CSR Limited Annual Report 2017
INSPIRING
BUILDING
FOR LIFE
Financial Overview
Five Year Performance Overview
Chairman’s Report
Managing Director’s Review
Building Products
CONTENTS
2
3
4
6
8
11 Viridian
12 Aluminium
13 Property
14 Sustainability Summary
15 Diversity
16 Corporate Governance Summary
17 Risk Summary
18 Board of Directors
20 Directors’ Report
23 Remuneration Report
41 Financial Report
83
84
87 Shareholder Information
Directors’ Declaration
Independent Auditor’s Report
Viridian is the largest glass supplier
in Australia and leads the industry for
quality and innovation
Bradford is more than just
insulation, providing acoustic control
and energy saving products for homes
and commercial buildings
AFS is a leader in load bearing
permanent formwork walling
solutions to deliver faster, lower cost
construction
Cover photo: Photographer Simon Kenny
Location: Meriton Serviced Apartments North Sydney
PGH Bricks produces a range
of over 180 colours and sizes of bricks
from 10 sites across the east coast
of Australia
Monier brings over 100 years in the
roofing industry with our commitment
to Australian made roofing products
BUILDING GREAT
SPACES TO LIVE
AND WORK
CSR’s products are a core part of
the industry that creates homes and
buildings where people live, work and
play. Our scale and network brings
together those in the industry that
believe in creating great spaces.
We are developing new systems to
make it easier and faster to build
and inspire smarter, more connected
homes and buildings.
We are helping our customers reduce
construction time, and deliver better
energy efficiency, comfort and design,
so that together we can build great
spaces to live and work.
Hebel is Australia’s only
manufacturer of autoclaved aerated
concrete that is used in residential,
commercial and infrastructure
applications
1
CSR ANNUAL REPORT 2017 FINANCIAL
OVERVIEW
The lift in full year net profit was driven by a significant increase in earnings from
Building Products, which delivered a record year EBIT of $202.8 million, up 21%.
TRADING REVENUE
EARNINGS BEFORE INTEREST AND TAX (EBIT)1
$2.5b
EBITDA1
$386.5m
7%
$298.0m
8%
7%
BUILDING PRODUCTS EBIT of $202.8 million up 21% with
higher volumes across all products with increased margins
reflecting improved pricing and market activity
VIRIDIAN EBIT of $7.0 million, down $1.1 million with growth
in revenue offset by impacts from WA and NZ operations
ALUMINIUM EBIT of $93.1 million, down 11% due to a lower
realised aluminium price (including premiums) partly offset by
increased production and improved operational performance
PROPERTY EBIT of $15.0 million which included a number
of smaller transactions completed in the first half of the year
NET PROFIT AFTER TAX1
EARNINGS PER SHARE1
$183.8m
11%
36.5c
11%
STATUTORY NET PROFIT AFTER TAX
FULL YEAR DIVIDEND
$177.9m
25%
26.0c
11%
1 All references are before significant items. They are non-IFRS measures and are used internally by management to assess the
performance of the business and have been extracted or derived from CSR’s financial statements for the year ended 31 March 2017
(YEM17). All comparisons are to the year ended 31 March 2016 (YEM16) unless otherwise stated.
2
2
CSR ANNUAL REPORT 2017
CSR ANNUAL REPORT 2017 FIVE YEAR
PERFORMANCE
OVERVIEW
FIVE YEAR PERFORMANCE Year ended 31 March ($ million) unless stated
2017
2016
2015
20141 20131,2
Operating results
Trading revenue
Earnings before interest and tax (EBIT)
Building Products3
2,468.3
2,298.8
2,023.4
1,746.6
1,682.4
202.8
167.6
119.7
91.5
76.3
TRADING REVENUE
Year ended 31 March ($ billion)
2.5
2.3
2.0
1.7
1.7
13
14
15
16
17
EBIT
Year ended 31 March ($ million)
298.0
276.8
235.4
Viridian
Aluminium
Property
Segment total
Corporate3,4
Restructuring and provisions
EBIT
Net profit after tax (before significant items)
Net profit/(loss) after tax (after significant
items)
Financial position
Total equity
Total assets
Net (debt)/cash
7.0
93.1
15.0
317.9
(14.0)
(5.9)
298.0
183.8
177.9
8.1
104.1
23.3
303.1
(17.7)
(8.6)
276.8
166.0
142.3
3.1
(14.9)
(38.8)
104.3
30.2
51.9
17.3
50.3
–
257.3
145.8
87.8
125.7
68.1
(14.6)
(12.7)
13
14
15
16
17
(16.8)
(5.1)
146.5
125.5
235.4
125.7
(5.5)
80.5
(7.0)
68.1
41.4
88.1
(150.0)
NET PROFIT (BEFORE
SIGNIFICANT ITEMS)
Year ended 31 March ($ million)
183.8
166.0
146.5
1,206.5
2,097.1
(11.4)
1,317.2 1,206.0
1,157.2
1,086.6
2,215.8 2,119.3
2,008.3
2,032.7
70.9
68.4
(28.5)
(25.1)
80.5
Key data per share
Earnings before significant items (cents)
Earnings after significant items (cents)
Dividend (cents)
Payout ratio before significant items (%)
Key measures
Profit margin (EBIT/trading revenue) (%)
Return on funds employed (ROFE) (%)5
Gearing at 31 March (net debt/
net debt plus equity) (%)
Employees (number of people employed)6
36.5
35.3
26.0
71.2
12.1
21.6
0.9
32.9
28.2
23.5
71.4
12.0
20.7
n/a
29.1
24.9
20.0
68.7
11.6
18.4
n/a
16.0
17.5
10.0
62.5
8.2
(29.6)
5.1
62.2
7.2
9.9
2.4
4.0
5.0
2.3
4,193
3,578
3,134
2,985
3,218
41.4
13
14
15
16
17
TOTAL RECORDABLE
INJURY FREQUENCY RATE
Year ended 31 March
(per million work hours)
17.5 17.7
15.6
13.8
13.8
1 On 1 April 2014, CSR Limited adopted a change of accounting policy over the classification of the discount unwind for the
asbestos liability, resulting in a restatement of balances for the financial year ended 31 March 2014 and the other
comparative years disclosed in the table above.
2 On 1 April 2013, CSR Limited adopted AASB 119 Employee Benefits (revised), resulting in a change of accounting policy
and a restatement of balances for the financial year ended 31 March 2013.
3 From 1 April 2016 there was a change in internal reporting which resulted in a transfer of operating expenditure from
Corporate to Building Products. As a result, the comparative years have been updated to reflect this change.
4 Represents unallocated overhead and other revenues.
5 ROFE is calculated as EBIT before significant items for the 12 months to 31 March divided by average funds employed
which excludes cash, tax balances and certain other non-trading assets and liabilities as at 31 March.
6 Includes employees of PGH Bricks and Viridian NZ.
13
14
15
16
17
CSR ANNUAL REPORT 2017
3
CHAIRMAN’S
REPORT
“ Strong performance in Building Products
delivering another record profit.”
CSR DIVIDENDS
Year ended 31 March (cents per share)
EARNINGS PER SHARE
BEFORE SIGNIFICANT ITEMS
Year ended 31 March (cents per share)
26.0
23.5
20.0
36.5
32.9
29.1
10.0
5.1
16.0
8.2
13
14
15
16
17
13
14
15
16
17
4
CSR ANNUAL REPORT 2017
CSR EARNINGS AT FIVE YEAR HIGH
CSR has continued its track record of growth in
earnings which improved for the fourth consecutive
year resulting in full year earnings reaching a five
year high.
Our net profit after tax (before significant items)
was up 11% year on year to $183.8 million and
our statutory profit of $177.9 million was up 25%.
Building Products EBIT was up 21% to
$202.8 million which exceeded last year’s
record. The result demonstrates the benefits
that management focus, cost control, innovation
and strategic investments have delivered to
shareholders.
One of the key investments we made during the
year was the $126 million acquisition of the 40%
minority stake in the PGH Bricks JV. Since formation
in May 2015, the PGH Bricks JV has delivered
strong earnings growth with increased volumes and
improved margins. By taking full ownership, we will
benefit from new opportunities to drive operational
efficiency, as well as accelerate future property
development projects.
CSR’s glass business, Viridian continues to face
challenging markets in some regions. We are
making good progress in growing revenue and
earnings from higher margin products in double
glazing and commercial applications. These
improvements, however, have been offset by
disappointing performances in Western Australia
and New Zealand. Further restructuring is underway
to align the cost base to demand and improve
profitability in markets where Viridian can leverage
our local manufacturing expertise.
CSR continues to benefit from its 25.2% interest
in the Tomago Aluminium Smelter which performed
well at an operational level. Increased sales
tonnage, ongoing cost reduction and improved
efficiency partly offset a reduction in realised
aluminium prices. The division delivered EBIT
of $93.1 million.
Our Property division continued to provide a
significant return to shareholders with EBIT of
$15.0 million and an expanded portfolio of future
opportunities following the PGH Bricks investment.
Board and management changes
In October 2016, we welcomed Christine Holman
to the CSR board as a non-executive director.
Christine brings over 20 years’ experience
across the technology, private equity and digital
sectors in a variety of functions including finance,
commercial, technology and marketing.
David Fallu also joined CSR in February 2017 as
the company’s chief financial officer. David brings
a broad range of financial and corporate expertise
following a number of roles in Australia and
New Zealand. He will be a valuable addition to
CSR as we continue to invest in new technology
and market segments and expand services
for customers.
CSR People
Finally, this year’s excellent result could not have
been achieved without the commitment and hard
work of the 4,200 CSR employees across Australia
and New Zealand. Everyone has been very busy
this year.
On behalf of the board, I would like to thank
them for their considerable effort and the strong
leadership of managing director Rob Sindel
and his management team.
Thanks as well, to you the shareholders for your
ongoing support.
JEREMY SUTCLIFFE Chairman
CSR’S TRUSTED BRANDS
Dividends and capital management
The growth in earnings over the last five years
is also reflected in higher dividends, consistent
with our policy of paying between 60-80% of full
year net profit after tax (before significant items).
Following the increase in earnings achieved this
year, we have resolved to pay a final dividend of
13.0 cents per share on 4 July 2017 which will
bring the full year dividend to 26.0 cents, up 11%.
The growth in earnings has also contributed to an
increase in franking credits, which will enable the
company to resume partial franking of dividends
with the final dividend to be franked at 50%.
In March 2016, CSR announced an on-market
share buyback of up to $150 million to take place
over two years. This provides CSR with flexibility
to manage the buyback with regard to share
price levels, cash flow generation and capital
requirements.
The $126 million investment in the PGH Bricks JV
provided a very attractive investment opportunity
during the year and therefore we have only
purchased a small number of shares to date. CSR’s
strong balance sheet and operating cash flows
will support further capital management initiatives
while also providing funds to invest in additional
growth options and property projects over the
coming years.
Progress on our strategy
CSR’s business today is more resilient to future
changes in the construction cycle. Our building
products businesses are operating on a lower,
more variable cost base and we have invested
in adjacent markets in multi-residential and
commercial construction.
We are making good progress on a number of
new projects in structural systems and offsite
construction. Most recently, we received a
$3 million grant from the Federal Government to
support development of an Australian-first high
performance building façade system.
Our AFS and Hebel businesses are also gaining
market share as they provide more flexible design
systems with increased speed of construction
incorporating lower labour and site crane
requirements. Both businesses are expanding
manufacturing capacity to meet growing demand.
Gyprock and Bradford have invested in their
distribution channels and expanded their digital
offering to provide delivery tracking and real-time
notifications to our customers.
In Aluminium, a significant increase in A$
aluminium prices in the second half of the year
also provided us the opportunity to increase our
hedging position for the next three years to reduce
future earnings volatility to movements in currency
and aluminium prices.
We are also accelerating our investment in key
Property sites as the market for industrial and
residential land remains strong. We have a
significant pipeline of development projects which
will come to market over the next five to 10 years.
CSR ANNUAL REPORT 2017
5
Workplace health, safety and environment
While the rate of lost time injuries is down 21%
from five years ago, and many individual sites in
CSR are performing well with year-on-year safety
improvement, the overall performance in the past
year did not reflect this improving trend. There
can be no excuses for an increase in our injury
frequency rates notwithstanding buoyant markets
and greater demands on our employees. The safety
performance of all our operations must be world-
class. To that end, the focus for the year ahead is to
ensure all of CSR’s businesses continue to improve
safety performance, supported by programs with
four key themes: Leadership, Risk Management,
Systems Performance and Healthy Body & Mind.
We have continued to make progress to meet
CSR’s 2020 goal of a 20% reduction per tonne of
saleable product in energy, waste and water usage,
using 2009/10 as the base year. We have now
exceeded our targets for water consumption and
waste production. And while we are on target to
meet our emissions reduction goal we have more
work to do to achieve our overall energy reduction
target. A number of initiatives are helping CSR to
improve operational performance in this area across
all our sites.
Financial results by business
Trading revenue from Building Products was
$1.6 billion, up 8%, with higher volumes and
improved margins across all products.
EBIT was up 21% to $202.8 million with earnings
growth across all divisions, reflecting the benefit of
price increases, improved factory performance and
cost management. The result includes investment
of approximately $12 million in a number of growth
initiatives, including CSR’s digital customer platform
and off-site construction development projects.
EBIT margin increased to 12.9%, up from 11.4%
as improved volume, pricing and product mix flowed
through to earnings.
Viridian’s adjusted trading revenue of
$315.1 million was up 5%, with increased
volumes from higher margin products and
improved performance in the commercial market.
This was partly offset by pressure on float glass
pricing due to ongoing import competition.
EBIT of $7.0 million was down from $8.1 million.
Improved performance in Home Comfort,
Commercial & Design and Local businesses was
offset by a reduction in earnings of approximately
$4 million in Western Australia and New Zealand.
In Aluminium, the realised aluminium price in
Australian dollars (including hedging and premiums)
was down 4% to A$2,422 per tonne with increased
production offset by lower premiums. Sales
volumes of 211,230 tonnes were up 1% due to
improvements in Tomago’s operating efficiency.
Trading revenue of $511.5 million was down 4%
from the prior year due to the 4% reduction in the
realised aluminium price.
EBIT of $93.1 million was down 11% due to the
lower realised aluminium price which was partly
offset by increased production and improved
operational performance.
MANAGING
DIRECTOR’S
REVIEW
“ Building a resilient business for the future.”
EBIT UP BY 8% FOLLOWING STRONG GROWTH
IN BUILDING PRODUCTS
Our strategy continues to deliver improved financial
results, positioning CSR for growth in adjacent
building solutions that improve speed and ease
of construction, while cementing our position as
a market leader in innovation and new products
and systems.
The buyout of the PGH Bricks JV was a highlight
of the year, achieving two prime objectives: much-
needed industry rationalisation and the rebuilding
of CSR’s Property pipeline of developable sites.
Both of these outcomes will add significant value
for shareholders over the coming years.
In the next few years, we will focus on further
improving our customers’ experience by investing
in our digital platforms and delivery processes.
This will give our customers a greater level of
visibility and certainty about the products they
want from CSR, essential in today’s changing
world of digital services.
6
CSR ANNUAL REPORT 2017
Property recorded EBIT of $15.0 million, down from
$23.3 million in the prior year. The result includes a
number of smaller transactions completed in
the first half of the year including the option fee
at Rosehill, NSW and the sale of industrial land
at Erskine Park, NSW and Clayton, VIC.
Sales from Stage 4 of the 584 lot residential
development at Chirnside Park, VIC were delayed in
construction due to significant wet weather events
in the Melbourne region. The Stage 4 sales were
completed in May 2017, following the end of CSR’s
financial year.
Outlook
Looking at the outlook for the year ending
31 March 2018 (YEM18), CSR confirmed:
Building Products – While residential
construction markets appear to have peaked from
recent record levels of activity, the pipeline of
activity currently underway will support demand
for CSR’s Building Products in the year ahead.
Earnings will be supported by reasonably steady
demand for detached housing and high-rise
construction on the east coast.
Viridian – Following a number of restructuring
initiatives to reduce costs in certain regions
combined with a growing position in higher margin
commercial projects, earnings are expected to
improve.
Aluminium – Pricing has improved significantly
in the past six months, which has provided an
opportunity for Gove Aluminium Finance (70%
CSR) to lock in returns in the hedge book to
reduce volatility in future earnings.
As previously highlighted, the Tomago smelter’s
new power supply contract with Macquarie
Generation takes effect from November 2017.
Based on this contract, power costs will increase
by approximately A$250 per tonne of production.
Property – Two transactions were recorded
in the first six weeks of YEM18. These were
the previously announced sale of the Monier
roofing site at Rosehill, NSW, and completion of
construction of Stage 4 at Chirnside Park, VIC. As
a result, Property EBIT in YEM18 will substantially
exceed long-term targets with $48 million secured
in already completed projects.
In summary, CSR continues its strategy to invest in
customer service and digital solutions while growing
its position in lightweight building and façade
systems. By strengthening our core businesses and
investing in new market segments, we are more
resilient to changes in the building cycle.
Overall earnings for the CSR group will be bolstered
by higher Property profits and a significant increase
in hedging in Aluminium reducing future earnings
volatility.
DELIVERING ON OUR STRATEGY
We are building on our strategy that covers five key areas for
CSR to grow our businesses over the medium term.
STRENGTHEN AND INVEST
Strengthening and investing in our businesses and our people
12%1 improvement in total recordable injury frequency rate
while the lost time injury frequency rate did not continue
the recent trend of improvement ending the year at 3.3
Acquisition of PGH Bricks JV 40% minority interest
Commissioned new consolidated processing plant
in Viridian New Zealand
SMARTER, FASTER, EASIER
Delivering building solutions that are smarter, faster and
easier to use
Relaunched the Gyprock Red Book, the market leading
design guide with enhanced technical support in all states
Launched development of an Australian-first high
performance building façade system with the support
of a $3 million grant from the Federal Government
CHANGING THE WAY WE LIVE AND WORK
Influencing design and adapting to the changing way we
live and work
Further expansion underway of the AFS Rediwall®
manufacturing facility following growing demand for
the PVC structural walling system in the multi-residential
market
Major expansion of Hebel’s Somersby operations underway
following growth in multi-residential and detached housing
markets
COMFORT AND ENERGY
Improving comfort, quality and efficiency of buildings
Bradford Energy Solutions expanded its alliances with
a number of major builders to provide a solar PV and
battery storage offering
Growth in Bradford product offering in adjacent markets
including polyester, specialist acoustic products, ventilation,
PIR foams and construction fabrics
CUSTOMERS
Ensuring that our customers choose to do business with CSR
Expanded 24/7 online and mobile digital access to CSR
customers to include delivery tracking and notifications
ROB SINDEL Managing Director
1 Total recordable injury and lost time injury frequency rate (per million work hours).
CSR ANNUAL REPORT 2017
7
BUILDING
PRODUCTS
Higher volumes and improved pricing lift earnings
Gyprock is Australia’s leading range of plasterboard supporting design and industry
professionals with high performance products and systems
8
CSR ANNUAL REPORT 2017
TOTAL RESIDENTIAL COMMENCEMENTS
ON A TWO QUARTER LAG BASIS FOR THE
12 MONTHS TO 31 MARCH 2017 OF 228,814
WERE UP 5% OVER THE PREVIOUS 12 MONTH
PERIOD.
Detached housing continues its steady growth
across key markets in New South Wales and
Victoria, offset by declines in Western Australia.
The multi-residential market remains robust with
growth in the last year of 11% driven by both the
medium and high density segments.
The non-residential market remains benign. Recent
increases in non-residential approvals in Australia
point to more supportive medium-term activity
in this segment. The alterations and additions
market is marginally down with some activity being
transferred to the ‘knockdown rebuild’ market.
The New Zealand market remains strong across
all segments.
While lead indicators, including building approvals,
are pointing to a softening in activity in residential
markets, the pipeline of projects underway is
expected to underpin reasonably steady demand
for CSR’s products in the year ahead.
Higher volumes and improved pricing lift
Building Products earnings
Trading revenue from Building Products was
$1.6 billion, up 8%, with higher volumes and
improved margins across all products.
EBIT was up 21% to $202.8 million with earnings
growth across all divisions, reflecting the benefit of
price increases, improved factory performance and
cost management. The result includes investment
of approximately $12 million in a number of growth
initiatives including CSR’s digital customer platform
and off-site construction development projects.
EBIT margin increased to 12.9%, up from 11.4%
as improved volume, pricing and product mix
flowed through to earnings.
PGH Bricks brings hundreds of colours, shapes, styles
and textures with smart design, blending of brick types and
diverse bricklaying techniques for homes and buildings
SUMMARY OF BUILDING PRODUCTS BUSINESS UNIT PERFORMANCE
Gyprock increased earnings with higher volumes reflecting the strong east coast activity in the
residential construction market, while average selling prices increased in all states. Gyprock continues
to expand its customer service experience including new delivery tracking services, relaunched the
Gyprock Red Book design guide with technical support across all states and investment in three new
Gyprock Trade Centre locations in Queensland and in New South Wales.
Cemintel fibre cement earnings were higher due to strong east coast building activity along with
growth from new façade systems and prefinished panels.
Hebel continued to increase earnings with market share growth in all major segments.
The $65 million expansion of the Somersby, NSW factory is underway to meet growing demand.
AFS walling systems including Logicwall® fibre cement and Rediwall® PVC continued to increase
earnings reflecting increased demand from the multi-residential market. Expansion of the Rediwall®
manufacturing facility located at Minto, NSW is underway to double the site’s capacity. AFS also
expanded its network in the Brisbane and Melbourne markets with new distribution and warehouse
facilities opened during the year.
Bradford earnings increased with higher volumes across all product groups underpinned by strong
market activity and improved pricing. CSR Martini has expanded its range of thermal and acoustic
polyester insulation products with growth from major commercial projects. Bradford Energy Solutions is
also growing its alliances with a number of major builders to provide solar PV and battery storage.
Monier roofing earnings grew during the year reflecting strong demand from the detached housing
market in NSW and Victoria. Product development continues with the launch of the Elemental
lightweight roofing range and Colour Lock Technology.
PGH Bricks’ earnings were higher with improved margins following strong market activity and the
full year benefit of the synergies following integration of the joint venture. PGH is expanding its digital
services and delivery tracking for customers in addition to further investment in its product ranges
and brick façade solutions.
CSR ANNUAL REPORT 2017
9
Building Products (continued)
CSR Gyprock and Bradford were selected to assist in the landmark development
of the new Royal Adelaide Hospital, South Australia’s single largest infrastructure
project
Bradford’s latest range of insulation is soft to touch,
easy installation, allergy friendly and Australian made
with sustainable, organic binders
CSR helps deliver landmark hospital project
CSR Gyprock and Bradford were selected to assist in
the landmark development of the new Royal Adelaide
Hospital (nRAH). The world-class facility in South
Australia is the state’s single largest infrastructure
project designed to admit more than 80,000 patients
per year.
Gyprock and Bradford were able to provide integrated
design solutions to meet the high performance and
environmental standards required for the project.
These systems also delivered critical energy efficiency,
increased comfort and safety solutions designed into
the building.
The nRAH included over 40km of internal wall
partitioning, made up of Gyprock systems including
EC08 Complete, Gyprock’s premium, multi-function
plasterboard which brings superior performance for
mould, impact, fire, acoustic and moisture resistance.
Bradford’s Glasswool Supertel boards were
customised for interior and external walls to provide
a more cost effective and faster installation, as well
as systems used in the HVAC and Safebridge roofing
systems.
The construction of nRAH is the largest healthcare
project CSR has been involved with to date and
highlights the expertise of CSR’s technical support
team as well as operations and logistics teams to
deliver the engineering solutions required for the
complex building requirements of the project.
BUILDING PRODUCTS EBIT
Year ended 31 March ($ million)
AUSTRALIAN HOUSING STARTS
Year ended 31 March (000 per annum)
BUILDING PRODUCTS
TRADING REVENUE
Year ended 31 March ($ million)
1,576.9
1,466.8
1,211.2
1,029.2
970.0
202.8
167.6
119.7
91.5
76.3
13
14
15
16
17
13
14
15
16
17
10
CSR ANNUAL REPORT 2017
113
113
102
102
117
116
117
116
16
17
16
17
84
84
110
110
15
15
68
68
96
96
56
56
90
90
13
14
13
14
Detached housing
Multi-residential
Source: ABS, two quarter lag
Detached housing
Multi-residential
Source: ABS, two quarter lag
VIRIDIAN
Revenue higher with WA and NZ
impacting performance
Viridian’s Lightbridge high performance double glazing brings the ultimate comfort
and natural light into your home
VIRIDIAN TRADING REVENUE
Year ended 31 March ($ million)
VIRIDIAN EBIT
Year ended 31 March ($ million)
379.9
301.3
279.3
268.2 262.0
13
14
15
16
17
8.1
7.0
3.1
13
14
15
16
17
(14.9)
(38.8)
ADJUSTED TRADING REVENUE OF $315.1
MILLION WAS UP 5% WITH INCREASED
VOLUMES FROM HIGHER MARGIN PRODUCTS
AND IMPROVED PERFORMANCE IN THE
COMMERCIAL MARKET.
This was partly offset by pressure on float glass
pricing due to ongoing import competition. The
adjusted revenue excludes nine months of revenue
from NZ Viridian Glass Limited Partnership (VGLP)
following CSR’s acquisition of the remaining 42%
stake in the JV completed on 30 June 2016.
EBIT of $7.0 million was down from $8.1 million.
Improved performance in Home Comfort,
Commercial & Design and Local businesses was
offset by an approximately $4 million impact
from Viridian’s exposure to the market slowdown
in Western Australia and higher costs from the
commissioning of the new consolidated processing
plant in Auckland, New Zealand which opened
in September 2016. An operational review is
underway for both regions.
Commercial market exposure is increasing with an
expanded product and service offering for larger
commercial projects. A number of operational
changes have now been completed that are
forecast to deliver efficiencies and improve
service during the next year. This includes the
commercial double glazing plant in Ingleburn, NSW
and the recently commissioned commercial glass
processing plant in Canberra.
CSR ANNUAL REPORT 2017
11
ALUMINIUM
Improved operational performance helped
to offset lower realised aluminium prices
THE REALISED ALUMINIUM PRICE IN
AUSTRALIAN DOLLARS (INCLUDING HEDGING
AND PREMIUMS) WAS DOWN 4% TO A$2,422
PER TONNE WITH INCREASED PRODUCTION
AND IMPROVED OPERATIONAL PERFORMANCE
OFFSET BY LOWER PREMIUMS.
There was significant price momentum in US$
aluminium prices in the second half of the financial
year with prices increasing 18% since 3 October
2016 to US$1,954 per tonne by the end of March
2017. This provided an opportunity for Gove
Aluminium Finance (GAF – 70% CSR) to lock in
hedge book returns to reduce volatility in
future earnings.
The Australian dollar averaged 75.3 US cents
during the year compared to 73.6 US cents in
the prior year.
The average ingot premium for the year was
US$94 per tonne, down 44% (Platts Metals Week
– Main Japanese Port ingot premium) as premiums
found a floor at US$75 per tonne (Q4 CY16) before
increasing to US$95 per tonne (Q1 CY17).
GAF’s sales volumes of 211,230 tonnes were up 1%
due to operational improvements at Tomago. Trading
revenue of $511.5 million was down 4% reflecting
the 4% reduction in the realised aluminium price.
EBIT of $93.1 million was down 11% due to the
lower realised aluminium price, partly offset by
increased production and improved operational
performance at the Tomago smelter.
Tomago’s operational improvement programs have steadily increased production
with Gove Aluminium’s sales volumes increasing from 193,808 in YEM12 to 211,230
in YEM17
ALUMINIUM TRADING REVENUE
Year ended 31 March ($ million)
ALUMINIUM EBIT
Year ended 31 March ($ million)
532.9 530.7
511.5
444.2 455.4
104.3 104.1
93.1
AVERAGE LME US$
ALUMINIUM CASH PRICE
Year ended 31 March (US$ per tonne)
1,976
1,889
1,773
1,688
1,592
50.3 51.9
13
14
15
16
17
13
14
15
16
17
13
14
15
16
17
12
CSR ANNUAL REPORT 2017
PROPERTY
Property transactions continue
to deliver earnings
CSR’S PROPERTY DIVISION RECORDED
EBIT OF $15.0 MILLION, DOWN FROM
$23.3 MILLION IN THE PRIOR YEAR.
The result includes a number of smaller transactions
completed in the first half of the year including
the option fee at Rosehill, NSW and the sale of
industrial land at Erskine Park, NSW and Clayton,
VIC.
Sales from Stage 4 of the 584 lot residential
development at Chirnside Park, VIC were delayed
due to significant wet weather in the Melbourne
region. The Stage 4 sales were completed and
settled in May 2017, following the end of CSR’s
financial year.
Chirnside Park development has settled 363
lots with 112 contracts exchanged and 109 lots
remaining as construction of Stage 5 continues.
To date, this project has delivered earnings of
$22.9 million.
Full development approval of the 70 hectare site
at Schofields, NSW is expected to be completed
by the end of 2018 with quarry rehabilitation
underway.
PROPERTY EBIT
Year ended 31 March ($ million)
30.2
23.3
17.3
15.0
CSR’s Chirnside Park project is located 40 minutes from the Melbourne CBD.
The Property division is coordinating the delivery of infrastructure, roads and other
services to the site to enable buyers to begin construction of their new homes
0
13
14
15
16
17
13
CSR ANNUAL REPORT 2017 SUSTAINABILITY
SUMMARY
Progressing our sustainability agenda
LOST TIME INJURY
FREQUENCY RATE
Year ended 31 March
(per million work hours)
4.5
4.2
3.1
3.3
2.4
13
14
15
16
17
TOTAL RECORDABLE
INJURY FREQUENCY RATE
Year ended 31 March
(per million work hours)
17.5 17.7
15.6
13.8
13.8
13
14
15
16
17
Note: includes joint ventures
and acquired businesses
CSR REMAINS COMMITTED TO SUSTAINABLE
PRACTICES THROUGHOUT ALL OF OUR
BUSINESSES.
We understand that a sustainable business
must ensure that it minimises its impact on the
environment and the community.
Full details of CSR’s sustainability agenda and
data relating to greenhouse gas emissions, energy
consumption and water and waste production are
included in CSR’s Sustainability Report which is
available on CSR’s website at www.csr.com.au
Safety
A major sustainability focus remains on safety, and
we place the same emphasis and importance on
managing workplace health and safety as any other
business imperative.
While the rate of lost time injuries is down 21%
from five years ago, and many individual sites
in CSR are performing well with year-on-year
safety improvement, the overall performance in
the past year did not reflect this improving trend.
The focus for the year ahead is to ensure all of
CSR’s businesses continue to improve safety
performance, supported by programs with four
key themes:
Leadership – building leadership capability
and performance measures
Risk management – eliminating or reducing
risk with a simple pragmatic approach
Systems performance – building a robust
workplace, health and safety system with
an increased focus on managing risk
Healthy body and mind – focusing on a high
performance environment with high
performance people
Environment
Our ongoing commitment is to minimise the impact
on the environment with specific targets to reduce
greenhouse gas emissions and waste production
and the consumption of energy and water used in
production.
We have continued to make progress to meet
CSR’s 2020 goal of a 20% reduction per tonne
of saleable product in energy, waste and water
usage, using 2009/10 as the base year. We have
now exceeded our targets for water consumption
and waste production. And while we are on target
to meet our C02-e reduction goal we have more
work to do to achieve our overall energy reduction
target. A number of initiatives are helping CSR
to improve operational performance in this area
across all our sites.
Community
We continue to partner with a number of
organisations in line with our commitment
to operate in a sustainable manner, with the
community at the centre of our right to operate.
For over 10 years, the CSR Community Support
Program has operated as a core component of
our community involvement in which CSR matches
employee contributions dollar for dollar to a range
of charitable organisations.
CSR launched the Community Support Program
14 years ago and during that time CSR and its
employees have donated over $2.9 million to
charity. In the year ended 31 March 2017, CSR
and its employees donated $102,553 to a range
of charitable organisations.
CSR also works with the Australian Business and
Community Network (ABCN), a partnership of
highly committed national business leaders and
companies working on mentoring and coaching
programs in schools in high need areas. For the
year to 31 March 2017, 107 CSR employees
mentored 202 students from 10 schools and
volunteered 758 hours.
People
At CSR we are committed to investing in our people.
Over the last few years we have developed a suite
of leadership development programs designed to
provide our leaders with the knowledge, skills and
support to enable them to perform at their best.
As at 31 March 2017, CSR had 4,193 full-time
equivalent (FTE) employees across its operations
in Australia and New Zealand. This total is up from
3,578 last year as it includes employees in joint
ventures which were acquired during the past year.
14
CSR ANNUAL REPORT 2017
DIVERSITY
A DIVERSE WORKFORCE
CSR believes that a diverse workforce improves business
decision making as well as increasing workforce sustainability,
leading to better organisational relationships and ultimately
better solutions for our customers. Each of these helps to
improve the financial results at CSR.
CSR workplace profile
20.6% of employees in senior management positions
are women, including the executive general manager of
Lightweight Systems, company secretary, general manager
treasury and strategic capital, group financial controller,
internal audit & risk manager and general manager investor
relations & corporate communications. During YEM17, the
percentage of women in the CSR workforce increased from 16.7%
to 18.0%.
Measurable objectives
Improving diversity requires cultural change driven by the leadership
and commitment of the board and senior management. CSR has
structured its measurable objectives around this commitment.
The achievements for YEM17 are set out below along with a brief
outline of the objectives for YEM18.
MEASURABLE
OBJECTIVE
Leadership
and culture
Understanding
and engaging
female talent
Recruitment
and retention
YEM17 ACHIEVEMENTS
OVERVIEW OF YEM18 OBJECTIVES
32% of attendees at CSR leadership programs
were women
Achieved gender pay equity through established
bi-annual processes
Senior executives were assessed on diversity
achievements and performance in this area impacted
short terms incentives
Diversity reporting within the organisation was further
improved to drive more informed recruitment decisions
The CEO led diversity council meets every two months
to drive and review diversity initiatives
Diversity initiatives are promoted, shared and
leveraged throughout the organisation through targeted
communication
Continue to provide opportunities for women to
attend CSR leadership programs. Promote and
continue to include diversity initiatives as part of
these programs
Maintain gender pay equity through established
bi-annual processes
Drive further accountability through the
organisation by including specific diversity
objectives for senior executives with
achievements assessed as part of determination
of short-term incentives
Continue to promote, share and leverage diversity
initiatives and achievements through targeted
and regular communication
Insights from the female talent review were leveraged
to further support female talent within their business unit
Career opportunities and development of women were
promoted (in YEM17, 34% of internal promotions were
women, compared with 33% in YEM16)
Continue to leverage learnings from the detailed
review of female talent, and maintain focus on
pay equity, development and career aspirations
Improve CSR policies and practices as they relate
to workplace flexibility
CSR participated in multiple industry projects to attract
Influence industry associations to attract more
more female candidates to the building industry
females in non-traditional roles
Achieved a 36% increase in number of female applications
Increase the number of female applicants by a
through better attraction strategies, and industry
partnerships
Appointed 43% more female staff compared to the prior
year
Partnered with labour hire and recruitment providers to
source more female applicants especially in operational
roles
Achieved target range for voluntary turnover of women
Completed nine workshops with senior leaders in the
organisation to discuss and identify any potential biases
that might affect recruitment decisions
further 10%
Advance retention strategies for women through
investment in career development and review of
turnover analysis
Challenge traditional recruitment processes and
appointment decisions
CSR ANNUAL REPORT 2017
15
CORPORATE
GOVERNANCE
SUMMARY
CORPORATE GOVERNANCE AT CSR
CSR’s corporate governance is the system by which the
company is directed and managed. It is the framework of rules,
relationships, systems and processes that underpin CSR’s
long established values and behaviours, the way it does
business and within which:
the CSR board of directors is accountable to shareholders
for the operations, financial performance and growth of
the company; and
the risks of business are identified and managed.
CSR’s Corporate Governance Statement which provides detailed
information about governance is available on CSR’s website at
www.csr.com.au in addition to policies in key areas including
the code of business conduct; workplace health, safety and the
environment; fairness, respect and diversity in employment and
trading in CSR shares.
CSR GOVERNANCE FRAMEWORK
The board
The board strives to create shareholder value and ensure that shareholders’ funds are safeguarded
CSR’s constitution, which sets out the provisions that govern the internal management of the company,
can only be amended by special resolution of shareholders
The board comprises directors with an appropriate mix of skills, experience and personal attributes which
are summarised in a matrix included in the corporate governance statement
Senior management
Day-to-day management of the company’s affairs and the implementation of strategy and policy initiatives
are formally delegated by the board to the managing director and senior executives
Risk management
Risk management is sponsored by the board and is a priority for senior managers, starting with the
managing director. The board oversees the risk appetite and profile of CSR and ensures that business
developments are consistent with the risk appetite and goals of CSR
Remuneration
CSR’s policy is to reward executives with a combination of fixed remuneration and short and long-term
incentives structured to drive improvements in shareholder value
Non-executive directors receive no incentive payments and there are no retirement benefit schemes
in place
Engagement with
investors
Code of business
conduct and ethics
Executives and directors may forgo part of their cash salary or, for non-executive directors, their directors’
fees, to acquire shares in CSR
CSR has a long established practice of providing relevant and timely information to stakeholders, supported
by its share market disclosure policy which details comprehensive procedures to ensure compliance with all
legal obligations
CSR has a robust framework of policies, underpinned by its goals and values and code of business conduct
and ethics. CSR’s code of business conduct and ethics and policies set the standards for dealing with
obligations to external stakeholders
The underlying principle of CSR’s code of business conduct and ethics is that ethical behaviour is required
of directors, executives and all other employees, as well as advisers, consultants and contractors
16
CSR ANNUAL REPORT 2017 RISK
SUMMARY
RISK MANAGEMENT AT CSR
There are a number of risks in the markets in which CSR
operates. A range of factors, some of which are beyond CSR’s
control, can influence performance across CSR’s businesses.
CSR’s approach to manage and mitigate material risks is
outlined in the Sustainability Report and the Corporate
Governance Statement which are available on CSR’s website
at www.csr.com.au
KEY AREAS OF
MATERIALITY
Aluminium and
currency markets
Australian
construction activity
and higher density
living
CHALLENGES
CSR’s results are impacted by movements in the global US dollar price for aluminium and currency
fluctuations
Approximately 50% of CSR’s total revenue is generated from product and service supplied into the new
residential construction sector of Australia and New Zealand which is impacted by several macro economic
factors
Multi-residential construction has increased as a proportion of total new home construction and now
represents over 50% of housing starts
Multi-residential houses are typically smaller which has the potential to reduce CSR product intensity
per new dwelling
As a supplier to the construction market, CSR is subject to a number of competitive forces including other
domestic and international suppliers and new technology which could replace existing building methods
The release of future land supply for residential development relies on the coordination of government and
regulatory bodies with builders and developers to deliver infrastructure and services for new projects
Digital
Digital services are increasingly used by the construction sector with CSR’s digital capability critical to
achieving growth in its key markets
Employee and
community
engagement
Energy and
climate change
Environmental
management
CSR recognises that it plays an important role in the success and prosperity of local communities as an
employer, operator of major manufacturing sites and developer of its legacy property assets
An engaged and diverse workforce is critical to CSR’s long-term success – to help develop new ideas
and build a workforce more representative of our society
CSR’s manufacturing operations use significant amounts of energy including electricity and gas
The transition to a low carbon economy and mitigating the potential impacts of climate change as
well as government regulations and planning may impact the availability and nature of supply
CSR has committed to a 20% per tonne reduction of greenhouse gas emissions, potable water
consumption and solid waste production to landfill per tonne of saleable product by 2020 using 2009/10
as the base year
Product liability
CSR’s product liability is based on involvement in asbestos in Australia and exporting asbestos to the
United States
CSR ceased asbestos mining in 1966 and divested remaining interests in 1977
CSR meets all valid claims in both Australia and the United States
The asbestos provision is impacted by movements in claim numbers, settlement rates and values and
movements in A$/US$ exchange rates
CSR relies on an extensive supply chain to manufacture and distribute its products and services
This supply chain can be impacted by natural, political or technological disruptions which the company
reviews to develop alternative supply options and minimise the risk of potential supply dislocation
CSR has a stated long-term objective of achieving zero harm to CSR people across all operations
Supply chain and
product compliance
Workplace health
and safety
17
CSR ANNUAL REPORT 2017 BOARD OF
DIRECTORS
JEREMY SUTCLIFFE
LLB (HONS), MAICD.
ROB SINDEL
BENG, MBA, GAICD.
CHRISTINE HOLMAN
PGDipBA, MBA, GAICD.
Chairman since July 2011, non-executive
director since December 2008 and held
the position of interim CEO and managing
director from 1 April to 31 December
2010.
Other CSR responsibilities
Member of the Remuneration & Human
Resources Committee.
Experience and expertise
Jeremy was formerly Group CEO of Sims
Metal Management Limited from 2002
until 2008 and a director until 2009.
Other directorships/offices held
Non-executive director of Amcor Limited
(2009 to current)
Non-executive director of Orora Limited
(2013 to current)
Advisory role with Veolia Environmental
Australia (2014 to current)
Appointed to the board as an executive
director in December 2010 and managing
director in January 2011. Rob joined
CSR in April 2008 as executive general
manager of CSR Lightweight Systems.
In October 2009, he was appointed
CEO of CSR Building Products.
Other CSR responsibilities
Attends committee meetings by invitation.
Experience and expertise
Rob was formerly the managing director
of Hanson’s slag cement business in the
United Kingdom, a subsidiary of the global
building materials company, Heidelberg
Cement Group. Rob also held the position
of commercial trading director for Hanson
Aggregates in the United Kingdom.
His 25 year career in the construction
industry started with Pioneer in Australia.
Other directorships/offices held
Director (2013 to current) and chair of
the Remuneration Committee (2015 to
current) of the Green Building Council
of Australia
Director of the Australian Business and
Community Network (2013 to current)
Member of the UNSW Australian
School of Business Advisory Council
Member of the Yalari NSW Advisory
Committee, an organisation that
works with students from indigenous
backgrounds
Non-executive director since
October 2016.
Other CSR responsibilities
Member of the Workplace Health,
Safety & Environment Committee
and the Remuneration & Human
Resources Committee.
Experience and expertise
Christine was formerly commercial
director at Telstra Broadcast Services until
March 2016 and chief financial officer
and commercial director of Globecast
Australia until June 2015. Christine
also spent seven years at Capital
Investment Group involved in strategy,
business development and mergers and
acquisitions. Christine has over 20 years’
experience across the technology, private
equity and digital sectors in a variety of
functions including finance, commercial,
technology and marketing.
Other directorships/offices held
Non-executive director of APN News
& Media Limited (2015 to current)
Non-executive director of The Bradman
Foundation (2016 to current)
Non-executive director of the State
Library of NSW Foundation (2017
to current)
18
CSR ANNUAL REPORT 2017
MIKE IHLEIN
BBUS (Accounting), FAICD, FCPA, FFIN, MFEI.
MATTHEW QUINN
BSc (HONS), ACA, ARCS, FAPI, FRICS.
PENNY WINN
BCOM, MBA, MAICD.
Non-executive director since July 2011.
Other CSR responsibilities
Chairman of the Risk & Audit Committee
and member of the Workplace Health,
Safety & Environment Committee.
Experience and expertise
Mike was formerly chief executive officer
and executive director of Brambles
Limited until November 2009, prior to
which he was Brambles’ chief financial
officer for four years. Mike also had
a long career with Coca-Cola Amatil
Limited including seven years as chief
financial officer and executive director
and a number of senior operational,
finance, business development and
treasury roles including managing
director of Coca-Cola Amatil Poland.
Other directorships/offices held
Non-executive director of Scentre Group
(2014 to current)
Non-executive director (2012 to
current) and chair of the People &
Culture Committee (2015 to current)
of Snowy Hydro Limited
Non-executive director (2012 to
current) and chair of the Finance, Risk
& Audit Committee (2016 to current) of
Murray Goulburn Co-operative Co Ltd
Non-executive director of Spark
Software sp. z o.o. (2015 to current)
Non-executive director of Kilfinan
Australia Limited (2016 to current)
Non-executive director since
August 2013.
Non-executive director since
November 2015.
Other CSR responsibilities
Chairman of the Remuneration &
Human Resources Committee and
member of the Risk & Audit Committee.
Other CSR responsibilities
Chairman of the Workplace Health,
Safety & Environment Committee and
member of the Risk & Audit Committee.
Experience and expertise
Penny was formerly director Group Retail
Services with Woolworths responsible
for leading the Logistics and Information
Technology divisions and the Customer
Engagement teams, a position held
until October 2015. Penny has over
30 years of experience in retail in senior
management roles in Australia and
overseas.
Other directorships/offices held
Non-executive director of Caltex
Australia Limited (2015 to current)
Chairman of Port Waratah Coal
Services Ltd (2015 to current)
Member of the UTS Business School’s
Advisory Board
Experience and expertise
Matthew was formerly managing director
of Stockland, a position held until
January 2013. Matthew’s management
career with Stockland spanned 12 years,
and he has an extensive background
in commercial, retail, industrial and
residential property investment and
development.
Other directorships/offices held
Non-executive director of Urban
Growth NSW, a State owned
corporation (2013 to current)
Chairman of Class Super (Director
since 2015, Chair since 2017 to
current)
Chairman of Carbonxt (2013 to current)
Non-executive director of QSR Holdings
Limited (2017 to current)
Director of a number of smaller
investment organisations
Member of the Australian Business
and Community Network Scholarship
Foundation
CSR ANNUAL REPORT 2017
19
CSR LIMITED | DIRECTORS’ REPORT
DIRECTORS’ REPORT
The board of directors of CSR Limited (CSR) presents its report of the
consolidated entity, being CSR and its controlled entities (CSR group),
for the year ended 31 March 2017. The information appearing on
pages 20 to 40 forms part of the directors’ report and is to be read in
conjunction with the following information:
Principal activities
The principal activities of entities in the CSR group during the year
included the manufacture and supply of building products in Australia
and New Zealand.
In Australia, the CSR group has an interest in the smelting of
aluminium through its 70% interest in Gove Aluminium Finance
Limited, which owns 36.05% of the Tomago aluminium smelter
located near Newcastle, NSW. CSR also maximises returns from the
sale of its surplus land by advancing sites through stages of the
development process.
Review of operations and financial results
A review of CSR group operations and the results for the year ended
31 March 2017 is set out on the inside front cover to page 17 and
pages 41 to 83 of the annual report and forms part of the directors’
report. This includes the summary of consolidated results as well as
an overview of the group’s strategy, material risks and future
prospects.
Significant changes
On 31 October 2016, CSR Limited (CSR) announced that it acquired
Boral’s 40% interest in the Boral CSR Bricks joint venture for $126.4
million, in addition to loan repayments to Boral of $7.5 million.
Further information on this business combination is set out in note 8
to the CSR group financial statements.
There have been no other significant changes to the CSR group in the
financial year ended 31 March 2017.
Events after balance sheet date
On 10 May 2017, the board resolved to pay a final dividend of 13.0
cents per ordinary share for the year ended 31 March 2017 to be
paid on 4 July 2017. CSR has sufficient franking credits at 31 March
2017 to resume franking and as a result this final dividend will be
franked at 50%.
The final dividend for the financial year ended 31 March 2017 has
not been recognised in this financial report.
On 18 April 2017, CSR announced the sale of its Monier Roofing site
located at Rosehill, NSW. Profit before tax of $49.2 million is
expected to be recognised as a result of the sale. Under the terms of
the sale, a $9.8 million option fee was recorded in the statement of
financial performance for the year ended 31 March 2017. The
remaining $39.4 million of profit before tax will be recognised in the
statement of financial performance in the year ending 31 March
2018.
No other matters or circumstances have arisen since the end of the
financial year that have significantly affected or may significantly
affect the CSR group’s operations, the results of those operations or
the CSR group’s state of affairs in future financial years.
Dividends and distributions to shareholders
Dividends through the year have been as follows:
a final, unfranked dividend of 12.0 cents per ordinary share, with
respect to the financial year ended 31 March 2016, was paid on
5 July 2016; and
an interim, unfranked dividend of 13.0 cents per ordinary share
was paid on 13 December 2016 (as set out in note 16 to the
financial statements on page 63).
20 CSR ANNUAL REPORT 2017
No other distributions were paid during the year.
Options over share capital
Other than as disclosed in the remuneration report:
no CSR options were granted to executives or non-executive
directors during the year;
there were no unissued shares or interests in CSR subject to
options at the date of this report; and
no CSR shares or interests were issued pursuant to exercised
options during or since the end of the year.
Indemnities and insurance
Under rule 101 of CSR’s constitution, CSR indemnifies every person
who is or has been an officer of CSR, to the extent permitted by law
and subject to the restrictions in sections 199A and 199B of the
Corporations Act 2001 against:
liability to third parties (other than related CSR companies) arising
out of conduct undertaken in good faith in their capacity as a CSR
officer; and
the costs and expenses of defending legal proceedings arising out
of conduct undertaken in their capacity as a current or former CSR
officer, unless the defence is unsuccessful.
For the purposes of rule 101 of CSR’s constitution, ‘officer’ means a
director, secretary and executive officer (as defined in the
Corporations Act 2001). CSR has entered into a deed of indemnity
with current and former directors of CSR and its subsidiaries. The
deeds of indemnity are substantially in the form approved by
shareholders in July 1999.
CSR has a similar policy covering all employees. CSR’s external
auditor is not indemnified under rule 101 of CSR’s constitution or any
agreement.
During the year, CSR paid premiums in respect of insurance
contracts for the year ended 31 March 2017 and, since the end of
the year, CSR has paid, or agreed to pay, premiums in respect of
such contracts for the year ended 31 March 2018. The insurance
contracts insure against certain liability (subject to exclusion)
incurred by persons who are or have been directors or officers of CSR
and its controlled entities. In accordance with normal commercial
practice, the insurance contract prohibits disclosure of the nature of
the liability covered by, or the premium payable under, the contract of
insurance. No claims under the indemnities have been made against
CSR during or since the end of the year.
Performance in relation to environmental regulation
The board places a high priority on environmental issues and is
satisfied that adequate systems are in place for the management of
CSR’s compliance with applicable environmental regulations under
the laws of the Commonwealth, States and Territories of Australia
and of New Zealand. CSR is not aware of any pending prosecutions
relating to environmental issues, nor is CSR aware of any
environmental issues, not provided for, which would materially
affect the business as a whole.
Political donations
CSR attended a small number of events organised by political parties
such as conferences in the year ended 31 March 2017. CSR’s
businesses are often involved in a degree of interaction with all levels
of government. CSR assists all sides of politics in the development of
policy in fields where CSR has specific expertise. Fees to attend these
events are below the threshold for disclosure to the Australian
Electoral Commission and totalled $5,050 including GST for the year
ended 31 March 2017 (2016: $20,035).
CSR LIMITED | DIRECTORS’ REPORT
Auditor independence
There is no current or former partner or director of Deloitte Touche
Tohmatsu, CSR’s auditor, who is, or was at any time during the year
ended 31 March 2017, an officer of the CSR group. No auditor
played a significant role in the CSR group audit for the year ended 31
March 2017 in reliance on a declaration made under section 342A of
the Corporations Act 2001. The auditor’s independence declaration
(made under section 307C of the Corporations Act 2001) is set out
on page 22.
Non-audit services
Details of the amounts paid or payable to the CSR group auditor,
Deloitte Touche Tohmatsu, for non-audit services provided by that
firm during the year are shown in note 30 to the financial statements
on page 82. In accordance with written advice provided by the Risk &
Audit Committee, the directors are satisfied that the provision of non-
audit services during the year by Deloitte Touche Tohmatsu:
is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001; and
did not compromise the auditor independence requirements of
the Corporations Act 2001 in view of the materiality of the
amounts, the nature of the services and the processes
established to monitor the independence of the auditors.
Proceedings on behalf of CSR
No proceedings have been brought, or intervened in, on behalf of
CSR, nor has any application for leave been made in respect of CSR
under section 237 of the Corporations Act 2001.
Remuneration of directors and key management personnel
The remuneration report on pages 23 to 40 provides: a summary of
the board’s remuneration policy and practices during the past year as
they apply to directors and other KMP (as defined by the Accounting
Standard AASB 124 Related Party Disclosures); the relationship
between remuneration policy and the CSR group’s performance; and
the remuneration details for each director and other KMP.
Directors’ secretaries, directors’ meetings and directors’
shareholdings
On 25 October 2016, Rebecca McGrath resigned as a non-executive
director. On 25 October 2016, Christine Holman was appointed as a
non-executive director and member of the Remuneration & Human
Resources and Workplace Health, Safety & Environment Committees.
There were no other changes to the board in the year ended 31
March 2017.
The names of directors who held office at 10 May 2017, as well as
details about current directors’ period of appointment, qualifications,
experience, special responsibilities, current directorships and
directorships for the past three years of other listed companies, are
on pages 18 and 19 and forms part of the directors’ report. The
qualifications and experience of the company secretary at 10 May
2017 are as follows:
Debbie Schroeder
BED (HONS), LLB, MAICD, MGIA.
Joined CSR in 2001 and held various roles before being appointed
Company Secretary. Debbie was previously a lawyer at Tress Cocks &
Maddox and Lander & Rogers. Debbie has extensive experience in
corporations law and corporate governance, dispute resolution,
employment law, insurance and competition and consumer law.
Debbie holds a Graduate Diploma in Applied Corporate Governance
and is a member of Governance Institute of Australia and the
Australian Institute of Company Directors (AICD).
The number of meetings of the company’s board of directors and
each board committee held during the year ended 31 March 2017,
and the number of meetings attended by each director are detailed in
Table 1 below. The directors’ relevant interests in shares in CSR or a
related body corporate as at the date of this report are detailed in the
remuneration report on pages 38 and 40. Other than as disclosed
elsewhere in this report, no director:
has any relevant interest in debentures of, or interests in a
registered scheme made available by, CSR or a related body
corporate;
has any rights or options over shares in, debentures of or interests
in a registered scheme made available by, CSR or a related body
corporate; or
is a party to or entitled to a benefit under any contracts that
confer a right to call for or deliver shares in, debentures of or
interests in a registered scheme made available by, CSR or a
related body corporate.
Table 1: Meetings of directors
Year ended
31 March 2017
CSR Board
Risk & Audit
Committee
Workplace Health, Safety
& Environment Committee
Remuneration &
Human Resources
Committee
Jeremy Sutcliffe
Christine Holman3
Michael Ihlein
Rebecca McGrath4
Matthew Quinn
Penny Winn
Rob Sindel
Held1
Attended2
Held1
Attended2
Held1
Attended2
Held1
Attended2
10
4
10
6
10
10
10
10
4
10
6
10
10
10
45
n/a
4
n/a
4
4
4
4
n/a
4
n/a
4
4
4
n/a
2
4
2
n/a
4
4
n/a
2
3
2
n/a
4
4
4
1
n/a
3
4
n/a
4
4
1
n/a
2
4
n/a
4
1 Meetings held while a member.
2 Meetings attended.
3 Christine Holman was appointed on 25 October 2016.
4 Rebecca McGrath resigned on 25 October 2016.
5
Jeremy Sutcliffe is not a member of the Risk & Audit Committee.
Jeremy Sutcliffe
Chairman
Sydney, 10 May 2017
Rob Sindel
Managing Director
Sydney, 10 May 2017
CSR ANNUAL REPORT 2017 21
CSR LIMITED | AUDITOR’S INDEPENDENCE DECLARATION
The Directors
CSR Limited
Triniti 3
39 Delhi Road
North Ryde NSW 2113
10 May 2017
Dear Directors
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
CSR Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the
directors of CSR Limited.
As lead audit partner for the audit of the financial statements of CSR Limited for the financial year ended 31 March 2017, I declare that to the
best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
JA Leotta
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
22 CSR ANNUAL REPORT 2017
CSR LIMITED | REMUNERATION REPORT | OVERVIEW
REMUNERATION REPORT
1 Basis of preparation
This remuneration report provides a summary of CSR’s remuneration policy and practices during the past financial year as they apply to CSR
directors and executives.
The remuneration report has been prepared in accordance with the requirements of section 300A of the Corporations Act 2001 and
Corporations Regulation 2M.3.03 and has been audited by CSR’s external auditor.
The report contains an overview which is intended to provide a ‘plain English’ explanation for shareholders of the key management personnel
(KMP) and senior executives’ actual remuneration outcomes for the year ended 31 March 2017 (YEM17) and the remuneration framework
including proposed changes for the financial year ended 31 March 2018 (YEM18).
Consistent with prior years, actual remuneration of executive KMP has been included in the remuneration report in note 4. In the interests of
transparency, year-on-year analysis is also provided on aggregate remuneration for senior executives (as defined in note 2).
Overview
2 Key management personnel (KMP) and senior executives
KMP for the year ended 31 March 2017 are detailed in the table below. KMP are as defined by the Accounting Standard AASB 124 Related
Party Disclosures (AASB 124).
CSR’s KMP are the non-executive directors, the managing director and the chief financial officer. This is consistent with the assessment
performed for the last four years.
Table 1: Key management personnel
Name
Non-executive directors (NEDs)
Jeremy Sutcliffe
Christine Holman
Michael Ihlein
Rebecca McGrath
Matthew Quinn
Penny Winn
Position
Chairman
Director
Director
Director
Director
Director
Executive KMP
Rob Sindel
David Fallu
Greg Barnes
Managing Director
Chief Financial Officer
Chief Financial Officer
Term as KMP
Full year
Appointed 25 October 2016
Full year
Resigned 25 October 2016
Full year
Full year
Full year
Appointed 2 February 2017
Resigned 30 June 2016
Senior executives of CSR are detailed in the table below. These senior executives are not KMP as defined by AASB 124. In some cases, where
aspects of the remuneration apply to other senior roles within CSR, the term ‘executive’ is also used.
Table 2: Senior executives
Name
Ian Hardiman
Peter Moeller
Luke Murphy
Andrew Mackenzie
Nick Pezet
Andrea Pidcock
Anthony Tannous
Mark White
Position
Executive General Manager – New Business, Innovation
and Technology1
Executive General Manager – Viridian
Executive General Manager – Human Resources
General Manager – Property
Executive General Manager – PGH Bricks
Executive General Manager – Lightweight Systems
Executive General Manager – Bradford
General Manager – Aluminium
Term as senior executive
Full year
Full year
Full year
Full year
Full year
Appointed 15 August 2016
Full year
Full year
1 Mr Hardiman was the Executive General Manager – Lightweight Systems until Andrea Pidcock’s appointment on 15 August 2016.
CSR ANNUAL REPORT 2017 23
CSR LIMITED | REMUNERATION REPORT | OVERVIEW
3 Overview of remuneration approach and framework
CSR’s remuneration framework is based on the principles that remuneration is performance driven, aligns with shareholder interests and
provides market competitive remuneration opportunities. The key features of CSR’s executive remuneration and non-executive remuneration
frameworks are outlined below, with further details provided in the body of the report.
Table 3: CSR executive remuneration framework
Feature
Explanation
Market
positioning
Fixed and
variable pay
mix
Short term
incentive
(STI) plan
Long term
incentive
(LTI) plan
Fixed remuneration is positioned at the market median against the Hay Group industrial and services index for roles of
comparative size, or relative to their counterparts in related industries.
Variable remuneration provides executives the opportunity to earn upper quartile total remuneration for stretch
performance.
Total remuneration is comprised of fixed plus variable (or ‘at risk’) remuneration.
A significant proportion of the total remuneration opportunity for senior executives is variable and ‘at risk’ based on
performance.
The STI plan provides rewards to executives for achievement of business financial performance metrics (60% weighting)
and individual performance goals (40% weighting).
Weightings of 50% financial and 50% individual performance goals may apply to lower job grades.
In addition, 20% of the total STI earned by executive KMP and senior executives is deferred into shares.
The Performance Rights Plan (PRP) provides CSR executives with grants of performance rights that vest based on:
- CSR’s three year total shareholder return (TSR) relative to the TSR of other S&P/ASX 200 index constituents (the peer
group);
- CSR’s compound annual growth in earnings per share (EPS) over three years; and
- The board’s assessment of achieving set strategic objectives in the areas of Growth, Portfolio and Digital objectives at
the end of the three year performance period (YEM17 PRP award only).
Any performance rights which vest will be converted automatically into shares.
Holders of performance rights are not entitled to dividends until the rights have vested and converted into shares.
Table 4: Non-executive director remuneration framework
Feature
Explanation
Market
comparison
Non-executive directors are paid a base fee for service to the board and an additional fee for service to the board
committees.
The fees are set with consideration to the fees paid in companies of a similar size and complexity.
Fee pool
The fee pool is currently $1,450,000 per annum including superannuation.
4
Actual remuneration
Actual remuneration disclosure has been prepared to provide shareholders with a view of the remuneration structure and how remuneration
was paid to the executive KMP for the year ended 31 March 2017. The board believes presenting information in this way provides
shareholders with increased clarity and transparency of the executive KMP remuneration, clearly showing the amounts awarded for each
remuneration component (fixed, short and long term) within the financial year. This disclosure differs from the statutory remuneration
disclosures contained in note 12, with a summary of the differences detailed in the table below.
Table 5: Comparison of actual and statutory remuneration disclosures
Fixed remuneration Short term
incentive
Long term incentive
Leave
accruals
Other
benefits
Actual
remuneration
disclosures
Cash salary and
superannuation
contributions
Statutory
remuneration
disclosures
As above
STI award for
YEM17, inclusive
of the 20% STI
deferral, expressed
as a cash value
Value of LTIs that have vested
during the year, calculated based on
the number of shares valued using
the five day volume weighted
average price (VWAP) prior to issue
of the shares. Excludes the value of
unvested LTIs at 31 March 2017
STI award for
YEM17, exclusive
of STI deferral, plus
amortisation of STI
deferrals relating
to current year and
prior two years
Value of LTIs recorded in
accordance with accounting
standards (based on fair value
determined at grant date expensed
over the vesting period). The amount
relates to YEM14 to YEM17 LTI
grants
Not
included
Included
Includes Universal Share
Ownership Plan (USOP),
and other costs relating to
company business or
contractual obligations,
where the benefit has
been received.
As above, except where
PRPs are granted as part
of contractual obligations.
These are expensed over
the vesting period.
24 CSR ANNUAL REPORT 2017
Rob Sindel
David Fallu3
Greg Barnes4
Total
CSR LIMITED | REMUNERATION REPORT | OVERVIEW
4
Actual remuneration (continued)
Actual remuneration received by executive KMP is set out in the table below. The remuneration disclosure is prepared on the basis
summarised in table 5. No termination benefits were paid to executive KMP during the year.
Table 6: Actual remuneration received by executive KMP
Year ended 31 March 2017
$
Fixed
remuneration
Short term
incentive1
Long term
incentive
1,219,987
899,000
2,503,729
89,376
162,500
–
–
–
286,441
Other
benefits2
3,856
100,000
–
Total
4,626,572
189,376
448,941
1,471,863
899,000
2,790,170
103,856
5,264,889
1 The STI award represented 105% of Mr Sindel’s target STI opportunity for YEM17.
2 Other benefits included travel expenditure for Mr Sindel and his spouse, all of which related directly to company business. The other benefit awarded to Mr Fallu
represents amounts paid to ensure no undue disadvantage upon resignation from his previous employment.
3 Appointed 2 February 2017.
4 Resigned 30 June 2016.
Given the flat organisation structure of the company and following a review of senior executives against the criteria for determining executive
KMP, only the managing director and chief financial officer qualify as executive KMP. The year-on-year change in total actual remuneration for
senior executives is summarised in the table below and is prepared on the basis outlined in Table 5. The analysis excludes the executive KMP,
Mr Sindel, Mr Fallu and Mr Barnes. The year-on-year decrease in total remuneration for senior executives was driven predominantly by the LTI
outcomes. No termination benefits were paid to senior executives during the year.
Table 7: Senior executive remuneration
Year ended 31 March
$
2017
2016
Fixed
remuneration
3,751,680
3,314,873
Underlying
increase in fixed
remuneration1
Short term
incentive
Long term
incentive
Other
benefits2
Change in
total
Total
2.5%
2,023,598
2,207,355
137,980
8,120,613
(9.4%)
2,168,812
3,359,135
119,077
8,961,897
1
In YEM17 there is an additional senior executive for part of the year, following the appointment of an Executive General Manager - New Business, Innovation and
Technology. As a result, given the additional executive included the actual change in aggregate fixed remuneration is 13.2%.
2 Other benefits include USOP, travel expenditure and relocation costs, related to company business or contractual obligations. In addition, for YEM17 other benefits
include amounts paid to the Executive General Manager – Lightweight Systems to ensure no undue disadvantage upon resignation from previous employment.
5
Performance outcomes
Table 8: Summary of performance outcomes for the year ended 31 March 2017
Remuneration
Performance outcome
Total
remuneration
Total remuneration expense decreased for executive KMP and senior executives from YEM16 to YEM17 due to:
-
-
-
changes in executive KMP following the resignation of Mr Barnes as Chief Financial Officer on 30 June 2016;
reduced STI payments given the demanding budget targets set; and
a decrease in the number of LTI rights that vested in YEM17.
Short term
incentive (STI)
YEM17 STI decreased compared with those for YEM16. YEM17 CSR group EBIT result was moderately above target,
compared to the YEM16 CSR group EBIT result which achieved between target and stretch performance.
Long term
incentive (LTI)
The value of LTI that vested in YEM17 decreased compared to YEM16 due to a lower number of rights vesting.
In YEM17, EPS and TSR performance hurdles for the YEM14 PRP were met resulting in a full vesting of the grant.
However, fewer rights were allocated in YEM14 when compared to the YEM13 grant, reflecting the relative share price
of the group at the time. Further detail is contained in note 9.
CSR ANNUAL REPORT 2017 25
CSR LIMITED | REMUNERATION REPORT | OVERVIEW
6 Remuneration framework changes
The board continually reviews the design of the remuneration framework to ensure the design is ‘fit for purpose’. This means the remuneration
framework supports the overall business strategy, is aligned with shareholder interests, is competitive with market practices and is simple for
both participants and shareholders to understand. The board has reviewed both the STI and LTI plans with changes outlined below.
Changes impacting YEM17 remuneration
As outlined in the YEM16 remuneration report, the following amendments have been made in relation to the YEM17 Performance Rights Plan:
Table 9: Changes to hurdles and weightings of the LTI plan
Performance
hurdle
YEM17 YEM16 Detailed explanation
Relative TSR 30%
50%
The proportion of the grant tested against this performance hurdle decreased from 50% in YEM16 to
30% in YEM17.
EPS
40%
50%
The proportion of the grant tested against this performance hurdle decreased from 50% in YEM16 to
40% in YEM17.
EPS is measured on an averaged basis over the three year performance period rather than point to
point. The EPS performance hurdles were set at 5% to 10% compound growth for target and stretch
performance respectively. This was a reduction from the previous hurdles of 7% to 12% which were
set in a higher growth environment and were no longer considered appropriate. Average EPS growth
between 5% and 10% will result in vesting between 50% and 100% increasing on a straight-line
basis.
Strategic
objectives
30%
0%
The proportion of the grant tested against this performance hurdle increased from 0% in YEM16 to
30% in YEM17.
There are three objectives in the YEM17 plan set by the board in the areas of growth, portfolio and
digital. Each objective is equally weighted with 5% to 10% of the overall grant being allocated for
target and stretch performance respectively. These objectives are aligned with CSR’s strategy and, if
achieved, will create value for shareholders.
The board will review performance against each objective at the end of the performance period and
determine any associated vesting. Any vesting will be disclosed in the remuneration report in the year
it occurs, with specific details regarding the outcomes achieved.
Changes impacting YEM18 remuneration
The board has resolved to make the following changes to the LTI and STI plan from YEM18:
Table 10: Changes to hurdles and weightings of the LTI plan from YEM18
Performance
hurdle
YEM18 YEM17 Detailed explanation
Relative TSR 50%
30%
This measure is consistent with market practice and aligns with shareholder interests. The ASX 200
will continue to be used as the comparator group given that CSR sits within this index.
EPS
50%
40%
EPS will continue to be measured on an averaged basis over the three year performance period
rather than point to point. The board believes this better addresses the cyclicality of the business and
incentivises participants to improve performance year on year by removing the current exposure
solely to the final year of the performance period.
The board will assess average EPS over the three year performance period and this result will then be
compared against the hurdles set by the board. The EPS performance hurdles will be set at 5% to
10% compound growth for target and stretch performance respectively.
Strategic
objectives
0%
30%
Objectives were included in the YEM17 grant and in the absence of materially different strategic
objectives it was determined that the grants would revert to the well-established performance
hurdles of relative TSR and average EPS equally weighted at 50% of grant value.
Changes to the STI plan from YEM18
Consistent with the group strategy to drive a customer centric organisation, all eligible STI participants will have a customer related objective
with a weighting between 10% and 20% at target performance. This customer objective will form part of the individual component of the STI
with the financial component of the STI remaining unchanged.
In recognition of the growth of the business and the hedging in place for Aluminium in YEM18, the threshold target for the YEM18 STI plan will
be increased from 90% to 95% and the stretch target will reduce from 120% to 110%.
26 CSR ANNUAL REPORT 2017
CSR LIMITED | REMUNERATION REPORT | REMUNERATION POLICY
Remuneration Policy
7 Remuneration governance
CSR’s remuneration governance framework is set out below. Whilst the board retains ultimate responsibility, CSR’s remuneration policy is
implemented through the Remuneration & Human Resources Committee. The composition and functions of the Remuneration & Human
Resources Committee, which oversees remuneration issues and human resources matters, are set out in the charter available from the CSR
website. The charter was reviewed and updated during the year.
Figure 1: CSR’s remuneration governance framework
CSR Board
Overall responsibility for the remuneration strategy and outcomes for executives and non-executive directors.
Reviews and, as appropriate, approves recommendations from the CSR Remuneration & Human Resources Committee.
Remuneration & Human Resources Committee
Management and Board remuneration policy
Human Resources, Talent Management and Diversity
Monitors, recommends and reports to the board on:
Alignment of remuneration incentive policies and guidelines
for executive managers and senior employees with long-term
growth and shareholder value.
Superannuation arrangements.
Employee share plans.
Recruitment, retention and termination policies and
procedures for senior management.
Board remuneration including the terms and conditions of
appointment and retirement, non-executive remuneration
within aggregate approved by shareholders.
Overseeing induction of new non-executive directors and
evaluation of board performance.
Monitors, recommends and reports to the board on:
The adequacy of talent pools for senior management
succession.
The effectiveness of CSR's diversity policies and initiatives,
including an annual assessment of performance against
measurable objectives and the relative proportion of women
at all levels.
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.
Assessing performance against CSR's compliance with
The remuneration of the managing director and senior
external reporting requirements.
executives.
Managing Director and Executive General Manager –
Human Resources
Makes recommendations to the CSR Remuneration & Human
Resources Committee on:
Incentive targets and outcomes.
Remuneration policy for all employees.
Long term incentive participation.
Individual remuneration and contractual arrangements for
executives.
External advisors
Provide independent advice, information and
recommendations relevant to remuneration decisions.
Throughout the year, the Remuneration & Human Resources
Committee and management received information from
external providers Ernst & Young, Hay Group, Herbert Smith
Freehills and Mercer Consulting (Australia) Pty Ltd related to
remuneration market data and analysis, market practice on
the structure and design of incentive programs (both long
term and short term), performance testing of existing long
term incentives and legislative and regulatory requirements.
There were no remuneration recommendations received
from external providers during the year.
CSR ANNUAL REPORT 2017 27
CSR LIMITED | REMUNERATION REPORT | REMUNERATION POLICY
8 Remuneration strategy
The core elements of CSR’s remuneration strategy for the executive KMP and executives are outlined below.
Figure 2: CSR’s remuneration strategy
Performance driven
Alignment with shareholder interests
Market competitive remuneration
opportunities
Total target executive remuneration
Fixed
At risk
Fixed remuneration
Short term incentive
Long term incentive
Fixed remuneration is targeted at the
median of the market for jobs of
comparable size and responsibility.
CSR’s executives participate in an STI
plan. Typically, the STI plan is weighted
60% to financial metrics and 40% to
individual performance metrics.
LTIs are provided through the
Performance Rights Plan and are linked
to:
Relative total shareholder return
Compounded annual growth in CSR’s
earnings per share (YEM11 –
YEM16) and average compound CSR
EPS growth (YEM17)
Delivery of strategic objectives
(YEM17 only)
Base salary
Superannuation
Other short-term benefits
Part cash and part equity
Equity is deferred for two years
Deferred equity remains at risk until
vesting
Equity with performance assessed
over three years (YEM16 – YEM17
PRP), three to four years (YEM12 –
YEM15 PRP) and three to five years
(YEM11 PRP)
The key principles on which CSR’s executive remuneration policy is based are outlined below.
Table 11: Key principles of CSR’s executive remuneration policy
Objective
Explanation
Performance driven Remuneration should reward executives based on annual performance against business plans and longer term
shareholder returns. The variable components of remuneration (both short term and long term) are driven by
challenging targets focused on both external and internal measures of financial and non-financial performance.
A significant proportion of executive remuneration is ‘at risk’. The following remuneration mix chart sets out the
remuneration mix as fixed remuneration, on-target STI and the maximum value of the LTI granted during the year for
the managing director and the chief financial officer.
Chief financial officer
Managing director
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fixed
STI
LTI
Market competitive
remuneration
opportunities
Remuneration opportunities, including those elements which can be earned subject to performance, are set at
competitive levels that will attract, motivate and retain high quality executives.
Executive remuneration is reviewed annually. CSR aims to provide market-competitive remuneration against jobs of
comparable size and responsibility (as measured by the Hay Group job evaluation system and by position matching
against equivalent roles from organisations with similar market capitalisation) as follows:
fixed remuneration for executives is targeted at market median; and
variable remuneration (through STI and LTI) provides the opportunity to earn total remuneration (fixed remuneration
plus variable remuneration) that reaches the top quartile of the market for superior performance.
28 CSR ANNUAL REPORT 2017
CSR LIMITED | REMUNERATION REPORT | REMUNERATION POLICY
8 Remuneration strategy (continued)
Table 11: Key principles of CSR’s executive remuneration policy (continued)
Objective
Explanation
Alignment with
shareholder
interests
Executives’ remuneration is aligned with shareholder interests through a significant emphasis on variable
remuneration. Incentive plans and performance measures are aligned with CSR’s short and long-term success.
Ownership of CSR shares is encouraged through the use of equity as the vehicle for the LTI plan, the STI deferral plan
(introduced in YEM12) for executive KMP and senior executives and the ability to forgo part of fixed remuneration to
acquire shares up to a maximum value of $5,000 annually through the Employee Share Acquisition Plan.
Executive KMP and senior executives are required to hold, or make progress towards holding, a minimum CSR
shareholding equivalent to 50% of their fixed annual remuneration.
9 Composition of remuneration
The components of the fixed and variable or ‘at risk’ remuneration (STI and LTI) are detailed below.
(i)
Fixed remuneration
Fixed remuneration comprises base salary, superannuation and other short-term benefits provided by the company. As discussed above, fixed
remuneration is targeted at the median of the market for jobs of comparable size and responsibility. In some cases, superior performance or
strong market demand for specific job categories may justify above-median fixed remuneration.
Base salary is reviewed annually or on promotion. There are no guaranteed base salary increases included in any executives’ contracts.
Employees are able to forgo part of their fixed remuneration to acquire CSR shares under the Employee Share Acquisition Plan (ESAP),
discussed in note 9(iv), up to a maximum salary sacrifice of $5,000 annually.
(ii)
At risk remuneration – short term incentive plan
Table 12: Details of the short term incentive plan
Purpose
To drive individual and team performance to deliver annual business plans and increase shareholder value.
Frequency and
timing
Awards are determined on an annual basis with performance measured over the year to 31 March.
Payment is normally made in June following the end of the performance year.
Financial
measures
The quantum of the STI pool is determined by EBIT before significant items, which assesses the amount of pre-tax
profit generated by the business. Typically, the STI plan is weighted 60% to financial metrics and 40% to individual
performance metrics. Financial performance for YEM17 STI awards was measured against EBIT that was assigned at
the organisational level that best reflects the role’s influence. All executives and eligible employees had 50% of their
financial component aligned to the CSR financial result (EBIT) with the remaining 50% of the financial component
aligned with the financial performance (EBIT) of the business unit which best reflects the role’s influence. Hence, the
measures used in the YEM17 STI plan are:
corporate roles: CSR EBIT before significant items (100%*); and
business unit executive roles: business unit EBIT before significant items (50%*) and CSR EBIT before significant
items (50%*).
* Expressed as a percentage of the STI financial component. STI financial component typically comprises 60% of target STI.
Return on Funds Employed (ROFE) is also assessed by the board to ensure that the effectiveness with which capital is
deployed within the business is measured and rewarded.
The financial targets are set each year by the managing director, in consultation with the business unit executives and
are approved by the board. The managing director’s targets are set each year by the board.
Threshold financial performance is set at 90% of the budget approved by the board, below which no financial
component can be paid. Target financial performance equates to the approved budget while stretch performance is
set at 120% of the approved budget. These parameters apply at both the CSR and business unit level.
Individual
objectives used
(and rationale)
Individual objectives are set for each participant and are aligned to the business plan. These objectives include
safety, health and environment, meeting customer needs and becoming supplier of choice, leadership and
development of people, sales targets, operational improvement, restructuring and rationalisation plans, production
targets, growth and other personally attributable goals.
CSR ANNUAL REPORT 2017 29
CSR LIMITED | REMUNERATION REPORT | REMUNERATION POLICY
9 Composition of remuneration (continued)
Table 12: Details of the short term incentive plan (continued)
Assessment of
performance
against measures
Board discretion
Service condition
Equity deferral
At the end of the CSR financial year, each participant’s performance is assessed based on financial results for CSR and
the relevant businesses. A review by the executive’s manager is undertaken to determine performance against the
relevant individual objectives for each executive.
The Remuneration & Human Resources Committee approves KMP and senior executive STIs and the overall STI pool in
aggregate. STI assessments and recommendations are made by an executive’s immediate manager, as he or she is
best placed to assess the individual’s performance. All recommendations are reviewed and approved by the business
unit executive general manager, the human resources executive general manager and the managing director.
Payment for the individual component is normally dependent on the business financial result. Should either CSR or the
applicable business unit fail to reach threshold EBIT performance set by the board, then only 50% of the individual
component will be eligible for payment. Should both CSR and the applicable business unit not reach the EBIT threshold
set, then any payment for the individual component will be at the discretion of the board.
The payout, based on performance, is between a minimum of 0% and a maximum of 200% of target.
The intention is to minimise discretionary adjustments to the plan outcomes. However, the board and the managing
director retain discretion in certain circumstances to alter payments having regard to:
CSR’s overall financial performance;
any significant changes in AUD price for aluminium compared with the prices assumed in the budget;
occurrence of a fatality, regardless of fault;
maintenance and preservation of the company’s assets;
development and attention to customer relationships;
any short term action which causes market share loss or other damage to CSR; and
other special circumstances (e.g. acquisitions and divestments).
New starters with CSR or people promoted into eligible roles can participate in the STI with pro rata entitlements if they
have been in the role for more than three months of the relevant financial year.
For staff who retire, die or are retrenched during the performance period, the managing director and the board have
discretion in awarding a payment. No payment will be made to participants who cease employment voluntarily, or have
their employment terminated for inadequate performance or for cause, before the end of the performance year.
Under the STI deferral plan, 20% of any STI earned by executive KMP and senior executives is delivered in CSR shares.
These shares must be held in trust subject to trading restrictions and have a continued service requirement for a
minimum of two years from the date of allocation. During this restriction period, the shares are subject to forfeiture if
the executive resigns or is terminated for cause. No further performance conditions will apply and shares will fully vest
to the executive at the end of the restriction period if the continued service requirement is met.
As the shares are awarded in lieu of a full cash STI payment and relate to an incentive that has already been earned,
the board has determined that during the restriction period, executives are entitled to all dividend and voting
entitlements applying to the shares held in trust in their name.
An important feature of the STI deferral plan rules is the clawback provisions which can allow the board to withhold
some or all of the deferred equity in the event of fraud, financial errors, misstatements or misrepresentations.
(iii) At risk remuneration – long term incentive plan
CSR’s LTI program aims to:
drive performance and deliver strategic objectives that create long-term shareholder value;
provide executives with the opportunity to build their interests in CSR equity; and
attract, motivate and retain the necessary executive talent to deliver and sustain business performance and increase returns to
shareholders.
All securities referred to in this report are granted by CSR Limited.
30 CSR ANNUAL REPORT 2017
CSR LIMITED | REMUNERATION REPORT | REMUNERATION POLICY
9 Composition of remuneration (continued)
Table 13: Features of the long term incentive plan – summary of the PRP
Participation
Managing director, direct reports and selected key roles are eligible subject to approval by the board.
Grant frequency
Grants are made on an annual basis.
Type of award
Grants of performance rights are subject to service requirements and performance vesting criteria. If performance
conditions are met, CSR shares will be purchased on market and transferred to participants. Refer to ‘Performance
period and conditions’ below for more detail.
Vesting and
performance
period
How is
performance
assessed
and why is
it assessed
that way?
Performance
period
and conditions
YEM16 to YEM17 PRP: Awards are subject to a three year vesting period. Immediately following completion of the vesting
period, the performance conditions (detailed below) are tested to determine whether, and to what extent, awards vest.
To the extent that performance rights have not vested following the testing, they will lapse (i.e. participants forfeit their
interests in the performance rights).
YEM12 to YEM15 PRP: Awards are subject to a three year vesting period. If some or all of the awards do not vest at the
initial three year test date, they are carried forward and the performance period is extended by 12 months and retested
over a four year performance period to determine if any additional vesting is achieved. Performance for both tranches is
measured over this extended period to try and mitigate any distortion caused by business and commodity cycles or
capital investment decisions. To the extent that performance rights do not vest as part of the retest, they will lapse.
YEM11 PRP: Awards were subject to a performance hurdle based on CSR’s TSR over a three year performance period,
with subsequent performance subject to a second and final test in years four and five. This retest was completed in July
2015 and all remaining unvested grants lapsed in YEM16.
TSR performance compared to the constituents of the S&P/ASX 200 index is considered appropriate given CSR’s
size and mix of businesses.
EPS performance hurdles were implemented in YEM12 and have been consistently applied for all subsequent grants.
Compound growth in EPS assesses the success of the business in generating continued growth in earnings and aligns
the effort of executive KMP and senior executives with shareholder interests.
For YEM17 PRP grants, three performance hurdles are applied and assessed over the performance period as follows:
Relative TSR (Tranche A – 30% of PRP grant)
This measure remains consistent with the methodology adopted for YEM12 to YEM16 PRP grants as detailed below.
EPS (Tranche B – 40% of PRP grant)
EPS is measured on an averaged basis over the three year performance period rather than point to point.
The EPS performance hurdles have been set at 5% to 10% compound growth for target and stretch performance
respectively.
Target performance is calculated by taking the total EPS from the performance period using actual YEM16 EPS
compounding 5% per annum for three years, and dividing the result by three. Stretch performance is calculated by taking
the total EPS from the performance period using actual YEM16 EPS compounding 10% per annum for three years and
dividing the result by three. This is illustrated below.
EPS performance
hurdle
Target
Stretch
Average EPS
growth
(% CAGR)
5.0%
10.0%
Cumulative EPS
required over
next three years
(cps)
Average EPS
required over
next three years
(cps)
108.9
119.8
36.3
39.9
YEM16
EPS (cps)
32.9
32.9
Average EPS growth (% CAGR) between 5% and 10% will result in vesting between 50% and 100% increasing on a
straight-line basis.
Strategic objectives (Tranche C – 30% of PRP grant)
There are three objectives for the YEM17 plan. Each objective is equally weighted with 5% to 10% of the overall grant
being allocated for target and stretch performance respectively. The objectives as set by the board are:
Growth: A specific EBIT growth objective to be derived from new products and services beyond ‘business as usual’.
Portfolio: To increase CSR’s exposure to its core building materials businesses through strategic acquisitions and to
reduce exposure to non-core businesses through divestments. The board will have regard to profit and Return on
Funds Employed (ROFE) when assessing the contribution from any acquisitions.
Digital: Further development and execution of CSR’s digital strategy that will drive significant change in customer
engagement, improved efficiencies and superior commercial outcomes.
CSR ANNUAL REPORT 2017 31
CSR LIMITED | REMUNERATION REPORT | REMUNERATION POLICY
9 Composition of remuneration (continued)
Table 13: Features of the long term incentive plan – summary of the PRP (continued)
Performance
period
and conditions
For YEM12 to YEM16 PRP grants, two equally weighted (50%) performance hurdles are applied and assessed over the
performance period as follows:
Relative TSR (Tranche A – 50% of PRP grant)
TSR measures the percentage growth in shareholder value, taking into account share price growth, dividends and
capital returns.
TSR performance is assessed against the constituents of the S&P/ASX 200 index defined at the start of the
performance period with the following vesting schedule applying:
TSR of CSR relative to the peer group
Proportion of Tranche A to vest
Below the 50th percentile
At the 50th percentile
0%
50%
Between the 50th percentile and the 75th percentile
Straight-line vesting between 50% and 100% (e.g. each
percentile improvement will result in an additional 2% vesting)
75th percentile or greater
100%
For the purposes of the TSR calculation, the start and end share prices will be calculated based on 10 trading days
VWAP.
EPS (Tranche B – 50% of PRP grant)
The annual compound EPS growth over the period from commencement of the performance period to the test date.
EPS is defined as net profit after tax per share before significant items. The board may adjust EPS to exclude the
effects of material business acquisitions or divestments and for certain one-off costs.
The board sets a threshold vesting schedule of 7% compound growth in EPS per year, with the following vesting
schedule applying:
EPS target range (compound growth per annum)
Proportion of Tranche B to vest
Below 7% compound EPS
Equal to 7% compound EPS
0%
50%
Between 7% and 12% compound EPS
Between 50% and 100% increasing on a straight-line basis
Greater than 12% compound EPS
100%
Treatment of
capital
return
There is no entitlement to a capital return. However, the board may make an adjustment to the number of shares
underlying unvested performance rights that would be awarded to the participant if and when the performance rights
vested. The number of additional shares underlying the performance rights corresponds to the cash amount per share
returned to shareholders, and is intended to ensure that the value of awards of PRP holders is not eroded by capital
returns. Capital returns are included as part of TSR performance.
Treatment on
vesting
Sales restrictions
post vesting
Treatment of
dividends
Treatment on
cessation of
employment
For all PRP grants, rights are eligible for one CSR share per one performance right on vesting.
Shares transferred to participants on the vesting of performance rights are subject to the CSR share trading policy.
There is no entitlement to dividends on performance rights under the plan during the vesting period.
Unvested awards: Generally, a participant who ceases to be employed prior to the performance conditions being met will
forfeit their interest in the unvested shares. However, if the cessation of employment is the result of retirement,
redundancy, total or permanent disablement, death or any other special circumstances at the board’s discretion, board
policy is to retain awards in the plan subject to ongoing performance hurdles following cessation of employment, i.e.
awards remain ‘on foot’. In exercising this discretion, the board would not generally accelerate vesting and would apply
pro rata assessments for plans on foot.
Vested awards: Awards that have vested are transferred to participants immediately at the time of vesting.
Treatment on
change of control
Unvested awards: The board has discretion to allow awards to vest on a change of control of CSR (e.g. a takeover or
merger). In exercising this discretion, the board would generally apply pro rata assessments for plans on foot.
Vested awards: Awards that have vested are transferred to participants at the time of vesting.
Prohibition of
hedging
arrangements
Participants will forfeit their interests in unvested shares if they enter into any hedging transaction in relation to those
shares in breach of CSR’s Share Trading Policy.
At 31 March 2017, executive KMP confirmed in writing their beneficial interest in CSR shares, including confirming that
they had not entered into any hedging arrangements over vested or unvested CSR shares.
32 CSR ANNUAL REPORT 2017
CSR LIMITED | REMUNERATION REPORT | REMUNERATION POLICY
9 Composition of remuneration (continued)
Table 14: Status and key dates of PRP awards
Grant
date
Valuation
per right1
Holding
period
Performance
testing windows
24 July 2010
(YEM11)
$1.23
24 July 2010 to
23 July 2013
24 July 2013 to
23 July 2015
23 July 2011
(YEM12)
Tranche A (TSR) $1.49
Tranche B (EPS) $2.27
23 July 2011 to
22 July 2014
23 July 2012
(YEM13)
Tranche A (TSR) $0.62
Tranche B (EPS) $0.93
23 July 2012 to
22 July 2015
23 July 2013
(YEM14)
Tranche A (TSR) $1.23
Tranche B (EPS) $1.82
23 July 2013 to
22 July 2016
23 July 2014
(YEM15)
Tranche A (TSR) $2.24
Tranche B (EPS) $3.26
23 July 2014 to
22 July 2017
24 July 2015
(YEM16)
Tranche A (TSR) $1.69
Tranche B (EPS) $3.05
24 July 2015 to
31 March 2018
26 July 2016
(YEM17)
Tranche A (TSR) $2.42
Tranche B (EPS) $3.40
Tranche C (Strategic
objectives) $3.40
26 July 2016 to
31 March 2019
23 July 2014 to
22 July 2015
(Tranche A)
1 April 2014 to
31 March 2015
(Tranche B)
23 July 2015 to
22 July 2016
(Tranche A)
1 April 2015 to
31 March 2016
(Tranche B)
23 July 2016 to
22 July 2017
(Tranche A)
1 April 2016 to
31 March 2017
(Tranche B)
23 July 2017 to
22 July 2018
(Tranche A)
1 April 2017 to
31 March 2018
(Tranche B)3
1 April 2015 to
31 March 2018
(Tranche A and B)
1 April 2016 to
31 March 2019
(Tranche A, B and
C)
Expiry date
(if hurdle
not met)
Performance
status2
24 July 2015 Performance condition (TSR) met at 51st
percentile in July 2014, resulting in
52.4% vesting of the allocation grant.
Following retesting in July 2015 the
balance of unvested rights lapsed.
23 July 2015 Tranche A (TSR): Performance condition
met at 68th percentile in July 2014,
resulting in 86.4% vesting of the
allocation grant. Following retesting in
July 2015 the balance of unvested rights
lapsed.
Tranche B (EPS): Performance condition
was not met and unvested rights lapsed.
23 July 2016 Tranche A (TSR): Performance condition
met at 97th percentile in July 2015,
resulting in maximum (100%) vesting of
the allocation grant.
Tranche B (EPS): 12% compound growth
performance condition met with
maximum (100%) vesting of the
allocation grant.
23 July 2017 Tranche A (TSR): Performance condition
met at 85th percentile in July 2016,
resulting in maximum (100%) vesting of
the allocation grant.
Tranche B (EPS): 12% compound growth
performance condition met with
maximum (100%) vesting of the
allocation grant.
23 July 2018 Tranche A (TSR) and Tranche B (EPS):
Performance testing window not yet
commenced.
1 April 2018
1 April 2019
Tranche A (TSR) and Tranche B (EPS):
Performance testing window not yet
commenced.
Tranche A (TSR), Tranche B (EPS) and
Tranche C (Strategic objectives):
Performance testing window not yet
commenced.
1 The value of performance rights at grant date calculated in accordance with AASB 2 Share-based Payments. Valuations are performed by a third party, Ernst & Young.
2 To ensure an independent TSR measurement, CSR engages the services of an external organisation, Mercer Consulting (Australia) Pty Ltd, to calculate CSR’s performance
against the TSR hurdles.
3 Subsequent to 31 March 2017 and up to the date of this report:
Tranche B (EPS) for YEM15 was deemed by the board to have met the 12% compound growth performance condition required for maximum (100%) vesting resulting in
485,933 rights vesting. No further testing is necessary for this tranche. The value of these shares has not yet been determined and will be disclosed in the YEM18
remuneration report.
CSR ANNUAL REPORT 2017 33
CSR LIMITED | REMUNERATION REPORT | REMUNERATION POLICY
9 Composition of remuneration (continued)
(iv) Other equity incentive plans
Table 15: Other equity incentive plans
Purpose
Participation
Form and quantum
of award
Universal Share Ownership Plan (USOP)
Employee Share Acquisition Plan (ESAP)
To encourage share ownership by enabling executives and employees to benefit from favourable Australian
tax treatment.
All executives and employees (except executive directors),
who have the equivalent of at least one year’s full-time
service at the date the shares are allotted.
Selected employees and directors within Australia.
Each year, the board approves the purchase of shares up
to a maximum value of $1,000 (being the limit of the tax
exemption) for each eligible participant. The award is
structured such that participants buy shares which are
then matched one for one by the company at
no additional cost to participants.
Directors and employees can forgo up to $5,000 of their
cash remuneration annually to acquire shares in the
company. The shares are purchased on market by the
CSR Share Plan trustee, who acts on instructions given in
accordance with the plan rules and the company’s Share
Trading Policy.
Vesting period
Shares vest immediately upon acquisition by participants.
The shares can only be sold three years after the date
of grant, unless the participant’s employment ceases
before then.
The shares are held in trust while the participant is
employed by CSR, unless board approval is granted to sell
or transfer shares under specific circumstances (e.g.
financial hardship). Under current Australian tax law, the
maximum period of income tax deferral on the shares
purchased is 15 years.
Absence of a
performance
condition
The plans are designed to encourage share ownership for employees and therefore do not have any performance
conditions attached.
Dividends and
voting rights
Participants are entitled to dividends and other
distributions and have full voting rights.
Participants are entitled to dividends and other
distributions and have full voting rights while the shares
are held in trust.
10 Linking remuneration to performance
A key underlying principle of CSR’s executive remuneration strategy is the link between company performance and executive reward.
(i)
STI and LTI financial measures
STI payments are based on a variety of performance metrics, both financial and non-financial.
The key financial measure in YEM17 for determining the value of STI payments was EBIT before significant items (while ROFE was maintained
as a qualifying metric). Significant items (both positive and negative) are generally excluded when measuring performance for STIs as they are
not considered part of ordinary trading results. Each year an assessment is undertaken by the board to determine whether any of these
significant items are included for the purpose of assessing STIs.
Building on the improved financial performance in YEM16, the YEM17 EBIT (before significant items) performance of CSR’s businesses
improved significantly, increasing by 8% to $298.0 million.
The improvements in financial performance and specifically EBIT results moderately exceeded the EBIT target for STIs set by the board. All
Building Products business units with the exception of Viridian made strong improvements in EBIT performance, reflecting a continued focus on
customer service, cost control and business growth. Aluminium EBIT decreased compared to the prior year with the impact of lower realised
aluminium prices partly offset by increased production and improved smelter performance. The Property business continues to generate strong
value from the portfolio. Whilst Property EBIT was lower than the target set, the board has recognised the significant work and shareholder
value associated with the Rosehill sale which will underpin a very strong Property result for YEM18.
LTIs have been linked to company performance as follows:
the value of performance rights (under the PRP) ultimately depends on share price performance; and
awards vest subject to CSR’s relative TSR performance compared against the constituents of the S&P/ASX 200 index and EPS growth. In
addition, the YEM17 PRP award also includes performance against specific strategic objectives in the areas of growth, portfolio and digital.
CSR’s TSR improved significantly against that of the S&P/ASX 200 index, resulting in full vesting of the YEM14 PRPs. Subsequent to 31 March
2017 but prior to the date of this report, the board determined that the EPS tranche of the YEM15 PRP met the performance condition
required, resulting in all rights vesting.
34 CSR ANNUAL REPORT 2017
CSR LIMITED | REMUNERATION REPORT | REMUNERATION POLICY
10 Linking remuneration to performance (continued)
The following table summarises the clear link between company performance and incentives awarded to executive KMP, senior executives and
other eligible employees:
Table 16: Summary of financial performance and STIs and LTIs awarded
Financial performance7,8
STI
LTI
EBIT
($ million)1
TSR
(%)2
EPS
(cents)1
ROFE
(%)3
Share
price ($)4
YEM17
298.0
45.7
36.5
21.6
YEM16
276.8
(10.9)
32.9
20.7
YEM15
235.4
17.3
29.1
18.4
YEM14
125.7
74.6
16.0
YEM13
68.1
27.0
8.2
9.9
5.0
4.51
3.30
4.03
3.51
2.06
Executive
KMP
($ million)
Senior
executives
($ million)
0.95
2.05
1.2
1.5
1.3
–
2.2
2.6
1.7
0.5
All eligible
employees
STI as a %
of EBIT
Vested value
– Executive
KMP
($ million)6
Vested value
– Senior
executives
($ million)6
5.5%
6.7%
9.0%
10.7%
5.1%
2.8
3.6
1.7
–
–
2.2
3.4
1.2
–
–
1 EBIT and EPS are calculated before significant items.
2 TSR at 31 March sourced from Bloomberg. Relative TSR performance is disclosed in Table 14 along with the LTI vesting outcomes.
3 Return on Funds Employed (ROFE) defined in note 2 to the CSR group financial statements.
4 Closing share price at 31 March.
5 Represents approved and expensed STI for YEM17 but at the time of writing this report, this amount has not yet been paid.
6 Represents the value of PRPs vesting in the period, calculated based on the number of shares issued, valued using the five day VWAP prior to issue.
7 Dividends paid for the last five years are disclosed on page 3.
8 During the year, 1,219,457 shares were bought back on-market as part of CSR’s ongoing capital management strategy. There has been no impact on remuneration.
Further information is disclosed in note 15 to the CSR group financial statements.
(ii)
STI non-financial measures
For YEM17, payments approved by the board for the non-financial component of the STI averaged across executive KMP and senior executives
were on target. The following table provides some examples of key performance measures used in YEM17 to assess executive performance in
the non-financial component of the STI.
Table 17: Non-financial measures and YEM17 performance
Performance area Measure
Performance
Workplace Health,
Safety and
Environment
Year on Year Reduction in: Lost Time Injury
Frequency Rate (LTIFR) and Total
Recordable Injury Frequency Rate (TRIFR)
Leading Safety Indicators
Energy Reduction
People and Culture
Leadership Development
Culture
Succession
Diversity
Below target
LTIFR increased to 3.3 from 2.4 and was below the target set
TRIFR improved by 12%, however, was below the target set
Achieved 98% against a target of 90% for the Injury Prevention Indicator
Achieved a 3% reduction against a 2% target at major facilities
On target
Additional investment and expanded offering to participate in CSR
leadership programs
2016 assessment resulted in improvement in overall results
Biannual talent and succession reviews completed and actions
implemented
These measures are important in delivering CSR’s overall business
strategy. The full set of measureable objectives is set out in the corporate
governance report which is available on CSR’s website
CSR’s female participation in the business improved from 16.7% to 18%
Innovation and
Growth1
Customer
Product Development
Growth from New Business or Acquisitions CSR commenced a Lean Startup program to accelerate innovation and
Promotions across the business for women increased from 33% to 34%
during the year
On target
Each business has targets to develop and introduce new products
Customer Service
Customer focused culture
Digital Strategy
growth.
On target
Each business unit has a range of customer service metrics monitored
during the year
A number of CSR wide forums were completed to engage and drive a
more customer centric organisation. Specific customer objectives are
now included in the YEM18 STI plan
Further progress was made on providing an end-to-end digital solution for
our customers. Our CSR Connect Platform and delivery tracking systems
have significantly advanced during the year. These all provide greater
certainty, visibility and improved service for our customers
CSR ANNUAL REPORT 2017 35
CSR LIMITED | REMUNERATION REPORT | REMUNERATION IN DETAIL
Remuneration in detail
11 Service agreements
Managing director – Executive service agreement
Rob Sindel was appointed as managing director of CSR effective 1 January 2011. Mr Sindel’s remuneration package is summarised as follows:
Table 18: Managing director’s remuneration package
Fixed
remuneration
Annual fixed remuneration of $1,227,471 inclusive of superannuation contributions effective from 1 July 2016. Fixed
remuneration is reviewed annually, but with no guarantee of an increase.
Notice period
Under the Executive Services Agreement there is no fixed term and Mr Sindel’s employment can be terminated by:
the company giving him 12 months’ notice of termination; or
Mr Sindel giving six months’ notice of resignation.
STI
LTI
There is no minimum entitlement to an STI payment and the maximum STI opportunity is 100% of annual fixed
remuneration for exceptional performance. Achievement of target performance would result in 70% of the maximum STI
being paid. The STI is weighted 60% on financial performance and 40% on individual performance.
Under the STI deferral plan rules, 20% of the STI value will be deferred into CSR shares which vest two years from the date
of allocation. Further detail on the STI deferral plan is contained in Table 12.
The value of any award of performance rights is currently set at a maximum of 120% of annual fixed remuneration. Grants
of performance rights are subject to performance hurdles and vesting criteria set by the board (refer to note 9 for details).
Chief financial officer – Executive service agreement
David Fallu was appointed as chief financial officer effective 2 February 2017. Mr Fallu’s remuneration package is summarised as follows:
Table 19: Chief financial officer’s remuneration package
Fixed
remuneration
Notice period
Annual fixed remuneration of $550,000 inclusive of superannuation contributions effective from 2 February 2017.
Under the Executive Services Agreement, Mr Fallu’s employment can be terminated by:
the company giving him six months’ notice of termination; or
Mr Fallu giving six months’ notice of resignation.
STI
LTI
There is no minimum entitlement to an STI payment and the maximum STI opportunity is 100% of annual fixed
remuneration for exceptional performance. Achievement of target performance would result in 50% of the maximum STI
being paid. The STI is weighted 60% on financial performance and 40% on individual performance.
Under the STI deferral plan rules, 20% of the STI value will be deferred into CSR shares which vest two years from the date
of allocation. Further detail on the STI deferral plan is contained in Table 12.
The potential value of any award of performance rights is set at a maximum of 60% of annual fixed remuneration. Grants of
performance rights are subject to performance hurdles and vesting criteria set by the board (refer to note 9 for details).
36 CSR ANNUAL REPORT 2017
CSR LIMITED | REMUNERATION REPORT | REMUNERATION IN DETAIL
11 Service agreements (continued)
Table 20: Treatment of the managing director’s and chief financial officer’s incentives on termination
Circumstance
Short term incentive1
Long term incentive – unvested performance rights2
Immediate termination for cause No STI payable and clawback provisions may
Rights are forfeited
Resignation
Notice by company, good leaver,
retirement, redundancy, death or
permanent disability
Change of control and
subsequent material change to
managing director’s role3
apply (including deferred STI)
Board discretion to award STI on a pro rata
basis (including deferred STI)
Board discretion to award STI on a pro rata
basis (including deferred STI)
STI will be paid on a pro-rata basis (including
deferred STI)
Rights are forfeited unless board determines otherwise
Board discretion to allow awards to vest or remain
subject to performance hurdles after termination on a
pro rata basis
The board has discretion to allow awards to vest on a
change of control of CSR (e.g. a takeover or merger). In
exercising this discretion, the board would generally
apply pro rata assessments for plans on foot
1 Any STI payments will be paid according to the normal annual STI payment time frame (i.e. payment timing will not be accelerated).
2 Shares allocated in respect of vested performance rights are not subject to restrictions after vesting.
3 Only applies to the managing director. If the managing director resigned due to a material change in the managing director’s status (including the company undergoing a
change of control), there would be an entitlement to a payment equivalent to 12 months’ notice of termination.
12 Statutory remuneration
Managing director’s and chief financial officer’s remuneration
The remuneration table below shows an increase in total remuneration expensed for accounting purposes for executive KMP in YEM17
compared with YEM16. The LTI expense in YEM17 accounts for the majority of the change in total expensed remuneration year on year.
Table 21: Executive KMP statutory remuneration
$ Year
ended
31 March
Fixed1
Variable
‘At risk’
Cash
salary
Super-
annuation
Leave
benefits
Other
benefits2
STI
expense3
LTI
expense4
Total
STI5
LTI5
Managing director – Rob Sindel
2017
2016
1,200,448
1,171,054
19,539
19,177
6,795
63,389
3,856
4,662
907,729 1,119,756
908,009 1,021,162
3,258,123
3,187,453
Chief financial officer – David Fallu6
2017
2016
84,472
–
4,904
–
Chief financial officer – Greg Barnes7
2017
2016
157,673
623,323
4,827
19,177
7,144
–
131,883
–
–
–
–
–
228,403
–
(94,680)
22,967
–
–
(67,787)
365,894
(314,876)
254,346
(314,843)
1,285,707
28%
28%
–
–
-
28%
34%
32%
–
–
-
20%
1 Fixed remuneration may be allocated at the executive’s discretion to cash, superannuation (subject to legislative minimums), annual and long service leave benefits,
motor vehicles and certain other benefits.
2 Other benefits included travel expenditure for Mr Sindel and his spouse, all of which directly related to company business. The other benefit awarded to Mr Fallu
represents amounts paid to ensure no undue disadvantage upon resignation from his previous employment. This includes the PRP grant of 43,000 rights which is being
expensed over the vesting period. Further information is contained in note 14.
3 STI expense for YEM17 plus amortisation of STI deferrals relating to prior years’ grants. STI payments may be allocated at the executive’s discretion to cash or additional
superannuation contributions.
4 LTI expense is as defined in the accounting standards. PRP grants are expensed over the vesting period at a valuation determined on grant date. Valuations are
performed by a third party.
5 STI and LTI as a percentage of total remuneration.
6 Appointed 2 February 2017.
7 Following Mr Barnes’ resignation on 30 June 2016, provision for long service leave, the STI deferral expense relating to the YEM15 grant and the LTI expense relating to
PRP grants which lapsed were reversed.
CSR ANNUAL REPORT 2017 37
CSR LIMITED | REMUNERATION REPORT | REMUNERATION IN DETAIL
13 Deferred shares
Table 22: STI deferred shares for executive KMP
Managing director – Rob Sindel
Chief financial officer – David Fallu3
Chief financial officer – Greg Barnes4
Balance
1 April 2016
54,278
–
26,840
Number of STI deferred shares
Granted1
51,294
–
–
Vested
(54,278)
–
–
Lapsed
Balance
31 March 20172
–
–
(26,840)
51,294
–
–
1 The value of deferred shares provided to Mr Sindel at grant date was $3.51 per share. These shares related to the YEM16 STI and were granted on 17 May 2016 and will
vest on 31 March 2018 consistent with the STI deferral plan.
2 The closing balance of deferred shares at 31 March 2017 represents unvested shares for YEM16 STI. Shares for the deferred portion for the YEM17 STI will be granted in
May 2017. The number of shares will depend on the 10 day VWAP prior to the May 2017 trading window.
3 Appointed 2 February 2017.
4 Following Mr Barnes’ resignation on 30 June 2016, unvested deferred shares relating to the YEM15 STI grant lapsed.
14 Performance rights
Table 23: Executive KMP performance rights
Managing director – Rob Sindel
Balance
1 April 2016
1,455,805
Chief financial officer – David Fallu3
–
Number of performance rights
Granted1
448,760
43,000
Vested2
Lapsed
(682,215)
–
–
–
Chief financial officer – Greg Barnes4
359,307
–
(80,461)
(278,846)
Balance
31 March 2017
1,222,350
43,000
–
1 The accounting value of Mr Sindel’s and Mr Fallu’s rights granted were $1,393,849 and $150,070 respectively.
2 The following rights vested to ordinary shares during the year ended 31 March 2017:
Mr Sindel: (a) YEM14 Tranche B (rights vested and shares awarded 341,107 on 12 May 2016). The value of each of these shares was $3.56, representing a total value
to Mr Sindel of $1,214,341. (b) YEM14 Tranche A (rights vested and shares awarded 341,108 on 3 November 2016). The value of each of these shares was $3.78,
representing a total value to Mr Sindel of $1,289,388.
Mr Barnes: (a) YEM14 Tranche B (rights vested and shares awarded 80,461 on 12 May 2016). The value of each of these shares was $3.56, representing a total value to
Mr Barnes of $286,441.
The rights vested do not include Tranche B (EPS) from the YEM15 PRP that were determined to have vested by the board subsequent to 31 March 2017 but prior to the
date of this report. These approved rights represented 207,290 shares for Mr Sindel.
3 Appointed 2 February 2017. PRP grant issued to Mr Fallu for 43,000 rights will vest automatically in the November 2017 trading window provided Mr Fallu remains
employed by the group. The accounting value of these rights granted was $3.49.
4 Following Mr Barnes’ resignation on 30 June 2016, unvested PRPs lapsed.
15 Shareholdings
Table 24: Executive KMP shareholdings
Number of CSR shares1
Balance
1 April 2016
Acquired2
Sold or
transferred
Other4
Balance
31 March 2017
Managing director – Rob Sindel
816,570
733,509
(620,000)
Chief financial officer – David Fallu3
–
Chief financial officer – Greg Barnes
268,694
–
80,461
–
–
–
–
(349,155)
930,079
–
–
1 CSR shares in which the executive KMP has a beneficial interest, including shares held by the CSR share plan trustee for vested shares from the PRP and shares held in
respect of the STI deferral plan, by the ESAP trustee or via their related parties. It also includes spouse shareholdings.
2 Represents shares allocated upon vesting of rights under the PRP and shares acquired under the STI deferral plan as detailed earlier in this report. Mr Sindel’s acquired
shares include 682,215 shares issued on vesting of PRPs and 51,294 shares acquired under the STI deferral plan. Mr Barnes’ acquired 80,461 shares issued on vesting
of PRPs.
3 Appointed 2 February 2017.
4 Following Mr Barnes’ resignation on 30 June 2016, Mr Barnes is no longer a KMP. The ‘other’ change does not represent a disposal of shares.
38 CSR ANNUAL REPORT 2017
CSR LIMITED | REMUNERATION REPORT | NON-EXECUTIVE DIRECTORS AND OTHER
Non-executive directors and other
16 Arrangements
Table 25: Non-executive director arrangements
Role
Annual fee for YEM17
Chairman base fees
$344,418
Other NED base fees (including one committee membership)
$137,767
Chairman of the Risk & Audit Committee
An additional $30,750
An additional $20,500
Chairman of the Remuneration & Human Resources Committee
Chairman of the Workplace Health, Safety & Environment Committee An additional $20,500
Additional committee memberships
An additional $10,250 per additional committee
(applies to NEDs other than the chairman)
All fees are exclusive of any Superannuation Guarantee Contribution (SGC). No retirement allowances are payable to NEDs. NEDs do not
participate in the company’s STI or LTI plans or receive any variable remuneration, but are able to forgo fees for CSR shares under the ESAP. To
further align NEDs’ interests with those of shareholders, the company expects all NEDs to acquire a beneficial interest in CSR shares. Following
benchmarking in YEM17, effective 1 April 2017 a 2.25% fee increase was applied to the chairman’s base fees, other NED base fees and all
committee fees.
17 Remuneration
Table 26: Non-executive directors’ remuneration
Year ended 31 March
Kathleen Conlon1
Christine Holman2
Michael Ihlein
Rebecca McGrath3
Matthew Quinn
Jeremy Sutcliffe (chairman)4
Penny Winn5
Total non-executive directors
YEM17
YEM16
YEM17
YEM16
YEM17
YEM16
YEM17
YEM16
YEM17
YEM16
YEM17
YEM16
YEM17
YEM16
YEM17
YEM16
Directors’ fees
Termination
benefits
Superannuation
–
88,431
64,459
–
168,517
164,407
88,654
154,407
158,267
156,324
357,600
348,763
153,569
56,961
991,066
969,293
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,401
6,124
–
16,009
15,619
8,422
14,669
15,035
14,851
19,539
19,177
14,589
5,411
79,718
78,128
Total
–
96,832
70,583
–
184,526
180,026
97,076
169,076
173,302
171,175
377,139
367,940
168,158
62,372
1,070,784
1,047,421
1 Resigned 9 November 2015.
2 Appointed 25 October 2016.
3 Resigned 25 October 2016.
4 Effective 1 July 2014, Jeremy Sutcliffe’s SGC was reduced from 9.5% of his base director’s fees to the capped minimum SGC. His base fees increased by the difference
between the employer’s SGC requirement and the minimum SGC cap. The application of these arrangements continued in YEM17 consistent with any changes in SGC
legislative requirements.
5 Appointed 9 November 2015.
CSR ANNUAL REPORT 2017 39
CSR LIMITED | REMUNERATION REPORT | NON-EXECUTIVE DIRECTORS AND OTHER
18 Shareholdings
Table 27: Non-executive directors’ shareholdings
Number of CSR shares1
Christine Holman2
Michael Ihlein
Rebecca McGrath3
Matthew Quinn
Jeremy Sutcliffe (chairman)
Penny Winn
Balance
1 April 2016
Included in
remuneration
–
58,357
35,441
17,321
137,729
26,548
–
–
–
–
–
–
Other4
Balance
31 March 2017
Acquired
20,000
1,316
–
–
–
(35,441)
21,723
1,316
16,855
–
–
–
20,000
59,673
–
39,044
139,045
43,403
1 CSR shares in which the director has a beneficial interest, including shares held under the ESAP trust or via related parties.
2 Appointed 25 October 2016.
3 Resigned 25 October 2016.
4 Following Ms McGrath’s resignation on 25 October 2016, Ms McGrath is no longer a KMP. The ‘other’ change does not represent a disposal of shares.
19 Other transactions with KMP
There were no other transactions, including loans between CSR and KMP (including their related parties), during YEM16 and YEM17.
40 CSR ANNUAL REPORT 2017
CSR LIMITED | FINANCIAL REPORT
FINANCIAL REPORT
Consolidated financial report
Statement of financial performance
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial report
Directors’ declaration
Independent auditor’s report
Shareholder information
42
43
44
45
46
47
83
84
87
Notes to the financial report
1
Basis of preparation
Financial performance overview
Segment information
2
Significant items
3
Earnings per share
4
Revenue and expenses
5
Net finance costs
6
Income tax expense
7
Business combinations
8
Balance sheet items
9
Working capital
10 Property, plant and equipment and intangible assets
11 Net deferred income tax assets
12 Provisions
13 Product liability
Issued capital
Capital structure and risk management
14 Borrowings and credit facilities
15
16 Dividends and franking credits
17 Reserves
18
Financial risk management
Group structure
19 Subsidiaries
20 Deed of cross guarantee
21 Non-controlling interests
22
23 Equity accounting information
24 Parent entity disclosures
Interest in joint operations
Other
25 Employee benefits
26 Related party disclosures
27 Subsequent events
28 Commitments and contingencies
29 Other non-current assets
30
31 Other accounting policies
Auditor’s remuneration
47
47
48
48
50
50
51
51
52
53
56
56
57
58
60
61
63
63
63
63
64
65
70
70
70
73
73
74
75
76
76
80
80
81
81
82
82
CSR ANNUAL REPORT 2017 41
CSR LIMITED | FINANCIAL REPORT
Statement of financial performance
$million
Trading revenue – sale of goods
Cost of sales
Gross margin
Other income
Warehouse and distribution costs
Selling, administration and other operating costs
Share of net profit of joint venture entities
Other expenses
Profit before finance costs and income tax
Interest income
Finance costs
Profit before income tax
Income tax expense
Profit after tax
Profit after tax attributable to:
Non-controlling interests
Shareholders of CSR Limited1
Profit after tax
Earnings per share attributable to shareholders of CSR Limited
Basic (cents per share)
Diluted (cents per share)
Note
2017
2016
2
5
23
6
6
7
21
4
4
2,468.3
(1,634.6)
2,298.8
(1,527.2)
833.7
27.6
(233.4)
(340.2)
14.7
(26.5)
275.9
3.5
(12.6)
266.8
(61.7)
205.1
27.2
177.9
205.1
35.3
35.1
771.6
31.2
(214.0)
(324.8)
13.2
(25.2)
252.0
2.8
(21.1)
233.7
(64.4)
169.3
27.0
142.3
169.3
28.2
28.0
1 Net profit before significant items attributable to shareholders of CSR Limited is $183.8 million (2016: $166.0 million). Refer to note 3 of the financial statements.
The above statement of financial performance should be read in conjunction with the accompanying notes.
42 CSR ANNUAL REPORT 2017
CSR LIMITED | FINANCIAL REPORT
Statement of comprehensive income
$million
Profit after tax
Other comprehensive income (expense), net of tax
Items that may be reclassified to profit or loss
Hedge (loss) profit recognised in equity
Hedge (profit) transferred to statement of financial performance
Share of (loss) on changes in fair value of cash flow hedges of joint venture entities
Exchange differences arising on translation of foreign operations
Recycling of foreign currency translation reserve on disposal of equity accounted investment,
transferred to statement of financial performance
Income tax benefit (expense) relating to these items
Items that will not be reclassified to profit or loss
Actuarial gain on superannuation defined benefit plans
Income tax (expense) relating to these items
Other comprehensive (expense) income – net of tax
Total comprehensive income
Total comprehensive income attributable to:
Non-controlling interests
Shareholders of CSR Limited
Total comprehensive income
Note
2017
205.1
2016
169.3
17
17
17
11
25
11
(44.6)
(16.3)
–
(0.5)
(5.6)
18.4
24.1
(7.3)
(31.8)
173.3
13.6
159.7
173.3
14.1
(0.9)
(0.5)
(1.9)
–
(3.9)
20.9
(6.2)
21.6
190.9
31.6
159.3
190.9
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
CSR ANNUAL REPORT 2017 43
CSR LIMITED | FINANCIAL REPORT
Statement of financial position
$million
Current assets
Cash and cash equivalents
Receivables
Inventories
Other financial assets
Income tax receivable
Prepayments and other current assets
Total current assets
Non-current assets
Receivables
Inventories
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Other financial liabilities
Tax payable
Provisions
Total current liabilities
Non-current liabilities
Payables
Borrowings
Other financial liabilities
Provisions
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Equity attributable to shareholders of CSR Limited
Non-controlling interests
Total equity
The above statement of financial position should be read in conjunction with the accompanying notes.
44 CSR ANNUAL REPORT 2017
Note
2017
2016
31
9
9
18
29
9
23
18
10
10
10
11
29
9
18
12
14
18
12
11
25
15
17
21
19.1
312.1
385.7
5.9
0.5
13.1
736.4
23.4
81.6
39.9
2.9
848.6
97.1
46.7
201.2
19.3
1,360.7
2,097.1
291.9
29.9
10.3
181.5
513.6
3.7
30.5
22.9
319.8
–
0.1
377.0
890.6
73.1
319.6
348.8
32.7
0.5
11.0
785.7
51.3
72.7
61.0
2.5
864.0
74.2
48.1
239.3
17.0
1,430.1
2,215.8
260.6
17.6
38.1
172.5
488.8
18.9
2.2
3.3
351.2
20.9
13.3
409.8
898.6
1,206.5
1,317.2
1,036.8
(73.4)
191.6
1,155.0
51.5
1,206.5
1,041.1
20.4
123.2
1,184.7
132.5
1,317.2
CSR LIMITED | FINANCIAL REPORT
Statement of changes in equity
$million
Note
Balance at 1 April 2016
Profit for the year
Total other comprehensive
(expense) income – net of tax
Dividends paid
On-market share buy-back
Acquisition of treasury shares
Acquisition of non-controlling
interest
Share-based payments
– net of tax
Balance at 31 March 2017
Balance at 1 April 2015
Profit for the year
Total other comprehensive
income – net of tax
Dividends paid
On-market share buy-back
Acquisition of treasury shares
Non-controlling interest on
acquisition of subsidiary
Share-based payments
– net of tax
Balance at 31 March 2016
16
15
17
8
16
17
17
Issued
capital
1,041.1
–
–
–
(4.3)
–
–
–
Reserves
20.4
–
(35.0)
–
–
(5.4)
(57.1)
Retained
profits
123.2
177.9
16.8
(126.3)
–
–
–
CSR
Limited
interest
1,184.7
177.9
(18.2)
(126.3)
(4.3)
(5.4)
(57.1)
Non-
controlling
interests
132.5
27.2
(13.6)
(20.4)
–
–
(74.2)
Total
equity
1,317.2
205.1
(31.8)
(146.7)
(4.3)
(5.4)
(131.3)
3.7
–
3.7
–
3.7
1,036.8
(73.4)
191.6
1,155.0
51.5
1,206.5
1,042.2
–
–
–
(1.1)
–
–
–
21.7
–
2.3
–
–
(7.1)
0.5
3.0
82.6
142.3
14.7
(116.4)
–
–
–
1,146.5
142.3
17.0
(116.4)
(1.1)
(7.1)
0.5
59.5
27.0
4.6
(28.5)
–
–
69.9
1,206.0
169.3
21.6
(144.9)
(1.1)
(7.1)
70.4
–
3.0
–
3.0
1,041.1
20.4
123.2
1,184.7
132.5
1,317.2
The above statement of changes in equity should be read in conjunction with the accompanying notes.
CSR ANNUAL REPORT 2017 45
CSR LIMITED | FINANCIAL REPORT
Statement of cash flows
$million
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends and distributions received
Interest received
Income tax paid
Net cash from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment and other assets
Proceeds from sale of property, plant and equipment and other assets
Purchase of controlled entities and businesses, net of cash acquired
Costs associated with acquisition of businesses
Loans and receivables (advanced) repaid
Net cash used in investing activities
Cash flows from financing activities
On-market share buy-back
Net drawdown (repayment) of borrowings
Dividends paid1
Acquisition of shares by CSR employee share trust
Interest and other finance costs paid
Transactions with non-controlling interests
Net cash used in financing activities
Net (decrease) increase in cash held
Net cash at the beginning of the financial year
Effects of exchange rate changes
Net cash at the end of the financial year
Reconciliation of net profit attributable to shareholders of CSR Limited
to net cash from operating activities
Net profit attributable to shareholders of CSR Limited
Net profit attributable to non-controlling interests
Depreciation and amortisation
Impairment of assets
Costs associated with acquisition of business
Share of profits of associates not received as dividends or distributions
Net gain on purchase of associate
Share-based payments
Finance cost net of discount unwind
Profit on disposal of assets
Net change in trade receivables
Net change in current inventories
Net change in trade payables
Movement in product liability provision
Net change in other provisions
Movement in current and deferred tax balances
Net change in other assets and liabilities
Net cash from operating activities
Note
2017
2016
23
8
15
17
8
2
21
5
10
3
17
5
2,726.0
(2,424.6)
14.2
1.9
(52.7)
2,499.5
(2,246.4)
11.2
2.5
(14.6)
264.8
252.2
(93.2)
44.7
(3.5)
(3.4)
(5.3)
(60.7)
(4.3)
28.3
(146.7)
(5.4)
(3.4)
(126.4)
(257.9)
(53.8)
73.1
(0.2)
19.1
177.9
27.2
88.5
11.2
(1.5)
(0.5)
(4.1)
3.2
3.3
(16.9)
5.7
(15.7)
19.7
(22.1)
(2.9)
1.7
(9.9)
264.8
(120.0)
71.2
(19.3)
(12.8)
0.1
(80.8)
(1.1)
(10.4)
(144.9)
(7.1)
(3.2)
–
(166.7)
4.7
68.4
–
73.1
142.3
27.0
83.2
–
10.8
(2.0)
–
3.1
8.8
(26.1)
(26.2)
1.0
12.6
(16.2)
(13.5)
48.1
(0.7)
252.2
1 During the year ended 31 March 2017, within the $146.7 million of dividends paid, dividends to CSR Limited shareholders were $126.3 million. Of the $126.3 million in
dividends, $8.5 million was used to purchase CSR shares on-market to satisfy obligations under the Dividend Reinvestment Plan (DRP), and the remaining $117.8
million was paid in cash.
The above statement of cash flows should be read in conjunction with the accompanying notes.
46 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | BASIS OF PREPARATION
Notes to the financial report
1 Basis of preparation
This section sets out the basis upon which the CSR group’s financial
statements are prepared as a whole. Significant and other accounting
policies that summarise the measurement basis used and are relevant
to an understanding of the financial statements are provided
throughout the notes to the financial statements. All other accounting
policies are outlined in note 31.
Rounding: Unless otherwise shown in the financial statements,
amounts have been rounded to the nearest tenth of a million dollars
and are shown by $million. CSR Limited is a company of the kind
referred to in the Australian Securities and Investments Commission
(ASIC) Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, dated 24 March 2016.
Statement of Compliance: CSR Limited is a limited company
incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange.
This general purpose financial report is prepared in accordance with
the Corporations Act 2001 and applicable Accounting Standards and
Interpretations, and complies with other requirements of the law. CSR
Limited is a ‘for profit’ entity. The financial report includes the
consolidated financial statements of CSR Limited and its controlled
entities (CSR group).
Accounting Standards include Australian Accounting Standards.
Compliance with Australian Accounting Standards ensures that the
financial statements and notes of the company and the CSR group
comply with International Financial Reporting Standards.
Basis of preparation: The financial report is based on historical cost,
except for certain financial assets which are at fair value.
In preparing this financial report, the CSR group is required to make
estimates and assumptions about carrying values of assets and
liabilities. These estimates and assumptions are based on historical
experience and various other factors that are believed to be reasonable
under the circumstances. Actual results may differ from these
estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis.
The accounting policies adopted are consistent with those of the
previous year, unless otherwise stated.
Basis of consolidation: The consolidated financial statements have
been prepared by aggregating the financial statements of all the
entities that comprise the CSR group, being CSR Limited and its
controlled entities. In these consolidated financial statements:
results of each controlled entity are included from the date CSR
Limited obtains control and until such time as it ceases to control an
entity; and
all inter-entity balances and transactions are eliminated.
Control is achieved where CSR Limited 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. Entities controlled by CSR Limited are under no obligation to
accept responsibility for liabilities of other common controlled entities
except where such an obligation has been specifically undertaken.
Business combinations: Non-controlling interests in the results and
equity of subsidiaries are shown separately in the consolidated
statement of financial performance, statement of comprehensive
income, statement of financial position and statement of changes in
equity respectively. The effects of all transactions with non-controlling
interests are recorded in equity if there is no change in control. Where
there is a loss of control, any remaining interest in the entity is
remeasured to fair value and a gain or loss is recognised in the income
statement. Any losses are allocated to the non-controlling interest in
subsidiaries even if the accumulated losses should exceed the non-
controlling interest in the individual subsidiary’s equity.
Comparative information: Where applicable, comparative information
has been reclassified in order to comply with current period disclosure
requirements, the impact of which is not material to the financial
report.
Currency: Unless otherwise shown in the financial statements, amounts
are in Australian dollars, which is the CSR group's functional currency.
New or revised accounting standards: The CSR group has adopted all
amendments to Australian Accounting Standards which became
applicable from 1 April 2016. There have been no new or revised
accounting standards which materially impacted the financial report.
New standards not yet applicable are discussed in note 31.
Critical accounting judgments and key sources of estimation
uncertainty: Critical judgments and key assumptions that management
has made in the process of applying the CSR group's accounting
policies and that have the most significant effect on the amounts
recognised in the financial statements are detailed in the notes below:
Note
Judgment/Estimation
10
11
12
12
Asset impairment
Recoverability of deferred tax assets
Measurement of provisions for restoration and
environmental rehabilitation and legal claims
Provision for uninsured losses and future claims
12, 13
Product liability
22
23
Classification of joint arrangements
Non-consolidation of entities in which the CSR group
holds more than 50%
NOTES TO THE FINANCIAL REPORT: The notes are organised into the
following sections.
Financial performance overview: provides a breakdown of individual line
items in the statement of financial performance, and other information
that is considered most relevant to users of the annual report.
Balance sheet items: provides a breakdown of individual line items in
the statement of financial position that are considered most relevant to
users of the annual report.
Capital structure and risk management: provides information about the
capital management practices of the CSR group and shareholder
returns for the year. This section also discusses the CSR group’s
exposure to various financial risks, explains how these affect the CSR
group’s financial position and performance and what the CSR group
does to manage these risks.
Group structure: explains aspects of the CSR group structure and the
impact of this structure on the financial position and performance of
the CSR group.
Other:
provides information on items which require disclosure to comply
with Australian Accounting Standards and other regulatory
pronouncements; and
provides information about items that are not recognised in the
financial statements but could potentially have a significant impact
on the CSR group’s financial position and performance.
CSR ANNUAL REPORT 2017 47
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
Accounting policies and inter-segment transactions
The accounting policies used by the CSR 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.
Transfers of assets between segments are recognised at book value.
It is the CSR group's policy that if items of revenue and expense are
not allocated to operating segments, then any associated assets and
liabilities are also not allocated to segments. This is to avoid
asymmetrical allocations within segments which management
believes would be inconsistent. Reporting provided to the board of
directors in respect of earnings is primarily measured based on
earnings before interest and tax (EBIT), excluding significant items,
with significant items reviewed and reported separately to the CODM.
The following items are not allocated to operating segments as they
are not considered part of the core trading operations of any
segment:
corporate overheads;
restructuring and provisions;
net finance cost; and
significant items.
Geographical information
The CSR group operates principally in Australia. For the year ended
31 March 2017, the CSR group's trading revenue from external
customers in Australia amounted to $2,343.4 million (2016:
$2,245.4 million), with $124.9 million (2016: $53.4 million) of
trading revenue related to other geographical areas. The CSR group's
non-current assets excluding investments accounted for using the
equity method, deferred tax assets and other financial assets from
continuing operations in Australia amounted to $1,055.8 million at
31 March 2017 (2016: $1,085.6 million), with $60.9 million (2016:
$41.7 million) related to other geographical areas.
Financial performance overview
2
Segment information
Operating and reportable segments
The CSR group has identified its operating segments based on the
internal reports that are reviewed and used by the board of directors
in their role as the chief operating decision makers (CODM) in
assessing performance and in determining the allocation of
resources. Operating segments are identified by management and
the board of directors based on the nature of the product sold and
production processes involved. Reportable segments are based on
operating segments determined by the similarity of the products
produced and sold as these are the sources of the CSR group's major
risks and have the most effect on the rates of return. Each of the
business units disclosed below has been determined as both an
operating segment and reportable segment.
Building
Products
Glass
Aluminium
Property
Lightweight Systems (Gyprock plasterboard, Hebel
autoclaved aerated concrete products, Cemintel fibre
cement, Ceilector ceiling solutions, Potter interior
systems and Rondo rolled formed steel products joint
venture), Insulation (Bradford and Martini insulation,
Bradford energy solutions and Edmonds ventilation
systems), AFS walling systems, Bricks (PGH Bricks and
Pavers and New Zealand Brick Distributors joint
venture) and Roofing (Monier roofing).
The Glass business includes the operations of Viridian
in Australia and New Zealand. Viridian is Australia’s
leading architectural glass provider and the only
manufacturer of float glass and hard coated
performance products in Australia. It manufactures
clear float, coated and bulk laminate glass in Victoria
and value-added processing of glass from a number of
facilities across Australia.
The Aluminium business unit relates to the CSR
group’s 70% interest in Gove Aluminium Finance
Limited, which in turn holds a 36.05% interest in the
Tomago aluminium smelter (i.e. an effective interest of
25.24%). Gove Aluminium Finance Limited sources
alumina, has it toll manufactured by Tomago and then
sells aluminium into predominantly the Asian market.
Products from the aluminium business include
aluminium ingot, billet and slab.
The Property business unit generates returns typically
from the sale of former operating sites by advancing
the sites through various stages of the development
cycle. In addition, this business is currently involved in
a small number of large-scale developments in New
South Wales, Queensland and Victoria. These projects,
in most cases, are in-fill developments (currently
vacant land or discontinued operating sites within
otherwise built up areas) located in metropolitan
regions.
48 CSR ANNUAL REPORT 2017
Trading revenue1
EBITDA before
significant items2
Depreciation and
amortisation
Earnings before
interest, tax and
significant items
2017
2016
2017
2016
2017
2016
2017
2016
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
2
Segment information (continued)
$million
Business segment
Building Products7
Glass
Aluminium
Property
Segment total
Corporate3,7
Restructuring and provisions4
1,576.9
379.9
511.5
–
1,466.8
301.3
530.7
–
2,468.3
2,298.8
–
–
–
–
252.2
20.3
118.0
15.3
405.8
(13.4)
(5.9)
213.4
17.9
131.0
23.3
385.6
(17.0)
(8.6)
Total CSR group
2,468.3
2,298.8
386.5
360.0
Reconciliation of earnings before interest, tax and significant items to profit after tax
$million
Earnings before interest, tax and significant items
Net finance costs
Income tax expense
Profit after tax before significant items (before non-controlling interests)
Less: non-controlling interests
49.4
13.3
24.9
0.3
87.9
0.6
–
88.5
45.8
9.8
26.9
–
82.5
0.7
–
83.2
Note
6
202.8
7.0
93.1
15.0
317.9
(14.0)
(5.9)
167.6
8.1
104.1
23.3
303.1
(17.7)
(8.6)
298.0
276.8
2017
298.0
(0.4)
(85.0)
212.6
(28.8)
2016
276.8
(5.3)
(73.4)
198.1
(32.1)
Profit after tax before significant items attributable to shareholders of CSR Limited
183.8
166.0
Significant items after tax attributable to shareholders of CSR Limited
3
(5.9)
(23.7)
Profit after tax attributable to shareholders of CSR Limited
177.9
142.3
Business segment
As at 31 March 2017
As at 31 March 2016
As at 31 March 2017
As at 31 March 2016
Funds employed ($million)5
Return on funds employed (%)6
Building Products
Glass
Aluminium
Property
Segment total
Corporate
Total CSR group
877.4
247.4
137.3
142.0
1,404.1
(36.3)
1,367.8
903.1
208.4
167.2
133.0
1,411.7
(17.5)
1,394.2
22.8%
3.1%
61.1%
10.9%
–
–
21.6%
19.4%
4.1%
60.5%
18.1%
–
–
20.7%
1 Trading revenue excludes net gain on disposal of assets, interest income, dividend income from other entities, share of net profit of joint venture entities and other
income. Inter-segment sales are negligible.
2 EBITDA before significant items is earnings before interest, tax, depreciation, amortisation and significant items.
3 Represents unallocated overhead expenditure and other revenues, including interest income.
4 Represents restructuring and provisions. Includes legal and managerial costs associated with long-term product liabilities and minor product liability claims that arise
from time to time, certain defined benefit superannuation liabilities and expenses, other payables, non-operating revenue and other costs (excluding those categorised as
significant items).
5 Funds employed is net assets of the CSR group less certain non-trading assets and liabilities. Funds employed at 31 March 2017 is calculated as net assets of $1,206.5
million (2016: $1,317.2 million), excluding the following assets: net cash of $19.1 million (2016: $73.1 million), net tax assets of $191.4 million (2016: $180.8 million),
net financial assets of $nil (2016: $14.3 million), net superannuation assets of $14.5 million (2016: $nil) and interest receivable of $0.6 million (2016: $0.5 million). In
addition, the following liabilities have been excluded from funds employed: asbestos product liability provision of $312.4 million (2016: $334.5 million), net
superannuation liabilities of $nil (2016: $9.0 million), net financial liabilities of $44.0 million (2016: $nil) and borrowings of $30.5 million (2016: $2.2 million).
6 Return on funds employed (ROFE) is calculated based on EBIT before significant items for the 12 months to year end divided by average funds employed. ROFE is not a
measure used for Corporate costs which are considered in the context of the CSR group result. Property ROFE varies due to timing of projects.
7 The prior period disclosure has been updated to reflect a change in CSR internal reporting to the CODM, resulting in a transfer of operating expenditure from Corporate to
Building Products. As a result, EBIT for Building Products decreased by $1.5 million and corporate EBIT cost reduced by an equivalent amount. This change had no impact
on the CSR group EBIT. Funds employed and ROFE have also been updated accordingly.
CSR ANNUAL REPORT 2017 49
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
3
Significant items
$million
Transaction and integration costs1
Restructuring costs and asset impairments2
Legal disputes, warranties and land remediation3
Gain on acquisition of controlled entity4
Reduction in product liability provision5
Significant items before finance costs and income tax
Discount unwind and hedging relating to product liability provision
Transaction costs included in finance costs
Interest income on tax refund6
Significant items before income tax
Income tax benefit on significant items
Income tax refund related to divested business6
Significant items after tax
Significant items attributable to non-controlling interests
Significant items attributable to shareholders of CSR Limited
Net profit attributable to shareholders of CSR Limited
Significant items attributable to shareholders of CSR Limited
Net profit before significant items attributable to shareholders of CSR Limited
Earnings per share attributable to shareholders of CSR Limited before significant items7
Basic (cents per share)
Diluted (cents per share)
2017
(5.4)
(23.8)
(0.7)
4.1
3.7
(22.1)
(10.4)
(0.4)
2.1
(30.8)
10.7
12.6
(7.5)
1.6
(5.9)
177.9
5.9
183.8
36.5
36.3
2016
(21.5)
(3.3)
–
–
–
(24.8)
(12.6)
(0.4)
–
(37.8)
9.0
–
(28.8)
5.1
(23.7)
142.3
23.7
166.0
32.9
32.7
1 During the financial years ended 31 March 2017 and 31 March 2016, the CSR group incurred costs associated with potential and completed acquisitions, including
integration costs relating to PGH Bricks & Pavers Pty Limited (formerly Boral CSR Bricks Pty Limited) which was formed on 1 May 2015 (refer note 8). In addition, in the
financial year ended 31 March 2016 adjustments were recorded as a result of the fair value re-measurement of contingent consideration on previous acquisitions.
2 During the financial years ended 31 March 2017 and 31 March 2016, restructuring and relocation programs took place across the Building Products, Glass and
Aluminium segments to align the business cost base with current market conditions and secure ongoing efficiencies. In addition, during the year ended 31 March 2017,
asset impairments were recorded in the Building Products segment to reduce the carrying value of assets to their recoverable amount following a review of plant and
equipment.
3 During the financial year ended 31 March 2017, the group recorded a net charge of $0.7m as a result of the re-measurement of provisions in relation to legal disputes,
warranties and land remediation.
4 On 30 June 2016, the CSR group acquired the remaining 42% interest in Viridian Glass Limited Partnership (VGLP). As a result of this transaction, a gain has been
recognised including the realisation of cumulative foreign exchange gains in relation to the previously held investment (refer note 8). This amount has been recognised in
other income in the statement of financial performance.
5 During the financial year ended 31 March 2017, the group reduced the product liability provision by $3.7 million to bring the prudential margin to $60.0 million or 23.8%
of the actuarially assessed product liability provision at 31 March 2017 (refer note 13).
6 During the financial year ended 31 March 2017, a tax refund (including interest) was finalised following an amendment to the capital gains tax paid in relation to the
divestment of the Sucrogen group in the year ended 31 March 2011.
7 The basis of calculation is consistent with the earnings per share disclosure in the statement of financial performance (refer note 4).
Recognition and measurement
Significant items are those which by their size and nature or incidence are relevant in explaining the financial performance of the CSR group,
and as such are disclosed separately.
4
Earnings per share
Profit after tax attributable to shareholders of CSR Limited ($million)
Weighted average number of ordinary shares used in the calculation of basic EPS (million)1
Weighted average number of ordinary shares used in the calculation of diluted EPS (million)2
Basic EPS (cents per share)
Diluted EPS (cents per share)
2017
177.9
503.9
506.3
35.3
35.1
2016
142.3
504.6
508.0
28.2
28.0
1 Calculated by reducing the total weighted average number of shares on issue of 505.0 million (2016: 506.0 million) by the weighted average number of shares
purchased on market and held in trust to satisfy incentive plans as these plans vest of 1,098,543 (2016: 1,371,255).
2 Calculated by increasing the weighted average number of shares used in calculating basic EPS by outstanding performance rights of 2,430,857 (2016: 3,372,155).
Performance rights granted under the LTI plan are included in the determination of diluted earnings per share to the extent to which they are dilutive.
50 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
5 Revenue and expenses
$million
Trading revenue
Other income
Net gain on disposal of assets
Gain on acquisition of controlled entity
Other
Expenses
Significant items
Employee benefits expense
Operating lease expense
Depreciation
Amortisation
Recognition and measurement
Note
2017
2016
2,468.3
2,298.8
8
3
10
10
16.9
4.1
6.6
26.2
581.9
67.3
81.6
6.9
26.1
–
5.1
24.8
523.6
58.5
78.2
5.0
Trading revenue: measured at the fair value of the consideration receivable, and is recognised when each of the following conditions is
met:
-
-
-
-
persuasive evidence that an arrangement exists, which is usually in the form of a contractual arrangement;
the seller's price to the buyer is fixed or determinable;
the significant risks and rewards of ownership of the goods have transferred from the CSR group to the buyer; and
collectability is reasonably assured.
Net gain on disposal of assets: income is recognised when the risks and rewards have been transferred and CSR does not retain either
continuing managerial involvement to the degree usually associated with ownership, or effective control over the assets sold. The
revenue is measured as the amount receivable under the contract. It is discounted to present value if deferred payments have been
agreed and the impact of discounting is material.
Employee benefits expense: includes salaries and wages, share-based payments and other entitlements.
Operating lease expense: payments made under operating leases (net of any incentives received by the lessor) are expensed on a
straight-line basis over the period of the lease.
6 Net finance costs
$million
Interest expense and funding costs
Discount unwind and hedge (gain) loss relating to product liability provision
Discount unwind of other non-current liabilities
Foreign exchange (gain) loss
Finance costs
Interest income
Net finance costs
Finance costs included in significant items
Net finance costs before significant items
Recognition and measurement
Note
2017
2016
3.4
10.4
1.3
(2.5)
12.6
(3.5)
9.1
(8.7)
0.4
4.1
12.6
1.4
3.0
21.1
(2.8)
18.3
(13.0)
5.3
3
Interest income and expense are accrued on a time basis, by reference to the principal outstanding and at the applicable effective interest
rates. Funding costs are capitalised and subsequently amortised over the term of the facility. Unwinding of the interest component of
discounted assets and liabilities is treated as a finance cost.
CSR ANNUAL REPORT 2017 51
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
7
Income tax expense
Reconciliation of income tax expense charged to the statement of financial performance:
$million
Profit before income tax
Income tax expense calculated at 30%
(Decrease) increase in income tax expense due to:
Share of net profit of joint venture entities
Non-taxable profit on property disposals
Income tax (over) under provided in prior years1
Other items2
Total income tax expense on profit
Comprising of:
Current tax expense
Deferred tax expense relating to movements in deferred tax balances
Total income tax expense on profit
Note
2017
2016
266.8
233.7
80.0
70.1
(4.3)
(1.9)
(11.4)
(0.7)
61.7
29.3
32.4
61.7
(3.7)
(5.9)
0.9
3.0
64.4
43.9
20.5
64.4
11
1
2
Includes a tax refund of $13.2 million and tax expense on interest income of $0.6 million. This relates to an amendment of the income tax return for the year ended 31
March 2011, in relation to capital gains tax paid on the sale of the Sucrogen group.
Includes the impact of permanent differences related to significant items.
Recognition and measurement
Current and deferred tax is recognised as an expense in the statement of financial performance except when it relates to items credited or
debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from an initial accounting for
a business acquisition, in which case it is taken into account in the determination of goodwill.
Disclosure of company tax information
Under tax legislation the Australian Tax Office will publish in 2017 the following data for the CSR Limited tax consolidated group, PGH Bricks
& Pavers Pty Limited and Gove Aluminium Finance Limited in relation to the 2016 tax year:
Entity
CSR Limited (ABN: 90 000 001 276)
PGH Bricks & Pavers Pty Limited (ABN: 68 168 794 821)
Gove Aluminium Finance Limited (ABN: 45 001 860 073)
Total revenue1
($million)
Taxable income
($million)
Tax payable
($million)
1,883.7
263.4
535.2
Nil
30.9
127.0
Nil
9.3
34.5
1 For financial reporting and taxation purposes, items may have been classified between revenue and expenses differently. Therefore, total revenue may not reconcile to
note 2.
Income tax is payable on profits (not total revenue) after allowing for expenses and specific adjustments under the tax law. For CSR Limited,
taxable income and tax payable were nil because CSR was entitled to utilise prior year tax losses and claim certain tax deductions that
made taxable income lower than accounting profit (for example, tax depreciation, certain restructure costs and payments of asbestos claims
settlements).
52 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
8 Business combinations
i)
Current year
PGH Bricks & Pavers Pty Limited
Background
On 1 November 2016, the CSR group acquired Boral Limited’s
(‘Boral’) 40% minority interest in PGH Bricks & Pavers Pty Limited
(‘PGH Bricks’), formerly Boral CSR Bricks Pty Limited (‘BCB’) for cash
consideration of $126.4 million. In addition, outstanding borrowings
held by PGH Bricks of $7.5 million were repaid to Boral.
Revenue and profit contribution
If the minority interest share of PGH Bricks was excluded from the
CSR group results for the year ended 31 March 2017, profit after tax
attributable to non-controlling interests would have been $7.6 million
lower and profit after tax attributable to shareholders of CSR Limited
would have been $7.6 million higher.
Preliminary acquisition accounting for the transaction
In accordance with AASB 10 Consolidated Financial Statements, as
the CSR group has a controlling interest in PGH Bricks, the
acquisition is treated as a transaction between shareholders. As a
result, the difference between the consideration paid by the CSR
group to purchase the remaining 40% of PGH Bricks and the non-
controlling interest has been recorded in equity. In accordance with
AASB 132 Financial Instruments, transaction costs associated with
the purchase of a non-controlling interest are also recorded in equity.
Fair value acquisition accounting is not required and the CSR group
continues to consolidate PGH Bricks. Effective 1 November 2016, the
CSR group has recognised 100% of the net profit after tax of PGH
Bricks.
At the date of finalisation of this full year report, the necessary tax
consolidation calculations have not been finalised (refer note a).
Therefore, the initial accounting for this acquisition and the net
impact of this transaction on equity has only been provisionally
determined at 31 March 2017 based on the directors’ best
estimates.
Details of the effect of changes in the ownership interest on the
equity attributable to owners of the CSR group during the year is
summarised as follows:
Carrying amount of non-controlling
interests acquired at acquisition date
Consideration paid
Less: deferred tax impact arising from
PGH Bricks joining the tax
consolidation group
Less: acquisition costs
Amounts recognised in non-controlling
interests reserve
Note $million
74.2
(126.4)
–
(a)
(b)
(4.9)
(57.1)
a) Deferred tax impact arising from PGH Bricks joining the CSR tax
consolidation group
PGH Bricks automatically entered the CSR tax consolidation group at
acquisition date. Accordingly, the tax cost base of the net assets of
PGH Bricks needs to be reset, which will result in an adjustment to
the deferred tax balances. As the entry into the tax consolidation
group was a direct consequence of CSR’s acquisition of the non-
controlling interest, the impact of revising the deferred tax assets will
be recorded in equity.
At 31 March 2017, calculations are being prepared to quantify the
deferred tax
joining the tax
consolidation group. This will be finalised for the 30 September 2017
half year financial report.
impact arising from PGH Bricks
b) Acquisition related costs
The CSR group has incurred acquisition related costs of $4.9 million
related to legal fees, due diligence, stamp duty and other costs.
These costs have been recorded in equity.
CSR ANNUAL REPORT 2017 53
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
8 Business combinations (continued)
i)
Current year (continued)
Viridian Glass Limited Partnership
Background
Details of the effective purchase consideration and the fair value of
the VGLP assets and liabilities acquired are set out below.
Note
$million
The CSR group acquired a 42% interest in the glass processing joint
venture operating in New Zealand, Viridian Glass Limited Partnership
(VGLP) on 30 June 2016. Following the acquisition, the CSR group
now holds 100% of the interest in VGLP.
VGLP is a leader in the manufacture, sale and installation of glass
and related products. The primary reason for the acquisition was to
continue CSR’s growth in the Glass segment.
Revenue and profit contribution
If VGLP’s share of revenue and profit before income tax and
significant items were excluded from the CSR group results for the
year ended 31 March 2017, CSR group revenue would have been
$64.8 million lower and profit before income tax and significant items
would be $0.9 million higher.
Acquisition related costs
Acquisition related costs expensed were $0.2 million.
Preliminary acquisition accounting for the transaction
Consideration
Acquisition date fair value
Cash paid
Contingent consideration
Total consideration
Assets acquired and liabilities assumed
Cash
Trade and other receivables
Inventories
Property, plant and equipment
Deferred tax assets
Other intangible assets
Trade and other payables
Borrowings from related parties
Provisions
In accordance with AASB 3 Business Combinations, the CSR group:
Fair value of net assets acquired
(a)
(b)
19.9
7.8
1.8
29.5
4.3
13.3
7.8
24.6
0.6
0.2
(9.2)
(32.8)
(3.1)
5.7
23.8
Goodwill arising on acquisition
The goodwill is attributable to the workforce, profitability and growth
potential of the acquired business. It will not be deductible for tax
purposes.
a) Purchase consideration – cash outflow
Consideration
Cash consideration
Less cash acquired
Outflow of cash – investing activities
b) Contingent consideration
$million
7.8
(4.3)
3.5
In the event that certain predetermined conditions are met at all
times by the subsidiary from 1 October 2015 up to and including 30
June 2017, additional consideration is payable. The maximum
amount payable is $1.8 million. The fair value of the contingent
consideration is not materially different to the maximum amount
payable.
transferred any other comprehensive income to the statement of
financial performance, which resulted in a gain of $5.6 million;
and
recorded the VGLP business at fair value at acquisition date and
recorded the impact of acquisition date adjustments in relation to
the previously held interest, resulting in a loss of $1.5 million.
The gain of $4.1 million recognised within other income in the
statement of financial performance for the year ended 31 March
2017 has been disclosed as a significant item, refer to note 3.
At the date of finalisation of this full year report, the necessary
acquisition accounting calculations have been finalised.
54 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
8 Business combinations (continued)
ii) Prior year
Boral CSR Bricks Pty Limited (now PGH Bricks & Pavers Pty Limited)
Background
On 4 April 2014, CSR and Boral Limited (‘Boral’) announced an
intention to combine each company’s brick operations on the east
coast of Australia. The Australian Competition and Consumer
Commission announced on 18 December 2014 it would not oppose
the proposed transaction. Subsequently, on 1 May 2015, CSR and
Boral announced the completion of the transaction and formation of
the combined venture.
The new venture, Boral CSR Bricks Pty Limited (‘BCB’ and trading as
‘PGH Bricks’) is owned 60% by CSR and 40% by Boral, reflecting the
valuation of the two businesses. There was effectively no cash
consideration as part of the transaction except for typical working
capital and closing adjustments.
The purpose of the transaction is to drive efficiencies across the
combined network of operations.
Consolidation of Boral CSR Bricks into CSR group
The structure of the transaction has seen the CSR group consolidate
the operating results and assets and liabilities of the newly formed
company, BCB, from 1 May 2015.
Structure of transaction
The effect of the transaction was that CSR and Boral transferred their
bricks business assets into the newly formed entity in return for
shares in BCB and loans to BCB. The net impact of the transaction is
summarised below.
Boral
CSR
Total
82.4
123.6
206.0
Fair value of net assets
contributed by each entity
($million)
Number of shares in BCB issued to
each entity at $1 each (million)
Debt issued by each entity to BCB
($million)
Revenue and profit contribution
If the non-controlling interest’s share of BCB revenue and profit
before income tax, finance cost, significant items and non-controlling
interests (PBT) were excluded from the CSR group results for the year
ended 31 March 2016, CSR trading revenue and PBT would have
been lower by $105.2 million and $14.9 million ($7.5 million after
finance cost and significant items) respectively.
Acquisition accounting for the transaction
In accordance with AASB 3 Business Combinations, the CSR group:
transferred the CSR bricks business to BCB at carrying value at 30
April 2015; and
recorded the Boral bricks business in BCB at fair value at 1 May
2015.
The initial accounting and fair value of acquired net assets for this
acquisition was finalised at 30 September 2016. Details of the
effective purchase consideration and the fair value of the Boral bricks
assets and liabilities acquired are set out in this note.
Consideration
Ordinary shares issued to Boral1
Loan payable to Boral
Total consideration
Assets acquired and liabilities assumed
Trade and other receivables
Inventories
Property, plant and equipment
Other intangible assets
Deferred tax assets
Trade and other payables
Provisions
Fair value of net assets acquired
$million
70.4
12.0
82.4
21.7
30.6
48.9
1.3
3.8
(15.5)
(8.4)
82.4
1 Promissory notes were issued by Boral Bricks Pty Limited in exchange for the
shares issued by BCB. These promissory notes were then settled when BCB
acquired the Boral bricks assets.
As part of the transaction, BCB paid $4.0 million related to typical
working capital and closing adjustments.
Acquisition related costs
The CSR group has incurred acquisition related costs of $13.7 million
related to legal fees, due diligence, stamp duty and other costs.
These costs have been expensed and included within transaction and
integration costs in significant items (refer note 3) in the year they
were incurred.
Accounting for non-controlling interest
The CSR group recognised the non-controlling interest in the acquired
entity based on the non-controlling interest’s proportionate share of
BCB’s net identifiable assets. This decision is made on an
acquisition-by-acquisition basis.
Australian Glass Group Queensland (Glass segment) for cash
consideration of $4.0 million with goodwill of $2.6 million arising
as a result of the acquisition.
Pacific Non-Wovens (Building Products segment) for cash
consideration of $2.1 million with no goodwill arising as a result of
the acquisition.
Picton Hopkins (Building Products segment) for cash
consideration of $1.3 million with goodwill of $0.9 million arising
as a result of the acquisition.
Southern Glass (Glass segment) for cash consideration of
$4.8 million with goodwill of $2.9 million arising as a result of the
acquisition.
Glazing and Construction Supplies (Glass segment) for cash
consideration of $2.0 million with goodwill of $1.9 million arising
as a result of the acquisition.
A-Jacks (Building Products segment) for cash consideration of
$1.1 million with no goodwill arising as a result of the acquisition.
In addition, $0.6 million was reclassified to goodwill in relation to
prior period acquisitions.
CSR ANNUAL REPORT 2017 55
70.4
105.6
176.0
Other acquisitions during the prior year
12.0
18.0
30.0
During the year ended 31 March 2016, the CSR group acquired:
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
Balance sheet items
9 Working capital
i)
Current receivables
ii)
Inventories
$million
2017
2016
$million
2017
2016
Trade receivables
Allowance for doubtful debts
Net trade receivables
Property debtors1
Other loans and receivables
291.9
(8.0)
289.0
(8.9)
283.9
280.1
4.5
23.7
19.1
20.4
Total current receivables
312.1
319.6
Ageing
Past due 0-60 days – not impaired
Past due >60 days – not impaired
Past due 0-60 days – impaired
Past due >60 days – impaired
Movement in allowance for
doubtful debts
Opening balance
Trade debts written off
Trade debts provided
Closing balance
1
Includes no amounts past due.
Recognition and measurement
8.7
–
2.5
5.5
(8.9)
3.8
(2.9)
(8.0)
7.7
–
0.6
8.3
(6.0)
2.6
(5.5)
(8.9)
Current
Raw materials and stores
Work in progress
Finished goods
Land development projects
Total current inventories1
Non-current
Land development projects
Total non-current inventories
80.3
18.7
235.4
51.3
385.7
81.6
81.6
92.1
18.8
199.2
38.7
348.8
72.7
72.7
1 Write-down of inventories recognised as an expense for the year ended 31
March 2017 totalled $12.4 million (2016: $10.2 million).
iii) Current payables
$million
Trade payables
Other payables
Total current payables
2017
240.5
51.4
291.9
2016
227.1
33.5
260.6
Trade receivables: are recognised initially at fair value and subsequently measured at amortised cost. An allowance for doubtful debts is
raised based on a review of outstanding balances at balance date. Bad debts are written off against the allowance account and any
other change in the allowance account is recognised in the statement of financial performance.
Inventories: are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and costs necessary to make the sale.
- Raw materials, stores, work in progress and finished goods: costs included in inventories consist of materials, labour and
manufacturing overheads which are related to the purchase and production of inventories. The value of inventories is derived by the
method most appropriate to each particular class of inventories. The major portion is valued on either a first-in-first-out or average
cost basis.
Land development projects: cost includes the cost of acquisition, development and holding costs during development. Costs
incurred after completion of development are expensed as incurred. Land development projects not expected to be sold within 12
months are classified as non-current inventories.
-
Trade and other payables: are recognised when the CSR group becomes obliged to make future payments resulting from the purchase of
goods and services. Payables are stated at their amortised cost.
56 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
10 Property, plant and equipment and intangible assets
i)
Property, plant and equipment
$million
Cost or written down value
Accumulated depreciation
Net carrying amount
Net carrying amount at 1 April
Capital expenditure
Disposed
Depreciation
Write downs and impairments
Exchange differences
Reclassifications
Land and buildings
Plant and equipment
Total
Note
2017
2016
2017
2016
2017
2016
393.4
1,476.7
1,392.7
1,866.6
1,786.1
(87.0)
(919.7)
(835.1)
(1,018.0)
(922.1)
5
(11.1)
(11.3)
389.9
(98.3)
291.6
306.4
2.1
–
306.4
281.5
1.3
(0.1)
–
(0.1)
–
–
(2.4)
(3.3)
–
(0.2)
2.9
27.2
–
5.1
557.0
557.6
54.9
(1.7)
(70.5)
(11.0)
(0.3)
–
24.6
3.7
(0.3)
557.6
539.8
64.9
(1.2)
(66.9)
–
(0.2)
(2.9)
27.0
(2.1)
(0.8)
848.6
864.0
57.0
(1.7)
(81.6)
(11.0)
(0.4)
–
24.6
1.3
(3.6)
864.0
821.3
66.2
(1.3)
(78.2)
–
(0.4)
–
54.2
(2.1)
4.3
Acquisitions through business combinations
Transferred (to) from intangible assets
8
10ii)
Transferred (to) from inventories and other assets
Balance at 31 March
291.6
306.4
557.0
557.6
848.6
864.0
ii) Goodwill and other intangible assets
$million
Cost
Accumulated amortisation
Net carrying amount
Net carrying amount at 1 April
Capital expenditure
Disposed
Amortisation
Write downs and impairments
Exchange differences
Acquisitions through business
combinations
Transferred (to) from property,
plant and equipment
Transferred from software to other
intangibles
Goodwill
Software
Other
Total other intangible
assets
Note
2017
2016
2017
2016
2017
2016
2017
2016
97.1
–
97.1
74.2
–
–
–
(0.2)
(0.7)
23.8
–
–
74.2
–
74.2
66.1
–
–
–
–
(0.8)
8.9
–
–
81.5
(65.2)
16.3
15.7
6.8
(0.2)
(4.9)
–
–
0.2
82.2
(66.5)
15.7
13.7
6.6
–
(3.2)
–
–
–
(1.3)
1.1
–
(2.5)
49.5
(19.1)
30.4
32.4
–
–
(2.0)
–
–
–
–
–
49.4
(17.0)
32.4
28.4
–
–
(1.8)
–
(0.2)
2.5
1.0
2.5
131.0
131.6
(84.3)
(83.5)
46.7
48.1
6.8
(0.2)
(6.9)
–
–
0.2
48.1
42.1
6.6
–
(5.0)
–
(0.2)
2.5
(1.3)
2.1
–
–
5
8
10i)
Balance at 31 March
97.1
74.2
16.3
15.7
30.4
32.4
46.7
48.1
Recognition and measurement
Property, plant and equipment: assets acquired are recorded at historical cost of acquisition less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of items. Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow
to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the
reporting period in which they are incurred. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the
end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Software: developed internally or acquired externally, is initially measured at cost and includes development expenditure. Subsequently,
these assets are carried at cost less accumulated amortisation and impairment losses.
Other intangible assets: including trade names and customer lists obtained through acquiring businesses are measured at fair value at
the date of acquisition. Trade names of $19.3 million (2016: $19.3 million) that have an indefinite life are assessed for recoverability
anually. See below for further detail. Customer lists and all other trade names that have a defined useful life are amortised and
subsequently carried net of accumulated amortisation. Intangible assets not obtained through acquiring businesses are measured at
cost. These assets are subsequently carried at cost less accumulated amortisation and impairment losses.
CSR ANNUAL REPORT 2017 57
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
10 Property, plant and equipment and intangible assets (continued)
Recognition and measurement (continued)
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.
Depreciation/amortisation: assets are depreciated or amortised at rates based upon their expected economic life using the straight-line
method. Land, goodwill and trade names with indefinite lives are not depreciated or amortised. Trade names currently have an indefinite
life as the CSR group is continually investing in marketing activities to develop and maintain the trade names and there are no
contractual or other restrictions on the use of the trade names. Useful lives are as follows: buildings 10 to 40 years; plant and equipment
2 to 40 years; and systems software and other intangible assets 2 to 8 years. The average life of buildings is 28 years and plant and
equipment is 11 years.
Critical accounting estimate – carrying value assessment
The CSR group tests property, plant and equipment and intangible assets for impairment to ensure they are not carried at above their
recoverable amounts:
at least annually for goodwill and trade names with indefinite lives; and
where there is an indication that the assets may be impaired (which is assessed at least each reporting date).
These tests for impairment are performed by assessing the recoverable amount of each individual asset or, if this is not possible, then the
recoverable amount of the cash generating unit (CGU) to which the asset belongs. CGUs are the lowest levels at which assets are grouped
and generate separately identifiable cash flows. The recoverable amount is the higher of an asset or a CGU’s fair value less costs of disposal
and value in use. The value in use calculations are based on discounted cash flows expected to arise from the asset. Management
judgment is required in these valuations to forecast future cash flows and a suitable discount rate in order to calculate the present value of
these future cash flows. Future cash flows take into consideration forecast changes in the building cycle, aluminium prices and exchange
rates where appropriate.
The carrying amount of goodwill forms part of the Building Products segment: $65.9 million (2016: $66.8 million) and Glass segment:
$31.2 million (2016: $7.4 million). The recoverable amounts of the cash generating units that include goodwill are determined using
discounted cash flow projections. Where a valuation is required, the valuation is determined using discounted cash flows. Cash flows are
reforecast annually, covering the next 10 years, and a valuation calculated using a post-tax annual discount rate of 9.0% for all segments
other than Aluminium which uses 10.0% (2016: 10.2% for all segments other than Aluminium which was 12.2%). A terminal value is used
from year 11 onwards including an annual growth rate, which was 2.5% in the year ended 31 March 2017 (2016: 2.5%). Discounted cash
flow projections over the period are deemed appropriate given the cyclical nature of the markets in which the CSR group operates. The first
five years represent financial plans forecast by management, based on the CSR group's view of the respective cycle, with years six to 10
applying averaging assumptions to ensure cash flows in year 10 are sufficiently stable to apply the terminal value.
If the recoverable amount of a cash generating unit is estimated to be less than its carrying amount, the carrying amount of the cash
generating unit is reduced to its recoverable amount with any impairment recognised immediately in the statement of financial
performance.
Impact of possible changes in key assumptions:
The recoverable amount of the Viridian Australia and Viridian New Zealand CGUs is estimated to exceed the carrying amount of the CGUs at
31 March 2017 by $25.1 million and $13.6 million respectively. The recoverable amount of the CGU would equal its carrying amount if any
of the following key assumptions were to change as follows:
Viridian Australia Viridian New Zealand
Business cash contribution - Reduces by 9% for each year modelled - Reduces by 17% for each year modelled
Pre-tax discount rate - Increase from 9.0% to 9.7% - Increase from 9.0% to 10.4%
Long-term growth rate - Decrease from 2.5% to 1.5% - Decrease from 2.5% to 0% (no growth)
Reasonable possible changes in other key assumptions have been considered and no instances have been identified which may cause the
carrying amount to exceed its recoverable amount.
11 Net deferred income tax assets
$million
Total deferred income tax assets arising on temporary differences1
Tax losses – revenue recorded as asset
Total net deferred income tax assets
As disclosed in the statement of financial position:
Deferred income tax assets
Deferred income tax liabilities
Total net deferred income tax assets
2017
145.6
55.6
201.2
201.2
–
201.2
2016
133.6
84.8
218.4
239.3
(20.9)
218.4
1
Includes temporary differences recorded as an asset of $145.6 million (31 March 2016: $154.5 million) and temporary differences recorded as a liability of $nil (31
March 2016: $20.9 million).
58 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
11 Net deferred income tax assets (continued)
Movement in deferred income tax assets
$million
2017
Property, plant and equipment
Superannuation defined benefit plans
Product liability provision
Employee benefits provisions
Other provisions
Spares and stores
Fair value of hedges
Other individually insignificant balances
Tax losses
Total net deferred income tax assets
2016
Property, plant and equipment
Superannuation defined benefit plans
Product liability provision
Employee benefits provisions
Other provisions
Spares and stores
Fair value of hedges
Other individually insignificant balances
Tax losses
Total net deferred income tax assets
Credited
(charged) to
profit or
loss1
Opening
balance
Credited
(charged) to
equity
Other
(including
transfers)2
Closing
balance
(11.0)
2.8
100.3
34.0
23.3
(8.7)
(4.7)
(2.4)
84.8
218.4
(5.4)
8.6
105.2
31.1
24.7
(13.5)
(0.8)
(3.6)
96.9
243.2
(3.4)
0.2
(6.6)
0.4
(2.3)
0.3
–
3.2
(21.1)
(29.3)
(6.7)
0.4
(4.9)
0.2
(2.9)
4.8
–
1.6
(11.2)
(18.7)
–
(7.3)
–
–
–
–
18.4
0.5
–
11.6
–
(6.2)
–
–
–
–
(3.9)
(0.5)
–
(10.6)
2.7
–
–
0.3
1.2
0.1
–
4.3
(8.1)
0.5
1.1
–
–
2.7
1.5
–
–
0.1
(0.9)
4.5
(11.7)
(4.3)
93.7
34.7
22.2
(8.3)
13.7
5.6
55.6
201.2
(11.0)
2.8
100.3
34.0
23.3
(8.7)
(4.7)
(2.4)
84.8
218.4
1
2
The movement in tax losses of $21.1 million (2016: $11.2 million) includes research and development tax benefits of $3.1 million (2016: $1.8 million) included in other
income in the statement of financial performance.
For the year ended 31 March 2017, the movement of $0.5 million in ‘other’ relates to net deferred tax assets recognised on the acquisition of the minority interest in
Viridian Glass Limited Partnership, and an adjustment to the net deferred tax assets recognised on the formation of PGH Bricks & Pavers Pty Limited (formerly Boral CSR
Bricks Pty Limited). For the year ended 31 March 2016, the movement of $4.5 million relates to net deferred tax assets recognised on the formation of PGH Bricks &
Pavers Pty Limited, and other acquisitions during the year. Refer to note 8 for further details.
Recognition and measurement
Current tax: represents the amount expected to be paid in relation to taxable income for the financial year measured using tax rates and tax
laws that have been enacted or substantively enacted by the reporting date. Current tax for current and prior periods is recognised as a liability
(or asset) to the extent that it is unpaid (or refundable).
Deferred income tax: is provided in full, using the balance sheet liability method, on temporary differences arising between the carrying amounts
of assets and liabilities for financial reporting and tax purposes. Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted by reporting date.
Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible
temporary differences or unused tax losses and tax offsets can be utilised.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in
controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future. A deferred tax liability is not recognised in relation to taxable temporary differences arising
from goodwill.
Tax assets and liabilities are offset when there is a legally enforceable right to offset tax assets and liabilities, when the tax balances relate to
the same taxation authority and when the CSR group intends to settle the tax assets and liabilities on a net basis. No provision for withholding
tax has been made on undistributed earnings of overseas controlled entities where there is no intention to distribute those earnings.
Critical accounting estimate – recoverability of deferred income tax assets
The deferred income tax assets include an amount of $55.6 million (2016: $84.8 million) which relates to the carried forward tax losses of the
CSR group. The CSR group has concluded that the deferred income tax assets will be recoverable using estimated future taxable income based
on the approved business plans. The losses have no expiry date and can be carried forward indefinitely.
CSR ANNUAL REPORT 2017 59
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
12 Provisions
$million
Current
Employee benefits
Restructure and rationalisation
Product liability
Restoration and environmental rehabilitation
Uninsured losses and future claims
Other1
Total current provisions
Non-current
Employee benefits
Product liability
Restoration and environmental rehabilitation
Uninsured losses and future claims
Other1
Total non-current provisions
2016
105.9
7.7
26.0
9.5
5.5
17.9
172.5
7.5
308.5
1.0
23.1
11.1
351.2
Acquired
through
business
combination
Recognised/
remeasured
Settled/
transferred
Discount
unwind
1.9
–
–
–
–
1.2
3.1
–
–
–
–
–
–
59.8
10.2
32.6
2.7
6.2
2.6
(57.0)
(8.6)
(29.4)
(3.5)
(6.1)
(3.6)
114.1
(108.2)
–
(36.3)
–
–
–
(36.3)
(2.3)
–
–
(1.6)
(3.1)
(7.0)
–
–
–
–
–
–
–
–
11.0
–
0.7
0.2
11.9
2017
110.6
9.3
29.2
8.7
5.6
18.1
181.5
5.2
283.2
1.0
22.2
8.2
319.8
1
Includes provision for anticipated disposal costs of Tomago aluminium smelters spent pot lining.
Recognition, measurement and critical accounting estimates
Provisions are recognised when the CSR 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 estimated. Provisions which are not expected to be settled within 12 months
are measured at the present value of the estimated future cash outflows to be made by the CSR group.
Provisions representing critical accounting estimates and key sources of estimation uncertainty
Product liability: provision is made for all known asbestos claims and reasonably foreseeable future claims has been determined using
reports provided by independent experts in each of Australia and the United States, and includes an appropriate prudential margin. Refer
to note 13 for further details of the key assumptions and uncertainties in estimating this liability.
Measurement of provisions for restoration and environmental rehabilitation and legal claims: the CSR group is in the process of
remediating land in relation to legacy factory sites and is involved in a number of ongoing legal disputes. The liability is immediately
recognised when the environmental exposure is identified and the rehabilitation costs can be reliably estimated. Judgment is required in
arriving at an estimate of future costs required to extinguish these obligations. Given the nature of these issues, circumstances may
change and estimates and provisions will be updated accordingly. Expert advice is relied upon (where available) and known facts at the
date of this report are considered to arrive at the best estimate for future liabilities.
Provision for uninsured losses and future claims: relates to the CSR group's self insurance for workers' compensation program. CSR
Limited is a licensed self insurer in New South Wales, Queensland, Victoria, Western Australia and the Australian Capital Territory for
workers compensation insurance. The provision recognises the best estimate of the consideration required to settle the present
obligation for anticipated compensation payments and is determined at each year end reporting date using reports provided by
independent experts annually.
Other provisions
Employee benefits provisions: provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long
service leave and other employee obligations when it is probable that settlement will be required and they are capable of being reliably
measured. Provisions made in respect of employee benefits expected to be settled within 12 months are measured at their nominal
values using the remuneration rate expected to apply at the time of settlement.
60 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
13 Product liability
Product liability
CSR Limited and/or certain subsidiaries (CSR) were involved in
mining asbestos and manufacturing and marketing products
containing asbestos in Australia, and exporting asbestos to the
United States. CSR’s involvement in asbestos mining, and the
manufacture of products containing asbestos, began in the early
1940s and ceased with the disposition of the Wunderlich asbestos
cement business in 1977. As a result of these activities, CSR has
been named as a defendant in litigation in Australia and the United
States.
In Australia, asbestos related personal injury claims have been made
by employees and ex-employees of CSR, by others such as
contractors and transporters and by users of products containing
asbestos, by people who lived near factories operated by former
subsidiaries of CSR, as well as residents of and visitors to Wittenoom.
As at 31 March 2017, there were 372 such claims pending.
In the United States, claims are made by people who allege exposure
to asbestos fibre used in the manufacture of products containing
asbestos or in the installation or use of those products. As at 31
March 2017, there were 378 such claims pending.
CSR has been settling claims since 1989. As at 31 March 2017, CSR
had resolved approximately 4,300 claims in Australia and
approximately 137,500 claims in the United States.
The annual amounts paid by CSR in respect of asbestos related
claims vary year on year depending on the number and types of
claims received and resolved during each year, the litigation or other
determination of particular claims or issues and any determination by
management to resolve claims that may have been received in earlier
years.
CSR’s recent claims experience is summarised in the graph and table
below.
Graph 1: Five year history – claim numbers
804
488
257
365
1,000
800
600
400
200
0
2013
2014
2015
2016
2017
Number of claims received
Number of claims resolved
Basis of provision
CSR includes in its financial statements a product liability provision
covering all known claims and reasonably foreseeable future
asbestos related claims. This provision is reviewed every six months.
The provision recognises the best estimate of the consideration
required to settle the present obligation for anticipated compensation
payments and legal costs as at the reporting date. The provision is
net of anticipated workers compensation payments from available
workers compensation insurers.
Table 1: Five year history – claim numbers and expenditure
CSR does not believe there is any other significant source of
insurance available to meet its asbestos liabilities. CSR no longer has
general insurance coverage in relation to its ongoing asbestos
liabilities.
In determining the product liability provision, CSR has obtained
independent expert advice in relation to the future incidence and
value of asbestos related claims in each of the United States and
Australia. CSR has appointed Finity Consulting Pty Limited as the
independent expert to estimate the Australian liabilities. CSR has
appointed Gnarus Advisors LLC as the independent expert to
estimate the United States liabilities. The independent experts make
their own determination of the methodology most appropriate for
estimating CSR’s future liabilities. The assessments of those
independent experts project CSR’s claims experience into the future
using modelling techniques that take into account a range of possible
outcomes. The present value of the liabilities is estimated by
discounting the estimated cash flows using the pre-tax rate that
reflects the current market assessment of the time value of money
and risks specific to those liabilities.
Many factors are relevant to the independent experts’ estimates of
future asbestos liabilities, including:
numbers of claims received by disease and claimant type and
expected future claims numbers, including expectations as to
when claims experience will peak;
expected value of claims;
the presence of other defendants in litigation or claims involving
CSR;
the impact of and developments in the litigation and settlement
environment in each of Australia and the United States;
estimations of legal costs;
expected claims inflation; and
the discount rate applied to future payments.
There are a number of assumptions and limitations that impact on
the assessments made by CSR’s experts, including the following:
assumptions used in the modelling are based on the various
434
considerations referred to above;
the future cost of asbestos related liabilities are inherently
uncertain for the reasons discussed in this note;
uncertainties as to future interest rates and inflation;
the analysis is supplemented by various academic material on the
epidemiology of asbestos related diseases that is considered by
the experts to be authoritative;
the analysis is limited to liability in the respective jurisdictions of
Australia and the United States that are the subject of the analysis
of that expert and to the asbestos related diseases that are
currently compensated in those jurisdictions; and
the effect of possible events that have not yet occurred which are
currently impossible to quantify, such as medical and
epidemiological developments in the future in treating asbestos
diseases, future court and jury decisions on asbestos liabilities,
and legislative changes affecting liability for asbestos diseases.
Number of claims received
Number of claims resolved
Amount spent on settlements (A$ million)1
Average cost per resolved claim (A$)
2013
347
488
31.0
63,553
Year ended 31 March
2014
339
804
29.2
36,411
2015
258
257
25.0
97,276
2016
281
365
21.9
59,980
2017
230
434
24.0
55,249
1 Excludes external legal costs, net of insurance and third party recoveries.
CSR ANNUAL REPORT 2017 61
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
13 Product liability (continued)
Basis of provision (continued)
In Australia, the methodology used by Finity Consulting Pty Limited
produces the central estimate of future asbestos liabilities which
represents the average expectation of the range of possible
outcomes. At 31 March 2017 the central estimate was A$157.9
million calculated using a discount rate of 3.75%. On an
undiscounted and inflated basis that central estimate would be
A$214.1 million over the year to 2066, being the year that the
Australian independent expert advises CSR is relevant for the
estimation of CSR’s future Australian asbestos liabilities.
In the United States the methodology used by Gnarus Advisors LLC
produces a base case estimate or most likely outcome. At 31 March
2017, the base case estimate was US$72.2 million calculated using
a discount rate of 2.80%. On an undiscounted and inflated basis that
base case estimate would be US$84.6 million over the anticipated
further life of the United States liability (40 years).
The product liability provision is determined every six months by
aggregating the Australian and United States estimates noted above,
translating the United States base case estimate to Australian dollars
using the exchange rate prevailing at the balance date and adding a
prudential margin. The prudential margin is determined by the CSR
directors at the balance date, having regard to the prevailing litigation
environment, any material uncertainties that may affect future
liabilities and the applicable long-term Australian dollar to United
States dollar exchange rate. As evidenced by the analysis below, due,
in particular, to the fluctuations in exchange rate, the prudential
margin has varied over the past five years. The directors anticipate
that the prudential margin will continue to fluctuate within a range
approximating 10% to 30% depending on the prevailing
circumstances at each balance date.
At 31 March 2017, a provision of $312.4 million (31 March 2016:
$334.5 million) has been made for all known claims and reasonably
foreseeable future claims, and includes a prudential margin of $60.0
million (31 March 2016: $65.2 million) above the aggregate most
likely estimate of the future asbestos liabilities in Australia and the
United States as determined by Finity Consulting Pty Limited and
Gnarus Advisors LLC respectively.
Having regard to the extremely long tailed nature of the liabilities and
the long latency period of disease manifestation from exposure, the
estimation of future asbestos liabilities is subject to significant
complexity. As such, there can be no certainty that the product
liability provision as at 31 March 2017 will definitively estimate CSR’s
future asbestos liabilities. If the assumptions adopted by CSR’s
experts prove to be incorrect, the current provision may be shown to
materially under or overstate CSR’s asbestos liability.
However, taking into account the provision already included in CSR’s
financial statements and current claims management experience,
CSR is of the opinion that asbestos litigation in the United States and
Australia will not have a material adverse impact on the CSR group's
financial condition.
Graph and table 2: Five year history – asbestos provision
CSR’s asbestos provision from 2013 to the year ended 31 March
2017 is summarised in the graph and table below.
423.8
369.1
350.7
334.5
312.4
500
400
300
200
100
0
2013
2014
2015
2016
2017
Base case provision A$m
Prudential margin A$m
Process agreed with the Foreign Investment Review Board (FIRB)
On 22 December 2010, CSR sold its Sucrogen business to Wilmar
International Limited (Wilmar). The sale of Sucrogen to Wilmar
required approval from the Commonwealth Treasurer (via the FIRB).
As part of the approval process, and as further evidence of CSR’s
commitment to responsibly managing its asbestos related liabilities,
CSR has put in place a process for the external oversight of any
repatriation of capital by CSR to its shareholders during the period of
seven years following the sale of Sucrogen (subject to limited earlier
termination provisions).
As part of this process, CSR has entered into an agreement with an
independent body, The Trust Company (TTC) which was acquired by
Perpetual Limited in 2013, pursuant to which CSR must demonstrate
that CSR has fulfilled certain requirements prior to any repatriation of
funds to its shareholders other than half yearly or annual dividends
paid by CSR in accordance with its usual practice and its dividend
policy in force from time to time.
These requirements include that:
CSR’s asbestos liabilities have been reviewed by an additional
independent expert;
CSR intends to retain its ‘investment grade’ credit rating following
any repatriation; and
an approved accounting firm has expressed an opinion that the
decision of CSR’s directors that a particular repatriation of capital
would not materially prejudice creditors, including current and
reasonably foreseeable future asbestos claimants, was formed on
a reasonable basis.
In accordance with the agreement with TTC, documentation was
provided by CSR to TTC to demonstrate that the above requirements
were fulfilled in relation to:
the special dividend and the capital return which were paid to CSR
shareholders on 2 February 2011 and 3 March 2011 respectively;
and
the on-market share buy-back announced by CSR on 4 March
2016 (refer note 15 for further details).
$million
Year ended 31 March
United States base case estimate US$
United States base case estimate A$
Australian central estimate A$
Subtotal A$
Prudential margin A$
Prudential margin %
Total product liability provision A$
62 CSR ANNUAL REPORT 2017
2013
194.0
185.8
158.3
344.1
79.7
23.2%
423.8
2014
123.5
133.5
161.8
295.3
73.8
25.0%
369.1
2015
104.9
137.0
157.2
294.2
56.5
19.2%
350.7
2016
86.0
112.2
157.1
269.3
65.2
24.2%
334.5
2017
72.2
94.5
157.9
252.4
60.0
23.8%
312.4
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
Capital structure and risk management
14 Borrowings and credit facilities
i)
Borrowings
Non-current borrowings – unsecured1
2017
30.5
2016
2.2
1 Of the $2.2 million in borrowings at 31 March 2016, $1.6 million related to loans held by PGH Bricks & Pavers Pty Limited. These loans were repaid during the year (refer
note 8).
Recognition and measurement
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured at
amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit or loss over
the period of the borrowing using the effective interest rate method.
ii) Credit facilities
The CSR group has a total of $325.0 million (31 March 2016: $325.0 million) committed standby facilities with external financial institutions.
These facilities have fixed maturity dates as follows: $30.0 million in 2018, $131.0 million in 2019, with the balance of $164.0 million in
2020. As at 31 March 2017, $294.5 million of the standby facilities were undrawn (2016: $325.0 million undrawn).
15
Issued capital
On issue 31 March 2016
On-market share buy-back – net of transaction costs
On issue 31 March 2017
Ordinary shares
fully paid1
Issued capital
$million
505,700,315
1,041.1
(1,219,457)
(4.3)
504,480,858
1,036.8
1 Fully paid ordinary shares are listed on the Australian Securities Exchange and carry one vote per share and the right to dividends.
No shares were issued during the years ended 31 March 2017 and 31 March 2016 under employee share plans as shares in respect of the
plans were acquired on market. During the years ended 31 March 2017 and 31 March 2016, eligible shareholders were able to reinvest all or
part of their dividends in fully paid ordinary shares. Shares were acquired on-market and did not have any impact on issued capital.
Net tangible assets per ordinary share for the year ended 31 March 2017 are $2.00 (2016: $2.10). Net tangible assets per share is calculated
as net assets attributable to CSR Limited shareholders of $1,155.0 million (2016: $1,184.7 million) less intangible assets of $143.8 million
(2016: $122.3 million) divided by the number of issued ordinary shares of 504.5 million (2016: 505.7 million).
During the year ended 31 March 2016, the company announced that as part of its ongoing capital management strategy, it would undertake
an on-market share buy-back of up to $150.0 million. The share buy-back commenced on 21 March 2016 and will continue over the financial
years ending 31 March 2017 and 31 March 2018.
16 Dividends and franking credits
i) Dividends
Dividend
type
Cents per
share
Franking
Total amount
$million
Date
paid/payable
Graph 1: Dividends declared in each financial year
– cents per share
2015 Final
2016 Interim
2016 Final
2017 Interim
2017 Final1
11.5
11.5
12.0
13.0
13.0
Nil
Nil
Nil
Nil
50%2
58.2
58.2
60.7
65.6
65.6
7 July 2015
15 December 2015
5 July 2016
13 December 2016
4 July 2017
30.0
20.0
10.0
-
10.0
5.1
23.5
26.0
20.0
2013
2014
2015
2016
2017
1 The final dividend for the financial year ended 31 March 2017 has not been recognised in this financial report because it was resolved to be paid after 31 March 2017.
The amounts disclosed as recognised in 2017 are the final dividend in respect of the financial year ended 31 March 2016 and the interim dividend in respect of the
financial year ended 31 March 2017.
2 Final dividend of 13.0 cents per share, 50% (6.5 cents) franked at 30.0% corporate tax rate.
ii) Franking credits
$million
Franking account balance on an accrual basis1
2017
38.2
2016
7.3
1 The above amounts are calculated from the balance of the franking account as at the end of the reporting period, adjusted for franking credits and debits that will arise
from the settlement of income tax liabilities or receivables after the end of the year.
CSR ANNUAL REPORT 2017 63
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
17 Reserves
$million
Balance at 1 April 2016
Hedge loss recognised in equity
Hedge profit transferred to the statement of financial
performance
Translation of foreign operations
Recycling of foreign currency translation reserve on
disposal of equity accounted investment
Income tax benefit related to other comprehensive
income
Share-based payments expense
Income tax benefit related to share-based payments
expense
Acquisition of treasury shares
Non-controlling interests on acquisition of subsidiary
Foreign
currency
translation
reserve
Employee
share
reserve
Share
based
payment
trust
reserve
Non-
controlling
interests
reserve
Other
Total
(0.5)
–
–
(0.5)
(5.6)
–
–
–
–
–
27.5
–
–
(10.5)
–
–
0.5
–
–
(3.3)
–
–
20.4
(31.3)
(10.1)
–
–
–
3.2
0.5
–
–
–
–
–
–
–
–
–
–
–
–
(5.4)
–
–
(57.1)
–
–
–
–
–
–
–
(0.5)
(5.6)
12.5
3.2
0.5
(5.4)
(57.1)
Hedge
reserve
6.7
(31.3)
(10.1)
–
–
12.5
–
–
–
–
Balance at 31 March 2017
(22.2)
(6.6)
31.2
(15.9)
(56.6)
(3.3)
(73.4)
Balance at 1 April 2015
Hedge profit recognised in equity
Hedge profit transferred to the statement of financial
performance
Translation of foreign operations
Share of loss on changes in fair value of cash flow
hedges of joint venture entities
Income tax expense related to other comprehensive
income
Share-based payments expense
Income tax expense related to share-based payments
expense
Acquisition of treasury shares
Non-controlling interests on acquisition of subsidiary
2.5
7.6
(0.9)
–
(0.5)
(2.0)
–
–
–
–
1.4
–
–
(1.9)
–
–
–
–
–
–
24.5
–
(3.4)
–
–
–
–
–
3.1
(0.1)
–
–
–
–
–
–
–
–
(7.1)
–
Balance at 31 March 2016
6.7
(0.5)
27.5
(10.5)
–
–
–
–
–
–
–
–
–
0.5
0.5
(3.3)
–
–
–
–
–
–
–
–
–
(3.3)
21.7
7.6
(0.9)
(1.9)
(0.5)
(2.0)
3.1
(0.1)
(7.1)
0.5
20.4
Nature and purpose of reserves
Hedge reserve: the hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised in
other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.
Foreign currency translation reserve: exchange differences arising on translation of foreign controlled entities are recognised in other
comprehensive income and accumulated in a separate reserve within equity.
Employee share reserve: the employee share reserve is used to recognise the share-based payments expense and associated income tax
recognised through other comprehensive income.
Share-based payment trust reserve: treasury shares are shares in CSR Limited that are held by the CSR Limited Share Plan Trust (‘Trust’) for
the purpose of issuing shares under the CSR employee share plans and the CSR executive incentive plans (see pages 29 to 34 of the
remuneration report for further detail). When the Trust purchases the company’s equity instruments, the consideration paid is recorded in
the share-based payments trust reserve.
Number of shares
Opening balance
Acquisition of shares by the Trust (average price of $3.51 (2016: $3.31) per share)
Issue of shares under executive incentive plans
Closing balance
2017
2016
989,753
1,540,000
(1,705,534)
1,457,775
2,145,000
(2,613,022)
824,219
989,753
Non-controlling interests reserve: this reserve is used to record the differences which may arise as a result of transactions with non-
controlling interests that do not result in a loss of control. Details of the nature of the amounts recognised in the year ended 31 March 2017
are set out in note 8.
Other reserves: other reserves are used to recognise the written put option the minority shareholders of the Martini business have to sell all
of their remaining interest to the group at an agreed price (based on the financial results of the business).
64 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
18 Financial risk management
The CSR group’s activities expose it to a variety of financial risks:
credit risk;
liquidity risk; and
(i)
(ii)
(iii) market risk.
This note presents information about the Risk Management Policy
framework (‘framework’) and each of these risks.
The framework sets out the specific principles in relation to the use
of financial instruments in hedging exposures to commodity risk,
foreign exchange risk, interest rate risk and credit risk, in addition to
the use of derivatives and the investment of excess liquidity. The Risk
Management Policy has been approved by the board of directors.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the CSR group’s activities.
Compliance with the framework and procedures is reviewed by the
Finance Committee on a routine basis. The Finance Committee
membership consists of the managing director and other relevant
senior executives.
The CSR group uses a variety of derivative instruments to manage
financial and commodity price risks. There have been no changes in
the CSR group’s exposure to risks or the Risk Management Policies
used to manage these risks during the years ended 31 March 2017
and 31 March 2016.
The CSR group does not use derivative or financial instruments for
speculative or trading purposes.
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 resulting gain or loss is
recognised in profit or loss immediately unless the derivative is
designated and effective as a hedging instrument, in which event the
timing of the recognition in profit or loss depends on the nature of the
hedge relationship.
i)
Credit risk
Nature of the risk
Credit risk is the risk of financial loss to the CSR group if a customer
or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the CSR group's receivables
from customers. The carrying amount of financial assets represents
the maximum credit exposure.
Credit risk management: receivables
The CSR group's exposure to credit risk is influenced mainly by the
individual characteristics of each customer. However, management
also considers the factors that may influence the credit risk of its
customer base, including the default risk of the industry and country
in which customers operate. To manage this risk, the CSR group has
a policy for establishing credit approvals and limits under which each
new customer is analysed individually for creditworthiness before the
CSR group's standard payment and delivery terms and conditions are
offered. Sale limits are established for each customer and reviewed
regularly.
Any sales exceeding those limits require approval from the general
manager. The CSR group continuously monitors the financial viability
of its counterparties, ageing analysis and, where necessary, carries
out a reassessment of sale limits provided.
Concentrations of credit risk with respect to receivables are limited
due to the large number of customers and markets in which the CSR
group does business, as well as the dispersion across many
geographic areas.
The CSR group establishes an allowance for impairment that
represents its estimate of incurred losses in respect of trade and
other receivables (see note 9).
Credit risk management: derivatives
The CSR group has an established counterparty credit risk policy.
Derivatives may be entered into with banks that are rated at least A–
from rating agency Standard & Poor's or A3 from rating agency
Moodys, unless otherwise approved by the board.
ii)
Liquidity risk
Nature of the risk
Liquidity risk is the risk that the CSR group has insufficient funds to
meet its financial obligations when they fall due.
Liquidity risk management
Liquidity risk management requires maintaining sufficient cash, bank
facilities and reserve borrowing facilities by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of
financial assets and liabilities. The CSR group’s approach to
managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, without
incurring unacceptable losses or risking damage to the CSR group’s
reputation. Details of credit facilities and the maturity profile are
given in note 14.
The table below analyses the undiscounted cash flows for the CSR
group’s financial liabilities and derivative financial instruments,
currently in a liability position, into relevant maturity groupings based
on the remaining period at the reporting date to maturity:
Liquidity risk
($million)
1 year
or less
1 to 3
years
3 to 5
years
Total
2017
Current payables
Non-current other payables
Borrowings (including
interest)
Commodity financial
instruments
Foreign currency financial
instruments1
291.9
–
0.8
–
3.7
30.7
–
–
–
291.9
3.7
31.5
29.6
23.0
0.9
53.5
0.6
0.1
–
0.7
Total
322.9
57.5
0.9
381.3
2016
Current payables
Non-current other payables
Borrowings (including
interest)
Commodity financial
instruments
Foreign currency financial
instruments1
260.6
–
0.1
–
18.9
1.7
–
–
–
260.6
18.9
1.8
0.2
2.1
1.5
3.8
17.6
–
–
17.6
Total
278.5
22.7
1.5
302.7
1
Settlement of commodity and foreign currency financial instruments will be
offset by revenue from the sale of commodities.
CSR ANNUAL REPORT 2017 65
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
18 Financial risk management (continued)
iii) Market risk
Nature of commodity price risk – aluminium
The CSR group has exposure to aluminium commodity prices which
arises from sales contracts that commit the CSR group to supply
aluminium in future years. Prices for product supplied under these
contracts are a function of the US dollar market price at the time of
delivery.
Commodity price risk management – aluminium
The CSR group has a policy of hedging its aluminium sales (net of any
linked exposure on inputs such as Alumina), where acceptable
pricing is available, to reduce the volatility of its aluminium earnings
when exchanged into Australian dollars. Eligible hedging instruments
used for hedging commodity price risk include commodity forward
contracts and commodity options. Hedging is undertaken at declining
levels for up to four years.
The price of product supplied under sales contracts comprises two
components, the London Metal Exchange (LME) Primary Aluminium
cash price, and a physical premium. Over the year ended 31 March
2017, the average of the daily LME cash price was US$1,688.0 per
tonne and the average Platts mid-point physical premium was
US$94.1 per tonne. The LME price component represented 95% of
the sum of the two. The CSR group designates the LME price
component of sales as the hedged item. Commodity forward and
option contracts are also priced against the LME Primary Aluminium
cash price. There is an established economic relationship between
the physical sales of aluminium and the commodity forward and
option contracts as they are both priced using the same reference
price. As the underlying risk of the aluminium price risk is identical to
the hedged component, the CSR group has established a hedge ratio
of 1:1 for all its hedging relationships over aluminium price risk.
The CSR group does not hedge its exposure to the variability in
physical metal premiums. In the CSR group’s view, there is currently
no viable hedge instrument for physical metal premiums and this
component of the metal sales price remains unhedged.
The table below provides information about the aluminium
commodity swaps entered into by the CSR group to manage its
aluminium commodity price exposure:
Notional value
Fair value
1 year
or less
1 to 3
years
3 to 5
years
Total Asset Liability
254.0
356.1
10.4
620.5
–
(49.1)
Commodity
price risk
($million)
2017
Aluminium
commodity
swaps1,2
2016
Aluminium
commodity
swaps1,2
1 The average price in US dollars per metric tonne at 31 March 2017 was
$1,838.4 (2016: $1,814.2). The average price for the individual periods does
not materially differ from the overall average price disclosed.
2 $49.1 million net of commodity contract losses (2016: $25.3 million net gains)
were deferred in 2017 as the losses relate to cash flow hedges of highly
probable forecast transactions. The expected timing of recognition based on the
fair values at 31 March 2017 is one year or less: $28.9 million loss (2016:
$23.5 million gain); one to three years: $20.0 million loss (2016: $1.8 million
gain); three to five years: $0.2 million loss (2016: $nil).
Commodity price risk sensitivity – aluminium
A 10% increase in the aluminium price, assuming a constant
exchange rate on hedging contracts in place at 31 March 2017,
would result in a decrease in other equity before tax of $65.5 million
66 CSR ANNUAL REPORT 2017
(2016: $14.1 million). A decrease of 10% in the aluminium price
would have the opposite impact.
Nature of commodity price risk – oil
The CSR group has exposure to oil commodity prices through an oil
price linked gas purchasing contract. The A$ gas purchase price is
partially a function of the prevailing US$ oil price and A$/US$
exchange rate.
Commodity price risk management – oil
The CSR group has a policy of hedging the oil price component of the
price of gas purchased to reduce the volatility of its energy costs.
Eligible hedging instruments include commodity and foreign
exchange forward contracts and commodity and foreign exchange
option contracts. The CSR group designates the oil price converted to
A$ component of the gas price as the hedged item. Both the gas
purchasing contract and the commodity forwards and options are
priced against the ICE Brent futures contract price and the A$/US$
hedge settlement rate reference prices and, as such, the CSR group
has established a hedge ratio of 1:1 for the hedging relationship
between the oil price component of the gas purchase contract and
the derivative hedges for all its oil price risk.
The table below provides information about the oil commodity swaps
entered into by the CSR group to manage its oil commodity price
exposure:
Notional value
Fair value
1 year
or less
1 to 3
years
3 to 5
years
Total
Liability
2.9
16.3
5.2
24.4
(3.0)
–
10.5
10.3
20.8
(3.3)
Commodity
price risk
($million)
2017
Oil commodity
swaps1,2
2016
Oil commodity
swaps1,2
1 The average price in A$ per barrel at 31 March 2017 was $81.4 (2016: $82.8).
The average price for the individual periods does not materially differ from the
overall average price disclosed.
2 $3.0 million net of commodity contract losses (2016: $3.3 million) were
deferred in 2017 as the losses relate to cash flow hedges of highly probable
forecast transactions. The expected timing of recognition based on the fair
values at 31 March 2017 is one year or less: $0.4 million loss (2016: $nil); one
to three years: $2.1 million loss (2016: $2.0 million loss); three to five years:
$0.5 million loss (2016: $1.3 million loss).
Commodity price risk sensitivity – oil
A 10% increase in the oil price, assuming a constant exchange rate
on hedging contracts in place at 31 March 2017, would result in an
increase in other equity before tax of $2.0 million (2016: $1.6
million). A decrease of 10% in the oil price would have the opposite
impact.
At the reporting date, CSR group’s interest rate exposure is limited to
the net debt balance of $11.4 million (2016: $70.9 million net cash
balance). The carrying amount of the net debt balance is the same as
the fair value. The maturity profile for the cash balance of $19.1
million is less than 1 year and the maturity profile for the borrowings
balance of $30.5 million is one to three years. The average interest
rate on debt for the year was 2.4% (2016: nil) and the average
interest rate on cash balances for the year was 0.44% (2016:
0.95%).
At 31 March 2017, if interest rates had increased/decreased by one
percentage point per annum from the year end rates with all other
variables held constant, the post-tax profit for the year would have
been $0.1 million higher/lower (2016: $0.9 million higher/lower),
mainly as a result of higher interest expense on debt balances.
143.6
24.4
–
168.0 25.5
(0.2)
Interest rate risk management
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
18 Financial risk management (continued)
iii) Market risk (continued)
Nature of foreign exchange risk
The CSR group’s major foreign currency exposure relates to its US dollar aluminium sales revenue and payments for raw materials and capital
equipment.
Foreign exchange risk management
The CSR group uses a variety of foreign exchange risk management instruments, including spot, forward and swap currency contracts and
currency options, to hedge foreign currency denominated receipts resulting from revenue and payments for raw materials and capital
equipment denominated in foreign currencies.
The CSR group’s policy is to hedge its net US dollar aluminium exposure to reduce the volatility of aluminium earnings, when acceptable
Australian dollar outcomes can be achieved.
Forecast US dollar receipts are based on highly probable forecast monthly sales transactions of aluminium which ensures that the underlying
foreign currency exchange risk is identical to the hedged risk component (i.e. the US dollar price). Therefore the CSR group has established a
hedge ratio of 1:1 for all its foreign exchange hedging relationships. Hedging is undertaken at declining levels for up to four years.
The CSR group’s policy to hedge foreign exchange exposures arising from payments for raw materials are hedged for up to 18 months with a
declining hedge level over time, although higher levels can be hedged when using currency options. The policy requires that material foreign
currency denominated purchases of capital equipment be fully hedged to the domestic currency to eliminate currency exposure. Similarly, the
policy also requires that all material foreign currency assets and liabilities are hedged to the relevant entity’s domestic currency.
Foreign exchange risk sensitivity
At 31 March 2017, had the Australian dollar strengthened/weakened by 10% against the respective foreign currencies with all other variables
held constant, the post-tax profit arising from forward exchange rate agreements would have been materially unchanged, mainly as a result of
the effectiveness of the hedging in place. Equity before tax would have been $31.7 million higher/$36.8 million lower (2016: $9.7 million
higher/$10.3 million lower) had the Australian dollar strengthened/weakened by 10% against the respective foreign currencies arising mainly
from foreign forward exchange contracts designated as cash flow hedges.
The table below provides information about the CSR group’s significant exchange rate exposures in forward exchange rate agreements:
Foreign exchange risk1,3
($million)
Average
exchange rate2
Notional value
Fair value
1 year or less
1 to 3 years
Total
Asset
Liability
2017
US dollar – buy
US dollar – sell
NZ dollar – buy
NZ dollar – sell
Euro – buy
Euro – sell
Total
2016
US dollar – buy
US dollar – sell
NZ dollar – buy
NZ dollar – sell
Euro – buy
Euro – sell
Total
0.76
0.75
1.07
1.06
0.69
0.71
0.73
0.76
1.10
1.11
0.66
0.66
68.1
207.4
11.1
29.4
9.1
2.7
179.2
202.9
32.5
71.0
12.9
5.8
–
176.0
–
–
–
–
–
11.7
–
–
–
–
68.1
383.4
11.1
29.4
9.1
2.7
179.2
214.6
32.5
71.0
12.9
5.8
0.9
7.4
–
0.3
–
–
8.6
0.4
8.4
0.3
0.5
–
0.1
9.7
(0.1)
(0.1)
(0.3)
–
(0.2)
–
(0.7)
(6.9)
(9.1)
(0.6)
(0.5)
(0.3)
–
(17.4)
1 $6.7 million of net foreign exchange contract gains (2016: $6.4 million losses) have been deferred as the gains relate to cash flow hedges of highly probable forecast
transactions. The expected timing of recognition based on the fair values at 31 March 2017 is one year or less: $3.9 million gain (2016: $7.3 million loss); and one to
three years: $2.8 million gain (2016: $0.9 million gain).
2 Average rates for the individual periods do not materially differ from the overall average rates disclosed.
3 The CSR group has insignificant exchange rate exposures in GBP and JPY.
CSR ANNUAL REPORT 2017 67
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
18 Financial risk management (continued)
iv) Capital management
The CSR group manages its capital to ensure that entities in the CSR group will be able to continue as a going concern while maximising the
return to shareholders through the optimisation of the debt and equity balances.
The capital structure of the CSR group consists of debt which includes the borrowings disclosed in note 14, cash and cash equivalents, issued
capital and reserves disclosed in notes 15 and 17 and retained profits. The CSR group reviews the capital structure regularly and balances its
overall capital structure through the payment of dividends, new share issues, share consolidations and share buy-backs, as well as the issue of
new debt or the redemption of existing debt.
v) Fair value measurement of financial instruments
The table below provides an analysis of hedge accounted financial instruments that are measured subsequent to initial recognition of fair
value, including their levels in the fair value hierarchy:
$million
Financial assets at fair value
Commodity swaps – aluminium
Forward exchange rate contracts
Total
Financial liabilities at fair value
Commodity swaps – aluminium
Commodity swaps – oil
Forward exchange rate contracts
Total
2017
Level 2
2016
Level 2
–
8.8
8.8
49.1
3.0
0.7
52.8
25.5
9.7
35.2
0.2
3.3
17.4
20.9
Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The
CSR group has no Level 1 financial instruments in the fair value hierarchy.
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). The CSR group has no Level 3 financial instruments in the fair value hierarchy.
There were no transfers from Level 2 to Level 1 and Level 3 in 2017 and no transfers in either direction in 2017.
The fair value amounts shown above are not necessarily indicative of the amounts that the CSR group would realise upon disposition, nor do
they indicate the CSR group’s intent or ability to dispose of the financial instrument.
Recognition and measurement
The fair value of financial instruments, including financial assets and liabilities approximates their carrying amount.
The fair values of derivative instruments are calculated using quoted market prices. Where such prices are not available, a discounted cash
flow analysis is performed using the applicable yield curve for the duration of the instruments for non-optional derivatives, and option pricing
models for optional derivatives. Foreign currency forward contracts are measured using quoted exchange rates and yield curves derived
from quoted interest rates matching maturities of the contract.
The CSR group designates its derivatives as cash flow hedges. The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges are deferred in equity. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss. Amounts deferred in equity are recycled in profit or loss in the year when the hedged item is recognised in profit
or loss.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts.
68 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
18 Financial risk management (continued)
vi) Cash flow hedging
The impact of hedging instruments designated in material hedging relationships as of 31 March 2017 on the statement of financial position of
the CSR group is as follows:
Commodity price risk1
Foreign exchange risk
Aluminium commodity swaps
(forecast sales)2
Forward currency contracts
(forecast sales)3
Forward currency contracts
(forecast purchases)4
2017
258,000
tonnes
2016
71,000
tonnes
–
49.1
(49.1)
25.5
0.2
25.3
2017
376.1
7.4
0.1
7.4
2016
172.2
7.2
9.2
(2.0)
2017
68.6
–
0.7
(0.7)
2016
97.4
0.9
5.3
(4.4)
$million
Notional amount
Carrying amount:
Asset
Liability
Changes in value of instrument used
for calculating hedge ineffectiveness
– gain (loss)
1 The CSR group has insignificant hedging relationships in oil commodity swaps.
2 $nil (2016: $23.7 million) of the carrying amount of Aluminium commodity swaps are disclosed within current other financial assets and $nil (2016: $1.8 million) within
non-current other financial assets. $28.9 million (2016: $0.2 million) of Aluminium commodity swaps are disclosed within current other financial liabilities and $20.2
million (2016: $nil) within non-current other financial liabilities.
3 $4.6 million (2016: $6.3 million) of the carrying amount of forward currency contracts are disclosed within current other financial assets and $2.8 million (2016: $0.9
million) within non-current other financial assets. $nil (2016: $9.2 million) of the carrying amount of forward currency contracts are disclosed within current other
financial liabilities and $0.1 million (2016: $nil) within non-current other financial liabilities.
4 $nil (2016: $0.9 million) of the carrying amount of forward currency contracts are disclosed within current other financial assets. $0.7 million (2016: $5.3 million) of
forward current contract liabilities are disclosed within current other financial liabilities.
The impact of hedged items designated in hedging relationships as of 31 March 2017 on the statement of financial position of the CSR group
is as follows:
Commodity price risk
Foreign exchange risk
Aluminium commodity swaps
(forecast sales)
Forward currency contracts
(forecast sales)
Forward currency contracts
(forecast purchases)
2017
49.2
2016
(25.6)
2017
(7.4)
2016
2.0
2017
0.7
2016
4.4
(49.1)
25.3
7.4
(2.0)
(0.7)
(4.4)
$million
Changes in value of hedged item
used for calculating hedge
ineffectiveness – gain (loss)
Cash flow hedge reserve
(continuing hedges) – gain (loss)
The below hedging relationships affected profit or loss and other comprehensive income as follows:
Commodity price risk
Foreign exchange risk
Aluminium commodity swaps
(forecast sales)
Forward currency contracts
(forecast sales)
Forward currency contracts
(forecast purchases)
2017
(50.7)
2016
14.0
2017
6.6
2016
8.0
2017
(0.7)
2016
(4.6)
(23.6)
25.7
2.8
(25.9)
4.5
1.1
$million
Hedge gain (loss) recognised in
other comprehensive income1
Gain (loss) reclassified from other
comprehensive income to profit or
loss before tax2
Line item in statement of
comprehensive income
Trading
revenue
Trading
revenue
Trading
revenue
Trading
revenue
Cost of sales
Cost of sales
No hedge ineffectiveness was recognised in profit or loss during the year.
1 The hedge gain (loss) recognised in other comprehensive income totalling $44.8 million loss (2016: $17.4 million gain) together with the $0.2 million gain (2016: $3.3
million loss) on oil swaps less non-controlling interests of $13.3 million (2016: $6.5 million gain) reconciles to the hedge gain (loss) transferred to equity in note 17.
2 The gain (loss) reclassified from other comprehensive income to profit or loss after tax totalling $16.3 million loss (2016: $0.9 million gain) less non-controlling interests
of $6.2 million loss (2016: $nil) reconciles to the hedge gain (loss) transferred to statement of financial performance in note 17.
CSR ANNUAL REPORT 2017 69
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
Group structure
19 Subsidiaries
Entity
2017
2016
Entity
% CSR
ownership
Incorporated in Australia
A-Jacks Hardwall Plaster Pty Ltd
A-Jacks Unit Trust
AFS Systems Pty Ltd
AFS Unit Trust
BI (Contracting) Pty Limited
Bradford Energy Finance Pty Limited
Bradford Insulation Industries Pty Limited
Bradford Insulation (SA) Pty Limited1
Bricks Australia Services Pty Limited2
Buchanan Borehole Collieries Pty Ltd
CSR Building Products Limited2
CSR Developments Pty Ltd
CSR Erskine Park Trust
CSR Finance Ltd2
CSR Industrial Property Trust
CSR Industrial Property Nominees No. 1 Pty Limited
CSR Industrial Property Nominees No. 2 Pty Limited
CSR International Pty Ltd
CSR Investments Pty Limited2
CSR Investments (Asia) Pty Limited
CSR Investments (Indonesia) Pty Limited
CSR Martini Pty Limited
CSR Share Plan Pty Limited
CSR Structural Systems Pty Limited2
CSR Viridian Finance Pty Limited2
CSR Viridian Holdings Limited2
CSR Viridian International Pty Limited
CSR Viridian Investment Company Pty Limited
CSR Viridian Limited2
CSR Viridian Operations Pty Limited
CSR Viridian Properties Pty Limited
CSR-ER Nominees Pty Ltd
DMS Security Glass Pty Ltd
Incorporated in Australia (continued)
100 Don Mathieson & Staff Glass Pty Ltd
100 Gove Aluminium Finance Ltd
100 Midalco Pty Limited
100 Monier PGH Superannuation Pty Limited
100 PASS Pty Limited
100 PGH Bricks & Pavers Pty Limited2,3
100 Rediwall Unit Trust
100 Rivarol Pty Limited2
100 SA Independent Glass Pty Ltd
100 Seltsam Pty Limited
100 Softwood Holdings Limited1
100 Softwood Plantations Pty Limited1
100 Softwoods Queensland Pty Ltd1
100 Thiess Bros Pty Ltd
100 Thiess Holdings Pty Limited
100
100
100 CSR Building Products (NZ) Ltd
100 CSR Viridian (New Zealand) Holdings Limited
100 CSR Viridian (New Zealand) Limited
100 Viridian Glass Limited Partnership4
Incorporated in New Zealand
70 Norm Fowke Glass Limited4
100 Euroglass Systems Limited4
100 Glass Concepts Limited4
100 National Glass Limited4
100 Tasman Glass Limited4
100
100
100 CSR Guangdong Glasswool Co., Ltd (China)
100 CSR (Guangdong) Rockwool Co., Ltd1 (China)
100 CSR Insurance Pte Limited (Singapore)
100 PT Prima Karya Plasterboard (Indonesia)
100
Incorporated in other countries
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
70
100
100
100
100
100
100
100
100
100
100
100
% CSR
ownership
2017
2016
100
70
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
79
100
100
100
100
70
100
100
100
60
100
100
100
100
100
100
100
100
100
100
100
100
58
58
58
58
58
58
79
100
100
100
In members voluntary liquidation.
1
2 These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with ASIC Corporations (Wholly-owned Companies) Instrument
2016/785. PGH Bricks & Pavers Pty Limited became a party to the deed of cross guarantee on 6 February 2017, for further information refer note 20.
3 The CSR group held a 60% interest in Boral CSR Bricks Pty Limited (‘BCB’) until 31 October 2016 when the remaining 40% interest was acquired. Following the
acquisition, BCB has changed its legal name to PGH Bricks & Pavers Pty Limited. Refer to note 8 for further details.
4 The CSR group held a 58% interest in Viridian Glass Limited Partnership until 30 June 2016 when the remaining 42% interest was acquired. Refer to note 8 for further
details.
20 Deed of cross guarantee
CSR Limited, Bricks Australia Services Pty Limited, CSR Building Products Limited, CSR Finance Ltd, CSR Investments Pty Limited, CSR
Structural Systems Pty Limited, CSR Viridian Finance Pty Limited, CSR Viridian Holdings Limited, CSR Viridian Limited, PGH Bricks & Pavers Pty
Limited (joined during the year ended 31 March 2017) and Rivarol Pty Limited are parties to a deed of cross guarantee (‘the Deed’) under
which each company guarantees the debts of the others. By entering into the Deed, the wholly owned entities have been relieved from the
requirement to prepare a financial report and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no other parties to the Deed that are
controlled by CSR Limited, they also represent the ‘extended closed group’.
70 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
20 Deed of cross guarantee (continued)
Set out below is a consolidated statement of financial performance, a consolidated statement of comprehensive income, a consolidated
statement of financial position and a summary of movements in consolidated retained profits for the years ended 31 March 2017 and 31
March 2016 (restated) of the closed group.
i)
Consolidated statement of financial performance
$million
Trading revenue – sale of goods
Cost of sales
Gross margin
Other income
Warehouse and distribution costs
Selling, administration and other operating costs
Share of net profit of joint venture entities
Other expenses
Profit before finance costs and income tax
Interest income
Finance costs
Profit before income tax
Income tax expense
Profit after tax
ii) Consolidated statement of comprehensive income
$million
Profit after tax
Other comprehensive income, net of tax
Items that may be reclassified to profit or loss
Hedge loss recognised in equity
Hedge loss (profit) transferred to statement of financial performance
Share of loss on changes in fair value of cash flow hedges of joint venture entities
Exchange differences arising on translation of foreign operations
Exchange differences on acquisition of controlled entity, transferred to statement of financial performance
Income tax (expense) benefit relating to these items
Items that will not be reclassified to profit or loss
Actuarial gain on superannuation defined benefit plans
Income tax expense relating to these items
Other comprehensive income – net of tax
Total comprehensive income
iii) Summary of movements in consolidated retained profits
$million
Opening retained profits
Profit for the year
Actuarial gain on superannuation defined benefit plans (net of tax)
Dividends provided for or paid
Closing retained profits
2017
20161
1,803.7
(1,105.9)
1,425.3
(903.0)
697.8
53.0
(206.6)
(310.7)
14.2
(24.4)
223.3
2.3
(13.7)
211.9
(32.5)
179.4
522.3
76.3
(158.0)
(272.4)
12.5
(1.9)
178.8
0.5
(17.4)
161.9
(27.2)
134.7
2017
179.4
20161
134.7
(0.6)
4.5
–
(0.5)
(5.6)
(1.0)
24.1
(7.3)
13.6
(7.8)
(0.9)
(0.5)
(1.9)
–
2.7
20.9
(6.2)
6.3
193.0
141.0
2017
57.9
179.4
16.8
(126.3)
127.8
20161
24.9
134.7
14.7
(116.4)
57.9
1 A number of entities which were not party to the Deed were included in the 2016 disclosure which has been restated to reflect only the entities party to the Deed. The
disclosure for 2017 has been prepared on a consistent basis.
CSR ANNUAL REPORT 2017 71
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
20 Deed of cross guarantee (continued)
iv) Consolidated statement of financial position
$million
Current assets
Cash and cash equivalents
Receivables
Inventories
Other financial assets
Income tax receivable
Prepayments and other current assets
Total current assets
Non-current assets
Receivables
Inventories
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Other financial liabilities
Tax payable
Provisions
Total current liabilities
Non-current liabilities
Payables
Borrowings
Other financial liabilities
Provisions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves2
Retained profits
Equity attributable to shareholders of the closed group
2017
20161
15.8
233.3
306.3
0.8
0.5
3.6
560.3
22.5
81.6
32.2
131.5
704.8
85.5
43.7
184.2
19.3
66.4
191.8
205.1
2.4
0.5
3.8
470.0
24.5
72.7
33.1
245.3
594.4
63.9
43.9
218.0
9.6
1,305.3
1,305.4
1,865.6
1,775.4
242.2
1.0
7.5
154.4
405.1
3.8
30.5
2.6
311.1
0.1
348.1
753.2
143.2
8.2
15.7
129.9
297.0
16.8
2.2
3.3
336.9
13.3
372.5
669.5
1,112.4
1,105.9
1,036.8
(52.2)
127.8
1,041.1
6.9
57.9
1,112.4
1,105.9
1 A number of entities which were not party to the Deed were included in the 2016 disclosure which has been restated to reflect only the entities party to the Deed. The
disclosure for 2017 has been prepared on a consistent basis.
2 PGH Bricks & Pavers Pty Limited (‘PGH Bricks’) became a party to the Deed on 6 February 2017, following the acquisition of Boral Limited’s 40% minority interest in PGH
Bricks. The balance includes ($57.1) million recognised in the non-controlling interests reserve on acquisition. Refer to note 8 for further details.
72 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
21 Non-controlling interests
Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the CSR group. The
amounts disclosed are before intercompany eliminations.
$million
Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Statement of financial performance
Revenue
Profit after tax for the year
Other comprehensive (expense) income for the year
Total comprehensive income for the year
Statement of cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash held
Transactions with non-controlling interests
Profit allocated to non-controlling interests2
Dividends paid to non-controlling interests
PGH Bricks & Pavers
Pty Limited1
Gove Aluminium Finance
Limited
2017
2016
2017
2016
–
–
–
–
179.6
19.1
–
19.1
14.4
(3.2)
(6.6)
4.6
7.6
8.3
114.6
142.6
64.8
5.7
263.0
12.0
–
12.0
42.6
(10.7)
(27.5)
4.4
4.8
–
155.4
130.9
98.6
28.9
511.5
63.1
(45.7)
17.4
86.1
(9.3)
(40.4)
36.4
18.9
12.1
137.9
150.7
74.6
32.5
530.7
72.3
15.5
87.8
80.5
(7.8)
(95.0)
(22.3)
21.7
28.5
1 The CSR group held a 60% interest in PGH Bricks & Pavers Pty Limited (formerly Boral CSR Bricks Pty Limited) until 31 October 2016 when the remaining 40% interest
was acquired. Refer to note 8 for further detail. Summarised financial information for the statement of financial performance and cash flows is for the 7 month period
ended 31 October 2016 (2016: 11 month period ended 31 March 2016). As PGH Bricks & Pavers Pty Limited is wholly owned by the CSR group at 31 March 2017 the
disclosure of the summarised statement of financial position is not applicable.
2 Profit allocated to non-controlling interests for subsidiaries that are not material for disclosure was $0.7 million for the year ended 31 March 2017 (2016: $0.5 million).
22
Interest in joint operations
The CSR group's interest in the Tomago aluminium smelter joint operation of 36.05% (2016: 36.05%) is held through a controlled entity in
which the CSR group has a 70% interest, resulting in an effective interest in the joint operation of 25.24% (2016: 25.24%).
Recognition and measurement
The shareholders of the joint operation are jointly and severally liable for the liabilities incurred by the operation and have rights to the
assets. This entity is therefore classified as a joint operation and the group recognises its direct right to the jointly held assets, liabilities,
revenues and expenses. Where the CSR group and the parties to the agreements only have rights to the net assets of each of the
operations under the arrangements, these entities will be classified as joint ventures of the CSR group and accounted for using the equity
method. Refer to note 23.
Critical accounting estimate
Investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual
rights and obligations of each investor, rather than the legal structure of the joint arrangement, and therefore requires judgment in
determining the classification. The CSR group has both joint operations and joint ventures.
CSR ANNUAL REPORT 2017 73
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
23 Equity accounting information
Carrying amount ($million)
Entity1
Glass
Viridian Glass New Zealand2
Building products
Rondo Pty Limited3
Gypsum Resources Australia3
New Zealand Brick Distributors2
Other3
Total investment
2017
Equity
accounted
investment
Long-term
loan
Net
investment
Long-term
loan
2016
Equity
accounted
investment
Net
investment
–
–
–
–
21.2
21.2
–
12.0
–
2.4
14.4
14.5
–
7.8
3.2
25.5
14.5
12.0
7.8
5.6
39.9
–
12.0
–
2.4
14.4
15.3
–
7.1
3.0
46.6
15.3
12.0
7.1
5.4
61.0
1 The CSR group held a 58% interest in Viridian Glass Limited Partnership until 30 June 2016 when the remaining 42% interest was acquired. Refer to note 8 for further
detail. CSR group’s interest in all other entities is 50% (2016: 50%).
2 These entities are limited partnerships in New Zealand.
3 Entities incorporated in Australia.
Recognition and measurement
Investments in joint venture and associate entities have been accounted for under the equity method in the CSR group financial statements.
CSR’s share of net profit/loss of joint venture entities is recorded in the statement of financial performance.
Purchases and sales of goods and services to joint venture entities are on normal terms and conditions.
Critical accounting estimate – non-consolidation of entities in which the CSR group holds more than 50%
The CSR group held a 58% interest in Viridian Glass Limited Partnership until 30 June 2016 when the remaining 42% interest was acquired.
Refer to note 8 for further detail. Up to 30 June 2016, the directors determined that they did not control Viridian Glass Limited Partnership
even though the CSR group owned 58% of the interest of this entity. It was not a controlled entity of CSR Limited because the decisions over
the relevant activities of the entity required unanimous consent between the two partners.
i) Net investment in joint ventures
$million
Opening net investment
Share of net profit before income tax
Share of income tax
Dividends and distributions received
Decrease in long-term loans
Disposal of investment in joint venture
Foreign currency translation and other
Closing net investment
ii) Summarised financial information of joint venture entities
$million
Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Statement of financial performance
Revenue
Share of net profit (loss) after tax
Viridian Glass New Zealand1
Rondo Pty Limited
Other
1 Contribution to net profit is for the 3 month period ended 30 June 2016 (2016: 12 month period ended 31 March 2016).
2017
61.0
21.0
(6.3)
(14.2)
–
(21.4)
(0.2)
39.9
2016
63.3
18.8
(5.6)
(11.2)
(0.7)
–
(3.6)
61.0
2017
2016
92.5
22.3
50.0
2.3
124.4
47.8
106.9
1.9
146.6
185.6
(0.3)
14.4
0.6
0.2
11.4
1.6
74 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
23 Equity accounting information (continued)
iii) Balances and transactions with joint venture entities
$million
Current loans payable to CSR
Non-current loans payable to CSR
Purchases of goods and services
Sales of goods and services
24 Parent entity disclosures
i)
Summary financial information of CSR Limited (parent)
$million
Statement of financial position
Current assets
Non-current assets
Current liabilities1
Non-current liabilities1
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
Statement of financial performance
Profit after tax for the year
Total comprehensive income
2017
2016
0.1
11.3
46.3
3.3
26.8
11.4
40.2
8.1
2017
2016
264.0
1,821.0
(488.1)
(334.4)
240.3
1,807.5
(445.9)
(346.3)
1,262.5
1,255.6
1,036.8
9.3
216.4
1,041.1
13.3
201.2
1,262.5
1,255.6
126.0
141.4
100.1
116.6
1
Included within current liabilities are the current portion of the product liability provision and uninsured losses and future claims provision of $29.2 million and $5.6
million respectively (2016: $26.0 million and $5.5 million respectively). Included within non-current liabilities are the non-current portion of the product liability provision
and uninsured losses and future claims provision of $283.2 million and $22.2 million respectively (2016: $308.5 million and $23.1 million respectively). See notes 12
and 13 for further details.
ii) CSR Limited transactions with controlled entities
During the financial years ended 31 March 2017 and 2016, CSR Limited advanced and repaid loans, sold and purchased goods and services,
and provided accounting and administrative assistance to its controlled entities. All loans advanced to and payable to these related parties are
unsecured and subordinate to other liabilities. Loans between members of the Australian tax consolidation group are not on normal terms and
conditions.
iii) Contingent liabilities
$million
Contingent liabilities, capable of estimation, arise in respect of the following categories:
Performance guarantees provided to third parties
Bank guarantees to Harwood Superannuation Fund1
Total contingent liabilities2
2017
2016
77.1
5.4
82.5
65.1
6.4
71.5
1 CSR Limited has an obligation to contribute amounts so as to ensure that the assets attributable to certain superannuation defined benefit plans are not less than 120%
of the amount required to meet the actuarial liabilities. Refer to note 25 for details of superannuation commitments as at 31 March 2017.
2 CSR Limited has not directly provided any financial guarantees to third parties outside of the CSR group. All financial guarantees disclosed above are related to bank
guarantees provided to third parties to guarantee CSR Limited's performance of its liabilities. In addition, CSR Limited has undertaken to provide financial support, as and
when required, to certain wholly owned controlled entities so as to enable those entities to pay their debts as and when such debts become due and payable.
iv) Capital commitments
CSR Limited has committed $nil to the acquisition of any property, plant and equipment as at 31 March 2017 (2016: $nil).
CSR ANNUAL REPORT 2017 75
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | OTHER
Other
25 Employee benefits
i)
Superannuation commitments
During the year, the CSR group participated in a number of superannuation funds (funds) in Australia and New Zealand. The funds provide
benefits either on a cash accumulation or defined benefit basis, for employees (and spouses) on retirement, resignation or disablement, or to
their dependants on death. Employer contributions are legally enforceable, with the right to terminate, reduce or suspend those contributions
upon giving written notice to the trustees. CSR Limited and its Australian controlled entities are required to provide a minimum level of
superannuation support for employees under the Australian superannuation guarantee legislation.
Australian superannuation funds
In Australia, the CSR group participates in the Harwood Superannuation Fund and the Pilkington (Australia) Superannuation Scheme for those
employees and pensioners who are currently members of these funds and any new employees who become members.
Retirement funds
The contributions to the funds for the year ended 31 March 2017 for the CSR group were $41.6 million (2016: $37.4 million).
Accumulation funds
The benefits provided by accumulation funds are based on the contributions and income thereon held by the funds on behalf of the members.
Contributions are made as agreed between the member and the company and for the financial year ended 31 March 2017, contributions
totalled $35.4 million (2015: $31.8 million). These contributions are expensed in the year they are incurred. CSR group’s legal or constructive
obligation is limited to these contributions.
Defined benefit funds
The benefits provided by defined benefit divisions of funds (DBDs) are based on length of service or membership and salary of the member at
or near retirement. Member contributions, based on a percentage of salary, are specified by the rules of the fund. Employer contributions
generally vary based on actuarial advice and may be reduced or cease when a fund is in actuarial surplus. DBDs are closed to new members.
Changes to defined benefit obligations
The Harwood Superannuation Fund Trust Deed was amended with effect from midnight on 31 December 2011 to restructure the various plans
within the fund, including splitting the CSR Plan Division One (defined benefit) into three separate plans. The amendment reflected the
agreement between CSR Limited and Wilmar International Limited that Sucrogen Limited would assume full responsibility to fund its
obligations for defined benefit members employed by the Sucrogen business as well as its share of the funding obligation in respect of the
Harwood Pensioner DBD Plan. As such, amounts recorded for the CSR group exclude funding obligations and share of assets and liabilities
which have been assumed by Wilmar Sugar Australia Limited.
Asset backing
The last actuarial assessment for the Harwood Superannuation Fund and the Pilkington (Australia) Superannuation Scheme was completed as
at 30 June 2016. The funding requirements were reviewed as at 30 June 2016. A combination of the attained age normal and projected unit
credit funding methods were used to determine the contribution rates for the Harwood Superannuation Fund. The projected unit credit funding
method was used for the Pilkington (Australia) Superannuation Scheme.
There is an obligation for plan employers to contribute such amounts so as to ensure that the assets are not less than 120% of the amount
required to meet the actuarial liabilities of Division One of the Harwood Superannuation Fund which includes DBD CSR and DBD Harwood
Pensioner. At the time of the last actuarial review, DBD CSR had a funding position of 153% and DBD Harwood Pensioner had a funding
position of 112%. Therefore, CSR Limited made available to the trustee of the fund, bank guarantees to satisfy the balance of its commitment
to 120%. As at 31 March 2017, CSR Limited has provided bank guarantees of $5.4 million to the Trustee of the fund (2016: $6.4 million). The
bank guarantees have been disclosed in note 24.
Table 1: Defined benefit plans (DBDs) sponsored by the CSR group
$million
CSR contributions
to the funds
Present value
of fund assets
Present value
of fund liability
Net defined benefit
asset (liability)
Contributions
paid
Harwood Superannuation Fund
DBD CSR and DBD
Harwood Pensioner1
DBD Monier PGH
$nil from 1 April 2017
$nil from 1 April 2017
73.0
47.5
(66.0)
(39.9)
7.0
7.6
–
1.0
Pilkington (Australia)
Superannuation Scheme
DBD2
14.6% of eligible salary
52.3
(52.4)
(0.1)
1.6
1 Actuarial liabilities are determined to be past service liabilities based on membership accrued up to 31 March 2017.
2 Funds contributed by CSR are for accumulation members.
76 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | OTHER
25 Employee benefits (continued)
i)
Superannuation commitments (continued)
Key assumptions used by actuaries
Key assumptions and parameters used by the actuaries (expressed as weighted averages) are outlined below:
%
Discount rate (after tax)
Expected salary increase
Asset class allocation – Equity instruments
– Debt instruments
– Property
– Other
Impact of plans on the statement of financial performance and comprehensive income
$million
Amounts recognised in the statement of financial performance1
Current service cost
Finance cost
Interest income
Total expense included in the statement of financial performance
2017
2016
4.1
3.1
44.1
39.5
4.7
11.7
3.6
3.3
44.2
39.5
4.4
11.9
2017
2016
2.9
5.9
(5.6)
3.2
3.4
5.1
(4.4)
4.1
Actuarial gain incurred during the financial year and recognised in the statement of comprehensive income
24.1
20.9
Cumulative actuarial losses recognised in the statement of comprehensive income
(49.4)
(73.5)
1 Disclosed in selling, administration and other operating costs.
Impact of plans on the statement of financial position
$million
Net asset (liability) of superannuation defined benefit plans
Fair value of assets
Present value of liabilities
Net asset (liability)
Included in the statement of financial position
Non-current other assets (note 29)
Other non-current liabilities
Net asset (liability)
Movements in the fair value of the defined benefit plan assets
Assets at the beginning of the financial year
Interest income
Return on assets (in excess of interest income)
Contributions from the employer
Contributions from participants
Benefits paid
Assets at the end of the financial year
Movements in the present value of the defined benefit plan liabilities
Liabilities at the beginning of the financial year
Current service cost
Finance cost
Contributions from participants
Actuarial gain
Benefits paid
Liabilities at the end of the financial year
2017
2016
172.8
(158.3)
167.1
(176.1)
14.5
(9.0)
14.6
(0.1)
14.5
167.1
5.6
8.4
2.6
1.0
(11.9)
4.3
(13.3)
(9.0)
182.5
4.4
(7.2)
2.7
1.0
(16.3)
172.8
167.1
176.1
2.9
5.9
1.0
(15.7)
(11.9)
211.0
3.4
5.1
1.0
(28.1)
(16.3)
158.3
176.1
CSR ANNUAL REPORT 2017 77
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | OTHER
25 Employee benefits (continued)
i)
Superannuation commitments (continued)
Net asset (liability) of superannuation defined benefit plans
193.3
157.2
182.2
168.8
211.0
182.5
176.1
167.1
172.8
158.3
(36.1)
(13.4)
(28.5)
(9.0)
14.5
2013
2014
2015
2016
2017
Present value of fund liabilities ($m)
Fair value of fund assets ($m)
Net asset (liability) ($m)
Recognition and measurement
For superannuation defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial
valuations being carried out at each reporting date. Actuarial gains and losses are recognised in full, directly in retained profits, in the year in
which they occur, and are presented in the statement of comprehensive income. Past service cost is recognised immediately to the extent
that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become
vested.
The defined benefit obligation recognised in the statement of financial position represents the present value of the defined benefit
obligation, adjusted for unrecognised past service cost, net of the fair value of the plan assets. Any asset resulting from this calculation is
limited to past service costs, plus the present value of available refunds and reductions in future contributions to the plan.
ii) Share-based payments
Long-term incentive (LTI) plan – Performance rights plan (PRP)
Under the LTI plan effective during the year ended 31 March 2017, eligible executives were invited to receive performance rights in the
company. Shares acquired on vesting of performance rights are fully paid ordinary shares and the amount payable to acquire these shares is
$nil.
A summary of the performance rights granted under the plan is set out below:
Number of performance rights
Opening balance
Granted during the year
Vested during the year
Lapsed during the year
Closing balance
2017
2016
3,727,228
1,315,620
(1,557,577)
(319,261)
6,081,313
1,053,185
(2,396,680)
(1,010,590)
3,166,010
3,727,228
There were no vested and exercisable shares at 31 March 2017 (2016: nil).
Performance rights outstanding at the end of the year have the
following expiry dates:
A summary of key valuation assumptions for rights granted in the
year ended 31 March 2017 is set out below:
Performance rights
Grant date
Expiry date
2017
2016
23 July 2013
23 July 2014
24 July 2015
26 July 2016
23 July 2017
23 July 2018
1 April 2018
1 April 2019
–
970,574
904,017
1,291,419
1,638,039
1,076,383
1,012,806
–
Total
3,166,010
3,727,228
Grant date
Vesting condition
Valuation method
Start of performance
period
Testing date
Expected life
Grant date share price
Volatility
Dividend yield
Risk-free rate
Fair value
26 July 2016
Relative TSR
26 July 2016
EPS and
strategic
objectives
Monte Carlo simulation Binominal Tree
1 April 2016
1 April 2016
31 March 2019 31 March 2019
2.7 years
$3.96
32%
5.7%
1.50%
$3.40
2.7 years
$3.96
32%
5.7%
1.50%
$2.42
Further details on the LTI plan and the terms of the grants during the year are detailed in the remuneration report on pages 30 to 33.
78 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | OTHER
25 Employee benefits (continued)
ii) Share-based payments (continued)
Deferred shares
Under the STI deferral plan, 20% of any STI earned by senior executives is delivered in CSR shares. These shares must be held in trust subject
to trading restrictions and have a continued service requirement for a minimum of two years from the date of allocation.
Deferred shares are administered by the CSR Share Plan Trust. The shares are acquired on market at the grant date and are held as treasury
shares until such time as they are vested. Forfeited shares are reallocated in subsequent grants. The number of shares to be granted is
determined based on the weighted average price at which the company’s shares are traded on the Australian Stock Exchange.
Number of rights to deferred shares granted
Fair value of rights at grant date
Other plans
2017
174,797
$3.51
2016
216,342
$3.79
Universal Share Option Plan (USOP): eligible employees can buy shares to a maximum value of $1,000 and receive an equivalent number of shares
for no cash consideration. The shares are acquired on market prior to issue with the cost of acquisition recognised in employee benefit expense.
Employee Share Acquisition Plan (ESAP): directors and employees can forgo up to $5,000 of their cash remuneration annually to acquire shares in
the company. The shares are purchased on market by the CSR Share Plan trustee, who acts on instructions given in accordance with the plan rules
and the company’s Share Trading Policy.
Number of shares issued under the plans
USOP1
ESAP
2017
547,476
99,485
2016
520,428
98,745
1 Number of shares issued includes the number of purchased shares issued to employees under the plan. Each participant was issued with shares worth $1,000 based on the
weighted average market price of $3.87 (2016: $3.77).
For further details on the USOP and the ESAP, refer to page 34 of the remuneration report.
Expenses arising from share-based payment transactions
$million
Long term incentive plan (PRP)
Deferred shares
Other plans
Total expense
Recognition and measurement
2017
2016
2,626,357
571,002
1,059,640
2,669,725
465,719
984,374
4,256,999
4,119,818
Share-based payments can either be equity settled or cash settled.
Equity settled: the fair value determined at the grant date of the equity settled share-based payments is expensed on a straight-line basis
over the vesting period (with a corresponding increase to the employee share reserve), based on the CSR group's estimate of shares that
will eventually vest.
Cash settled: the ultimate expense recognised in relation to cash settled transactions will be equal to the actual cash paid to the
employees, which will be the fair value at settlement date. The expected cash payment is estimated at each reporting date and a liability
recognised to the extent that the vesting period has expired and in proportion to the amount of the awards that are expected to ultimately
vest.
CSR ANNUAL REPORT 2017 79
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | OTHER
26 Related party disclosures
i)
Transactions with directors or other key management personnel
Transactions entered into during the financial year with directors of CSR Limited and other key management personnel of the CSR group and
with their closely related entities which are within normal customer or employee relationships on terms and conditions no more favourable than
those available to other customers, employees or shareholders included:
contracts of employment (see section ii) and reimbursement of expenses;
acquisition of shares in CSR Limited under the employee share plans and the dividend reinvestment plan;
dividends from shares in CSR Limited; and
sale and purchase of goods and services.
No new loans, loan repayments or loan balances occurred between the CSR group and directors and other key management personnel of the
CSR group during the financial year ended 31 March 2017 (2016: nil).
ii) Key management personnel remuneration
Total remuneration paid or payable to directors and key management personnel is set out below:
$
Short-term employee benefits
Share-based payments expense
Total
2017
2016
3,437,587
804,880
4,245,073
1,275,508
4,242,467
5,520,581
Details of remuneration and the CSR Limited equity holdings of directors and other key management personnel are shown in the remuneration
report on pages 23 to 40.
iii) Other related parties
Other than transactions with joint venture entities disclosed in note 23, no material amounts were receivable from, or payable to, other related
parties as at 31 March 2017 (2016: nil), and no material transactions with other related parties occurred during those years.
Details of payments to superannuation defined benefit plans are shown in note 25.
27 Subsequent events
With the exception of the items disclosed below, there has not arisen in the interval between 31 March 2017 and the date of this report, any
other matter or circumstance that has significantly affected or may significantly affect the operations of the CSR group, the results of those
operations or the state of affairs of the CSR group in subsequent financial years.
Dividends
For dividends resolved to be paid after 31 March 2017, refer to note 16.
Sale of Rosehill Monier Roofing site
On 18 April 2017, CSR announced the sale of its Monier Roofing site located at Rosehill, NSW. Profit before tax of $49.2 million is expected to
be recognised as a result of the sale. Under the terms of the sale, a $9.8 million option fee was recorded in the statement of financial
performance for the year ended 31 March 2017. The remaining $39.4 million of profit before tax will be recognised in the statement of
financial performance in the year ending 31 March 2018.
Monier Roofing will continue its manufacturing operations at Rosehill under an operating lease and will transition to a new manufacturing site
over the next three to four years.
80 CSR ANNUAL REPORT 2017
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | OTHER
28 Commitments and contingencies
i)
Commitments
$million
Operating lease and hire expenditure
Land and buildings
Plant and equipment
Total
Contracted lease and hire expenditure comprises:
Within one year
Between one and five year(s)
After five years
Total
Contracted capital expenditure comprises:
Payable within one year
2017
2016
212.8
27.6
240.4
51.1
117.6
71.7
240.4
159.4
19.9
179.3
44.0
91.2
44.1
179.3
12.6
7.7
The total of minimum rentals to be received in the future under non-cancellable sub-leases as at 31 March 2017 is not material. Contingent
rentals for 2017 and 2016 financial years were not material. The leases on most of the CSR group’s rental premises contain renewal options.
The CSR group’s decision to exercise renewal options is primarily dependent upon the profitability of business conducted at the location.
Recognition and measurement – operating leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the CSR group as lessee are classified as
operating leases.
ii) Contingencies
Contingencies for CSR Limited are outlined in the parent entity note 24. There are no other contingencies in relation to controlled entities
within the CSR group. Operating lease expenditure for 2017 and 2016 is disclosed in note 5.
29 Other non-current assets
$million
Loans to joint venture entities1
Other loans and receivables2
Total non-current receivables
Prepayments
Other assets
Superannuation defined benefit plans – fair value of surplus
Total other non-current assets
1 The CSR group has provided facilities to joint venture entities on arm's length terms.
2 No fixed repayment term.
Note
25
2017
11.3
12.1
23.4
–
4.7
14.6
19.3
2016
37.2
14.1
51.3
7.4
5.3
4.3
17.0
CSR ANNUAL REPORT 2017 81
CSR LIMITED | NOTES TO THE FINANCIAL REPORT | OTHER
30 Auditor’s remuneration
$
Deloitte Touche Tohmatsu in Australia
Audit or review of financial statements
Sustainability and carbon related assurance services
Other advisory services
Total auditor's remuneration
31 Other accounting policies
2017
2016
788,400
58,000
40,600
887,000
715,000
57,500
10,000
782,500
Cash and cash equivalents: net cash is defined as cash at bank and on hand and cash equivalents, net of bank overdrafts. Cash equivalents
include highly liquid investments which are readily convertible to cash, and loans which are not subject to a term facility. Cash and cash
equivalents held at 31 March 2017 included $19.1 million of cash at bank and on hand (2016: $35.6 million) and $nil short-term deposits
(2016: $37.5 million).
Tax consolidation: Australian tax legislation allows groups, comprising a parent entity and its Australian resident wholly owned entities, to elect to
consolidate and be treated as a single entity for income tax purposes.
The CSR group has elected for those entities within the CSR group that are wholly owned Australian resident entities to be taxed as a single entity
from 1 April 2004.
Prior to the adoption of the tax consolidation system, CSR Limited, as the head entity in the tax consolidated group, agreed to compensate or be
compensated by its wholly owned controlled entities for the balance of their current tax liability/(asset) and any tax loss related deferred tax asset
assumed by CSR Limited. Due to the existence of a tax funding arrangement between the entities in the tax consolidated group, amounts are
recognised as payable to or receivable by CSR Limited and each member of the group in relation to the tax contribution amounts paid or payable
between CSR Limited and the other members of the tax consolidated group in accordance with the arrangement.
Foreign currency: all foreign currency transactions during the financial year have been brought to account using the exchange rate in effect at
the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at that date.
Exchange differences are brought to account in profit or loss in the year in which they arise except if designated as cash flow hedges.
On consolidation, the results and financial position of foreign operations are translated as follows:
assets and liabilities are translated using exchange rates prevailing at the end of the reporting period;
exchange differences arising, if any, are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of
income and expense items are translated at the average exchange rates for the period; and
the operation.
Put option liabilities on non-controlling interests: contracts that contain an obligation to pay cash in the future to purchase minority shares held
by non-controlling interests, even if the payment is conditional on the option being exercised by the holder, are recorded as a financial liability.
The initial redemption liability is recorded against equity. The financial liability is recognised at the present value of the expected redemption
amount.
Goods and services tax: revenues, expenses and assets are recognised net of the amount 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 from or payable to the taxation
authority is included as a current asset or liability.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and
financing activities which are recoverable from or payable to the taxation authority are classified as operating cash flows.
New standards not yet applicable:
1
2
3
AASB 16 Leases (AASB 16): released on 23 February 2016 and will primarily affect the accounting treatment of leases by lessees and will
result in the recognition of almost all leases on the statement of financial position. The standard removes the current distinction between
operating and financing leases and requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals for
almost all lease contracts. The standard will be first applicable for the year commencing 1 April 2019 and the group is currently in the process
of quantifying the expected impact. The impact of this standard is expected to be material to the CSR group. However, until the group
undertakes a detailed review, it is not practicable to provide a reasonable estimate of the effect of this standard.
AASB 15 Revenue from contracts with customers (AASB 15): issued in December 2014 and is expected to be first applicable to CSR Limited
in the year commencing 1 April 2018, with amended comparatives. AASB 15 will replace AASB 118 Revenue, which covers contracts for
goods and services, and AASB 111 Construction Contracts, which covers construction contracts. The new standard is based on the principle
that revenue is recognised when control of a good or service transfers to a customer, that is, the ‘notion of control’ replaces the existing
‘notion of risks and rewards’. The impact of this standard is not expected to have a material impact to the CSR group.
AASB 9 Financial instruments (AASB 9): the CSR group has adopted AASB 9 as issued in December 2013, which resulted in changes in
accounting policies and adjustments to the amounts recognised in the financial statements. The CSR group has adopted the two main phases
relating to classification and measurement of financial assets and financial liabilities (Phase 1) and hedge accounting (Phase 3). The update
to AASB 9 Financial Instruments as issued in December 2013 which includes impairment (Phase 2) has not yet been adopted by the CSR
group. Phase 2 of this standard is not expected to have a material impact on the CSR group and is first applicable for the year commencing 1
April 2018.
82 CSR ANNUAL REPORT 2017
CSR LIMITED | DIRECTORS’ DECLARATION
CSR LIMITED
ABN 90 000 001 276
Directors' declaration
The directors declare that:
1
2
3
4
5
in the directors’ opinion, there are reasonable grounds to believe that CSR Limited will be able to pay its debts as and when they become
due and payable;
in the directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards, as
disclosed in note 1;
in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including
compliance with accounting standards and giving a true and fair view of the financial position and performance of the CSR group;
the directors have been given the declarations required by section 295A of the Corporations Act 2001 from the managing director and
chief financial officer for the financial year ended 31 March 2017; and
there are reasonable grounds to believe that CSR Limited and the group entities identified in note 20 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 between CSR Limited and those group
entities pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations Act 2001.
Jeremy Sutcliffe
Chairman
Sydney, 10 May 2017
Rob Sindel
Managing Director
Sydney, 10 May 2017
CSR ANNUAL REPORT 2017 83
CSR LIMITED | INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of CSR Limited (“CSR” or the “company”) and its subsidiaries (the “group”), which comprises the
consolidated statement of financial position as at 31 March 2017, the consolidated statement of financial performance, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and 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:
(i)
(ii)
giving a true and fair view of the group’s financial position as at 31 March 2017 and of its financial performance for the year then
ended; and
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 this 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 (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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the company,
would be in the same terms if given to the directors as at the time of this auditor’s report.
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 judgement, were of most significance in our audit of the financial report for the
current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter
How the scope of our audit responded to the key audit matter
Product Liability Provision
(Refer to Note 13 Product liability)
CSR has recognised a product liability provision of
$312.4 million as at 31 March 2017. The provision is
in respect of all known and reasonably foreseeable
future asbestos claims. The provision is determined
after considering the advice provided by management
appointed external experts in Australia and the United
States of America (“USA”), being the countries giving
rise to the liabilities.
The determination of the provision is subject to
significant judgement as to expected settlement
amounts and likelihood of future claims. In addition,
the assumptions in respect of movements in foreign
exchange rates and discount rates have a significant
impact on the estimate of provisions.
The size and complexity of the assumptions used in
determining the provision result in it being considered
as a key audit matter.
In conjunction with actuarial specialists, our procedures included, amongst
others:
assessing the competence and independence of management appointed
external experts;
assessing the appropriateness of the assumptions and methodology used in
the reports prepared by the management appointed external experts;
including:
- evaluating the reasonableness of the methodology used to calculate the
provision;
- benchmarking of the discount rates; and
- comparison of historical claims experience to assumptions used to
estimate future claims;
testing on a sample basis the accurate inclusion and exclusion of asbestos
claims in management’s liability database, which is provided to management
appointed external experts and forms the basis for the reports;
making enquiries of management appointed external experts and the
company’s internal and external legal counsel in respect of their conclusions;
agreeing the provision breakdown between liabilities relating to Australia and
the USA to the respective external experts’ reports;
testing the translation of the USA liability to Australian dollars at the
appropriate foreign currency exchange rate;
assessing the basis for the determination of the prudential margin through
enquiries of management and their consideration of the external experts’
reports; and
assessing the appropriateness of the relevant disclosures in the financial
statements.
84 CSR ANNUAL REPORT 2017
CSR LIMITED | INDEPENDENT AUDITOR’S REPORT
Key audit matter
Asset valuation
(Refer to Note 10 Property, plant and equipment and
intangible assets)
At 31 March 2017 the group’s consolidated
statement of financial position includes goodwill
amounting to $97.1 million, other intangible assets
amounting to $46.7 million and property, plant and
equipment amounting to $848.6 million, comprised of
several cash generating units (CGUs).
The assessment of impairment of the company’s
goodwill, other intangible assets and property, plant
and equipment balances involved the exercise of
significant judgement in respect of key assumptions
such as discount rates, inflation, growth rates,
forecast changes in the building cycle and forecast
future cash flows, as appropriate.
Management prepare an impairment trigger analysis
to identify which CGUs should be considered further
for impairment. The Viridian Australia and Viridian
New Zealand CGUs were identified by management as
CGUs requiring an impairment analysis due to the low
return on funds employed.
We focussed on this area as a key audit matter due to
the judgment involved in forecasting future cash flows
and the selection of assumptions.
How the scope of our audit responded to the key audit matter
In conjunction with valuation specialists, our procedures included, amongst
others:
evaluating the process used by management in the determination of those
CGUs requiring further impairment analysis as a consequence of an
impairment trigger by:
- assessing management’s determination of the company’s CGUs based on
our understanding of the business and consistency with the segment
reporting;
- evaluating management’s impairment trigger analysis based on a number
of factors including annual financial performance and external market
conditions; and
- checking that each CGU containing goodwill had been included in
management’s impairment testing;
evaluating the analysis performed by management and the conclusions
drawn in relation to the Viridian Australia and Viridian New Zealand CGUs by:
- critically assessing the appropriateness of the impairment model
methodology, key inputs and assumptions used in each model using our
knowledge of each business and the industry, including assessment of:
the discount rate;
the terminal growth rate;
the inflation rate;
forecast changes in the business cycle; and
forecast cash flows;
- testing, on a sample basis, the mathematical accuracy of the cash flow
models, including agreeing relevant data to the latest board approved
forecasts;
- assessing the historical accuracy of forecasting of the CGUs;
- obtaining and reading the position papers prepared by management to
support the models for these CGUs;
- evaluating management’s process, including testing controls on a sample
basis in respect of the preparation and review of forecasts; and
- assessing the appropriateness of the relevant disclosures in the financial
statements.
Other Information
The directors are responsible for the other information. The other information comprises the information included in the group’s annual report
for the year ended 31 March 2017, 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 express any form of assurance conclusion thereon.
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.
Directors’ Responsibilities 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 ability of the group to continue as a going concern, disclosing,
as applicable, matters related 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 has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
CSR ANNUAL REPORT 2017 85
CSR LIMITED | INDEPENDENT AUDITOR’S REPORT
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement 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’s 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, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial
report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 23 to 40 of the company’s annual report for the year ended 31 March 2017.
In our opinion, the Remuneration Report of CSR Limited for the year ended 31 March 2017, complies with section 300A of the Corporations
Act 2001.
Responsibilities
The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section
300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
J A Leotta
Partner
Chartered Accountants
Sydney, 10 May 2017
86 CSR ANNUAL REPORT 2017
CSR LIMITED | SHAREHOLDER INFORMATION
20 LARGEST HOLDERS OF ORDINARY SHARES
As at 28 April 2017
RANK
NAME
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD LENDING DRP
BNP PARIBAS NOMINEES PTY LTD LENDING COLLATERAL
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
AMP LIFE LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
PRUDENTIAL NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
ECAPITAL NOMINEES PTY LIMITED
UBS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR ALLAN ERNEST ORMES
CSR SHARE PLAN PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
Top 20 holders of issued capital
Remaining holders balance
SUBSTANTIAL SHAREHOLDERS OF CSR LIMITED
UNITS
161,695,116
81,826,711
53,131,022
28,266,912
9,283,737
5,998,060
4,205,000
3,477,809
3,109,435
2,786,924
2,528,460
2,500,000
1,433,974
1,202,622
1,190,000
1,178,071
1,067,698
1,066,667
874,219
850,934
367,673,371
136,807,487
% OF UNITS
32.05
16.22
10.53
5.60
1.84
1.19
0.83
0.69
0.62
0.55
0.50
0.50
0.29
0.24
0.24
0.23
0.21
0.21
0.17
0.17
72.88
27.12
The Vanguard Group Inc. and its subsidiaries advised that as of 17 June 2016, it and its associates had an interest in 25.3 million shares,
which represented 5.00% of CSR’s issued capital at that time.
Blackrock Group and its subsidiaries advised that as of 2 February 2017, it and its associates had an interest in 25.2 million shares, which
represented 5.00% of CSR’s issued capital at that time.
SHAREHOLDINGS BY GEOGRAPHIC LOCATION
Location
AUSTRALIA
NEW ZEALAND
HONG KONG
UNITED KINGDOM
UNITED STATES OF AMERICA
Other
Total
Units
500,095,558
2,586,165
668,749
407,940
148,754
573,692
Units %
99.13
0.51
0.13
0.08
0.03
0.12
Holders
48,441
1,314
43
255
97
233
Holders %
96.15
2.61
0.09
0.51
0.19
0.45
504,480,858
100.00
50,383
100.00
CSR ANNUAL REPORT 2017 87
CSR LIMITED | SHAREHOLDER INFORMATION
DISTRIBUTION OF SHAREHOLDINGS
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
UNMARKETABLE PARCELS
Holders
24,897
20,449
3,151
1,788
98
50,383
Units
12,389,868
45,809,154
22,290,833
38,506,073
385,484,930
504,480,858
Minimum $ 500.00 parcel at $4.70 per unit
107
Minimum parcel size
Holders
1,344
% of issued capital
2.46
9.08
4.42
7.63
76.41
100.00
Units
46,773
RECENT CSR DIVIDENDS
Date paid
December 2012
July 2013
December 2013
July 2014
December 2014
July 2015
December 2015
July 2016
December 2016
Type of dividend
Dividend per share
Franking
Franked amount
per share at 30%
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
3.0 cents
2.1 cents
5.0 cents
5.0 cents
8.5 cents
11.5 cents
11.5 cents
12.0 cents
13.0 cents
0%
0%
0%
0%
0%
0%
0%
0%
0%
NA
NA
NA
NA
NA
NA
NA
NA
NA
88 CSR ANNUAL REPORT 2017
SHAREHOLDER
INFORMATION
ANNUAL GENERAL MEETING
11:00am
Friday 23 June 2017
Northside Conference Centre
Corner Oxley Street and Pole Lane
Crows Nest NSW 2065 Australia
REGISTRY INFORMATION
All inquiries and correspondence regarding shareholdings
should be directed to CSR’s share registry:
Computershare Investor Services Pty Limited
GPO Box 2975 Melbourne VIC 3001 Australia
1800 676 061
Telephone
International +61 3 9415 4033
Facsimile
International +61 3 9473 2500
(03) 9473 2500
www.investorcentre.com/contact
CSR LIMITED
ABN 90 000 001 276
Triniti 3, Level 5, 39 Delhi Road
North Ryde NSW 2113 Australia
Locked Bag 1345
North Ryde BC NSW 1670 Australia
(02) 9235 8000
Telephone
International +61 2 9235 8000
Facsimile
International +61 2 8362 9013
(02) 8362 9013
Email investorrelations@csr.com.au
www.csr.com.au
The CSR Annual Report, Corporate Governance Statement and
Sustainability Report are available to view online or download,
visit www.csr.com.au
csr.com.au