
1 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., as
well as operational technology risks with a
potential to adversely impact the Group’s
manufacturing operations. 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. A significant
ongoing focus is on addressing key operational
technology risks including review of controls at
a site level.
The Group continues to be cautious and
monitor COVID-19 impacts on its operations
and provides ongoing support for staff as
required.
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;
regulatory standards and materials standards
reducing competitiveness and a reduction in
investor and lender appetite for Brickworks if
decarbonisation targets are not met.
The Group has developed a new carbon
target: to achieve a 15% reduction in
greenhouse gas emissions by 2030, from a
2022 baseline, across the combined Australia
and North America business. 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.
Property
The achievement of business objectives in Land and Development
may be impacted by the following significant risks:
Risk
Mitigation
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.
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.
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.
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3
2
N/A
N/A
N/A
3
3
3
2
1
2
2
N/A
2
2
2
1
1
’
s
r
o
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10
10
9
10
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5
4
Number of
Meetings held:
Number attended:
R D Millner
M J Millner
L R Partridge
D R Page
M P Bundey
R N Stubbs
J A Fitzgibbon
(appointed 1 January 2023)
R J Webster
(retired 22 November 2022)
1.
In 2023 the Remuneration Committee and the Nomination
Committee were combined into the Remuneration and Nomination
Committee.
Directors Interests
As at 31 July 2023, Directors had the following relevant interests in
Brickworks shares:
Director
R D Millner
M J Millner
L R Partridge
D R Page
M P Bundey
R N Stubbs
J A Fitzgibbon
Ordinary Shares
4,817,967
4,797,141
226,000*
17,400
3,970
1,000
500
*
In addition, Lindsay Partridge has been allocated 82,049 ERP
awards on terms subject to performance criteria outlined in the
remuneration report.
As at 31 July 2023, 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 2023 p 99
Farrier Lane Residence
Customised Carbon Neutral Bricks
White Gum Valley, WA
100 p Brickworks Annual Report 2023
100 p Brickworks Annual Report 2023
Chairman of the Remuneration
and Nomination Committee
Letter
On behalf of the Board of Directors, I am pleased to provide you with the FY2023 Remuneration Report
for which we are seeking your approval at the upcoming Annual General Meeting.
Our People
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 10.0 at 31 July 2023 from 12.2 at 31 July 2022 as we continue to target a
reduction of injury rates year on year.
Operational and Financial Performance
Brickworks had another year of strong performance in FY2023 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:
◗ Commenced commissioning of the Austral Bricks Plant 2 at Horsley Park
◗ Completed commissioning of the Austral Masonry Oakdale East plant in New South Wales
◗ Launch of a new business unit in Austral Bricks – Advanced Cladding Systems
◗ Entered into a supply agreement with Brickability PLC for the sale of a minimum 10 million bricks per annum into the UK
◗ Continued consolidation of brick plants in the US to reduce the plant footprint and improve overall plant efficiency
◗ Completed extensive upgrades to the US Sergeant Bluff and Adel plants
◗ Completed the sale of Oakdale East Stage 2 into the JV Property Trust for $302 million delivering a gain of $263 million after taking into
account book value and transaction costs
◗ Continued property development activity within the JV Trust with the completion of several new facilities at Oakdale West reaching the
milestone of 1 million square meters of leased area within the Trust
Brickworks Annual Report 2023 p 101
Directors’ Report
Financial
Despite the significant headwinds caused by global inflation and challenging labour and construction markets the Group has finished with a
strong year across all performance measures.
◗ The annual EBIT from continuing operations (before significant items) generated by Building Products Australia has decreased from
$152.9 million in FY2022 to $52.8 million in FY2023. The prior year EBIT from continuing operations included an amount of $89.1 million
representing a gain on sale of assets to the Brickworks Manufacturing Trust. Overall, excluding the gain arising on this transaction, the
Building Products Australia EBIT in FY2023 reduced by 17% compared to the prior year ($52.8 million vs $63.8 million) primarily on
account of softer market conditions in the building industry.
◗ The annual EBIT (before significant items) generated by the Property division in Australia has reduced from $643.7 million in FY2022
to $505.5 million in FY2023. The prior year EBIT included a development profit of $387.0 million and revaluation gains of $227.4 million,
compared to a development profit of $78.3 million and revaluation gains of $112.3 million in the current year. Current year EBIT includes a
gain of $262.6 million in respect of the Oakdale East Stage 2 sale into the JV Property Trust.
◗ The annual EBIT (before significant items) generated by Brickworks North America has decreased from $24.9 million in FY2022 to
$12.8 million in FY2023. This included an EBIT of $6.5 million arising in respect of Property transactions (2022: $13.2 million).
◗ The Underlying Shareholder Return on NTA – excluding equity accounting investment in WHSP – demonstrates a reduction from
FY2022 to FY2023 from 47.1% to 24.7% primarily on account of significant property revaluation gains and development profits
recognised last year.
◗ Statutory Group NPAT (after significant items) in FY2023 amounted to $394.7 million compared to $854.4 million in FY2022. The prior
year statutory 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 2023 amounted to $97.1 million compared to the prior year operating cash flow
of $130.5 million. The reduction was primarily driven by softening market conditions in Australia, as well as increased interest payments.
Property sales in Australia and North America contributed an additional cash flow of $28.4 million compared to $227.5 million last year.
◗ Brickworks has preserved its strong balance sheet position and conservative debt metrics as it has grown the Property Division and
expanded into Building Products North America whilst at the same time continuing to grow the dividends paid to shareholders. At 31 July
2023 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 14.5%, Leverage Ratio at 2.73x and Interest Cover at 6.24x. During the financial year
ended 31 July 2023 Brickworks increased its dividend from 63.0 to 65.0 cents per share (3.2% 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 FY2023
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 2023 financial year included:
Executive Incentives
◗ Short Term Incentives (STI): Recognising the Company’s strong operational and financial performance, as well as leadership during
FY2023, the Board awarded 78% of the maximum annual STI opportunity to the Managing Director, Mr Lindsay Partridge and the Chief
Financial Officer, Mr Grant Douglas, noting that financial and non-financial metrics set at the beginning of the year to trigger this, were
met. The Executive General Manager Building Products, Mark Ellenor achieved 70% of the target annual STI opportunity reflecting the
Building Products performance across both Australia and North America. The Executive General Manager, Property and Development,
Ms Megan Kublins achieved 97% of the target annual STI opportunity based on consideration of divisional performance excluding
revaluation gains.
◗ Long term incentives (Current Executive Rights LTI Plan): In FY2023 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 2022 to 31 July 2025. This included a pro-rata award to the previous CFO prior to his cessation date.
◗ The Executive Rights Plan was introduced in 2019 and the second full allocation to the MD and the previous CFO under this plan occurred
in FY2021 following shareholder approval and was tested on 31 July 2023.
◗ The Absolute TSR Performance over a 3-year period (for testing historical allocations) was 24.7% 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 86th 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 the previous CFO in 2018 which were eligible for testing at 31 July 2023 established the following:
◗ The Absolute TSR Performance (for testing of historical allocations) was 21.9%. Relative TSR Performance (for testing of historical
allocations) was at 212% 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 2023 vesting.
102 p Brickworks Annual Report 2023
Remuneration in FY2023
Brickworks is a diversified international Building Products, Investments and Property company today. Retention of executives and highly
skilled staff and pay for performance continues to be a high priority for the Brickworks Board.
MD and CFO
Remuneration Structure
Total Fixed Remuneration (TFR) (including car allowance and superannuation)
on an annual basis
Short Term Incentive
Long Term Incentive (subject to the relative and absolute TSR performance measures
being met over three years)
For the Managing Director, a 5% salary increase came into effect from 1 July 2022.
MD
FY2023
CFO
FY2023
$1,641,500
$650,000
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
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) taking effect from 1 July 2022. Together with a $5,000 increase in the fees for each of the Remuneration Committee Chair and
the Audit and 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 $1,500,000 per annum. Following the 2022
AGM the Remuneration Committee and the Nomination Committee were combined into one Remuneration and Nomination Committee.
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 and Nomination Committee Chair
Brickworks Annual Report 2023 p 103
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 2022 AGM with 98.33% of votes in favour of the
Remuneration Report.
During FY2023 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 AO
Non-executive Chair
Mr M. Millner
Non-executive Deputy Chair
Mr L. Partridge AM
Executive Director (Managing Director)
Mrs D. Page AM
Non-executive Director
Mr M. Bundey
Ms R. Stubbs
Non-executive Director
Non-executive Director
The Hon. R. Webster Non-executive Director (retired 22 November 2022)
The Hon J. Fitzgibbon Non-executive Director (appointed 1 January 2023)
Executive KMP
Mr G. Douglas
Mr R. Bakewell
Mr M. Ellenor
Ms M. Kublins
Chief Financial Officer (from 29 August 2022)
Chief Financial Officer (ceased employment on 28 February 2023)
Executive General Manager – Building Products (from 1 August 2022)
Executive General Manager – Property & Development
104 p Brickworks Annual Report 2023
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 and Nomination Committee.
◗ Overall responsibility for the remuneration strategy and outcomes for executives and non-executive Directors
◗ Reviews and, as appropriate, approves recommendations from the Remuneration and Nomination Committee
Brickworks Board
External
Advisors
◗ Provide
independent advice,
information and
recommendations
relevant to
remuneration
decisions
◗ Throughout
the year, the
Remuneration
and Nomination
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 and Nomination 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
Developing and implementing a process for the evaluation of the performance of the Board of Directors
Managing Director and Human Resources Manager
Provides information to the Remuneration and Nomination 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 and Nomination Committee (formerly two separate committees combined into one committee
following the 2022 AGM) which operates under the delegated authority of the Board of Directors. The Remuneration and Nomination
Committee charter is included on the Brickworks website (www.brickworks.com.au). All non-executive Directors of Brickworks are members
of the Remuneration and Nomination Committee and the membership of Committee is as follows:
Mr M. Bundey
Mr M. Millner
Non-executive Committee Chair
Non-executive Director
Mr R. Millner AO
Non-executive Director
Mrs D. Page AM
Non-executive Director
Ms R. Stubbs
Non-executive Director
The Hon J. Fitzgibbon Non-executive Director
The Committee is chaired by Malcolm Bundey an independent non-executive Director. The Committee is authorised by the Board to obtain
external professional advice, and to secure the attendance of advisers with relevant experience and expertise if it considers this necessary.
Brickworks Annual Report 2023 p 105
Remuneration Report
1.5
Use of remuneration consultants
Where the Remuneration and Nomination 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.
◗ In the prior 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 report was issued in August 2022 and disclosed in the
last year’s remuneration report. The consideration for the remuneration benchmarking for executives provided by Aon was $11,000 and
was paid in FY2022 as disclosed last year.
◗ Remuneration information was provided to the Committee as an input into decision making only. The 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 and Nomination Committee.
◗ During the current year no remuneration recommendations, as defined by the Corporations Act, were provided.
1.6
Board Policies for determining remuneration
Remuneration strategy and guiding principles
The guiding remuneration principles in Brickworks remuneration structure include:
◗ alignment between executive remuneration outcomes and shareholder outcomes;
◗ driving performance by linking remuneration outcomes to clearly specified targets; and
◗ reflecting market practice by benchmarking remuneration outcomes against relevant peer companies.
There are three main parts to the Brickworks business model:
1. the Building Products Group (Australia and North America) – Austral Bricks, Concrete Products1, Bristile Roofing, and Brickworks
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 Limited ('WHSP') 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 and Nomination 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 to 20 years.
The Property Trust established 16 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.
1
Following the prior year decision to exit concrete precast panel manufacturing operations and sell the assets, the Austral Precast assets are
classified as held for sale with results for the current and prior financial year classified as losses on discontinued operations.
106 p Brickworks Annual Report 2023
Remuneration Components
2
2.1. Remuneration structure
The core elements of Brickworks remuneration structure for the executive KMP are outlined below:
Total Executive Remuneration
FIXED
AT RISK
Fixed remuneration
Short-term incentive
Long-term incentive
Fixed remuneration having regard to the
market for jobs of comparable size and
responsibility
Brickworks' executives participate in an STI
plan
For the MD and CFO, the LTI is assessed
over three years and linked to:
The STI is weighted 75% to relevant
business unit financial metrics and 25% to
individual performance metrics
Refer to 2.5 for further details
◗ Relative total shareholder return
◗ Absolute total shareholder return
For the other executive KMP grants are
made following as assessment of prior year
performance
Refer to 2.7 for further details
◗ For the MD and CFO, equity with
performance assessed over three years
◗ For other executives 20% of an LTI
grant vests annually on 31 July over
five years
◗ Base salary
◗ Superannuation
◗ Other benefits such as maintained
motor vehicles
◗ Other eligible salary sacrifice benefits
◗ 100% cash
◗ For the MD and CFO 50% deferred into
equity for one year
2.2 Historical performance, shareholder wealth and remuneration
Financial Performance
The following table shows a number of relevant measures of Group financial performance over the past five years. Although a detailed discussion
on the current year results is included in the review of operations and is not duplicated in full here, an analysis of the figures below demonstrates
sustainable dividend growth, and consistent performance notwithstanding our Building Products operation operates in a highly cyclical industry.
This highlights the benefit of our strategy and diverse operations in Investments and Property to complement the cycles in Building Products.
Measures of Group performance
5-year comparison
2019
2020
2021
2022
2023
Revenue, EBIT and underlying NPAT 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)*
Underlying NPAT before
significant items after tax
(millions)*
Statutory NPAT
including significant items
(millions)*
*
Statutory Group NPAT (after significant items) in FY2023 amounted to $394.7 million compared to $854.4 million in FY2022. The prior year
statutory 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.
Brickworks Annual Report 2023 p 107
Remuneration Report
The graph below shows the alignment of LTI outcome with medium to long term financial performance2.
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
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
Total Shareholder Returns (TSR)
Our diversified portfolio of assets has translated into consistently strong absolute shareholder returns, including a return of 26.6% for the year
ended 31 July 2023 compared to a 11.1% 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
9.3%% on a compound basis over the 20 years.
Annual TSR
Brickworks Ltd
All Ordinaries Accumulation Index
BKW Relative Performance
1 year
26.6%
11.1%
15.5%
3 years
20.0%
12.2%
7.8%
5 years
14.2%
7.7%
6.5%
10 years
15 years
20 years
11.3%
8.5%
2.8%
8.9%
7.1%
1.8%
9.3%
9.0%
0.3%
2
The Leverage and Interest Cover Ratio covenants only apply if gearing exceeds 22.5%.
108 p Brickworks Annual Report 2023
Total Shareholder Return (Cumulative)
3-year comparison
150%
100%
50%
0%
-50%
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
2
2
0
2
t
c
O
3
2
0
2
n
a
J
3
2
0
2
r
p
A
3
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, Building Products revenue per employee
increased by 4% when compared to FY2022. Overall, a significant
improvement in productivity measures was observed over the last 2
years with Building Products revenue per employee increasing from
US$189,563 in FY2021 to USD$321,620 in FY2023. This was driven
by additional revenue and synergies related to the IBC acquisition
in August 2021, continued rationalisation of manufacturing and
retail operations and an increase in participation in the detached
residential market.
2.3 Potential Remuneration Mix
Total remuneration for the MD and the other executive KMP’s
comprises both fixed remuneration and an at-risk component
(STI and LTI). The mix shown in the graph below is the potential
remuneration based on the current remuneration at 31 July 2023
with STI and LTI based on maximum opportunities.
This structure is designed to retain and pay executives
competitively based on their performance.
Building Products Australia
Revenue per Employee
($'000)
800
700
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
3
2
0
2
Brickworks Annual Report 2023 p 109
Remuneration Report
Potential MD Remuneration Mix
Potential CFO Remuneration Mix
Fixed Remuneration
37.7%
LTI
28.3%
STI – Cash
17.0%
STI – Shares
(deferred for 1 year)
17.0%
Fixed Remuneration
43.1%
LTI
25.9%
STI – Cash
15.5%
STI – Shares
(deferred for 1 year)
15.5%
Potential Executive GM Building Products
Remuneration Mix
Potential Executive GM Property & Development
Remuneration Mix
Fixed Remuneration
46.5%
LTI
26.8%
STI – Cash
26.8%
Fixed Remuneration
52.1%
LTI
23.9%
STI – Cash
23.9%
2.4.
Remuneration Component – Fixed Remuneration
For the Managing Director, a 5% salary increase came into effect from 1 July 2022 for the FY2023 year.
A benchmarking exercise was undertaken by Aon dated August 2022 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.
110 p Brickworks Annual Report 2023
By way of summary:
◗ Brickworks MD’s TFR is positioned within the market with 6% above median and 8% below 75th percentile.
◗ 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.
◗ The MD’s remuneration is reflective of the value that has been created for shareholders throughout his tenure as outlined below.
Total Shareholder Return
20-year comparison
Brickworks
9.3% p.a. growth (since July 2003)
All Ords Accumulation Index
9.0% p.a. growth (since July 2003)
500%
400%
300%
200%
100%
0%
3
0
0
2
5
0
0
2
7
0
0
2
9
0
0
2
1
1
0
2
3
1
0
2
5
1
0
2
7
1
0
2
9
1
0
2
1
2
0
2
3
2
0
2
2.5.
Remuneration Component – Short-Term Incentives (STI)
The information below outlines the Company’s STI Plan for FY2023:
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 executive KMP
For the Executive General Manager Building Products the STI is awarded up to a maximum of 60% of total fixed
remuneration. For the Executive General Manager Property KMP 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.
Brickworks Annual Report 2023 p 111
Remuneration Report
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 subject to a tenure of service requirement 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)
60% of total fixed remuneration (inc. base
salary, car allowance and superannuation)
Maximum STI
opportunity (cash)*
90% of total fixed remuneration
72% of total fixed remuneration
Other Executive
KMP** ***
Between 10% and 60% of fixed remunera-
tion (inc. base salary and superannuation)
60% of total fixed remuneration for EGM
Building Products
50% of total fixed remuneration for EGM
Property
*
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 performance rights
to vest over the LTI plan’s performance period.
Each year at the beginning of the year the Remuneration and Nomination 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
executive KMP.
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.
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:
112 p Brickworks Annual Report 2023
Why are the
STI measures
adopted
considered
appropriate?
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.
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.
What is the
financial and
non-financial
component of
the STI Award
for the MD and
CFO and how is
it applied?
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
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 FY2023 incentive
amounts payable.
Brickworks Annual Report 2023 p 113
Remuneration Report
What is the
financial and
non-financial
component of
the STI Award
for the MD and
CFO and how
is it applied?
continued
What is the
financial and
non-financial
component of
the STI Award
for other
executive KMP
and how is it
applied?
Cash flow – 37.5% of total available STI Award
Achievement
Below base cash flow
STI Award
0%
Between base profit and target cash flow
Between 100% and 110% of target cash flow
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 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.
Other STI award criteria
The remaining 25% of any STI Award is subject to the achievement of challenging non-financial measures with profit
performance used to determine the maximum STI award for these components.
◗ 12.5% of potential STI award (up to a maximum of 15%) is paid if all RONTA3/quality of earnings considerations are
met (otherwise 12.5% of the STI award is forfeited)
◗ 6.25% of potential STI award (up to a maximum of 7.5%) is paid if all workplace health & safety (“WHS”) initiatives
and outcomes are met (otherwise 6.25% of the STI award is forfeited)
◗ 6.25% of potential STI award (up to a maximum of 7.5%) is paid if all succession planning criteria is met (otherwise
6.25% of the STI award is forfeited)
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.
In respect of the Building Products division the cash measure used is based on divisional EBITDA, research &
development claim benefits achieved, changes in Days Sales Outstanding (DSO’s) and inventory movements in the year.
This KPI considers a strong focus on cash generation through improved cash collections and inventory management
required from the senior Building Products executives and the wider management team.
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.
3
Return on Net Tangible Assets.
114 p Brickworks Annual Report 2023
When and how
is the STI Award
assessed?
MD and CFO
At the end of the financial year the Remuneration and Nomination 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 Committee with an objective assessment of each
individual’s performance.
Other executive KMP
At the end of the financial year the MD assesses the executive KMP’s actual performance against their respective KPIs
set at the beginning of the financial year and determines the STI quantum to be paid to the executive KMP. The MD
provides these assessments to the Remuneration and Nomination Committee annually for review and approval.
Is quality of
earnings a
relevant factor
in assessing STI
Awards?
The Remuneration and Nomination 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.
Can the Board
clawback STI
Awards?
The Board and the Remuneration and Nomination 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.
2.6. STI outcomes
The table below outlines the weighting of financial and non-financial KPIs in relation to each executive KMP for financial year 2023 and the
performance achieved. Unless otherwise stated all earnings measures exclude significant items.
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. 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. 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.
Executive KMP 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
WHSP) was $269.9 million compared to $408.1 million in the
prior financial year.
Outcome
76%
achieved
Cash flow
This translated into a partially achieved STI target.
The Group Cash Flow for the year ended 31 July 2023 was
$427.1 million compared to $346.9 million in the prior year. This
translated into overperformance in respect of the STI target.
106%
achieved
FY2023 Cash Flow measure includes:
◗ the subscription of units in the trust following the sale
of the Oakdale East land to the JV Property Trust
($301.6 million)
◗ cash proceeds from other property sales in Australia and
North America ($28.4 million).
FY2022 Cash Flow measure includes net proceeds of
$198.3 million from the Project Build transaction and the sale
of other property assets across the Group.
EGM Building
Products
Divisional profit against target for
Building Products Australia and North
America
Building Products divisional profit amounted to $65.6 million
compared to $88.7 million in the prior financial year. The prior
year EBIT excludes the gain on sale of assets to the Brickworks
Manufacturing Trust.
65%
achieved
This translated into a partially achieved STI target.
Cash flow
The Building Products cash measure amounted to $131.2 million
compared to $156.4 million in the prior financial year.
55% achieved
This translated into a partially achieved STI target.
Brickworks Annual Report 2023 p 115
Remuneration Report
Executive KMP Measure(s)
Performance
Outcome
Financial 75%
EGM Property &
Development
Divisional profit against target for
Property
Cash Flow
Property divisional profit (excluding property revaluation
gains) amounted to $393.2 million compared to the prior year
profit of $416.2 million.
96%
achieved
This translated into a partially achieved STI target.
The Cash Flow measure applicable to the Property division
amounted to $348.9 million compared to $234.4 million. The
FY2023 amount included the subscription of units in the
JV Property Trust ($301.6 million) and proceeds from other
property sales in Australia ($11.2 million).
100%
achieved
This translated into a fully achieved STI target.
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 tangible assets/quality
of earnings considerations
◗ Return on Net Tangible Assets for the Group excluding
investments in associates (WHSP) amounted to 24.3%
which translated into a fully achieved STI target.
◗ An improvement in injury frequency rates with the Group
Total Recordable Injury Frequency Rate (TRIFR) of 10.0
compared to 12.2 last year
◗ Other key lead target metrics all met, including:
◗ presence of safety indicators met with respect to all
required targets (2,490 workplace inspections, 694
safety device checks, 1,952 safety contacts conducted
in FY2023).
◗ drug and alcohol testing embedded into the business
with approximately 70% of company employees
tested in Australia in FY2023.
◗ psychosocial procedures developed and documented
as part of Brickworks safety management system,
e-learning courses developed and assigned,
presentations delivered to Brickworks Board,
executives and employees in FY2023.
◗ Development of Brickworks North America safety
management system supported through the
application and rollout of the Group procedures, safety
software and reporting tools across the US operations.
Safety
Key lag target metrics across the
Group:
◗ Where the last year’s TRIFR is 5
or less, the TRIFR target is the
average TRIFR over the past 3
years. Where the last year’s TRIFR
is between 5 and 20 the TRIFR
target is +10% of last year’s TRIFR.
Where the last year’s TRIFR is
above 20, TRIFR target is same or
better than last year.
Other key lead target metrics
◗ Presence of safety indicators
(these targets are based on a
10% increase from the last year’s
final numbers for Australia).
Workplace Inspections >2,100
Safety Device checks >495
Safety Contacts >1,488
◗ Random drug and alcohol testing
of at least 25% of company
employees in Australia
◗ Development of psychosocial
procedures written into
Brickworks safety management
system – eLearning Courses for
employee training
◗ Support Brickworks North
America safety team with
Management System
development and rollout
116 p Brickworks Annual Report 2023
Executive
Measure(s)
Performance
Outcome
Non-financial 25%
MD & CFO
Succession Planning
Key Metrics:
◗ Regular talent and succession
reviews
◗ Mentoring program for emerging
leaders in Australia
◗ Successful appointment of Mark Ellenor to an expanded
role of the Group Chief Operating Officer
◗ Successful completion of bi-annual succession strategy
sessions
100%
achievement
of succession
planning KPIs
100%
achievement
of non-
financial KPIs
EGM Building
Products
Building Products Return on net
tangible assets/ quality of earnings
considerations
Return on Net Tangible Assets for the Building Products
division of 21.3% which translated into a fully achieved STI
target
◗ An improvement in injury frequency rates with the Group
Total Recordable Injury Frequency Rate (TRIFR) of 10.0
compared to 12.2 last year.
◗ Other key lead target metrics all met, including:
◗ presence of safety indicators met with respect to
all required targets (2,490 workplace inspections,
694 safety device checks, 1,952 safety contacts
conducted in Australia in FY2023).
◗ SHEMS rollout in North America completed.
◗ 4 quarterly safety meetings held in North America.
Safety
Key lag target metrics across the
Group:
◗ Where the last year’s TRIFR is 5
or less, the TRIFR target is the
average TRIFR over the past
3 years. Where the last year’s
TRIFR is between 5 and 20 the
TRIFR target is +10% of last
year’s TRIFR. Where the last
year’s TRIFR is above 20, TRIFR
target
◗ Presence of safety indicators
(these targets are based on a
10% increase from the last year’s
final numbers for Australia).
Workplace Inspections > 2,100
Safety Device checks >495
Safety Contacts >1,488
◗ Rollout of Safety, Health &
Environment System (SHEMS)
fully completed in Brickworks
North America
◗ 4 quarterly safety meetings held
in North America in FY23
Succession Planning and Diversity
◗ Female employees as a proportion of total workforce
◗ Diversity greater than last year
◗ President and VP Production
appointed in North America
EGM Property &
Development
Property Trust Return on net
tangible assets/quality of earnings
considerations
Safety
Target Metrics
◗ Category 1 events same or better
than last year
◗ Category 2 events (injuries, near
misses and development related
risks) actioned or closed out
within 6 months
increased from 24.6% to 25.6% in Australia
◗ Female and minority employees as a proportion of
total workforce increased from 36.1% to 37.9% in North
America
◗ Brickworks North America President and VP Production
both appointed during FY2023
Return on Net Tangible Assets for the Property division of
22.2% which translated into a fully achieved STI target.
Strong safety performance as measured by the number of
safety events in the financial year ended 31 July 2023:
◗ No Category 1 events (FY2022: nil)
◗ All Category 2 events actioned and closed within
6 months
100%
achievement
of non-
financial KPIs
Mixture of Strategic and Operational
relevant to the executive KMP
◗ Successfully managed Trust property leases to achieve
high occupancy rates (>99%) at 31 July 2023
◗ Successful sale of Oakdale East Stage 2 into the JV
Property Trust
Brickworks Annual Report 2023 p 117
Remuneration Report
STI achieved
The table below outlines the weighting of financial and non-financial KPIs in relation to each executive KMP for 2023 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 KMP for 2023.
Target STI
Opportunity
$
Max STI
Opportunity
$
Weighting
%
Achieved*
%
Forfeited
%
Weighting
%
Achieved*
%
Forfeited
%
FINANCIAL
NON-FINANCIAL
1,231,125
1,477,350
390,000
468,000
75%
75%
91%
91%
9%
9%
25%
25%
100%
100%
628,554
628,554
75%
60%
40%
25%
100%
280,000
280,000
75%
96%
4%
25%
100%
0%
0%
0%
0%
STI
awarded***
$
1,145,128
362,757
441,648
271,340
STI over
performance
subject to LTI
$
–
–
–
–
Executive KMP
MD
CFO
EGM Building
Products**
EGM Property
& Development
Calculated as % of Target STI opportunity.
*
** Translated into AUD based on the AUD/USD rate of 0.6682 applicable at 31 July 2023.
*** 50% of the MD and CFO’s STI awards deferred into equity, for one year being $572,564 for the MD and $181,379 for the CFO.
2.7. Remuneration Component – Long Term incentives (LTI) for FY2023
What is the LTI?
The Group operates an LTI Plan through the Brickworks Deferred Employee Share Plan and Executive Rights Plan
in which employees receive Brickworks Limited shares or performance rights. No consideration is payable by
participants for shares or performance rights under the terms of the plan.
What is the scope
of the LTI?
What is the
purpose of the
LTI?
What is the LTI
Opportunity for
the MD and CFO?
What is the LTI
Opportunity for
other executive
KMP?
What LTI
performance
measures apply
to executive KMP
(other than the
MD and CFO)?
What LTI
performance
measures apply
to the MD and
CFO?
The LTI includes:
◗ a broad-based employee share plan with 512 employees participating as at 31 July 2023 via 1,131,835 shares on
allocation of which 33.88% remain unvested (and 66.12% vested). In addition, 52,258 shares in the plan were
forfeited during the year to 31 July 2023; and
◗ an Executive Rights Plan with 32 participants as at 31 July 2023 via 618,349 rights on allocation of which 70.02%
remain unvested (and 29.98% vested). 0 rights were forfeited during the year to 31 July 2023.
The primary purpose of the LTI is the retention of the Company’s senior executive team.
The LTI also provides alignment between executive remuneration and shareholders, as measured by the absolute and
relative total shareholder return (TSR).
The value of shares or performance rights granted to the MD 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.
For all other executive KMP, 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
executive KMP.
The vesting of shares/rights to other executive KMP 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 2022 to 31 July 2025.
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 2022. The actual share price
used to compare to the TSR target share price is the 90-day VWAP prior to 31 July 2025.
The remaining 50% of the award is subject to an absolute TSR p.a. compounding vesting condition also over the same
period.
118 p Brickworks Annual Report 2023
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
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 2023
1 Year to
31 July 2022
1 Year to
31 July 2021
1 Year to
31 July 2020
7.8%
13.8%
25.1%
28.4%
(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 25.1% 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 2023 was 20.0%.
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.
How does the
Absolute TSR
measure (50%
of each award)
work?
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
Brickworks Annual Report 2023 p 119
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.
Brickworks Asset Exposure
Strategic
Investments
Large caps
Property
Building Products
Private Equity
Structured Yield
17%
14%
49%
11%
4%
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 and
Nomination 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.
Dividends will not be paid on unvested performance rights, and will only be granted 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 executive KMP through the LTI executive rights plan. Shares
granted to employees other than the MD, CFO and executive KMP were issued as new shares.
120 p Brickworks Annual Report 2023
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 FY2023 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 2023 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-2022
1-Aug-2021
1-Aug-2020
1-Aug-2019
1-Aug-2018
31 July 2023
25.7%
11.9%
32.6%
19.6%
19.7%
21.9%
8%
100% vested
MD – 3,487 shares
Previous CFO (Robert Bakewell) – 1,821 shares
Brickworks’ Average TSR of 21.9% 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 2023 (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 94.0% for the period from 1 August 2020 to 31 July 2023 is equal to an annual TSR of 24.7%. As this is higher than
the threshold of 8% p.a. for 100% vesting, all awards under the Absolute TSR test will vest (MD – 15,722 shares to vest, previous CFO (Robert
Bakewell) – 8,069 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:
TSR
1 year
2 years
3 years
4 years
5 years
Simple average
Outcome
XJOAI
Franked
8.9%
6.4%
16.1%
9.3%
11.0%
10.3%
Brickworks
(inc. Franking)
Brickworks
as % Index
Vesting criteria
2018 allocation
25.7%
11.9%
32.6%
19.6%
19.7%
21.9%
If Brickworks’ TSR as a
% of the index’s return is
greater than 120%, then
all shares subject to the
Relative Test will vest.
211.9%
100%
MD – 3,487 shares
Previous CFO (Robert Bakewell) – 1,821 shares
Brickworks’ relative TSR performance of 211.9% 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 2023.
Brickworks Annual Report 2023 p 121
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 2020 to 31 July 2023, Brickworks generated a TSR of 94.0%, which would place BKW at the 86th
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 – 15,721 shares to vest, previous CFO (Robert Bakewell)– 8,069 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 2023, there were 620 employees participating in the Brickworks Deferred Employee Share Plan and the Brickworks Exempt
Employee Share Plan, holding 1,222,156 shares (0.8% 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
KMP Employment Contracts
Termination payments
A payment will be made by the Company to KMP upon termination or bona-fide retirement, equivalent to a proportion (not exceeding
100%) of each executive KMP’s average base pay for the previous 3 years, and any unvested shares or performance rights held on behalf
of the executive KMP will remain within the employee share plan and retain their performance/vesting criteria. If an executive KMP resigns,
any unvested shares or rights will be forfeited. The Board and the Remuneration and Nomination 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 executive KMP. It can terminate an executive KMP’s employment on months’ notice (or
payment in lieu of notice) and executive KMP’s can be terminated on 6 months’ notice.
If the MD or any other executive KMP 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 KMP Restraint
All executive KMP’s 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 KMP’s employment contract to prevent executive KMPs 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 executive KMP 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 executive KMP with deep corporate
knowledge and significant capacity to contribute to the profitability of the Company from seeking employment with competitors.
122 p Brickworks Annual Report 2023
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 $1,500,000, and was approved by shareholders at the 2022 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 FY2023 and FY2024 are as follows:
Chair
NED Base Fee
Member – Audit & Risk Committee
Member – Remuneration & Nomination Committee
Chair – Audit & Risk Committee
Chair – Remuneration & Nomination Committee*
FY2023
$282,555
$141,278
$8,694
$10,868
$27,822
$41,678
FY2024
$293,857
$146,929
$9,042
$11,302
$28,934
$43,345
*
The Remuneration and Nomination Committee was combined during the year and the fees reflect the fee previously paid to both Chairs.
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 two participating Directors, which have been fully provided for in the Company’s financial
statements, are as follows:
Name
R. Millner
M. Millner
Benefit as at 30 June 2003
$300,000
$150,000
Brickworks Annual Report 2023 p 123
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 executive KMP during the financial year ended 31 July 2023 are
disclosed in the following table.
Base fees/
salary
Non-
monetary
benefits
Post
Employment
(Super)
Total fixed
remuneration
Short Term
Incentive
Long Term
Incentive4
Other
Total
Directors
RD Millner
MJ Millner
JA Fitzgibbon5
DR Page
RJ Webster6
MP Bundey
RN Stubbs
LR Partridge
Year
2023
2022
2023
2022
2023
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
254,793
245,559
137,196
132,224
84,907
178,993
167,746
47,477
148,043
163,883
154,324
145,036
154,540
1,616,208
1,548,923
Total
2023
2,628,493
2022
2,551,359
–
–
–
–
–
–
–
–
–
–
–
–
26,860
24,662
14,463
13,280
8,976
–
–
4,985
14,869
17,276
15,501
15,289
15,515
281,653
270,221
151,659
145,504
93,883
178,993
167,746
52,462
162,912
181,159
169,825
160,325
170,055
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,529
4,550
7,529
4,550
25,468
1,649,205
1,145,128
743,777
23,712
1,577,185
1,409,736
840,206
113,317
2,749,339
1,145,128
743,777
107,539
2,663,448
1,409,736
840,206
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
281,653
270,221
151,659
145,504
93,883
178,993
167,746
52,462
162,912
181,159
169,825
160,325
170,055
3,538,110
3,827,127
4,638,244
4,913,390
4
5
6
Reflects the grant date fair value of the shares/executive rights vested during the financial year.
JA Fitzgibbon was appointed on 1 January 2023.
R Webster retired on 22 November 2023.
Year
Base fees/
salary
Non-
monetary
benefits
Post
Employment
(Super)
Total fixed
remuneration
Short Term
Incentive
Long Term
Incentive7
Other
Total
Other Key Management Personnel
RC Bakewell8
2023
476,996
24,446
2022
784,339
GS Douglas9
2023
582,104
MA Ellenor10
2023
1,464,045
MM Kublins
2023
579,208
2022
553,288
Total
2023
3,102,353
2022
1,337,627
22,377
13,901
46,291
7,697
7,719
92,335
30,096
516,196
–
382,809
178,324
1,077,329
14,754
23,712
830,428
579,509
435,358
23,360
619,365
362,757
106,516
25,468
1,535,804
438,825
275,522
25,468
23,712
612,373
271,340
399,307
584,719
287,500
340,122
–
–
–
–
–
1,845,295
1,088,638
2,250,151
1,283,020
1,212,341
89,050
3,283,738
1,072,922
1,164,154
178,324
5,699,138
47,424
1,415,147
867,009
775,480
–
3,057,636
Reflects the grant date fair value of the shares/executive rights vested during the financial year.
RC Bakewell ceased employment on 28 February 2023. Other benefits represent a termination benefit.
CFO from 29 August 2022.
7
8
9
10 EGM Building Products from 1 August 2022. USD denominated remuneration was translated using an AUD/USD rate of 0.6725 representing an
average rate for FY2023. Includes a secondment allowance of AUD 378,781 (USD 254,730) which ceased to be paid on 1 August 2023 on MA
Ellenor’s return to Australia.
124 p Brickworks Annual Report 2023
Notes: In addition to the total benefits above, these KMPs accrued leave entitlements during the year as follows:
◗ L R Partridge: net increase of $210,566 in accrued leave entitlements (2022: $12,047 increase)
◗ G S Douglas: net increase of $61,795 in accrued leave entitlements
◗ R C Bakewell: net increase of $70,448 in accrued leave entitlements (2022: $41,569 net increase in accrued leave entitlements)
◗ M A Ellenor: net increase of $32,067 in accrued leave entitlements
◗ M Kublins: net increase of $21,434 accrued leave entitlements (2022: $20,364 decrease)
5.2
Director and Key Management Personnel shareholdings and performance rights
The number of shares held in Brickworks Limited during the financial year by each director and key management personnel, including their
related entities are set out below.
Non-Executive Directors
Non-executive Directors
RD Millner
MJ Millner
DR Page
MP Bundey
RN Stubbs
JA Fitzgibbon1
RJ Webster2
Held 31 July 2022
Acquired
Shares Disposed
Held 31 July 2023
4,817,967
4,797,141
17,400
3,970
1,000
N/A
15,922
–
–
–
–
–
500
N/A
–
–
–
–
–
–
N/A
4,817,967
4,797,141
17,400
3,970
1,000
500
N/A
1
2
Joel Fitzgibbon was appointed to the Board on 1 January 2023.
Robert Webster retired as a director on 22 November 2022. This represents the number of shares held as at his retirement date.
Executive Key Management Personnel
Executive Director and Key Management Personnel shareholdings and performance rights
Held 31 July 2022
Granted as
Remuneration1
Shares
Acquired2
Shares
Disposed
Held 31 July 2023
FPO
DESP
EEP
ERP
STI Def
ERP
STI Def
FPO
DESP
EEP
ERP
STI Def
Executive Key Management Personnel
LR Partridge
151,000
22,107
– 115,449
21,604
RC Bakewell4
8,357
11,637
GS Douglas
–
3,861
MA Ellenor
4,325
8,972
MM Kublins
57,345
10,990
–
–
–
–
15,255
27,789
42,315
54,127
11,088
–3
–3
–3
18,229
–
–
– 26,490
33,182
75,000
– 226,000
6,973
13,640
38,548
–
–
–
–
–
–
6,945
(5,619)
1,326
1,459
14,198
(3,699)
14,824
2,955
19,782
(9,602)
67,525
3,566
–
–
–
–
–
82,049
33,182
–
11,126
38,572
57,545
–
–
–
–
FPO
DESP
ERP
Fully paid ordinary shares held including unrestricted employee shares
Deferred Employee Share Plan – unvested/restricted shares which vest to the employee if performance criteria are satisfied including
shares vesting on 31 July 2023
Executive Rights Plan – unvested/restricted rights which vest to the employee if performance criteria are satisfied including rights vesting
on 31 July 2023.
EEP
Exempt Employee Share Plan.
STI Def
Short Term Incentive Deferred Plan – MD and CFO’s 50% of STI awards deferred into equity restricted for one year.
1
2
3
4
Granted as remuneration under the ERP or STI Deferred Plan.
Shares acquired through vesting under the DESP, ERP or STI Deferred Plans and FPO shares purchased.
Under the ERP, the LTI opportunity for FY2023 is yet to be allocated to LR Partridge for AUD 1,231,125, RC Bakewell for AUD 252,900 and
GS Douglas for AUD 390,000 following approval of the allocation to the MD at the 2022 Annual General Meeting.
RC Bakewell ceased as CFO on 28 February 2023.
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 2023 p 125
Directors' Report
Auditor’s Independence Declaration
Following a mandatory partner rotation, the financial year ended 31 July 2023 is the third year with Jodie Inglis as audit partner.
The Directors received an independence declaration from the auditor, EY. A copy has been included on page 129 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 $125,402. The non-audit services were for the
provision for tax advisory services, as well as advisory services in relation to sustainability.
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:
28 September 2023
R.D. Millner AO
Director
L.R. Partridge AM
Director
126 p Brickworks Annual Report 2023
Residence
Bowral Bricks in Chillingham White
Bellevue Hill, NSW
Brickworks Annual Report 2023 p 127
Morgan State Behavioural Science Center
Cream White Wirecut
Baltimore, Maryland
128 p Brickworks Annual Report 2023
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 2023,
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;
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
28 September 2023
Brickworks Annual Report 2023 p 129
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
131
132
133
134
135
136
136
138
146
155
158
167
178
130 p Brickworks Annual Report 2023
130 p Brickworks Annual Report 2023
Consolidated Income Statement
Continuing operations
Revenue
Cost of sales
Gross profit
Gain/(loss) on deemed disposal of associate
Other income
Distribution expenses
Administration expenses
Selling expenses
Note
2.2
6.3
2.2
Impairment of non-current assets
3.2,3.3
Restructuring costs
Business acquisition costs
Other expenses
Loss on derecognition of associate
Share of net profits of associates and joint ventures
Profit from continuing operations before finance cost and income tax
Finance costs
Profit from continuing operations before income tax
Income tax expense
2.3
2.2
4.1
2023
$000
2022
$000
1,181,178
(833,217)
1,095,353
(748,759)
347,961
346,594
(994)
277,834
(93,553)
(61,972)
(149,187)
(62,701)
(41,033)
(252)
(35,552)
(11,273)
402,729
572,007
(59,563)
512,444
(107,180)
722,179
111,233
(88,303)
(57,904)
(137,642)
(145,352)
(27,737)
(4,965)
(40,065)
–
630,408
1,308,446
(31,699)
1,276,747
(407,011)
Profit from continuing operations after tax
405,264
869,736
Discontinued operations
Loss from discontinued operations, net of income tax benefit
6.5
(10,570)
(15,345)
Profit after tax
394,694
854,391
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.
394,694
854,391
Cents
Cents
259.4
258.4
266.3
265.3
563.0
561.2
573.2
571.2
Brickworks Annual Report 2023 p 131
Consolidated Statement of
Other Comprehensive Income
Profit after tax
394,694
854,391
Note
2023
$000
2022
$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
Net other comprehensive income/(loss) not to be reclassified to Income Statement
Other comprehensive income/(loss), net of tax
4.1
4.1
(40,632)
2,344
12,190
(26,098)
258
1,528
(77)
1,709
17,267
5,196
(2,155)
(6,498)
8,614
(17,484)
2,351
(2,264)
5,283
6,992
Total comprehensive income
377,210
861,383
Total comprehensive income, attributable to:
Shareholders of Brickworks Limited
377,210
861,383
The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying notes.
132 p Brickworks Annual Report 2023
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
6.5
5.4, 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
6.5
3.4
5.4
5.4
3.5
3.3
5.5
3.4
4.2
5.6
5.7
2023
$000
2022
$000
69,565
147,387
319,122
12,771
1,321
1,095
13,532
417
106,083
152,138
327,202
11,453
2,228
2,348
24,224
28
565,210
625,704
7,180
13,107
4,397,730
2,446
631,858
375,720
144,437
6,901
5,876
3,822,570
1,031
636,013
332,515
141,510
5,572,478
4,946,416
6,137,688
5,572,120
136,032
–
–
–
984
8,465
46,840
2,922
16,760
93,226
148,694
15,250
41
6,315
826
9,367
39,559
1,427
16,701
86,953
305,229
325,133
711,552
457
16,165
561,662
10,608
29,971
941,028
579,407
–
15,984
504,213
10,955
35,498
840,935
2,271,443
1,986,992
2,576,672
2,312,125
3,561,016
3,259,995
399,835
168,830
2,992,351
392,263
183,616
2,684,116
3,561,016
3,259,995
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Brickworks Annual Report 2023 p 133
Consolidated Statement of Changes in Equity
Notes
Issued
capital
$000
Reserves
$000
Retained
profits
$000
Total
$000
For the year ended 31 July 2023
Balance at 1 August 2022
Profit after tax
Other comprehensive income/(loss) – net of tax
Net dividends paid
Share issue costs
Issue of shares through employee share plan
Shares vested to employees
Shares purchased under STI scheme
Shares vested under STI scheme
Share based payments expense
Balance at 31 July 2023
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
2.5
5.6
5.7
5.6
5.6
5.6
7.1
2.5
5.6
5.7
5.7
5.6
5.6
5.6
7.1
392,263
183,616
2,684,116
3,259,995
–
–
–
(23)
2,521
5,216
(994)
852
–
–
(17,484)
–
–
(2,521)
(5,216)
994
(852)
10,293
394,694
–
(86,459)
–
–
–
–
–
–
394,694
(17,484)
(86,459)
(23)
–
–
–
–
10,293
399,835
168,830
2,992,351
3,561,016
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
Balance at 31 July 2022
392,263
183,616
2,684,116
3,259,995
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
134 p Brickworks Annual Report 2023
Consolidated Statement of Cash Flows
Note
2023
$000
2022
$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
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
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
1,265,608
(1,237,135)
635
(55,554)
124,944
(1,357)
97,141
(113,662)
28,809
(2,121)
(29,910)
(1,903)
(118,787)
285,061
(160,000)
(44,358)
(23)
(97,436)
(16,756)
(38,402)
1,884
106,083
69,565
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
5.2
Reconciliation of net profit attributable to shareholders of Brickworks Limited to
net cash from operating activities
Profit after tax
394,694
854,391
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 assets held for sale
Impairment of non-current assets
(Gain)/loss on deemed disposal of associate
Net losses/(gains) on disposal of property, plant and equipment
Loss on derecognition of an associate
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
36,934
38,523
(5,518)
(310)
(1,388)
5,933
62,701
994
(297,900)
11,273
10,293
(277,785)
(21,556)
5,811
19,864
132
5,513
(812)
(12,910)
541
(478)
406
100,630
97,141
44,232
33,961
(1,588)
(523)
(7,782)
18,727
145,352
(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
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
1
Includes a deferred consideration payment of $ 1.9 million in the current year (2022: $1.4 million). Refer Note 5.5.
Brickworks Annual Report 2023 p 135
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 2022;
◗ 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 28 September 2023.
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.
136 p Brickworks Annual Report 2023
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)
6.5
Judgement/Estimate
Property, plant and equipment
Non-current assets impairment assessment
Right-of-use assets and lease liabilities
Provisions
Equity accounted investments – Fair value of investment property
Discontinued Operations
1.3
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.
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 2023 p 137
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, 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) and FBR Limited (FBR).
138 p Brickworks Annual Report 2023
31 July 2023
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
682,253
445,283
50,972
–
182
313
–
–
99
1,315
Revenue
733,720
446,697
Property
$’000
Investments
$’000
Continuing
operations
$’000
Discontinued
operations2
$’000
Consolidated
$’000
–
–
–
72
54
126
–
1,127,536
6,070
1,133,606
–
635
–
–
635
50,972
635
353
1,682
33,760
–
–
–
84,732
635
353
1,682
1,181,178
39,830
1,221,008
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
100,479
(29,537)
(18,133)
33,355
(8,272)
(18,801)
236,657
–
–
158,707
–
–
529,198
(37,809)
(36,934)
(6,112)
(714)
–
523,086
(38,523)
(36,934)
52,809
6,282
236,657
158,707
454,455
(6,826)
447,629
–
6,513
268,860
–
275,373
–
275,373
Total segment EBIT
52,809
12,795
505,517
158,707
729,828
(6,826)
723,002
Unallocated expenses
Significant items6
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
1,117,074
591,096
2,273,675
2,138,352
720,829
157,696
16,243
454,790
(143,851)
(53,100)
(20,433)
512,444
(107,180)
(8,265)
–
–
(152,116)
(53,100)
(20,433)
(15,091)
4,521
497,353
(102,659)
405,264
(10,570)
394,694
6,120,197
3,959
13,532
–
6,133,729
3,959
6,124,156
13,532
6,137,688
1,349,558
711,552
498,802
16,760
–
–
1,366,318
711,552
498,802
2,559,912
16,760
2,576,672
1,959
19,620
–
–
240,171
160,599
402,729
2,273,675
2,104,435
4,397,730
69,743
44,337
6,762
23,148
143,990
–
–
–
402,729
4,397,730
143,990
102,730
53,597
–
–
156,327
5,933
162,260
1
2
3
4
Included in the income tax expense is tax expense related to
significant items amounting to $43,366,000
Refer to Discontinued operations – Note 6.5.
Recognised at a point in time.
Recognised over time.
5
6
Borrowing costs are presented net of fair value change on
derivatives ($1,388,000) and exclude items disclosed in the
“Significant items” line.
Significant items are presented before tax.
Brickworks Annual Report 2023 p 139
Notes to the Consolidated Financial Statement
2.1
Segment reporting (continued)
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
621,677
398,698
65,049
–
30
8,017
–
–
139
1,403
Property
$’000
Investments
$’000
Continuing
operations
$’000
Discontinued
operations2
$’000
Consolidated
$’000
–
–
–
46
58
–
1,020,375
7,733
1,028,108
–
236
–
–
236
65,049
236
215
9,478
27,844
–
–
87
92,893
236
215
9,565
1,095,353
35,664
1,131,017
Revenue
694,773
400,240
104
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 items6
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
1,157,609
538,249
1,754,134
2,094,527
708,026
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
5,544,519
3,377
24,224
–
5,568,743
3,377
5,547,896
24,224
5,572,120
1,315,415
594,657
385,352
16,701
–
–
1,332,116
594,657
385,352
2,295,424
16,701
2,312,125
42
17,430
–
–
650,579
(20,213)
630,408
1,754,134
2,051,006
3,822,570
–
–
–
630,408
3,822,570
215,343
112,048
101,145
2,150
186,886
37,062
–
–
–
215,343
223,948
18,727
242,675
1
Included in the income tax expense is tax expense related to
significant items amounting to $185,116,000.
2 Refer to Discontinued operations – Note 6.5.
3 Recognised at a point in time.
4 Recognised over time.
5 Borrowing costs are presented net of fair value change on
derivatives ($7,782,000) and exclude items disclosed in the
“Significant items” line.
Significant items are presented before tax.
6
140 p Brickworks Annual Report 2023
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.
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
Austral Bricks Western Australia exit costs2
Plant relocation and commissioning costs3
Other restructuring activities and site closure costs – North America4
Other restructuring activities and site closure costs – Australia5
Business acquisition and legal costs6
IT implementation costs7
COVID-19 – incremental and unabsorbed costs
Australian East Coast floods
Significant items from continuing operations before income tax (excluding associates)
Income tax benefit on other significant items (excluding associates)8
Note
3.2
2023
$000
2022
$000
(49,240)
(32,265)
(25,015)
(13,429)
(5,762)
(5,445)
(2,954)
–
–
(134,110)
37,820
(132,223)
–
(39,788)
(5,250)
(8,482)
(4,271)
(3,060)
(11,061)
(2,853)
(206,988)
36,567
Significant items from continuing operations after income tax (excluding associates)
(96,290)
(170,421)
Gain/(loss) on deemed disposal of associate9
Income tax expense arising on deemed disposal8
Gain on deemed disposal of associate after income tax
Loss on derecognition of associate10
Income tax expense arising on derecognition of associate8
Loss on derecognition of associate after income tax
Significant one-off transactions of associate11
Income tax expense arising from the carrying value of the investment in the associates (WHSP)8
Significant items after income tax (associates)
6.3
(994)
298
722,179
(270,609)
(696)
451,570
(11,273)
1,673
(9,600)
2,526
1,095
–
–
–
(200,689)
43,132
3,621
(157,557)
Significant items from continuing operations after income tax (including associates)
(102,965)
123,592
Impairment of assets held for sale12
Gain on disposal of assets held for sale12
Other significant items12
Significant items from discontinued operations before income tax
Income tax (expense)/benefit12
6.5
(5,933)
693
(3,025)
(8,265)
2,480
(18,727)
–
(587)
(19,314)
5,794
Significant items from discontinued operations after income tax
(5,785)
(13,520)
Table notes on following page
Brickworks Annual Report 2023 p 141
Notes to the Consolidated Financial Statement
2.1
Segment reporting (continued)
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.
1
Disclosed in ‘Impairment of non-current assets’ line on the Income
Statement. An assessment was conducted in line with the value-
in-use methodology. Includes an impairment loss of $33.7 million
recognised in relation to Property, Plant and Equipment and $15.5
million in relation to Right-of-use assets.
2 Disclosed in 'Restructuring costs' ($32.2 million) line on the Income
Statement.
3 Disclosed in 'Cost of Sales' ($17.4 million), 'Finance Costs' ($4.8
million), ‘Impairment of non-current assets’ ($4.1 million) and
'Restructuring costs' $1.3 million lines on the Income Statement.
4 Disclosed in 'Restructuring costs' ($4.9 million) and ‘Impairment of
non-current assets’ ($8.5 million) lines on the Income Statement.
5 Disclosed in 'Restructuring costs' ($4.9 million) and ‘Impairment of
non-current assets’ ($0.9 million) lines on the Income Statement.
6 Disclosed in 'Other Expenses' ($4.8 million), 'Business acquisition
costs' ($0.3 million), 'Finance costs' ($0.3 million) and 'Restructuring
costs' ($0.1 million) lines on the Income Statement
7 Disclosed in 'Other Expenses' line on the Income statement.
8 Disclosed in 'Income tax expense' line on the Income statement.
9 Disclosed in 'Gain/(loss) on deemed disposal' line on the Income
statement.
10 Disclosed in 'Loss on derecognition of associate' line on the Income
statement.
11 Disclosed in 'Share of net profits of associates and joint ventures'
line on the Income Statement.
12 Disclosed in the 'Losses from discontinued operations, net of
income tax benefit' line on the Income statement.
2.2 Revenues and expenses
(a)
Revenue and other income
REVENUE
Revenue from contracts with customers
Sale of goods
Revenue from supply and install contracts1
Other operating revenue
Sale of surplus gas
Interest received
Rental revenue
Other
2023
$000
2022
$000
1,127,536
50,972
1,020,375
65,049
1,178,508
1,085,424
–
635
353
1,682
6,842
236
215
2,636
Total operating revenue from continuing operations
1,181,178
1,095,353
OTHER INCOME
Net gain on disposal of property, plant and equipment
Net fair value change on derivatives
Other items
Total other income from continuing operations
276,310
1,388
136
102,414
7,782
1,037
277,834
111,233
1
All remaining performance obligations related to supply and install contracts are expected to be recognised within one year.
142 p Brickworks Annual Report 2023
Current year
In the current year the Group sold the remainder of the Oakdale East land into a newly established JV trust with Goodman Group (BGMG
Oakdale East No 2.). Consideration for the sale amounted to $301.3 million and represents the Group’s initial investment in this trust (refer
Note 6.3). Total profit recognised in respect of the sale amounted to $262.6 million and includes $13.0 million of costs associated with
environmental remediation obligations arising from the sale of the land. The Group also sold other properties in Australia during the current
year with the total gain of $6.3 million recognised in respect of these transactions. The gain recognised in respect of the sale and leaseback
transaction in North America amounted to $6.5 million.
Prior year
In the prior year, 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 comprised 496 hectares in land area and had 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 the 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 prior 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 previous financial year) were received during the prior year.
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 obligations under each lease (refer Note 3.4).
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.
Brickworks Annual Report 2023 p 143
Notes to the Consolidated Financial Statement
2.2 Revenues and expenses (continued)
(b)
Expenses
Specific Expense Disclosures
Wages and salaries
Post-employment benefits expense
Health insurance expense – North America
Share based payments expense
Other
2023
$000
264,528
15,743
15,677
10,293
12,306
2022
$000
241,948
14,900
11,291
6,958
13,344
Employee benefits expense from continuing operations
318,547
288,441
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
35,850
37,809
1,084
74,743
37,697
21,553
313
59,563
42,036
32,923
566
75,525
22,053
9,303
343
31,699
Recognition and measurement
Employee benefits expense includes salaries and wages, leave entitlements (refer note 3.4), post-employment benefit (refer note 3.5),
share based payments and other employee entitlements. The expense is charged against profit in their respective expense categories
when services are provided by employees, except for share based payment expense which is recognised based on the vesting period
(refer note 7.1).
Finance costs expense relates primarily to the interest on interest bearing liabilities and is recognised in the period in which they are
incurred, except when they are included in the costs of qualifying assets in which they are capitalised up to the point that the asset is
ready for its intended use.
2.3 Share of net profits of associates and joint ventures
Share of net of profits/(losses) of associates
Share of net profits of joint ventures
Notes
6.3 (a)
6.3 (b)
2023
$000
160,599
242,130
2022
$000
(20,213)
650,621
402,729
630,408
Recognition and measurement
Share of net profits of associates and joint ventures is accounted for using the equity method. The consolidated income statement
reflects the Group’s share of the results of associates and joint ventures.
Accounting policies applied with respect to the Group’s investments in associates and joint ventures are further outlined in Note 6.3.
144 p Brickworks Annual Report 2023
2.4 Earnings per share (EPS)
Profit after tax attributable to shareholders of Brickworks Limited ($’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
2023
2022
394,694
405,264
152,166
152,772
259.4
258.4
266.3
265.3
854,391
869,736
151,744
152,251
563.0
561.2
573.2
571.2
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.
2.5 Dividends and franking credits
Dividends declared in each financial year
cents per share
Type of
dividend
(fully franked)
2021 Final
2022 Interim
2022 Final
2023 Interim
2023 Final1
Cents
per share
40.0
22.0
41.0
23.0
42.0
Total
amount
$’000
60,710
33,391
Date paid/
payable
24-Nov-21
03-May-22
62,420
23-Nov-22
35,016
02-May-23
63,943
22-Nov-23
70
60
50
40
30
20
10
0
38.0
39.0
40.0
41.0
42.0
19.0
20.0
21.0
22.0
23.0
2019
2020
2021
2022
2023
Interim ordinary dividend
Final ordinary dividend
2022 Final ordinary dividend (PY: 2021)
2023 Interim ordinary dividend (PY: 2022)
Group’s share of dividend received by associated company
Franking account balance on a tax paid basis
2023
$000
62,420
35,016
(10,977)
86,459
156,608
2022
$000
60,710
33,391
(14,118)
79,983
160,371
The impact on the franking account of dividends resolved to be paid after 31 July 2023, but not recognised as a liability, will be a
reduction in the franking account of $27.4 million (2022: $26.7 million).
1
The final dividend for the 2023 financial year has not been recognised as a liability in this financial report because it was resolved to be paid after
31 July 2023. The amounts disclosed as recognised in 2023 are the final dividend in respect of the 2022 financial year and the interim dividend in
respect of the 2023 financial year.
Brickworks Annual Report 2023 p 145
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
2023
$000
2022
$000
(b) Inventories
2023
$000
2022
$000
Current
Raw materials and stores
Work in progress
Finished goods
49,560
5,433
264,129
54,402
5,699
267,101
Total
319,122
327,202
Non-current
Raw materials
7,180
6,901
Write-down of inventories recognised as an expense for the 2023
financial year amounted to $29.0 million (2022: $11.8million).
(c) Current payables
Trade payables and
accruals
136,032
148,694
Average terms on trade payables are 30 days from statement.
Trade receivables
Allowance for expected
credit losses
148,591
149,973
(6,568)
(2,548)
Net trade receivables
Other debtors
142,023
5,364
147,425
4,713
Total
147,387
152,138
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
2,548
6,048
(2,057)
–
29
2,134
1,938
(635)
(913)
24
Closing balance
6,568
2,548
Receivables past due
Past due 0–30 days
Past due 30+ days
8,853
13,624
12,857
10,595
22,477
23,452
As at 31 July 2023 the contract assets amounted to $1.3 million (2022: $2.2 million) and contract liabilities to $8.5 million (2022: $9.4 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. Cost of sales excludes freight costs which are classified as distribution expenses in the Income statement.
146 p Brickworks Annual Report 2023
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
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
Cost
Accumulated depreciation
and impairment losses
322,262
342,541
839,370
817,474
1,161,632
1,160,015
(48,389)
(50,878)
(481,385)
(473,124)
(529,774)
(524,002)
Net carrying amount 31 July
273,873
291,663
357,985
344,350
631,858
636,013
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
291,663
11,508
315,242
67,536
344,350
101,974
390,283
67,020
636,013
113,482
705,525
134,556
6.5
–
(26,150)
–
(1,562)
6,128
(7,714)
28,327
(115,809)
–
(758)
6,523
(9,398)
308
(20,237)
–
(45,665)
5,391
(28,136)
7,386
(41,236)
(18,727)
(31,341)
5,233
(34,268)
308
(46,387)
–
(47,227)
11,519
(35,850)
35,713
(157,045)
(18,727)
(32,099)
11,756
(43,666)
Net carrying amount 31 July
273,873
291,663
357,985
344,350
631,858
636,013
As at 31 July 2023 capital works in progress, disclosed as part of plant and equipment, amounted to $134.0 million (2022: $135.3 million).
Impairment losses of $47.2 million include:
◗ $33.7 million of impairment losses recognised based on an assessment of CGU asset carrying amounts in line with value-in-use
methodology and primarily related to Austral Bricks Western Australia assets (Note 3.2c).
◗ $9.4 million of impairment losses recognised following a review of carrying amounts of assets impacted by site closures undertaken as
part of restructure activities and primarily related to the closure of the Marseilles plant in Illinois, North America (Note 2.1).
◗ $4.1 million of impairment losses recognised following a review of carrying amounts of assets impacted by plant relocations (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 $0.3 million (2022: $0.5 million) of capitalised borrowing costs in the current year.
Brickworks Annual Report 2023 p 147
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 (e.g. 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
307,114
(205,489)
Brand
names
$’000
20,149
–
Other
$’000
Total
$’000
24,830
(2,167)
352,093
(207,656)
Net carrying amount 31 July 2023
101,625
20,149
22,663
144,437
Net carrying amount 1 August 2022
Additions
Foreign currency exchange difference
Amortisation expense
100,252
–
1,373
–
19,632
–
517
–
21,626
2,121
–
(1,084)
141,510
2,121
1,890
(1,084)
Net carrying amount 31 July 2023
101,625
20,149
22,663
144,437
Cost
Accumulated amortisation and impairment losses
285,936
(185,684)
19,632
–
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
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
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.
148 p Brickworks Annual Report 2023
(c)
Impairment assessment
Allocation of goodwill and intangible assets with indefinite useful lives to cash generating units
(i)
The Group’s CGUs consist of Austral Bricks East Coast, Austral Bricks WA, Austral Masonry and Bristile Roofing in Australia, as well as
Brickworks North America. Goodwill is allocated to CGUs (or a Group of CGUs in respect of Austral Bricks) 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 2023 the following CGUs representing business
operations had allocations of goodwill tested for impairment:
◗ Austral Bricks CGU Group: $72.0 million (2022: $72.0 million);
◗ Building Products North America: $29.6 million (2022: $28.2 million).
For the purpose of impairment assessment outlined below brand names with indefinite useful lives with a carrying value of $20.1 million
(2022: $19.6 million) have been allocated to the following CGUs, which form part of the Building Products Australia and North America
operating segments:
◗ Austral Bricks CGU Group: $9.0 million (2022: $9.0 million);
◗ Building Products North America: $11.1 million (2022: $10.6 Million).
Each CGU tested for impairment has been valued based on value-in-use methodology, using the assumptions outlined in point (iv) below.
Furthermore, impairment indicators have been identified in respect of the Austral Masonry CGU at 31 July 2023. Consequently, this CGU has
also been tested for impairment based on value-in-use methodology.
Results of impairment assessment – half year
(ii)
As at 31 January 2023 an impairment loss of $46.1 million was recognised in respect of non-current assets related to the Austral Bricks
Western Australia CGU, predominantly due to the loss of several key customers and the resulting decline in market share requiring an
impairment assessment be performed at the half year.
The impairment loss was recognised within ‘Impairment of non-current assets’ in the consolidated income statement.
Results of impairment assessment – year end
(iii)
An impairment loss of $3.1 million was recognised in right-of-use assets with the impairment loss recognised within ‘Impairment of non-
current assets’ in the consolidated income statement. The loss related to the Austral Bricks WA CGU ($1.5 million) and Bristile Roofing CGU
($1.6 million).
There has been no additional impairment identified based on the value-in-use assessment conducted at 31 July 2023.
In the prior year, an impairment assessment was conducted in line with the value-in-use methodology. Based on the assessment, the Group
recognised an impairment loss of $132.2 million. 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.
(iv)
Austral Bricks, Austral Masonry 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 2023 and what the Management and the Directors believe can
reasonably be expected at that date.
Brickworks Annual Report 2023 p 149
Notes to the Consolidated Financial Statement
3.2 Property, plant and equipment and intangible assets (continued)
(iv)
Austral Bricks, Austral Masonry and Building Products North America impairment assessment – key assumptions
(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
For Austral Bricks the terminal value earnings are based on the 7-year average historical earnings moderated to
reflect structural changes to the market in which the CGU operates.
For Austral Masonry and Brickworks North America, the terminal value earnings are based on the average
cashflows forecast over the 3 final years of the forecast period. This takes into account:
◗ the nature of newly acquired businesses and forecast benefits from the plant rationalisation program
completed in the current year (North America); and
◗ a range of strategic initiatives, including transition to the new manufacturing facility at Oakdale and
continued growth of premium products (Austral Masonry).
Long-term growth rates used in cash flow valuation reflect 2.5% (2022: 2.5%).
Management uses an independent external advisor to calculate the appropriate discount rate applied
consistently across all CGUs. For 2023, the post-tax discount rate calculated including the impact of AASB 16 –
Leases for the Australian CGUs was 9.31% (2022: 9.23%) and 9.34% (2022: 8.96%) for the North American CGU.
Long-term growth
rates (LTGR)
Discount rate
Sensitivity to changes in assumptions
(v)
The table below illustrates the impact of key assumptions on the non-current assets impairment for those CGUs where the carrying amount
approximates the recoverable amount.
The excess of CGUs recoverable amount over
its carrying amounts ($ millions)
Austral Bricks
Austral Masonry
Brickworks North America
24.4
31.0
53.6
Change in the assumption required for the model to break even
Reduction in EBIT over the forecast period*
(10.4%)
(12.5%)
(13.7%)
Reduction in LTGR
From 2.50% to 2.01%
No reasonable change leads
to impairment
From 2.50% to 0.99%
Increase in post-tax WACC
From 9.31% to 9.64%
From 9.31% to 11.45%
From 9.34% to 10.46%
*
In respect of the Austral Masonry and Brickworks North America CGUs, the forecast EBIT sensitivity over the forecast period included the impact
on terminal EBIT representing the average of the last three years of the forecast period.
The recoverable amount of the Austral Bricks CGU is sensitive to the terminal earnings assumption calculated based on the 7-year average
historical earnings. The impairment model will break even if the terminal value earnings reduce by 3.5%.
There are no other CGUs where a reasonably possible change in a key assumption would result in an impairment to the carrying value of non-
current assets as at 31 July 2023.
150 p Brickworks Annual Report 2023
In respect of sensitivity to changes in assumptions in the prior year’s impairment assessment:
◗ given an impairment loss was recognised in respect of Austral Bricks and Austral Masonry in the prior, the carrying values of the CGU’s
are held at their recoverable amount. Therefore, any negative change in key assumptions would result in an additional impairment charge
being recognised as at 31 July 2022.
◗ in respect of Brickworks North America, for the headroom in the model to reduce to $nil:
the post-tax discount rate would need to increase from 8.96% to 11.22%, or
◗
◗ a 26% reduction in EBIT over the forecast period would be required.
◗ no reasonable possible change to LTGR would lead to an impairment being required.
3.3 Right-of-use assets and lease liabilities
Right-of-use assets
Property
Equipment
Note
$’000
$’000
Vehicles
$’000
Total
$’000
Liabilities
$’000
As at 1 August 2022
New and modified leases2
Leases terminated
Depreciation expense
Impairment losses
Payment of principal portion of lease liability
Foreign exchange difference
As at 31 July 2023
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
3.2
6.5
197,459
43,101
(263)
(20,157)
(13,868)
133,484
51,933
(222)
(16,531)
(1,606)
1,572
642
(194)
(1,121)
–
332,515
95,676
(679)
(37,809)
(15,474)
1,078
376
37
1,491
(543,772)
(105,525)
1,020
–
41,562
(1,787)
207,350
167,434
936
375,720
(608,502)1
120,063
126,359
(672)
(16,347)
(28,850)
–
(4,395)
1,301
68,139
83,764
(174)
(16,005)
(2,139)
–
(283)
182
2,871
629
(38)
(1,609)
(264)
–
(71)
54
191,073
210,752
(884)
(33,961)
(31,253)
–
(4,749)
1,537
(200,895)
(377,679)
1,002
–
–
29,023
6,472
(1,695)
As at 31 July 2022
197,459
133,484
1,572
332,515
(543,772)1
During the year, the Group recognised rent expense of $5.6 million (2022: $5.2 million) from short-term leases and variable lease payments.
Impairment losses of $15.5 million were recognised based on an assessment of CGU asset carrying amounts in line with value-in-use
methodology and primarily related to Austral Bricks Western Australia and Bristile Roofing assets. (Note 3.2c)
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.
1
2
$46.8 million (2022: $39.6 million) included in current liabilities and $561.7 million (2022: $504.2 million) in non-current liabilities.
The difference between additions to right-of-use assets and lease liabilities relates to sale and leaseback accounting and lease modification in the
current year. In the prior year, additions included $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 prior financial year. Refer note 2.2(a).
Brickworks Annual Report 2023 p 151
Notes to the Consolidated Financial Statement
3.3 Right-of-use assets and lease liabilities (continued)
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.
Sale and leaseback transactions
When we sell and lease 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.
Site
Closures
$’000
14,290
11,489
294
(21,188)
4,885
4,885
–
4,885
Other
$’000
2,155
2,274
25
(2,324)
2,130
2,130
–
2,130
Total
$’000
122,451
121,493
856
(121,603)
123,197
93,226
29,971
123,197
4,288
3,499
–
(3,336)
4,451
4,451
–
4,451
3.4 Provisions
Opening balance 1 August 2022
Recognised / (reversed)
Foreign currency exchange difference
Settled
Employee
benefits
$’000
58,797
87,425
365
(89,638)
Remediation
and make
good
Workers
compensation
$’000
$’000
42,921
16,806
172
(5,117)
Closing balance 31 July 2023
56,949
54,782
Current
Non-current
Total
53,362
3,587
28,398
26,384
56,949
54,782
152 p Brickworks Annual Report 2023
Opening balance 1 August 2021
Recognised/(reversed)
Business combinations
Transferred to liabilities held for sale
Foreign currency exchange difference
Settled
Employee
benefits
$’000
Remediation
and make
good
Workers
compensation
$’000
$’000
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
3,294
1,100
457
–
32
(2,728)
Total
$’000
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
55,078
3,719
58,797
11,142
31,779
42,921
4,288
–
4,288
14,290
–
14,290
2,155
–
2,155
86,953
35,498
122,451
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.
Brickworks Annual Report 2023 p 153
Notes to the Consolidated Financial Statement
3.5 Post-employment liabilities (continued)
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 years, 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 2023 of $20.4 million (2022: $18.2 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 $17.1 million (2022: $16.8 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 2024, amount to $1.5 million (2022: $1.4 million).
Opening balance 1 August 2022
Recognised/(reversed)
Settled
Foreign currency exchange difference
Closing balance 31 July 2023
Current
Non-current
Total
Opening balance 1 August 2021
Recognised/(reversed)
Settled
Foreign currency exchange difference
Closing balance 31 July 2022
Current
Non-current
Total
Post-employment
liabilities
$’000
16,810
94
(570)
815
17,149
984
16,165
17,149
18,768
(2,405)
(497)
944
16,810
826
15,984
16,810
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.
154 p Brickworks Annual Report 2023
4
Income Tax
This section provides the information considered most relevant to understanding the taxation treatment adopted by the Group during
the financial year.
The Group is subject to income taxes in Australia and United States of America. The entities incorporated in the United States of
America are not part of the Australian tax consolidated group and therefore taxed separately.
Tax consolidation
Brickworks Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group (Tax Group) under the
Australian Tax Consolidation regime. Brickworks Limited is the head entity of that group.
The Tax Group has entered into a tax sharing agreement whereby each company in the group contributes to the income tax payable
based on the current tax liability (or current tax asset) of the entity. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a standalone taxpayer in its own right. Such amounts are reflected in amounts receivable from or
payable to other entities in the Tax Group. In addition, the agreement provides for the allocation of income tax liabilities between the
entities should the head entity default on its tax payment obligations. At balance date, the possibility of default is considered remote.
Tax expense, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the Tax Group are
recognised in the separate financial statements of the members of the group. Any current tax liabilities (or assets) and deferred tax
assets arising from unused tax losses and tax credits of the members of the group are recognised by the parent company (as head entity
of the Tax Group).
4.1
Income tax expense
Profit from continuing operations before income tax
Loss from discontinued operations before income tax benefit
Profit before income tax
Prima facie tax expense calculated at 30%
(Decrease)/increase in income tax expense due to:
Franked dividend income
Share of net profits of associates
(Under)/overprovided in prior years
R&D tax incentive
Loss on derecognition of associate
Disposal of land
Business acquisition costs
Tax rate difference in overseas entities
Gain on deemed disposal of associate
Goodwill and impairment losses
Utilisation of carried forward capital losses
Other non-allowable items
Income tax expense attributable to profit
Current tax (benefit)/expense
Deferred tax expense relating to movements in deferred tax balances
Overprovided in prior years
Utilisation of carried forward capital losses
4.2
Total income tax expense on profit
Notes
6.5
2023
$000
512,444
(15,091)
2022
$000
1,276,747
(21,997)
497,353
1,254,750
149,206
376,425
(26,597)
(23,186)
3,255
(2,580)
1,709
(1,702)
1,437
206
–
–
–
911
(18,391)
(18,676)
2,344
(1,076)
–
(7,854)
690
(502)
53,955
24,600
(11,246)
90
102,659
400,359
(24,258)
123,662
3,255
–
25,616
383,645
2,344
(11,246)
102,659
400,359
Brickworks Annual Report 2023 p 155
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
Total income tax expense / (benefit) recognised directly in equity
4.2
Income tax assets and liabilities
(a) Current income tax liability/(asset)
Current income tax liability
Current income tax asset
Notes
6.5
2023
$000
2022
$000
107,180
(4,521)
407,011
(6,652)
102,659
400,359
(7,010)
1,318
(5,692)
–
(5,692)
2023
$000
–
(1,095)
1,636
705
2,341
(129)
2,212
2022
$000
6,315
(2,348)
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).
156 p Brickworks Annual Report 2023
(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
2023
$000
2022
$000
2023
$000
2022
$000
1,084,726
(45,239)
(52,938)
(46,984)
3,931
(2,468)
945,549
(46,625)
(44,971)
(12,551)
1,922
(2,389)
143,744
582
(14,095)
(10,175)
2,009
1,597
477,092
(77,856)
(14,074)
(2,252)
579
156
Net deferred income tax liability
941,028
840,935
123,662
383,645
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 2023 p 157
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
2023
$000
2022
$000
5.2
3.1(a)
5.3
5.4(c), 5.8(a)
69,565
147,387
13,107
2,863
106,083
152,138
5,876
1,059
3.1(c)
5.4(a)
3.3
5.5
5.4(c)
232,922
265,156
136,032
711,552
608,502
13,530
457
148,694
594,657
543,772
12,382
41
1,470,073
1,299,546
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.
158 p Brickworks Annual Report 2023
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 (2022: 40%).
Net debt
Total equity
Capital employed
Net debt to capital employed
5.2 Cash and cash equivalents
Cash on hand
2023
$000
2022
$000
652,030
3,561,016
493,099
3,259,995
4,213,046
3,753,094
15.5%
13.1%
2023
$000
2022
$000
69,565
106,083
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
2023
$000
13,107
13,107
2022
$000
5,876
5,876
Brickworks Annual Report 2023 p 159
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
2023
$000
2022
$000
–
–
15,250
15,250
721,595
(10,043)
583,932
(4,525)
711,552
579,407
In December 2022 the Group completed a partial refinancing of its debt, which consisted of the following changes:
◗ Syndicated loan facility (Tranche E) (Previously Tranche A): the facility limit of A$100 million was extended with the maturity date set to
August 2027 (2022: December 2023);
◗ Syndicated loan facility (Tranche E1) (Previously Tranche A1): the facility limit of US$100.0 million was extended with the maturity date set
to August 2027 (2022: December 2023); and
◗ Working capital facility: the facility limit of A$75.0 million was extended with the maturity date set to December 2024 (2022: December
2023).
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 Term SOFR2 (USD) bid rate with a credit spread adjustment 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 2023 approximated their carrying amount (2022: 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.
Term SOFR is the market implied forward looking term index rate published by the Chicago Mercantile Exchange (‘CME’) Group used as an index.
160 p Brickworks Annual Report 2023
(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 2023
the Group had AUD 226.0 million and USD 52.0 million of unused bank facilities (2022: AUD 324.0 million and USD 67.0 million).
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.
The maturity profile of the Group’s loan facilities at 31 July 2023 is outlined below.
Currency
Limit
($m)
Drawn
($m)
Available
($m)
Facility
Tranche B
Tranche C
Tranche E
Syndicated loan facility
Tranche B1
Tranche E1
Tranche D
Syndicated loan facility
Facility A-ITL
Facility B-ITL
Facility C-ITL
Syndicated ITL facility
Facility D-ITL
Syndicated ITL facility
Working capital facility
AUD
AUD
AUD
AUD
USD
USD
USD
USD
AUD
AUD
AUD
AUD
USD
USD
AUD
175
104
100
379
100
100
55
255
25
35
40
100
60
60
75
80
103
–
183
100
48
55
203
25
35
40
100
60
60
45
Maturity date
06–Aug–24
20–Dec–26
06–Aug–27
06–Aug–24
06–Aug–27
21–Jun–28
16–Feb–28
16–Feb–26
16–Feb–26
07–Dec–31
95
1
100
196
–
52
–
52
–
–
–
–
–
–
30
11–Dec–24
Brickworks Annual Report 2023 p 161
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 2023
Trade and other payables
Borrowings
Lease liabilities
Other financial liabilities
Derivatives
31 July 2022
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
136,032
44,920
70,584
2,922
(417)
–
719,885
301,264
8,589
(1,989)
–
98,994
414,970
4,490
–
136,032
863,799
786,818
16,001
(2,406)
254,041
1,027,749
518,454
1,800,244
148,694
36,755
50,465
1,427
41
–
555,068
196,560
7,136
(1,058)
–
99,847
333,497
6,422
–
148,694
691,670
580,522
14,985
(1,017)
237,382
757,706
439,766
1,434,854
(c) Management of interest rate risk
The Group’s main interest rate risk arises from fluctuations in the BBSY bid rate and Term SOFR 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 3.33%
(2022: 2.51%). 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 2023 the Group entered into one new interest
rate swap arrangement to the value of $100.0 million.
Notional Principal Amount
Average Interest Rate
Fair value
Less than 1 year
1 to 3 years
3 to 5 years
2023
$000
25,000
175,000
–
2022
$000
25,000
100,000
–
Total asset/(liability)
200,000
125,000
2023
%
2.77
3.41
–
3.33
2022
%
2.54
2.48
–
2.51
2023
$000
417
1,989
–
2,406
2022
$000
(41)
1,031
–
990
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.
162 p Brickworks Annual Report 2023
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 of derivatives which do not qualify for hedge accounting are recognised immediately in the income statement.
Sensitivity analysis
At 31 July 2023, 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 $4.0 million higher/lower respectively (2022: $3.7 million higher/lower). There would not have been
any other significant impacts on equity.
5.5 Other financial liabilities
Deferred consideration related to business combinations:
Current
Non-current
Total
2023
$’000
2022
$’000
2,922
10,608
13,530
1,427
10,955
12,382
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 2023 p 163
Notes to the Consolidated Financial Statement
5.6 Contributed equity
Contributed equity
Ordinary shares, fully paid
Treasury shares
2023
2022
Number of shares
Number of shares
2023
$’000
2022
$’000
152,244,695
151,775,663
(517,193)
(445,339)
410,150
(10,315)
401,090
(8,827)
Movement in ordinary issued capital
Opening balance 1 August
151,775,663
151,596,520
401,090
Issue of shares through employee share plan
469,032
179,143
Share issue costs
9,083
(23)
397,060
4,043
(13)
399,835
392,263
Closing balance 31 July
152,244,695
151,775,663
410,150
401,090
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
(445,339)
(309,412)
(46,822)
32,692
251,688
(576,426)
(110,905)
(32,692)
41,054
233,630
(8,827)
(6,562)
(994)
852
5,216
(10,173)
(2,814)
(852)
803
4,209
Closing balance 31 July
(517,193)
(445,339)
(10,315)
(8,827)
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.
164 p Brickworks Annual Report 2023
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 2022
88,102
17,598
36,125
1,317
10,180
3,665
26,629
183,616
Other comprehensive
income for the year
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
–
–
–
–
–
–
5,692
–
–
–
–
–
–
–
–
–
–
–
2,344
–
(2,155)
(23,365)
(17,484)
–
–
–
–
–
(2,521)
994
(852)
(5,216)
10,293
–
–
–
–
–
–
–
–
–
–
(2,521)
994
(852)
(5,216)
10,293
Balance at 31 July 2023
88,102
23,290
36,125
3,661
12,878
1,510
3,264
168,830
Balance at 1 August 2021
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
88,102
26,920
36,125
(211)
8,611
1,314
37,056
197,917
–
–
–
–
–
–
–
(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
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. 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 2023 p 165
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 2023 the net investment in
the US subsidiaries of the Group of USD 297.9 million (2022: USD 290.8 million) was hedged with USD denominated borrowings of
USD 263.0 million (2022: USD 248.0 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
2023
$000
–
–
–
2022
$000
–
28
28
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’s listed equity investments are susceptible to market price risk arising from uncertainties about future values of the investment
securities. At 31 July 2023, the exposure to equity investments at fair value listed on the Australian Stock Exchange was $13.1 million
(2022: $5.8 million). The Group has determined that an increase/decrease of 10% in the share price could have an impact of approximately
$1.3 million (2022: $0.58 million) increase/decrease on the other comprehensive income and equity attributable to the Group on pre-tax basis.
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 profit and loss or other comprehensive income. As a result, fluctuations in equity prices would potentially impact both the
Group’s net profit after tax and equity reflecting the Group’s share of fair value movements recognised by WHSP.
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 2023 or subsequently.
166 p Brickworks Annual Report 2023
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
43.12%
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
2023
$000
2022
$000
21,402
1,084,888
(2,455)
(73,284)
37,825
1,119,013
(24,236)
(87,390)
1,030,551
1,045,212
399,835
86,139
544,577
392,263
100,837
552,112
1,030,551
1,045,212
72,506
72,506
556,061
556,061
The parent entity’s contingent liabilities of $26.8 million (2022: $25.9 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 (2022: nil).
Brickworks Annual Report 2023 p 167
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
2023
2022
Entity
% Group’s interest
% Group’s interest
2023
2022
Incorporated in Australia
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
Austral Cement 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 Ltd11
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Brickworks Sub Holding Co No. 3 Pty Ltd1
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 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
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).
168 p Brickworks Annual Report 2023
6.3
Investments accounted for using the equity method
Associated companies
Joint ventures
Notes
6.3(a)
6.3(b)
2023
$000
2022
$000
2,104,435
2,293,295
2,051,006
1,771,564
Total investments accounted for using the equity method
4,397,730
3,822,570
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
2023
%
2022
%
2023
$’000
2022
$’000
2023
$’000
2022
$’000
2023
$’000
2022
$’000
Washington H. Soul
Pattinson and Company
Limited
FBR Limited
Total
26.13
–
26.13
162,295
(20,213)
2,104,435
2,051,006
3,107,674
2,422,949
–
(1,696)
–
–1
–
–
–
160,599
(20,213)
2,104,435
2,051,006
3,107,674
2,422,949
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
During the year, the Group acquired additional shares in FBR Limited (FBR) which resulted in Brickworks being the largest shareholder in this
entity. Following these share acquisitions, at 31 October 2022 the Group’s interest in FBR was 19.65% (July 2022: 5.29%). Given the resulting
ability to exercise significant influence in FBR, the Group’s investment in FBR was classified as an investment in associate company and
measured using the equity method of accounting with 31 October 2022 as the date of transition. The Group’s accounting policy is to apply
‘fair value as a deemed cost’ method to account for transition between available for sale investments and investments in associates.
1
At 31 July 2023 the Group’s investment in FBR was classified as a financial asset measured at fair value through other comprehensive income
(FVOCI).
Brickworks Annual Report 2023 p 169
Notes to the Consolidated Financial Statement
6.3
Investments accounted for using the equity method (continued)
(a)
Associated company (continued)
Subsequent to 31 October 2022, FBR issued additional shares to its other shareholders which resulted in the Group’s interest reducing from
19.65% at 31 October 2022 to 19.05% at 31 January 2023. The non-cash loss on deemed disposal recognised by the Group amounted to
$1.0 million.
In March 2023, FBR completed an equity raise which led to further dilution of Brickworks shareholding. Consequently, the Group no longer
held significant influence and the investment in FBR was derecognised as an associate. Upon derecognition, a loss of $11.3 million was
recognised as part of significant items, reflecting the decline in market value of FBR.
At the end of the year, the market value of Brickworks stake in FBR was $13.1 million with the investment measured at Fair Value Through
Other Comprehensive Income (FVOCI).
In addition to the Group owning 26.13% (2022: 26.13%) of issued ordinary shares of WHSP, at 31 July 2023, WHSP owned 43.12% (2022: 43.25%)
of issued ordinary shares of Brickworks Limited.
In the prior year, 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 owned 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 in the prior year, 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 issue WHSP shares, net of deferred income tax expense.
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
2023
$000
2022
$000
1,717,298
7,253,879
(375,241)
(529,081)
(13,141)
1,592,873
7,549,125
(402,320)
(879,926)
(10,512)
8,053,714
7,849,240
2,104,435
2,051,006
629,465
2,784,562
621,145
(70,187)
(124,509)
(42,212)
550,958
(166,721)
88,657
61,305
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 (2022: nil and $22 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.
170 p Brickworks Annual Report 2023
(b)
Joint ventures
Information relating to joint ventures is outlined below.
Group’s interest
Contribution to Group
profit before tax
Carrying value
Principal activity
2023
%
2022
%
2023
$’000
2022
$’000
2023
$’000
2022
$’000
Domiciled in Australia
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
BGMG Oakdale East Stage
2 Trust1
Brickworks Goodman
Manufacturing Trust
(BGMT)2
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
–
37,472
7,201
16,348
33,559
5,319
40,691
236,856
207,993
4,877
14,479
91,321
15,607
27,407
75,542
20,354
60,185
348,915
321,207
70,649
66,486
51,065
101,723
277,567
230,232
1,122
(1,070)
3,062
19,370
15,725
90,179
14,934
93,352
Property development,
management and
leasing
947
19,604
28,308
27,416
82,339
339,845
585,476
500,463
50.1
50.1
5,869
–
–
–
301,275
–
215,776
211,512
Property Trusts
240,171
650,579
2,273,675
1,754,134
Southern Cross Cement
33.33
33.33
826
(608)
11,272
10,446
Import of cement
Domiciled in New Zealand
NZ Brick Distributors
50.00
50.00
1,133
650
8,348
6,984
Import and distribution
of building products
Total
242,130
650,621
2,293,295
1,771,564
Property Trusts and Southern Cross Cement have balance dates of 30 June. The balance date for NZ Brick Distributors is 31 March.
1
2
In the current year the Group sold the remainder of the Oakdale East land into a newly established JV trust with Goodman Group (BGMG Oakdale
East No 2.). Consideration for the sale amounted to $301.3 million and represents the Group’s initial investment in this trust (refer Note 2.2).
In the prior year, 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 2023 p 171
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
2023
$000
190,621
49,550
2022
$000
614,470
36,109
Total equity accounted profit from Property Trusts
240,171
650,579
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
2023
$000
2022
$000
169,841
5,757,595
(87,619)
(1,233,581)
54,781
4,712,395
(87,360)
(1,133,019)
4,606,236
3,546,797
2,293,295
1,771,564
19,552
(30,765)
(1,231,655)
232,198
(4,077)
509
(56,267)
485,062
–
19,792
(65,989)
(1,129,822)
148,224
(3,951)
26
(33,692)
1,300,635
–
485,062
1,300,635
Distributions received by Brickworks Limited from the joint ventures
36,287
36,182
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.
236,680
210,360
–
–
172 p Brickworks Annual Report 2023
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 2023 (2022: 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. A profit and
risk adjustment 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 of 20% was determined based on the location, size and
status of the development at the valuation date.
Brickworks Annual Report 2023 p 173
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
174 p Brickworks Annual Report 2023
2023
$000
2022
$000
55,437
91,072
154,897
8,334
920
13,532
324,192
835,011
7,180
354,149
2,124,055
374,478
315,124
103,705
67,337
99,756
188,311
6,425
1,968
24,224
388,021
613,653
6,901
345,503
2,068,436
397,926
300,077
102,669
4,113,702
3,835,165
4,437,894
4,223,186
373,201
–
–
39,682
5,240
661
16,760
82,855
518,399
711,552
457
496,312
28,175
307,555
313,749
15,250
41
32,708
12,851
1,557
16,701
69,886
462,743
579,407
–
473,080
33,069
415,672
1,544,051
1,501,228
2,062,450
1,963,971
2,375,444
2,259,215
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
2023
$000
2022
$000
399,835
128,699
1,846,910
392,263
168,319
1,698,633
2,375,444
2,259,215
267,073
(31,965)
235,108
1,698,261
235,108
(86,459)
–
591,312
(199,842)
391,470
1,372,382
391,470
(79,983)
14,764
Retained profits at the end of the year
1,846,910
1,698,633
Brickworks Annual Report 2023 p 175
Notes to the Consolidated Financial Statement
6.5 Discontinued operations
In the previous 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 had been classified as held for sale.
The results for the year ended 31 July 2023 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
Impairment loss recognised on the measurement to fair value less costs to sell
Gain on disposal of assets held for sale
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
2023
$000
2022
$000
39,830
(46,562)
35,664
(38,939)
(6,732)
(3,275)
(5,933)
693
(3,025)
(94)
(15,091)
4,521
(18,727)
–
(587)
592
(21,997)
6,652
(10,570)
(15,345)
(2,906)
107
(1,541)
(7,759)
(343)
(751)
(4,340)
(8,853)
(6.9)
(6.9)
(10.1)
(10.1)
176 p Brickworks Annual Report 2023
Assets and liabilities classified as held for sale
Receivables
Inventories
Contract assets
Right-of-use assets
Other assets
2023
$000
2022
$000
6,698
2,479
4,325
–
30
5,745
7,802
5,637
4,749
291
Assets classified as held for sale
13,532
24,224
Payables
Provisions
Contract liabilities
Lease liabilities
Liabilities held for sale
Net assets/(liabilities) held for sale
4,967
4,147
2,894
4,752
16,760
(3,228)
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.
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.
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.
Brickworks Annual Report 2023 p 177
Notes to the Consolidated Financial Statement
7
Other Disclosures
This section provides information on items which require disclosure to comply with AASBs and other regulatory pronouncements and
any other information that is considered relevant for the users of the financial report which has not been disclosed in other sections.
7.1
Share based payments
At 31 July 2023, there were 620 employees participating in the Brickworks Deferred Employee Share Plan and the Brickworks Exempt
Employee Share Plan, holding 1,222,156 shares (0.8% 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
349,052
333,316
(251,688)
(46,978)
809,206
–
251,688
(275,533)
1,158,258
333,316
–
(322,511)
383,702
785,361
1,169,063
The unvested shares vest to employees at 20% per year for each of the following 5 years, provided ongoing employment is maintained. In
addition, a performance hurdle related to the Group’s Total Shareholder Return (TSR) is applicable to the unvested shares granted to the
Managing Director and Chief Financial Officer. Unvested shares are unavailable for trading by the employees. All shares granted to employees
provide dividend and voting rights to the employee.
Executive Rights Plan
The Executive Rights Plan was introduced in the current year. The rights vest at 20% per year for each of the following 5 years, provided
ongoing employment is maintained. In addition, a performance hurdle related to the Group’s Total Shareholder Return (TSR) is applicable to
rights granted to the Managing Director and Chief Financial Officer.
218,059 rights were allocated in the current year (2022: 217,538). 185,370 rights vested on 31 July 2023 (2022: 144,774). There were no rights
forfeited in the current year (2022: nil).
A fair value of rights with a TSR performance hurdle has been determined with reference to an independent valuation. A summary of key
valuation assumptions is outlined below.
2023
23-Nov-22
Monte-Carlo simulation
3 years
$21.88
27.84%
3.23%
Grant date
Valuation method
Performance period
Grant date share price
Estimated volatility
Risk free rate (2.69-yr rate)
178 p Brickworks Annual Report 2023
2023
$
2022
$
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
10,292,819
20,348,704
8,457,457
5,835,149
6,958,114
17,017,602
3,582,055
4,748,973
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 Group and Goodman Australia Industrial Fund,
an unlisted property trust. During the financial year ended 31 July 2023, the Group sold the Oakdale East Stage 2 land holding into the
Property trust for a consideration of $301.3 million and realising a profit of $262.6 million (2022: nil). All transactions with the property
trust are at arm’s length value.
◗ 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 (2022: nil).
7.3 Auditor’s remuneration
2023
$
2022
$
Fees for auditing the statutory financial report of the parent covering the group
1,279,715
1,361,777
Other assurance services
Taxation services
Other services (Climate change and sustainability services)
Fees for other services
Total fees
119,952
5,450
420,601
54,470
125,402
475,071
1,405,117
1,836,848
The financial statements of the Group are audited by EY. Details of non-audit services provided by EY are outlined in the Directors’ Report.
Brickworks Annual Report 2023 p 179
Notes to the Consolidated Financial Statement
7.4 Commitments and contingencies
(a) Commitments
Contracted capital expenditure
Within one year
2023
$000
2022
$000
21,509
38,048
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
2023
$000
2022
$000
59,461
60,454
The Group does not anticipate that any of the bank guarantees issued on its behalf will be called upon.
The entities forming the Group are parties to various legal actions against them that are not provided for in the financial statements.
These actions are being defended and the Group does not anticipate that any of these actions will result in material adverse consequences
for the Group.
7.5
Events occurring after balance date
On 1 September 2023 the Company filed proceedings in the Federal Court of Australia against BGC (Australia) Pty Limited and Midland Brick
Pty Ltd seeking unspecified damages for various alleged contraventions of sections 46 and 50 of the Competition and Consumer Act. The
claim is now before the Federal Court and a further update will be provided in due course.
Apart from the above, 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
There were no other new accounting standards, interpretations and amendments significantly impacting the Group in the year ended 31 July 2023.
(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 2023. 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
◗ Definition of Accounting Estimates – Amendments to IAS 8
◗ Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
180 p Brickworks Annual Report 2023
Dumbarton Oaks
Santa Fe, Shenandoah, Victorian
Washington, DC
Brickworks Annual Report 2023 p 181
House at Flat Rock
Austral Masonry Australite in Smooth Grey
and Bowral Bricks in Chillingham White
Bendalong, NSW
182 p Brickworks Annual Report 2023
182 p Brickworks Annual Report 2023
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 131 to 180, 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 2023 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 2023.
This declaration is made in accordance with a resolution of the Board of Directors.
R.D. Millner
Director
L.R. Partridge AM
Director
Dated:
28 September 2023
Brickworks Annual Report 2023 p 183
184 p Brickworks Annual Report 2023
Allianz Stadium
Austral Masonry Techpave in Custom Colours
Sydney, 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 2023, 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 2023 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 2023 p 185
Independent Auditor's Report
Valuation of investment properties held within joint venture property trusts
Why significant
How our audit addressed the key audit matter
At 31 July 2023, the Group’s total assets include interests in
joint venture property trusts that are equity accounted with a
carrying value of $2,273.7 million. 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 $190.6 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 changes in key inputs
such as the expected development costs to complete, the
stage of completion and associated profit and risk adjustments,
capitalisation rates, expected rental income, letting up periods
and incentives.
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 investment property
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 expected development
costs to complete, stage of completion and associated
profit and risk adjustments, capitalisation rates, expected
rental income, letting up periods and incentives, 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 that 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 contained in Note
6.3(b) to the financial report.
186 p Brickworks Annual Report 2023
Impairment assessment of goodwill and other non-current assets
Why significant
How our audit addressed the key audit matter
At 31 July 2023, the Group’s consolidated balance sheet
includes goodwill and other intangible assets totalling $144.4
million, and property plant and equipment and right of use
assets totalling $1,007.6 million.
The Directors have assessed goodwill and other intangible and
tangible assets for impairment at 31 July 2023 and concluded
no impairment is required.
As disclosed in Note 3.2(c) to the financial report, the
impairment assessment incorporated significant judgments
and estimates, 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 Cash Generating
Units 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 specialists.
◗ Performed sensitivity analysis on key assumptions including
discount rates and terminal value growth rates.
◗ Assessed the adequacy of the disclosures relating to goodwill
and other intangible assets in Note 3.2(c) to the financial
report including those made with respect to judgments and
estimates.
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
2023 Annual Report, but does not include the financial report and our auditor’s report thereon.
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, 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.
Brickworks Annual Report 2023 p 187
Independent Auditor's Report
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
◗ Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
◗ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
◗ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
◗ Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
◗ Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the
financial report represents the underlying transactions and events in a manner that achieves fair presentation.
◗ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the
Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the
financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
188 p Brickworks Annual Report 2023
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 104 to 125 of the directors' report for the year ended 31 July 2023.
In our opinion, the Remuneration Report of Brickworks Limited for the year ended 31 July 2023, 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
28 September 2023
Brickworks Annual Report 2023 p 189
University of Rochester, Wegmans Hall
53-DD
Rochester, New York
190 p Brickworks Annual Report 2023
190 p Brickworks Annual Report 2023
Statement of
Shareholders
Ordinary Shares
as at 31 August 2023
Shareholders
Number of holders
Voting entitlement is one vote per fully paid
ordinary share % of total holdings by or on
behalf of 20 largest shareholders
Distribution of shareholdings:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Holdings of less than marketable parcel of
19 shares
20 Largest Shareholders
as disclosed on the Share Register as at 31 August 2023
Number of
Shares
%
1 WASHINGTON H SOUL PATTINSON
65,645,140
43.12
& COMPANY LIMITED
2 HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
12,469,149
8.19
3
4
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA
PTY LIMITED
7,915,423
7,068,792
5 NATIONAL NOMINEES LIMITED
3,359,205
J S MILLNER HOLDINGS PTY LIMITED
3,018,836
6
7
BNP PARIBAS NOMS PTY LTD
8 WILDESMEADOW PTY LTD
9
T G MILLNER HOLDINGS PTY LIMITED
10 ARGO INVESTMENTS LIMITED
26,323
69.79%
18,444
6,316
903
609
51
26,323
693
11 HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED – A/C 2
Substantial Shareholders
The names of the substantial shareholders as disclosed in the
shareholder notices received by the Company:
12 BKI INVESTMENT COMPANY LIMITED
13 HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
Shareholder
Washington H Soul Pattinson and Company
Limited
Number
of Shares
14 MR GREGORY JAMES STONIER
15 MR JAMES WILLIAM STONIER
16 MRS KATHRYN ELIZABETH HOZACK
65,645,140
17 MILLANE PTY LIMITED
18 DIXSON TRUST PTY LIMITED
19 HEXHAM HOLDINGS PTY LIMITED
20 MRS LOUISE MARGARET RASMUSSEN
250,000
5.20
4.64
2.21
1.98
0.75
0.54
0.46
0.38
0.29
0.29
0.25
0.25
0.24
0.24
0.22
0.20
0.17
0.16
1,149,162
828,480
698,509
584,009
439,188
436,209
380,449
374,686
369,685
360,886
341,349
302,418
261,209
106,252,784
69.79
Brickworks Annual Report 2023 p 191
Corporate
Information
Registered Office
738–780 Wallgrove Road
Horsley Park NSW 2175
Telephone: (02) 9830 7800
Website: www.brickworks.com.au
info@brickworks.com.au
Email:
Auditors
Ernst & Young
Bankers
National Australia Bank
Share Register
Computershare Investor Services Pty Limited
GPO Box 2975
Melbourne Victoria 3001
Telephone: 1300 855 080 (within Australia)
+61 3 9415 4000 (International)
Principal Administrative Office
738–780 Wallgrove Road
Horsley Park NSW 2175
Telephone: (02) 9830 7800
Email:
info@brickworks.com.au
192 p Brickworks Annual Report 2023
B23 New Arrivals
Daniel Robertson Civic Series
Important Dates
2023 annual result released
Record date for final ordinary dividend
Annual General Meeting
Payment date for final ordinary dividend
2024 half-year end
2024 half-year result announced
Record date for interim ordinary dividend
Payment date for interim ordinary dividend
2024 financial year end
28 September 2023
1 November 2023
21 November 2023
22 November 2023
31 January 2024
21 March 2024
10 April 2024
1 May 2024
31 July 2024
2024 annual result released
26 September 2024
The above dates are indicative only and are subject to change