CSR LIMITED
ANNUAL REPORT 2021
BUILDING
SOLUTIONS FOR
A BETTER FUTURE
CSR at a glance
Chair’s Message
Building Products Overview
– Masonry & Insulation
Contents
2
4
6 Managing Director’s Review
8
8
10 – Interior Systems
12 – Construction Systems
14 Property
15 Aluminium
16 Sustainability at a glance
18 – Environment
20 – People and Safety
22 – Community
CSR LIMITED ABN 90 000 001 276
24 Financial Overview
25 Operating and Financial Review
30 Corporate Governance Statement and Risk
44 Board of Directors
46 Directors Report
50 Remuneration Report
71 Financial Report
112 Directors Declaration
113 Independent Auditor’s Report
116 Shareholder Information
AGM DETAILS
CSR’s Annual General Meeting (AGM) will be held on
25 June 2021 at 10am (AEST). Details on arrangements
for the AGM are included in the Notice of Meeting.
CSR is building solutions for a better future for our
customers by investing in new building systems
to reduce construction time and deliver better
energy efficiency, comfort and design…and for our
people and the environment by creating a safe,
diverse and sustainable place to work and grow.
1
CSR AT
A GLANCE
CSR is a leading building products company in Australia
and New Zealand.
Formed in 1855, CSR is one of Australia’s oldest manufacturing companies. Today it is a leading
building products company in Australia and New Zealand and is the name behind some of the
market’s most trusted and recognised brand names.
BUSINESS SEGMENT OVERVIEW
CONSTRUCTION MARKET DIVERSIFICATION
9%
21%
YEM21
EBIT
$238m
70%
Building Products
Property
Aluminium
8%
8%
10%
YEM21
Building Products
Revenue
$1.5bn
54%
20%
Detached
Non-residential
Medium density
High density
Alterations
and additions
Strong financial position1
Operational excellence
with a strong foundation
4%
$2.1bn
Revenue
17%
$146m
Statutory net profit
after tax
10%
$238m
Earnings Before Interest
and Tax (EBIT)
21%
33.1c
Earnings per share
2,538
CSR employees
170+
Manufacturing and
distribution sites across
Australia and New Zealand
50+
Property sites owned
across Australia
18,000+
Customers across Australia
and New Zealand
23c
Full year ordinary dividend
(fully franked)
13.5c
Special dividends
(fully franked)
1. Before significant items, unless stated.
2
$251m
Net cash
$2.2bn
Total assets
CSR LIMITED ANNUAL REPORT 2021 Building Products
CSR’s leading range of building
products and systems serve
a broad range of construction
segments backed by technical
expertise across building
technology, compliance, energy
efficiency and architectural design.
CSR continues to invest in new
solutions to reduce construction
time and improve the comfort and
design of homes and buildings.
MASONRY & INSULATION
Masonry & Insulation brings together the key areas of PGH Bricks and Monier Roofing
for selection of external colours and design, integrating with Bradford’s insulation and
ventilation systems for improved energy efficiency and home comfort.
INTERIOR SYSTEMS
Interior Systems builds on Gyprock’s leading brand position in the plasterboard market
with the extensive range of Martini, Himmel and Potter commercial fitout offerings.
CONSTRUCTION SYSTEMS
Construction Systems develops engineered walling and cladding systems across three
leading brands of Hebel, AFS and Cemintel which bring speed of construction with
versatile design applications.
Aluminium
Through its 70% shareholding
in Gove Aluminium Finance
Limited, CSR holds an
effective 25.2% interest
in the Tomago aluminium
smelter in New South Wales.
Property
CSR generates additional
earnings from its Property
business which focuses on
maximising financial returns
from surplus former
manufacturing sites and
industrial land.
3
CHAIR’S MESSAGE
STRONG OPERATIONAL
AND FINANCIAL
PERFORMANCE Significant increase in dividends
reflects strong cash generation
CSR’s strong operational performance
and financial position has enabled the
company to provide a significant lift in
dividends for shareholders. Following the
additional proceeds from Property this
year, we have also declared a special
dividend of 9.5 cents per share (fully
franked).
This is in addition to the final dividend we
have declared of 14.5 cents per share
(fully franked). This compares to the
previous year when no final dividend was
paid due the company’s COVID-19 cash
preservation position.
This will bring the full year dividend
(excluding special dividends) to
23.0 cents per share (fully franked)
up from 10.0 cents per share (50%
franking) in the previous year.
We ended the year with a strong net
cash position of $251 million which is
before the $116.5 million in dividends
to be paid in July 2021. This provides
significant opportunity to invest in the
business over the coming years.
Building Products positioned
for growth
A key milestone this year was the launch
of a number of strategic initiatives for
the business. CSR has a very strong
position in the detached housing market,
but we see opportunities to diversify into
other sectors so we can drive improved
performance through the housing cycle
and scale for growth by leveraging
capability from across the business.
Julie and the team have reorganised
the business this year to deliver on
this strategy. This was achieved while
ensuring the business stayed focused
on our customers and operating in the
COVID-19 environment. This was a
difficult situation to manage and our
result this year is a strong endorsement
of the capabilities of the CSR team.
JOHN GILLAM CHAIR
Result reflects
improved performance
in Building Products
and increased
Property contribution
I am pleased to report that we ended the
year with a strong result for the business.
Throughout this year, we have operated
within the COVID-19 environment with
the health and safety of our teams
remaining our first priority. We also
ensured the business had a solid liquidity
position and managed our costs, so we
were prepared for the year ahead with
a secure financial position.
With this platform, we performed very
well while making a number of important
strategic changes to how we organise the
business and drive future growth.
Group statutory net profit after tax
up 17%
Our statutory net profit after tax of
$146.1 million was up 17% from
$125.3 million in the previous year.
Before significant items, net profit after
tax of $160.4 million was up 19%.
The lift in net profit was driven by an
8% increase in Building Products earnings
to $184.3 million. Strong cost control and
operational efficiency offset the impact of
the slowdown in residential construction
activity which declined 4% during the year.
Property delivered earnings of
$54.2 million compared to the previous
year when no significant earnings
were recorded due to the timing of
transactions. This result is the second
major settlement of the Horsley Park
industrial development and is a great
example of the significant value created
from our Property projects.
Earnings from our investment in
Aluminium declined to $23.4 million
down from $59.6 million reflecting a
sharp decline in aluminium prices at
the start of the financial year which
was partly offset by hedging and lower
input costs.
4
CSR LIMITED ANNUAL REPORT 2021 “
We are increasing our position across more diverse construction segments
and markets to drive improved performance through the housing cycle and
scale for growth.
”
Environment and climate change
a key priority
Climate change is a key priority area
for CSR. We continue to progress our
strategy to improve the sustainability of
our operations. This includes ongoing
review of the risks and opportunities of
climate change across the business.
Over the past ten years, we have covered
many of the key recommendations of the
Task Force on Climate-related Financial
Disclosures (TCFD) framework. This
includes how we manage our internal
risks to capture specific questions on
climate risks on the business.
Further details on our approach to
sustainability over the past year are
included in the 2020 CSR Sustainability
Report which was published in
December 2020.
Property delivering strong returns
Property plays a crucial role in our
strategy to provide flexibility for our
Building Products operations, capture
the best value from our extensive land
holdings and fund reinvestment in our
manufacturing businesses.
Work continues on the next stage of
our Horsley Park development. We have
also made good progress on our 200
hectare site at Badgery’s Creek which
is adjacent to the new Western Sydney
Airport. The industrial zoning of this site
was completed in September 2020 and
we are now providing water from the
rehabilitation of the quarry at the site for
the construction of the airport which is
saving over 1 billion litres of potable water.
The strong demand for industrial sites
in western Sydney, combined with the
delivery of contracted transactions above
expectations, has significantly increased
the valuation of CSR’s extensive
Property portfolio.
Our Property portfolio is well positioned
to deliver strong returns over the next
10 years and beyond.
Board changes
In December 2020, we welcomed
Nigel Garrard to the CSR board as a
non-executive director. Nigel brings
extensive operational, manufacturing
and listed company experience to CSR.
Nigel has already provided a valuable
contribution to the board over the last
few months since he joined the company.
We will also be saying farewell to non-
executive director Mike Ihlein later this year.
As an experienced board director across
a range of industries, Mike has played a
crucial role on our board committees and
we thank him for his contribution to CSR
over the past 10 years.
Thank you to the CSR team
On behalf of the board, I want to
commend the 2,500 CSR employees
across Australia and New Zealand for
their efforts this year. The team faced
many challenges and delivered
a strong performance.
Thanks to all of our teams for supporting
each other and our customers during
this difficult year. Thanks as well to our
shareholders for your ongoing support.
JOHN GILLAM
CHAIR
Capital management increasing
returns for shareholders
CSR’s strong financial performance is
backed by our operational discipline,
cost control and investment in growth
which has provided the opportunity
for the company to deliver consistent
returns to shareholders both through
dividends and capital management
over the past five years.
CAPITAL MANAGEMENT (DIVIDENDS AND SHARE BUY BACKS)
$ MILLION
$135
$137
$138
$131
$177
4
1
7
131
136
131
65
112
62
20
49
$177m
In total dividends
to be paid for YEM21
YEM17
YEM18
YEM19
YEM20
YEM21
Dividends
Special dividends
Share buy backs
5
MANAGING DIRECTOR’S REVIEW
BUILDING ON
A STRONG
FOUNDATION
JULIE COATES MANAGING DIRECTOR AND CEO
Maximising current
market opportunity
and delivering long-
term growth
CSR performed very well during the year
reflecting the strength of our position
across different segments and markets.
This ensured we delivered a strong
performance as market conditions were
mixed, particularly at the start of the year
with COVID-19. The second half of the
year has seen improvement in detached
housing activity and we will benefit from
our strong position in this market.
Our business is operating on a strong
foundation with a unique opportunity to
build scale and growth. To achieve this,
we have completed the formation of a
streamlined structure with three new
business units: Masonry & Insulation,
Interior Systems and Construction
Systems. These businesses include
our trusted brands with market leading
positions and are expanding their offering
across the construction market by
developing more complete solutions.
6
We have also formed two new teams in
Supply Chain and Customer Solutions to
ensure we maximise our business units’
operational strengths while capturing
the value of CSR’s considerable synergy
opportunities.
Building Products earnings up 8%
Our Building Products business performed
well as strong cost control and operational
efficiency generated an 8% increase in
earnings to $184.3 million.
CSR’s largest business Gyprock delivered
increased earnings as the business
benefitted from a diversified revenue
base across residential and commercial
sectors. PGH Bricks’ earnings also
increased following the benefit of
overhead cost savings. Hebel and AFS
were lower as they have a significant
exposure to the high density market
which continues to decline after
a period of very strong demand.
Our work on optimising our extensive site
network continues to identify areas for
re-investment, improve efficiency and
ultimately release valuable surplus land
for redevelopment.
Sustainability – core to how we
operate and grow
Sustainability is a core part of our
strategy both in how we operate and
how we will grow. This strategy is aligned
with our priority areas of environment,
people, community and supply chain.
In June 2020, we completed
environmental targets set back in 2010
with some significant results including
a 57% reduction in waste per tonne
of saleable product, 32% reduction in
emissions, 24% reduction in energy use
and 13% reduction in water.
This year we have broadened our
approach to set new targets to 2030
across a range of metrics including the
use of resources, renewable energy
and biodiversity which are linked to
five of the United Nations Sustainable
Development Goals.
CSR LIMITED ANNUAL REPORT 2021 Building solutions for
a better future
A key part of developing our strategy is
establishing our purpose. This captures
both what we are doing across the
organisation with an eye on the future
with innovation and sustainability for all
stakeholders.
Customer Solutions: Moving from a
product-focused to a solution-focused
business and from a core position
in detached housing to servicing a
broad range of construction segments.
This involves enhancing our level of
technical assistance – particularly in
the specification stage which includes
planning for the various requirements
from acoustic and fire protection to
structural and engineering advice.
Supply Chain: Unlocking efficiencies
across our large network and developing
a supply chain model that integrates the
logistics activity across all of our brands
to provide benefits to customers while
increasing productivity across our sites
and reducing our environmental impact.
Each CSR business unit is now updating
their roadmap to align their operations
to these goals which will be reviewed
regularly by senior management and
the board Workplace Health, Safety and
Environment Committee.
In terms of safety, COVID-19 had a
significant impact on how we operated
the business as we shifted our safety
agenda to adapt the business to new
guidelines. This followed a significant
investment over the past few years in our
safety management systems.
We are now transitioning our safety
strategy to focus on two key areas.
Firstly, to build on our risk management
framework by focusing our operational
teams and activities with high
consequence risk.
STRONG FOUNDATION
– Trusted brands with leading market position
– Serving a broad range of construction segments
– 18,000+ customers across Australia & New Zealand
– Multiple channels to market
OPERATIONAL EXCELLENCE
– 40+ Manufacturing sites – operations excellence and innovation
– Significant upside from supply chain integration across CSR
– Extensive network of 100+ CSR branded and distribution outlets
(metro and regional reach)
SUSTAINABLE PLATFORM
– Strong balance sheet
– Industry leading Building Products Return on Funds Employed (ROFE)
with track record of financial discipline
– 50+ Property sites owned across Australia with significant EBIT locked in
for the next three years
CUSTOMER ENGAGEMENT
– Experienced team of 2,500+
– Highly credentialed team to unlock value and deliver strategy
– Sales, marketing and technical expertise in building technology,
compliance, energy efficiency and architectural design
Secondly, we are transitioning our safety
strategy to focus more on coaching and
mentoring our teams to ensure we move
towards demonstrating best practice
safety leadership into the future.
We have also launched a new program
this year called Wellbeing@CSR which
is providing our teams with tools needed
to stay well both physically and mentally.
Providing health and wellbeing support
for our employees is a top priority for us.
Outlook for the year ending
31 March 2022 (YEM22)
Building Products – The diversity of
CSR’s business provides resilience and
performance will benefit from our strong
position in the detached housing market.
Property – The Horsley Park project
is progressing well with a further
$146 million in sale proceeds contracted
over the next three years, including
$18 million of EBIT expected to complete
in YEM22. Marketing continues on the
final 12 hectare tranche at Horsley Park,
with work progressing on other projects.
Aluminium – The forward hedge position
was strengthened in the second half of
YEM21 to lock-in future returns. Based
on the significant hedge position, EBIT
for YEM22 is expected to be in the range
of $32 million to $40 million, assuming
all other revenue and cost areas are
unchanged.
A further update on current trading for
the CSR Group will be provided at the
company’s AGM on 25 June 2021.
Thanks to the team for their
dedication and commitment to CSR
In closing, I want to echo John’s
comments about the dedication of the
CSR team this year in what has been a
very challenging environment. We now
have a great opportunity to maximise
the opportunities in the current market
and drive the growth and development of
the business for the long-term. We look
forward to sharing more with you on our
strategy in the year ahead.
JULIE COATES
MANAGING DIRECTOR AND CEO
7
BUSINESS UNIT OVERVIEW | BUILDING PRODUCTS
MASONRY
& INSULATION
MASONRY & INSULATION BRINGS
TOGETHER ESTABLISHED BRANDS WITH
LEADING MARKET POSITIONS BACKED BY
OUR MANUFACTURING EXPERTISE AND
TECHNICAL AND ENGINEERING TEAMS.
CSR provides a unique depth of product
offering, ranges, colours and textures to
complete the look and feel of the home.
Unique depth of product range and
systems
Our offering includes leading solutions in
exterior design, home health and comfort
and energy efficiency. As part of the path
to establishing net-zero in the Australian
National Construction Code (NCC), we
are providing improvements in energy
efficiency, condensation control and
internal air quality in new homes through
our suite of systems across insulation,
construction fabrics and ventilation.
Extensive distribution and selection
centres
The Masonry & Insulation businesses
include an extensive range of selection
centres and distribution networks that
supports our builder customers, approved
resellers, retail hardware partners and a
network of installers and tradespeople.
Sustainability of operations
Sustainability is core to our operations with
Bradford glasswool insulation produced
from up to 80% recycled glass. Monier is
extending its use of waste by-product fly
ash to incorporate 15-20% of its cement
requirements, while PGH continues to
assess biosolids as a feedstock for the kiln
system to reduce gas consumption.
“
Early planning for thermal and
acoustic insulation for a new
build or renovation will ensure
the structural health and
comfort of your home.
”
YEM21 BUILDING PRODUCTS REVENUE
LEADING BRANDS
$1.5bn 43%
MASONRY &
INSULATION
Leading supplier of materials
designed to make homes and
buildings energy efficient,
comfortable and healthy.
The leading roofing expert
with over 100 years
experience manufacturing
quality roofing products
underpinned by a
commitment to innovation.
Leading manufacturer and
innovator of clay bricks,
walling systems and façade
solutions.
8
CSR LIMITED ANNUAL REPORT 2021 “
Choosing sustainable
home materials with the
environment in mind.
”
Get the look
from The
Block 2020
CSR HAS A LONG
RELATIONSHIP WITH THE
BLOCK TV SHOW WHICH
HAS SHOWCASED MANY
OF OUR PRODUCTS OVER
THE YEARS.
The 2020 season of The Block was located in the bayside
suburb of Brighton in Melbourne with each team allocated
a different period home to transform in keeping with its
original heritage style. The Block showcased the versatility
of PGH Bricks when it comes to designing for any style.
Using brick allows seamless design flows between indoor
and outdoor spaces, creating cohesive areas for the
Australian lifestyle.
Bradford was also the secret weapon in every room in
The Block, as insulation solutions are the key to ensuring
comfort and sustainability. The Block also highlighted the
importance of designing insulation systems prior to the
construction phase across internal and external walls,
ceilings and roofs.
bradfordinsulation.com.au | pghbricks.com.au
Monier Crafted for
Australia campaign
Monier’s terracotta rooftiles bring a timeless
beauty and rustic charm to a home.
Manufactured in Australia, Monier terracotta
bring natural materials, long-lasting colour,
natural insulation and a 50 year guarantee.
The beautiful array of colours and profiles
were relaunched in 2020 as part of the
Crafted for Australia campaign. Terracotta
maintains a consistent temperature in the
home to keep it cooler in summer and
warmer in winter, lowering energy bills with
its thermal properties and natural materials
reducing condensation and mould.
monier.com.au
9
The Three Birds
Renovations team
created a Hamptons
haven using Monier’s
Horizon tile.
BUSINESS UNIT OVERVIEW | BUILDING PRODUCTS
INTERIOR
SYSTEMS
“
The Block 2020 featured a curved wall using
Gyprock Flexible and ceilings with style using
Gyprock Supaceil.
”
INTERIOR SYSTEMS BUILDS ON
GYPROCK’S LEADING BRAND
POSITION WITH THE INTERIOR
SYSTEMS EXPERTISE OF MARTINI,
HIMMEL AND POTTER TO PROVIDE
A COMPLETE RESIDENTIAL AND
COMMERCIAL OFFERING.
Gyprock – Australia’s leader in
plasterboard
For almost 75 years, CSR has led
the innovation of plasterboard in
the Australian market. The business
is backed by four strong, low cost
manufacturing sites in Brisbane, Sydney,
Melbourne and Perth. A key channel to
market is the 56 Gyprock Trade Centres
and 38 aligned distributors and retail
partners across Australia. Our customers
have a strong connection to the Gyprock
brand and have referred to themselves
as Gyprockers for decades.
Unique offering in interior systems
with deep technical expertise
Gyprock’s leading position is bolstered by
a stronger presence in the commercial
segment to provide complete interior
lining systems for our customers.
Martini manufactures a range of
acoustic insulation products with
thermally-bonded polyester fibres made
from up to 80% recycled PET packaging.
Himmel in Australia and Potter in
New Zealand are leading interior systems
businesses supplying ceiling tiles,
aluminium partitions and architectural
hardware across social, infrastructure
and commercial projects. All of the
businesses have extensive technical
expertise which we use to work with
architects and specifiers to deliver
solutions for the unique challenges
and specifications for their projects.
LEADING BRANDS
YEM21 BUILDING PRODUCTS REVENUE
Gyprock is Australia’s leading
manufacturer of gypsum
based products including
plasterboard, cornice and
compounds.
Designs and manufactures
high quality thermal and
acoustic polyester fibre
products.
Leading brands in
aesthetic and acoustic
interior solutions.
$1.5bn
39%
INTERIOR
SYSTEMS
10
CSR LIMITED ANNUAL REPORT 2021 Martini brings
style and
acoustic
performance
to Google
MARTINI’S DECO QUIET
PANELS INCLUDED IN THE
INNOVATIVE DESIGN OF
GOOGLE’S SYDNEY OFFICE
When designing the new office of Google, the team wanted
a functional and contemporary working space that is buzzing
with activity. The office was designed with a number of open
planned collaborative spaces, as ideas get bounced around
so does the noise.
Martini dECO Quiet Panels were selected to help attenuate
reverberating noise. Product performance and test data were
central in the decision making process to use the Martini
product. Multiple colours from the Captivate range were
chosen to bring energy and brightness to the various spaces.
Captivate is velcro receptive and pinnable so the panels can
become working walls for brainstorming and collaboration.
csrmartini.com.au
Gyprock Living –
Designers first
choice for home
interior solutions
Gyprock is bringing its technical expertise
for superior impact resistance, sound
absorption, strength and style with the
latest building trends and experts in
Gyprock Living.
Projects are featured from Australia’s
leading designers including Greg Natale,
Kate Walker and Three Birds Renovations
who have used Gyprock to create
beautiful spaces including curves and
arches.
The Gyprock Living website features
the new magazine and encourages
home owners to take their property
from Simple to Stunning!
gyprockliving.com.au
“
Walls and ceilings are often the first considerations in designing a room.
”
(Left) Himmel Troldtekt
features in MK Lawyers
office in Melbourne.
(Above) Potter’s products at the offices
of Minter Ellison Rudd Watts in Auckland,
New Zealand.
himmel.com.au
potters.co.nz
11
BUSINESS UNIT OVERVIEW | BUILDING PRODUCTS
CONSTRUCTION
SYSTEMS
CONSTRUCTION SYSTEMS IS TARGETING
A NUMBER OF NEW MARKETS IN
STRUCTURAL SYSTEMS AND FACADES
AND CLADDING.
An unparalleled suite of products to
deliver beautiful buildings, ease of
installation and lower cost construction.
Strong and versatile, high
performance systems
AFS is a leader in load bearing
permanent formwork walling solutions
with codemarked concrete walling and
permanent PVC formwork systems. For
over two decades, AFS has contributed
to the swift construction of apartments,
offices, warehouses and more. Utilising
cutting edge technologies, AFS are
constantly researching new opportunities
for innovation for load-bearing, hand-
erected walls.
Cemintel provides the Australian market
with an alternative fibre cement range of
traditional and prefinished fibre cement
products and systems. Through research,
analysis of trends and customer
feedback, Cemintel has delivered
innovative fibre cement products to
the market for external and internal
applications. Its diversified range includes
products that are suitable for facades
and cladding, internal linings, ceilings
and soffits, and compressed flooring and
decking products.
Hebel is a strong, versatile, high
performance building product made
from Autoclaved Aerated Concrete
(AAC). CSR has developed the expansion
of Hebel across Australia and New
Zealand over the past 25 years as an
innovative product. Hebel systems are
non-combustible, thermally efficient and
have inherent acoustic performance
properties. The systems are lightweight
and easy to install.
Barestone Internal Original
Barestone Internal Ash
Barestone Internal Graphite
Barestone Internal Lunar
“
Cemintel Barestone panels are manufactured in Australia.
Their natural, raw appearance blends seamlessly into its environment.
”
LEADING BRANDS
YEM21 BUILDING PRODUCTS REVENUE
A leader in load bearing
permanent formwork walling
solutions with concrete
walling and permanent
PVC formwork systems.
Traditional and prefinished
fibre cement solutions for
facades and cladding, internal
linings, ceilings and soffits,
flooring and decking.
Australia’s only manufacturer
of Aerated Autoclaved
Concrete (AAC) products
commonly used in
intertenancy, boundary wall
and cladding solutions.
12
CONSTRUCTION
SYSTEMS
18%
$1.5bn
CSR LIMITED ANNUAL REPORT 2021 Hebel’s PowerPattern
hits the mark
HEBEL’S POWERPATTERN RANGE
IS A COLLECTION OF DECORATIVE,
PRE-ROUTED HEBEL PANELS.
This range was featured in the stunning
Schofield Gardens development in
Sydney. The range delivered a variety
of design options with the benefits of
Hebel including fire-rating compliance,
fast construction times and a high
quality finish that is seen throughout the
entire project. Each panel contains steel
reinforcement for added strength and
an anti-corrosion layer on the steel for
maximum durability.
hebel.com.au
“
Tested and Trusted – All systems are
backed by CSR technical expertise
and rigorous compliance testing
with a full suite of solutions across
a range of residential, commercial,
industrial and civil applications.
“
AFS walling solutions are part of the new BUPA Aged Care building in St. Ives, NSW afsformwork.com.au
Prefinished Cemintel
Territory gaining
traction
The new Marion Hotel development in
Adelaide completed in 2020 originally
specified natural timber cladding in the
soffits under the eaves. Cemintel worked
with the builder, Sarah Constructions,
to achieve the look of teak without the
ongoing maintenance budget associated
with timber. Prefinished products
continue to gain traction in the market as
the benefits are more widely accepted.
Territory is the only fibre cement product
to pass the rigorous AS 5113 test,
gaining an EW classification.
cemintel.com.au
13
BUSINESS UNIT OVERVIEW | PROPERTY
PROPERTY
PROPERTY HAS DELIVERED OVER
$150 MILLION IN EARNINGS IN THE
LAST FIVE YEARS BRINGING COMPLEX
PROJECTS TO THE MARKET.
CSR has over 50 Property sites owned
across Australia which is almost
1,400 hectares of freehold land, and
over 1,000 hectares of that sits in urban
areas. We also manage a significant
network of leased sites to support the
operational businesses.
The Group Property team works with the
CSR business units to understand their
requirements to grow and expand their
operations. We have built an inhouse
team to identify, plan and execute
large-scale projects including:
– Maximising value of operational
footprint
– Generating returns through various
stages of the development cycle
– Providing an opportunistic approach
to the staged development process
– Managing numerous projects through
rehabilitation, zoning and planning
consent
50+
property sites are owned
and managed by CSR
across Australia
Warner Quarry, Queensland
“
Property projects provide flexibility for our Building Products operations, capture the best value
from each landholding, fund reinvestment and deliver realised capital growth.
”
CONTINUED DEVELOPMENT OF MAJOR PROJECTS
Horsley Park, NSW
(Industrial)
– 52ha site of a former PGH Brick factory redeveloped into an industrial park. Rehabilitation of the final stage
of the project is expected to continue over the next three years
– Completed and contracted proceeds of $284 million with marketing underway of the final 12ha
Schofields, NSW (Residential)
– 90ha site (1,525 lots) zoning under review as part of broader planning of West Schofields precinct
– Stage 1 (32ha) will be developed when zoning and local town planning approvals are finalised
with timing based on market conditions
– Stage 2 (58ha) currently includes a PGH Brick operating plant – timing based on market conditions
and operational network requirements
Warner, QLD (Residential)
– Residential zoning of around 450 lots under review located 20km from Brisbane
Badgerys Creek, NSW
(Industrial)
– 200ha strategically located adjacent to Western Sydney International Airport
– Zoned Enterprise (Industrial) in September 2020
– Rehabilitation underway with water from the site being transferred for construction of the Western
Sydney Airport
14
CSR LIMITED ANNUAL REPORT 2021 BUSINESS UNIT OVERVIEW | ALUMINIUM
ALUMINIUM CSR IS A JOINT VENTURE PARTICIPANT
IN THE TOMAGO ALUMINIUM SMELTER
– ONE OF AUSTRALASIA’S LARGEST
ALUMINIUM SMELTERS.
Through its 70% shareholding in Gove
Aluminium Finance Limited (GAF),
CSR holds an effective 25.2% interest in
the Tomago aluminium smelter, located
near Newcastle, NSW. Tomago produces
around 600,000 tonnes of aluminium
each year.
CSR was one of the founding partners
in the smelter in 1983 which today
employs approximately 1,000 people.
Tomago is managed independently with
joint venture partners Rio Tinto, GAF
and Hydro Aluminium.
tomago.com.au
Power saving projects
underway at Tomago
A NUMBER OF SIGNIFICANT
POWER-SAVING PROJECTS ARE
UNDERWAY AT TOMAGO TO REDUCE
POWER CONSUMPTION AND
IMPROVE ENERGY EFFICIENCY.
The largest and most significant project
is the Pacific Aluminium Low Energy Pot
(PALE) launched in 2015.
The materials used in the construction
of PALE pots enables the cell to operate
using much less energy and without
compromising anode cathode distance
(ACD), therefore maintaining excellent
metal production performance. The
new design also ensures the pot can
operate in a broader amperage range,
with the flexibility to accommodate
market conditions and business needs
by running at a low ACD.
An extended testing and trial phase over
the past few years has ensured Tomago
has delivered a smooth implementation
of the PALE design across the pot
network which is expected to be
completed by 2024 delivering more
than $30 million to Tomago in power
cost savings and improved energy
efficiency.
15
“
Reducing the use of electricity in the production of aluminium is a key priority
at Tomago.
GAF ALUMINIUM HEDGE BOOK POSITION
In order to reduce volatility and lock-in profitable returns, GAF has a significant hedge
book in place over the next few years.
”
AS OF 30 APRIL 2021
YEM22
YEM23
YEM24
YEM25
YEM26
Average price A$ per tonne (excludes
premiums)
$2,800
$2,879
$2,910
$2,969
$2,991
% of net aluminium exposure hedged
95%
79%
66%
41%
2%
A$ Aluminium Price
ALUMINIUM PRICE
A$/TONNE
3,000
2,800
2,600
2,400
2,200
2,000
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M
SUSTAINABILITY | AT A GLANCE
SUSTAINABILITY
AT A GLANCE
Our approach to sustainability is underpinned
by targets set across key areas of the
environment, our people and the community
We continued to improve the sustainability of our operations, whilst also helping
our customers in the construction market by making substantial progress in energy
efficiency, comfort and the performance of homes and buildings.
Further details on CSR’s approach to sustainability over the past year are included in
the 2020 CSR Sustainability Report which was published in December 2020.
CSR is also in a very unique position to make a substantial reduction in emissions
linked to the built environment which represents approximately 25% of Australia’s
emissions. Our leading range of energy efficient solutions includes insulation, building
fabrics, ventilation, solar and battery systems as well as design and technical support.
CSR is also Tesla’s preferred solar battery supplier into the new home market and is
working on the launch of the Tesla Solar Roof into the Australian residential market.
16
Clean Up Australia Day, North Ryde office, Sydney
CSR LIMITED ANNUAL REPORT 2021 Environment
CSR is committed to contributing to an overall positive impact on the environment and reducing reliance on non-renewable resources.
CSR seeks to reduce greenhouse gas emissions by improving energy efficiency across its network and through the roll-out of renewable
energy solutions. Increasing our water recycling and reducing solid waste to landfill are also key priorities. CSR is also working with
customers to minimise waste at building sites and provide services to pick-up pallets and unused building products so they can be
recycled or re-used.
2020 PERFORMANCE OF KEY METRICS (ABSOLUTE BASIS)1
11%
decrease in total
CO2e in 2020
5%
6%
11%
decrease in total potable
water usage in 2020
increase in total solid waste
to landfill in 20202
decrease in total energy use
in 2020
1 Environment data is based on the period of 1 July 2019 to 30 June 2020 to be consistent with the National Greenhouse Reporting and Energy (NGER) scheme.
2 Increase in waste due in part to commissioning of new Hebel factory at Somersby, NSW.
People
CSR recognises that a sustainable
workplace is one that provides a safe,
rewarding and diverse environment for
our employees. A key part of our strategy
is to focus more on coaching and
mentoring our teams to ensure we move
towards demonstrating best practice
safety leadership into the future.
Scouts at Warner, Queensland
12.8
Safety performance declined during the
year as measured by Total Recordable Injury
Frequency Rate (TRIFR) from 10.2 to 12.8 as
at March 2021 (per million hours worked)
Community
A key part of our sustainability strategy is based on proactively maintaining our social
license to operate through greater interaction and positive impacts on the community.
To achieve this aim, we continue to partner with a number of organisations in line with
our commitment to operate in a sustainable manner and to gain the confidence of
the communities in which we operate. Our community relations program covers four
key areas: Site level community relations, Building Products donations for charities,
Community Support Program funding donations and the Student Mentor Program.
21%
Female participation in the business declined
slightly in YEM21 to 21% from 22% in YEM20
8 years
CSR volunteers have donated their time for
Business Clean Up Day at sites across Australia
for the past 8 years
$73,580
donated to CSR Community Support
program in YEM21
43%
Female board membership and 25% of
executive leadership team are women
Bushfire rebuild
CSR product and technical support for
bushfire rebuild projects
Online mentoring
CSR volunteers continued to support
ABCN Student Mentor Program in 2020
17
SUSTAINABILITY | ENVIRONMENT
ENVIRONMENT
AS PART OF MITIGATING THE IMPACTS
OF CLIMATE CHANGE FROM OUR
OPERATIONS, IN 2009 CSR SET
FOUR INTENSITY TARGETS.
These were to deliver a 20% reduction
per tonne of saleable product in energy
consumption, greenhouse gas emissions,
solid waste to landfill and potable water
usage using 2009/10 as the base year.
At the time, CSR was one of the first
manufacturing companies in Australia to
set specific environmental targets.
2020 TARGETS COMPLETED
TARGETING A 20% REDUCTION
57%
decrease in solid waste to landfill
(Kg/tonne of product)
24%
decrease in energy use
(GJ/tonne of product)
Completion of 2020 environment goals sets a
strong platform to 2030 sustainability targets
32%
decrease in greenhouse gas emissions
(Kg/tonne of product)
Approach to climate risk and opportunities
Identifying, managing and reporting on environmental and climate change risks has
long been a key component of CSR’s risk management and governance framework.
In 2018, CSR developed a staged approach to assess and disclose climate-related risks
and opportunities using the global Task Force on Climate Related Financial Disclosure
(TCFD) framework. This included the development of new sustainability targets to the
year 2030.
As part of this staged approach, over the past two years, CSR has completed detailed
climate related risk analysis of its operations including scenario analysis of its Gyprock
plasterboard and Bradford insulation businesses. This analysis models three climate
scenarios focused on transition risk, physical risks and qualitative commentary on
supply chain risk. This disclosure is in line with the TCFD framework on Strategy,
Governance, Risk Management and Metrics and Targets and is included in the
2020 CSR Sustainability Report.
18
13%
decrease in potable water
(Ltr/tonne of product)
CSR LIMITED ANNUAL REPORT 2021 “
All of our businesses are now working on initial three year plans as a pathway
to achieve our 2030 targets which will not only improve our sustainability
platform but lead to better efficiency and business outcomes in the future.
”
Sustainability targets to 2030
In mid 2020, CSR announced its new strategy to ensure the business is resilient for
future market changes. Sustainability is a foundation pillar of this strategy. In line with
the sustainability pillar, CSR has developed new 2030 targets covering a range of
metrics. These goals are linked to five of the United Nations Sustainable Development
Goals most relevant to CSR and where we can make the greatest impact. All
businesses have initial three year plans to identify projects and programs to help
achieve these targets. These projects are tested to ensure robustness and tracked
to determine alignment with CSR’s overall emission reduction target.
UNITED NATIONS SUSTAINABLE
DEVELOPMENT GOAL
2030 TARGETS
INITIATIVES TO HELP REACH TARGETS
Affordable and Clean Energy
– Establish and implement a CSR connected
power network; 50% of electricity generated
by renewable energy
– Solar installations continue across major sites with Monier
Darra, QLD and Bradford ventilation at Seven Hills, NSW
both installing 99kW systems in 2020
– 20% energy reduction (GJ) per tonne of
– Examples include: Replacing wastewater pumps with high
saleable product
Sustainable Cities
and Communities
– 5% of indirect spend by Procurement
to be spent with social enterprises
efficiency pumps at Bradford Ingleburn, NSW and installation
of a more efficient boiling system at Cemintel Wetherill
Park, NSW
– Develop tender/contract award procedures and evaluation
– Completed review of existing arrangements
– Training and reporting to embed target across CSR
Responsible Consumption
and Production
– CSR packaging to be closed loop (either
100% reusable; recyclable; compostable)
– Increase data analysis across all packaging to capture
key opportunities
– 75% reduction in solid waste to landfill
– Waste and water reduction projects under review as part
– 30% reduction of potable water consumed (ltr)
per tonne of saleable product
of initial three year roadmap
– An example is the redesign of water spray systems to
reduce potable water use at Bradford ventilation at
Sevens Hills, NSW
Climate Action
– 30% reduction of greenhouse gas emissions
– Viable projects rolled into the CSR wide capital
(CO2e) per tonne of saleable product
allocation process
– All projects are assessed against the CSR targets to
understand pathway to achieving the 2030 ambition
Life on Land
– Enhance biodiversity outcomes on CSR sites
– Baseline information under review
and developments
– Key biodiversity outcomes underway at Property sites
including Warner, QLD and Horsley Park, NSW
“
We have set sustainability targets
to 2030 aligned to UN development
goals most relevant to CSR
and where we can make the
greatest impact.
”
19
SUSTAINABILITY | PEOPLE AND SAFETY
PEOPLE
AND SAFETY
CSR recognises that a sustainable workplace
is one that provides a safe, rewarding and
diverse environment for our employees
RECORDABLE INJURIES AT CSR SITES
8%
15%
77%
Zero Recordable injuries
1 Recordable injury
at 21 sites
>1 Recordable injury
at 12 sites
112
sites achieved zero
recordable injuries
in YEM21
In the second half of YEM21, we moved
to a centralised Workplace Health, Safety
and Environment (WHSE) team across
all of CSR and this team, in partnership
with the executive leadership team and
operational leaders have prepared a
three year WHSE strategy to guide on
a path forward this year.
TOTAL RECORDABLE INJURY FREQUENCY RATE (TRIFR)
PER MILLION WORK HOURS
40
35
30
25
20
15
10
5
0
36.7
27.4
25.6
13.3 13.2
13.2
10.6
10.5
10.6
10.2
10.2
12.8
20.8
YEM10 YEM11 YEM12 YEM13 YEM14 YEM15 YEM16 YEM17 YEM18 YEM19 YEM20
YEM21
Safety performance in YEM21
YEM21 was significantly impacted by
COVID-19. The intended workplace
health and safety programs needed
to be paused to ensure that the safety
agenda shifted to adapt the business
to new guidelines and address the
potential transmission risks to our people
and customers. This created a loss of
valuable face to face time within sites.
The business has adapted well to utilising
new technology to progress our safety
agenda. However, our performance as
measured by total recordable injury
frequency rate (TRIFR) declined to
12.8 from 10.2 (per million work hours).
We are very proud of the 112 sites
who achieved zero recordable injuries
in the year.
20
CSR LIMITED ANNUAL REPORT 2021 THEME
APPROACH
YEM22 AREAS OF FOCUS
Hearts and Minds
Launch and communicate
WHSE programs to engage
our people
Developing a program across CSR that
talks to a consistent narrative that
appeals to the hearts and minds of
our people
Risk Management
Risk reduction in areas of
high exposure
Refocus on embedding Hazard
Identification, Risk Assessment and
Control (HIRAC) into business
System
Refinement
Investing in current
systems to improve the
clarity and consistency
across CSR
Development and implementation of CSR
wide WHSE hazard and system standards
Leading safety at CSR
The revised approach being rolled out
across the business specifically focuses
on the top risks within CSR and each
part of the business is working on risk
reduction plans to address those top
risks. Our leaders will play a key role in
ensuring our teams are supported, that
we are working with one system that
is clear and easy to understand and is
using a risk based approach to prioritise
areas that will make the biggest impact
on safety.
Recognising the scale and breadth of
CSR’s activities in serving customers
through our manufacturing, supply chain,
building and construction requires that
we focus on simple, clear, consistent and
well managed standards. Our approach
to safety is based on three key principles:
Hearts and Minds, Risk Management and
System Refinement.
Risk reduction emphasis
While TRIFR is a key metric for CSR and
will remain so, we are encouraging our
people to shift focus to making sure that
we clearly understand the key risks in
our business and most importantly we
implement corrective actions to reduce
the potential for harm.
Our strategic plan gives our business
units and sites a roadmap of the
activities to undertake to achieve that
outcome of reducing risk. Our audit
assurance, leadership activities and
incident prevention indicators have
all been modified to be consistent in
supporting this shift in focus and to
support our operational areas to achieve
this outcome.
Forking Safely program improving safe
behaviours
Our risk management approach seeks to eliminate or reduce risks with a simple,
common sense approach which can be applied across all operations. Forklift safety
remains a key risk area which is responsible for many incidents at CSR. Within
Interior Systems, over 600 forklift operators work across the manufacturing sites,
distribution centres and Gyprock Trade Centres.
During the past year, we have progressed the Forking Safely program which was
launched in 2018. Many of CSR’s products include larger sizes and variable weights
that require specific training. During YEM21, state based champions helped lead
the program and build capability at all sites to ensure all teams take responsibility
and ownership of their drivers’ coaching and training. Over the next year, sites
will be identifying high interaction points and improving the segregation methods
between mobile plant and pedestrians.
21
SUSTAINABILITY | COMMUNITY
COMMUNITY
CSR continues to work with our local communities in line
with our commitment to operate in a sustainable manner
WE CONTINUE TO PARTNER WITH A NUMBER OF ORGANISATIONS IN LINE WITH OUR COMMITMENT TO OPERATE
IN A SUSTAINABLE MANNER AND TO GAIN THE CONFIDENCE OF THE COMMUNITIES IN WHICH WE OPERATE.
Clean Up Australia Day, Bradford Ingleburn, NSW
Site level community relations – working
together in Warner, Queensland
CSR is progressively rehabilitating the quarry in Warner, QLD which includes the
planting of over 5,000 trees at the site.
CSR founded the Warner Working Group in 2018 to bring the community together in
a forum including representatives of koala care and rescue groups, local community
members, Landcare, schools, industry and government. This group has led a number
of initiatives including engaging ecologists and veterinary scientists in koala research
to track the movement of the koala population and rehabilitating sick or injured koalas
for release back into the area.
The advocacy of the Warner Working Group was included in the Queensland
Government’s South East Queensland Koala Conservation Strategy 2020-2025.
Clean Up Business Day
CSR participates in Clean Up Business Day
as a signatory to the Australian Packaging
Covenant – a sustainable packaging initiative
targeting sustainable packaging, increasing
recycling rates and reducing packaging litter.
8 years
CSR volunteers have donated their time
for Business Clean Up Day at sites across
Australia for the past 8 years
22
CSR LIMITED ANNUAL REPORT 2021 Bushfire rebuild support
Following the devastating bushfires in
Australia in the summer of 2020, CSR
supported a number of initiatives to assist
communities impacted by the disaster and
support the rebuild process. CSR raised a
total of $50,000 from employee donations
and matching by CSR for the Salvation Army
Bushfire Appeal. CSR has also partnered
with some of its customers to provide
community and non-profit organisations
access to CSR products and expertise to
assist in the rebuild of buildings impacted
by the bushfires.
“
CSR has supported the efforts of
Hotondo Helping Hands to rebuild homes
in the local community following the
unprecedented bushfire crisis.
”
Australian Business and Community
Network
CSR commenced working with the Australian Business and Community
Network (ABCN) in 2011. It is a partnership of highly committed national
business leaders and companies working on mentoring and coaching
programs in schools in high need areas. Since 2011, CSR volunteers have
donated over 6,000 hours to the program. In 2020, mentoring was moved
on-line in response to COVID-19.
CSR was part of three pilot programs to continue mentoring in a digital
format which included over 60 volunteer hours by CSR volunteers working
online with 38 students.
Online mentoring
CSR volunteers continued to support
ABCN Student Mentor Program in 2020
Community Support Program
Launched in 2003, CSR matches employee contributions dollar for dollar to three
charitable organisations. Over $3.4 million has been donated by CSR and its
employees over the last 18 years. During YEM21, $73,580 was donated by CSR
and its employees to three charities, The Salvation Army, Youth Off The Streets
and Assistance Dogs Australia.
The Salvation Army is a national charity, offering caring support for every
problem “from the cradle to the grave.” They offer services to aged care, crisis
accommodation, suicide prevention, youth and families at risk, telephone counselling,
to name just a few.
Youth off the Streets is a youth-specific charity, assisting young people dealing
with issues of substance and other abuse, alienation from family and community
and homelessness.
Assistance Dogs Australia trains and places unique dogs with Australians in unique
situations. They currently train dogs that specialise in support for people with a
physical disability, autism as well as PTSD. As well as providing a range of services
to these individuals and their families.
Luna from Assistance Dogs visits the team at CSR’s
office in North Ryde, NSW
23
FINANCIAL OVERVIEW
FINANCIAL OVERVIEW
Statutory net profit after tax of $146.1 million, up 17% which reflects good operational performance
and continued cost management
FOUR YEAR PERFORMANCE SUMMARY 1
Year ended 31 March ($ million) unless stated
Operating results
Trading revenue
Earnings before interest and tax (EBIT)
Building Products
Property
Aluminium
Segment total
Corporate and restructuring and provisions2
CSR EBIT
2021
2020
2019
2018
2,122.4
2,212.5
2,322.8
2,237.7
184.3
54.2
23.4
261.9
(24.0)
237.9
170.5
(1.5)
59.6
228.6
(11.8)
216.8
134.8
125.3
206.5
38.8
36.6
281.9
(16.9)
265.0
181.7
78.0
214.1
47.8
79.5
341.4
(21.1)
320.3
210.6
188.8
Net profit after tax (before significant items)
160.4
Statutory net profit after tax (after discontinued operations)
146.1
Financial position
Total equity
Total assets
Net cash / (debt)
1,152.5
2,171.5
250.8
1,125.5
2,404.5
94.8
1,231.1
1,991.1
50.0
1,274.1
2,136.0
(14.3)
Key data per share
Earnings before significant items (cents)
Earnings after significant items and discontinued operations
(cents)
Dividend ordinary (cents)
Dividend special (cents)
33.1
30.1
23.0
13.5
Payout ratio on ordinary dividends (%)
69.5
Key measures
Profit margin (EBIT/trading revenue) (%)
Return on funds employed (ROFE) (%)3
Employees (number of people employed)
11.2
21.1
2,538
27.3
25.4
10.0
4.0
36.6
9.8
17.8
2,823
36.1
15.5
26.0
–
72.0
11.4
21.8
2,960
41.9
37.5
27.0
–
64.4
14.3
27.8
2,861
1 From continuing operations for 2018 and 2019 unless stated, which excludes the Viridian Glass business which was sold on 31 January 2019.
2 Represents unallocated overhead expenditure and other revenues.
3 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.
24 CSR LIMITED ANNUAL REPORT 2021
OPERATING AND FINANCIAL REVIEW
OPERATING AND
FINANCIAL REVIEW
Group EBIT of $237.9 million, up 10% with improved earnings from Building Products and Property
Trading revenue of $2.1 billion for the year ended 31 March 2021 (YEM21), down 4% on the prior year.
Earnings before interest and tax (EBIT before significant items) of $237.9 million, up 10% included the following results:
Building Products - EBIT of $184.3 million, up 8%, with EBIT margin increased to 12.0% from 10.7%. Strong cost control and operational
efficiency offset the slowdown in residential construction activity which declined 4% during the year
Property - EBIT of $54.2 million compared to the previous year when no significant earnings were recorded
Aluminium - EBIT of $23.4 million, down from $59.6 million, reflecting a sharp decline in aluminium prices at the start of the financial year
due to COVID-19 volatility which was partly offset by hedging and lower input costs
Statutory net profit after tax of $146.1 million, up 17%.
Earnings per share (before significant items) of 33.1 cents, up 21%.
Dividends - Final dividend of 14.5 cents per share (fully franked) declared. This compares to the previous year when no final dividend was declared
due to COVID-19 cash preservation position. Full year dividend (excluding special dividends) of 23.0 cents per share (fully franked) up from 10.0
cents per share (50% franking) in the previous year. Special dividend of 9.5 cents per share (fully franked) declared following settlement of the
Property sale at Horsley Park.
A$m unless stated1
Trading revenue
EBIT
Building Products
Property
Aluminium
Corporate (including restructure and provisions)
Group EBIT
Net finance costs
Tax expense
Non-controlling interests
Net profit after tax before significant items1
Significant items after tax
Statutory net profit after tax
2021
2,122.4
2020
2,212.5
184.3
54.2
23.4
(24.0)
237.9
(6.1)
(65.7)
(5.7)
160.4
(14.3)
146.1
170.5
(1.5)
59.6
(11.8)
216.8
(10.8)
(58.0)
(13.2)
134.8
(9.5)
125.3
change
(4%)
8%
(61%)
10%
19%
17%
1 All references are before significant items unless stated. These 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 2021 (YEM21). All comparisons are to the year ended 31 March 2020
(YEM20) unless otherwise stated.
Statutory net profit after tax of $146.1 million for the year ended 31 March 2021, up 17% with good operational performance in Building Products
and Property offset by the expected reduction in earnings from Aluminium. This includes significant items of $14.3 million (after tax) from business
restructuring, asset impairment and plant closure costs offset by a previously recorded lease adjustment.
Tax expense of $65.7 million (before significant items) was up from $58.0 million due to the higher pre-tax profits. CSR’s effective tax rate for
the year (before significant items) was 28% in line with the prior year.
Cash flow from operating activities of $253 million was up 3% with higher operating cash flow following a strong focus on working capital.
Capital expenditure (excluding Property and acquisitions) was $49.0 million during the year. Of this total, $26.1 million was for stay-in-business
projects and $22.9 million was development related capital expenditure, including the purchase of the Bradford Brendale, QLD site for $16 million.
Capital expenditure (excluding Property and acquisitions) was down from $100.2 million in YEM20 as some projects were delayed due to the
COVID-19 environment. Property invested $29.8 million during the year as part of rehabilitation of key sites.
Net cash of $250.8 million increased from the net cash position of $94.8 million as of 31 March 2020, which included settlement of two Property
transactions. CSR also has additional credit standby facilities of $420 million. These facilities have fixed maturity dates as follows: $154.0
million in 2023, $191.0 million in 2024 and $75.0 million in 2025.
Share buyback – In March 2019, CSR launched a $100 million on-market share buyback. $69 million in shares were purchased prior to the
completion of the program in February 2021.
Product liability – As at 31 March 2021, the asbestos provision fell to $231.0 million from $246.9 million as at 31 March 2020. This provision
included a prudential margin of $34.9 million. CSR paid asbestos related claims of $20.6 million (including legal costs) compared to $27.8
million in the prior year.
25
OPERATING AND FINANCIAL REVIEW
BUILDING PRODUCTS PERFORMANCE
Construction market activity by segment
Australia Residential (12 months – 000s)
Detached1
Medium density1
High density1
Total Residential Commencements
Non-residential (A$B)2
A&A (A$B)2
NZ consents (12 months - 000s)3
2021
2020
change
104.1
33.1
36.5
173.7
46.9
9.9
37.7
107.2
33.9
39.5
180.6
48.0
9.3
36.5
(3%)
(3%)
(8%)
(4%)
(2%)
6%
4%
1 Source ABS data – (original basis two quarter lag – i.e. 12 months to September).
2 Source ABS, BIS Oxford Economic forecast (value of work done – 12 months to March).
3 Source Statistics New Zealand – (residential consents 2 quarter lag – 12 months to September).
The majority of CSR’s Building Products are utilised at the end of the construction process which results in product sales occurring on average
two quarters after the start of a residential housing commencement. While this can vary between detached and multi-residential housing, CSR’s
revenues for YEM21 are generally aligned to residential commencements for the 12 months to September 2020.
Australian residential housing commencements on a two quarter lag basis of 173,657 were down 4% compared to the prior year. Detached
housing on the east coast of Australia decreased by 3%, while Western Australia was down 5%. The medium and high density market slowed
during the period, down 5%, as projects continue to slow following a period of very high activity over the last few years.
The non-residential market was down 2% with growth in the social sector offset by declines in the commercial sector. The alterations and
additions market has performed strongly backed by a buoyant trade retail sector which was up 22% in the 12 months to March 2021. The New
Zealand market remained reasonably strong across all segments despite the impact of the COVID-19 shutdown at the start of the financial year.
The Australian Government’s HomeBuilder stimulus provided significant new demand during the year with almost 100,000 applications for new
homes and 22,000 substantial renovations received in the program. The extension of the HomeBuilder commencement to 18 months
announced in April 2021 is expected to spread the pipeline of activity across calendar years 2021 and 2022.
Strong cost control and operational efficiency lift earnings by 8%
A$m unless stated1
Revenue
EBITDA
EBIT
Funds employed2
EBIT/revenue
Return on funds employed3
2021
1,534.5
265.7
184.3
844.3
12.0%
20.6%
2020
1,591.3
254.9
170.5
945.8
10.7%
18.0%
change
(4%)
4%
8%
(11%)
1 Before significant items.
2 Excludes cash and tax balances and certain other non-trading assets and liabilities as at 31 March. A reconciliation of funds employed is included in Note 2 in the
financial report.
3 Based on EBIT (before significant items) for the 12 months to 31 March divided by average funds employed.
Trading revenue from Building Products was $1,534.5 million, down 4% in line with the decline in market activity. Building Products EBIT of
$184.3 million was up 8% as strong cost control and operational efficiency offset the decline in volumes due to the slowdown in building activity
during the period.
CSR’s largest business Gyprock delivered increased earnings as the business benefitted from a diversified revenue base across residential and
commercial sectors. PGH Bricks earnings also increased despite the slowdown in the detached market following the benefits of overhead cost
savings. Hebel and AFS earnings were lower as they have significant exposure to the high density market which was down 8% during the period.
EBIT margin of 12.0% was up from 10.7% due to cost savings across the operating network with the opportunity for price increases above
inflation becoming more limited in some products and regions. No payment of Australian JobKeeper was received during the year.
The return on funds employed of 20.6% increased from 18.0%.
26 CSR LIMITED ANNUAL REPORT 2021
OPERATING AND FINANCIAL REVIEW
Building Products Business Performance
MASONRY & INSULATION
INTERIOR SYSTEMS
CONSTRUCTION SYSTEMS
43%
39%
18%
YEM21 revenue $667m
(4% below YEM20)
YEM21 revenue $593m
(3% below YEM20)
YEM21 revenue $275m
(3% below YEM20)
Volumes in line with detached activity
EBIT higher supported by overhead cost
reductions
PGH and Monier EBIT higher with cost
management offsetting lower volumes
Bradford EBIT down due to higher
proportion of imports, product mix and
freight costs partly offset with improved
factory performance
Building Products Outlook
Gyprock – stable volumes due to diversified
market position. Pricing flat as 2020 price
increase did not proceed due to COVID-19
Cemintel and Hebel continuing share
growth in residential housing, especially
Victoria
EBIT higher following operational
Slowdown in high density apartments
improvement and cost management
impacting Hebel and AFS sales
Commercial Interiors EBIT impacted by
lockdowns, slowdown in commercial and
reduced exports due to COVID-19
EBIT in line with previous year with cost
management offsetting volume decline
in high density apartment market
Detached (54% of revenue) – activity will be supported by HomeBuilder commencements with the extension of the timetable likely to extend the
pipeline across calendar years 2021 and 2022.
Medium/High density (18% of revenue) – medium density market expected to be more resilient than the high rise market following the
continued decline in high rise approvals since the previous peak in 2018.
Alterations and Additions (8% of revenue) – strong trade retail performance expected to continue (up 22% in the year to March 2021),
complemented by larger value HomeBuilder renovation projects.
Non-residential (20% of revenue) – pipeline of approvals is down 9% (year to March 2021) following COVID-19 uncertainty over the last year.
Weaker private commercial activity expected to be offset in part by continued elevated levels of social infrastructure spend.
Overall, the diversity of CSR’s business provides resilience and performance will benefit from our strong position in the detached housing
market.
27
OPERATING AND FINANCIAL REVIEW
PROPERTY
Good progress on key development projects
A$m unless stated1
EBIT
Funds employed2
Return on funds employed3
2021
54.2
139.5
35.3%
2020
(1.5)
167.8
(0.8%)
change
n/m
(17%)
1 Before significant items.
2 Excludes cash and tax balances and certain other non-trading assets and liabilities as at 31 March. A reconciliation of funds employed is included in Note 2 in the
financial report.
3 Based on EBIT (before significant items) for the 12 months to 31 March divided by average funds employed.
CSR’s Property business continued to make good progress on key development projects. Property delivered EBIT of $54.2 million compared to a
loss of $1.5 million in the previous year when no significant transactions were completed. The result includes the completion of the first tranche
of Stage 2 at the industrial development at Horsley Park, NSW. This project has contracted proceeds of $146 million over the next three years
with marketing underway of the final 12 hectares at the site.
Horsley Park property project
Size (ha)
Proceeds ($m)
EBIT ($m)
10.1
11.7
4
5
8.6
39.4
12.4
58
80
28
34
84
284
32
52
18
22
48
172
Completion
Completed
Completed
YEM22
YEM23
YEM24
Marketing underway (increased from 9ha due to strong demand for site)
Tranche
Stage 1
Stage 2.1
Stage 2.2a
Stage 2.2b
Stage 3.1
Total contracted
Stage 3.2
28 CSR LIMITED ANNUAL REPORT 2021
OPERATING AND FINANCIAL REVIEW
ALUMINIUM
EBIT down reflecting lower A$ aluminium price
A$m unless stated1
Sales (tonnes)
A$ realised price2
Revenue
EBITDA
EBIT
Funds employed3
EBIT/revenue
Return on funds employed4
2021
213,722
2020
209,905
2,751
587.9
35.4
23.4
136.0
4.0%
16.9%
2,960
621.2
71.5
59.6
141.0
9.6%
42.4%
change
2%
(7%)
(5%)
(50%)
(61%)
(4%)
1 Before significant items.
2 Realised price in A$ per tonne (including hedging and premiums).
3 Excludes cash and tax balances and certain other non-trading assets and liabilities as at 31 March. A reconciliation of funds employed is included in Note 2 in the
financial report.
4 Based on EBIT (before significant items) for the 12 months to 31 March divided by average funds employed.
The realised aluminium price in Australian dollars (including hedging and premiums) of A$2,751 was down 7% following the decline in the A$
aluminium price in the first half of YEM21.
Gove Aluminium Finance (GAF – 70% CSR) sales volumes of 213,722 tonnes were up 2% from the prior year due to the timing of
shipments. Trading revenue of $587.9 million was down 5% due to LME aluminium prices.
The Australian dollar averaged 72 US cents compared to 68 US cents in the prior year, while the average MJP ingot premium for the year was
US$94 per tonne, below the US$98 per tonne in the prior year (Platts Metals Week – Main Japanese Port ingot premium).
EBIT of $23.4 million was down from $59.6 million due to the lower A$ aluminium price and higher alumina costs following the start of new
contracts in January 2020. Other input costs including coke declined as well as the overall cost of electricity due to a lower coal cost pass
through compared to the prior year.
GAF has secured new contracts for alumina, all of which are effectively linked to the US$ aluminium price. These new contracts began in
January 2020 which have staged end dates to 31 December 2023.
For future years, the following alumina volumes have been contracted:
Calendar years 2021 and 2022: 100% of alumina volume
Calendar year 2023: ~60% alumina volume.
GAF Aluminium Hedge Book position - significant increase in forward hedge position
Given Tomago’s high energy cost (which is not correlated to LME aluminium prices), CSR’s approach is to take advantage of profitable pricing by
hedging when possible. A significant hedge book is in place through to March 2026.
As of 30 April 2021
Average price A$ per tonne (excludes premiums)
% of net aluminium exposure hedged
YEM22
2,800
95%
YEM23
2,879
79%
YEM24
2,910
66%
YEM25
2,969
41%
YEM26
2,991
2%
YEM22 EBIT scenario
The table below provides a YEM22 EBIT range based on various A$ per tonne aluminium spot prices. This assumes all other revenue and cost
areas are unchanged.
As of 30 April 2021
YEM22 EBIT A$m
Aluminium average spot price A$/t for YEM22
A$3,100
A$2,700
A$2,300
A$32m
A$36m
A$40m
29
CORPORATE GOVERNANCE STATEMENT AND RISK
CORPORATE
GOVERNANCE STATEMENT
Corporate governance is the system by which CSR is directed and
managed. It is the framework of rules, relationships, systems and
processes that underpin the company’s values and behaviours, the
way it does business and how:
the CSR board of directors is accountable to shareholders for the
operations, financial performance and growth of the company; and
business risks are identified and managed.
This Corporate Governance Statement is current as at 12 May 2021
and has been approved by the board.
CSR actively reviews Australian and international developments in
corporate governance and considers the views of shareholders,
regulators and other stakeholders. The CSR board adopts those
arrangements which it considers are in the best interests of CSR and
its shareholders.
The directors of CSR are committed to ensuring that the company
maintains an effective system of corporate governance and that good
corporate governance is an integral part of the culture and business
practices of the CSR group.
Throughout the reporting period, being the year ended 31 March
2021, CSR complied with the recommendations contained in the
ASX Corporate Governance Council’s Corporate Governance Principles
and Recommendations (4th edition) (ASX CGC Principles). CSR’s
existing practices were largely consistent with the changes introduced
in the 4th edition, with some practices updated to address the
emerging issues included in the 4th edition.
Charters and policies referred to in this corporate governance
statement are available on CSR’s website in the ‘Investors and News’
section under Corporate Governance.
The board
The board strives to build sustainable value for shareholders whilst
protecting the assets and reputation of the company.
CSR's Constitution sets out the provisions that govern the
management of the company and can only be amended by special
resolution of shareholders. Under the constitution, shareholders elect
directors, whose function is to represent shareholders and to act in
the best interests of the company.
Role of the board
The board has adopted a formal board charter, available on CSR’s
website on the Corporate Governance page which establishes those
matters reserved for the board and authority delegated to
management. The board’s functions, as summarised in the board
charter, include:
approving CSR strategies, budgets, plans and policies;
assessing performance against business plans to monitor both the
performance of management as well as the continuing suitability
of business strategies;
reviewing operating information to understand the current status
of the company;
considering management recommendations on proposed
acquisitions, divestments and significant capital expenditure;
considering management recommendations on capital
management, the issue or allotment of equity, borrowings and
other financing proposals, guarantees of non-group liabilities, and
restructures;
ensuring that the company operates an appropriate corporate
governance structure and culture, in particular ensuring that CSR
acts legally and responsibly on all matters and that the highest
ethical standards are maintained;
approving CSR’s risk framework and appetite, as well as CSR's risk
management strategy and monitoring whether the company is
operating within that framework and appetite;
considering the social, ethical and environmental impact of CSR’s
activities and monitoring compliance with CSR’s sustainability
policies and practices;
ensuring that the company’s governance processes, in particular,
the remuneration and other reward structures, align with the
company’s values and risk appetite;
maintaining a constructive and ongoing relationship with the
Australian Securities Exchange (ASX) and regulators, and approving
policies regarding disclosure and communications with the market
and shareholders; and
monitoring internal governance including delegated authorities,
and monitoring resources available to senior executives.
Appointment and election of directors
CSR undertakes a rigorous process when selecting new directors.
The company aims to have a board which, as a whole, has the range
of skills, knowledge, background and experience to govern CSR, made
up of individuals of high integrity, with sound commercial judgement,
inquiring minds and the ability to work cohesively with other directors.
When considering director candidates, CSR seeks a combination of
former chief executives and individuals experienced in manufacturing,
finance, the law and, ideally, the industries in which CSR participates
as well as the areas in which it hopes to grow. CSR undertakes
background checks on prospective candidates, covering the
candidate’s character, experience, education, criminal record and
bankruptcy history.
External consultants are engaged, where appropriate, to advise on
potential appointees. The potential appointees must have a strong
reputation and high ethical standards. Prospective directors are
required to confirm that they will have sufficient time to meet their
obligations and that they will keep the company informed of their
other commitments.
Non-executive directors are subject to re-election by rotation at least
every three years. Newly appointed directors must seek election at the
first general meeting of shareholders following their appointment. The
relevant notice of meeting contains all material information for
shareholders in relation to the election or re-election of a director.
30 CSR LIMITED ANNUAL REPORT 2021
CORPORATE GOVERNANCE STATEMENT AND RISK
Directors’ independence
At all times throughout YEM21, the board comprised of a majority of independent directors. Each of the non-executive directors, including the
chair, has been determined by the board to be independent of CSR and its management, having no business or other relationships that could
compromise his or her autonomy as a director.
The board’s framework for determining director independence is included in the board charter and operates in accordance with the
considerations set out in the ASX CGC Principles. Any past or present relationship with the company is examined carefully to assess the likely
impact on a director’s ability to be objective and exercise independent judgement. Directors are required to disclose, on an ongoing basis,
circumstances that may affect their ability to exercise independent judgement enabling the board to determine independence on a regular basis.
The length of tenure of each director is set out below.
Table 1: Director tenure
Director
John Gillam (chair of the board)
Julie Coates (managing director)
Nigel Garrard
Christine Holman
Michael Ihlein
Matthew Quinn
Penny Winn
Date appointed
December 2017
September 2019
December 2020
October 2016
July 2011
August 2013
November 2015
Date last re-elected
2018 Annual Meeting
2020 Annual Meeting
Not previously elected
2020 Annual Meeting
2020 Annual Meeting
2019 Annual Meeting
2018 Annual Meeting
The board charter states that non-executive directors will not seek re-election after serving for ten years.
Director letters of appointment
Letters of appointment are prepared for non-executive directors
covering duties, time commitments, induction, company policies and
corporate governance.
The managing director’s responsibilities and terms of employment,
including termination entitlements, are set out in a formal executive
service agreement. A summary of the main elements and terms of the
managing director service agreement is set out in the remuneration
report and is disclosed to the ASX when the managing director is
appointed.
Directors’ induction, education and access to information
The board strives to ensure that directors and key executives have the
knowledge and information needed to operate effectively.
The chair briefs new directors on their roles and responsibilities. New
directors receive a comprehensive information pack as part of this
induction, as well as briefings from management and visits to key
operating sites to assist them to rapidly understand CSR’s businesses,
strategic direction and associated material risks.
Time is allocated at board and committee meetings for continuing
education on significant issues facing the company and changes to
the regulatory environment.
To help directors maintain their understanding of the businesses and
to assess the people managing them, directors are briefed regularly
by members of the senior management team. Directors also have
access to a wide range of employees at all levels during inspections of
operations and in other meetings.
Directors receive a comprehensive monthly business performance
report regardless of whether a board meeting is scheduled. Directors
have unrestricted access to company records and information.
Directors may obtain independent professional advice, at CSR’s
expense, on matters arising in the course of their board and
committee duties, after obtaining the chair’s approval. The board
charter requires that all directors be provided with a copy of such
advice and be notified if the chair’s approval is withheld.
The board appoints and removes the company secretary. All directors
have direct access to the company secretary who is accountable to
the managing director and, through the chair, to the board, on all
governance matters.
The work of directors
In addition to attending board and committee meetings, non-executive
directors allocate time for, amongst other things, strategy and budget
sessions, preparing for meetings and inspecting operations.
The chair commits additional time and meets regularly with the
managing director to review business and strategic issues and to
agree board meeting agendas. The directors usually meet with no
management present at the commencement of board meetings and
on other occasions as required. Non-executive directors also meet
without the managing director present where it is appropriate to do so.
Except where the directors need to meet privately, the company
secretary and chief financial officer attend all board meetings. Other
members of management, such as business unit executive general
managers, or other functional managers also attend board meetings
by invitation, where appropriate. The board also invites external
experts to present to it on key matters, where appropriate.
The directors regularly visit the company’s operations, as COVID-19
travel restrictions allow, to better understand the issues facing each
of the businesses and their people. These visits are conducted either
as a full board, a board committee or with one or two directors.
Every meeting of the Workplace Health, Safety & Environment
Committee is held at a CSR site, either physically or virtually when
restrictions have not enabled physical site visits.
In addition, directors may meet customers, business partners,
suppliers and other stakeholders of the company as requested by
management.
31
CORPORATE GOVERNANCE STATEMENT AND RISK
Size, composition and skills of the board
The board comprises directors with an appropriate mix of skills,
experience and personal attributes that allow the directors
individually, and the board collectively, to:
discharge their responsibilities and duties under the law effectively
and efficiently;
understand the suite of CSR businesses and the external
environment in which CSR operates so as to be able to agree with
management the objectives, goals and strategic direction to
maximise shareholder value; and
assess the performance of management in meeting those
objectives and goals.
The board currently comprises six non-executive directors and one
executive director. Information about directors, including their skills,
experience, expertise and their period in office is set out on pages 44
to 45 and is available on CSR’s website on the Corporate Governance
page.
The chair is appointed by the board and provides leadership to ensure
that a high standard of values, processes and constructive interaction
is maintained by the board. The chair represents the views of the
board to shareholders and canvasses the views of stakeholders,
including through the annual general meeting.
In YEM21, changes to the board were as follows:
Nigel Garrard joined the Board as an independent non-executive
director on 1 December 2020.
CSR has developed a matrix of required skills and experience of the
board. This matrix is developed by taking into account CSR’s desire to
ensure a diverse range of gender, background and experience is
maintained on the board at all times, and also ensuring directors are
appropriately qualified.
The board keeps the balance of skills and experience of its members,
as well as their independence, under review. The board strives to
achieve diversity in its composition as evidenced by the charts below.
The table on the following page sets out the skills and experience the
board considers essential for effective governance, including the
current representation of those skills and experience on the board.
Figure 1: Board diversity
TERTIARY QUALIFICATIONS
INDUSTRY SECTOR EXPERIENCE
14%
14%
14%
TENURE
42%
Commerce/Accounting 58%
14%
Mathematics/Education 14%
14%
43%
58%
Engineering/Science 14%
Business Administration &
Management 14%
29%
Manufacturing operations 43%
Supply chain management 29%
Property development 14%
Technology & Digital 14%
GENDER DIVERSITY
29%
29%
0 to 2 years 29%
2 to 5 years 29%
5 to 10 years 42%
43%
57%
Men 57%
Women 43%
32 CSR LIMITED ANNUAL REPORT 2021
CORPORATE GOVERNANCE STATEMENT AND RISK
Size, composition and skills of the board (continued)
Table 2: Summary of board skills and experience
Skills
Relevant experience
Leadership and Governance
Directors with
skill/experience
Executive
leadership
Sustainable success in business at a senior executive level and a proven track record of
leadership to create long-term shareholder value.
Governance and
Compliance
Commitment to the highest standards of governance, including experience with a major
organisation that is subject to rigorous corporate governance standards, and an ability to assess
the effectiveness of senior management.
Finance and Risk
Financial acumen
Experience as a senior executive or equivalent experience in financial accounting and reporting,
corporate finance and internal financial controls, including an ability to probe the adequacies of
financial and risk controls.
Strategy
Track record of developing and implementing a successful strategy, including appropriately
questioning and challenging management on the delivery of agreed strategic planning objectives.
Risk management
Track record in developing a business portfolio over the long-term that remains resilient to
systemic risk, including an ability to identify key business risks (both financial and non-financial)
and mitigation strategies, as well as monitoring the effectiveness of risk management
frameworks and controls.
Capital projects
Experience working in an industry with projects involving large-scale capital outlays and long-term
investment horizons.
Operations and Technology
Operations and
Supply chain
Experience having led or overseen the management of complex operating assets, with a focus on
business operations, end to end supply chain and the oversight of key processes.
Health, safety and
environment
Experience related to workplace health and safety, environmental and social responsibility,
including implementing and monitoring systems to ensure safe working conditions.
Sustainability and
climate change
Experience or demonstrated understanding of key environmental impacts, including climate
change risks and community concerns, and the governance of these impacts.
Innovation and
digital platforms
Proven success creating more effective processes, products and ideas, leading to new growth
platforms. For example, experience using digital platforms to improve the service offering and
subsequent performance and customer experience; or understanding how to align existing digital
touch points to improve performance and customer interfaces.
People
Human Resources
and Remuneration
Board remuneration committee membership or management experience in relation to
remuneration, including incentive programs and relevant legislation and contractual frameworks
governing remuneration.
Culture and People
Experience and ability to develop succession plans, develop talent, oversee people management,
monitor culture and improve diversity.
Marketing and
Customers
Senior executive experience in consumer and customer marketing and customer service delivery.
33
The specific responsibilities allocated to each committee are set out
below and on the following page.
Risk & Audit Committee
The Risk & Audit Committee is chaired by Mike Ihlein. Until 28 October
2020 the other members of the committee were Christine Holman
and Matthew Quinn. From 29 October 2020 the other members of the
committee were Christine Holman, Matthew Quinn and Penny Winn,
and from 1 December 2020 the other members of the committee
were Nigel Garrard, Christine Holman, Matthew Quinn and Penny
Winn. Each of these directors is deemed to be independent and their
qualifications and experience are set out on pages 44 and 45 of the
annual report, available on CSR’s website on the Annual Reports
page.
The external audit firm partner in charge of the CSR audit attends all
Risk & Audit Committee meetings by invitation, together with relevant
senior managers (also by invitation).
The committee advises the board on all aspects of internal and
external audit, the adequacy of accounting and risk management
procedures, systems, controls and financial reporting. A summary of
CSR’s material environmental, social and economic sustainability
risks is set out on pages 40 and 41 of this statement.
The Risk & Audit Committee Charter sets out the committee’s specific
responsibilities, and include:
reviewing the scope of the annual audit plans of the external
auditor and internal auditor and oversight of the work performed
by the auditors throughout the year;
considering and recommending to the board significant accounting
policies and material estimates and judgements in financial
reports;
reviewing and monitoring internal controls and risk management
across the group, including the risk management framework and
risk appetite statements;
reviewing and recommending to the board the adoption of the
company’s full-year and half-year financial statements; and
reviewing the performance and effectiveness of the internal and
external auditors.
The committee is a direct link for providing the views of internal and
external auditors to the board, when necessary, independently of
management influence. Time is allocated for detailed questioning of
the material presented and for separate sessions with each of the
external auditor, internal auditor and chief financial officer.
CORPORATE GOVERNANCE STATEMENT AND RISK
Dealing with conflicts of interest
The board has a process in place to ensure that conflicts of interest
are managed appropriately. If a potential conflict of interest arises,
the director concerned is excluded from all discussion and decision
making on the matter. At all times, directors are required to keep the
company secretary informed of all relevant interests and directors
must advise the board immediately of any interests that could
potentially conflict with those of CSR.
Performance evaluation of the board, its committees
and individual directors
The performance of the board is reviewed regularly. The board
undertakes a self-assessment of its collective performance and that
of individual directors and its committees and seeks specific feedback
from the executive management team on particular aspects of its
performance.
The board establishes procedures and oversees this performance
assessment program. The process may be assisted by an independent
third party facilitator. The results and any action plans flowing from
this assessment are documented, together with specific performance
goals that are agreed for the coming year.
The performance of the managing director is reviewed, at least
annually, through a formal performance appraisal process conducted
by the non-executive directors.
In YEM21, no formal board or committee reviews were undertaken
however the directors and executive management continued to
provide regular feedback to the chair in relation to the processes and
operation of the board. A review of the board and the Remuneration &
Human Resources Committee are scheduled to be undertaken in
YEM22.
Board Committees
To increase its effectiveness, the board has three committees
consisting of the Risk & Audit Committee, Workplace Health, Safety &
Environment Committee and Remuneration & Human Resources
Committee. It is the policy of the board that a majority of the members
of each committee be independent directors, that all Risk & Audit
Committee members be independent directors and that the
Remuneration & Human Resources Committee and the Workplace
Health, Safety & Environment Committee be chaired by an
independent director.
Each committee has a charter which includes a more detailed
description of its duties, responsibilities and specific composition
requirements. The charters are available on CSR’s website on the
Corporate Governance page. The Risk & Audit Committee, the
Remuneration & Human Resources Committee and the Workplace
Health, Safety & Environment Committee each comprise at least three
non-executive directors and are chaired by a director who is not the
chair of the board. All committees meet at least four times per year.
The managing director attends meetings of board committees by
invitation. Other members of management also attend committee
meetings by invitation. All directors are welcome to attend committee
meetings even though they may not be a member.
Committee papers are made available to all directors before the
meetings. Minutes of committee meetings are included in the papers
for the next board meeting and the chair of each committee reports to
the board on matters addressed by the committee.
34 CSR LIMITED ANNUAL REPORT 2021
CORPORATE GOVERNANCE STATEMENT AND RISK
Board Committees (continued)
Remuneration & Human Resources Committee
Nominations Committee
The company’s size is not considered sufficient to warrant a separate
nominations committee.
The board takes on the role of the nominations committee, which
includes the following functions:
determining the appropriate size and composition of the board (in
accordance with the company’s constitution);
determining the appropriate criteria (necessary and desirable skills
and experience) for the appointment of directors;
addressing board succession, including recommending the
appointment and removal of directors;
assessing the independence of each non-executive director;
defining the terms and conditions of appointment to and
retirement from the board;
overseeing induction and continuing education programs for non-
executive directors; and
evaluating the board’s performance.
Attendance at board and committee meetings during YEM21
Details of director attendance at board and board committee
meetings held during the year are provided on page 48 of the
Directors’ Report.
The Remuneration & Human Resources Committee is chaired by
Matthew Quinn. Until 30 November 2020 the other members of the
committee were John Gillam and Penny Winn. From 1 December
2020 the other members of the committee are Nigel Garrard, John
Gillam and Penny Winn. Each of these directors is considered to be
independent.
The committee’s specific responsibilities are set out in the
Remuneration & Human Resources Committee Charter, and include:
advising the board on remuneration policies and practices;
assessment of culture within the company;
evaluating the performance of the managing director against pre-
agreed goals;
making recommendations to the board on remuneration for the
managing director and executive managers reporting to the
managing director; and
overseeing CSR’s human resources strategy, particularly
succession and development planning for executive managers.
The committee considers independent advice on policies and
practices to attract, motivate, reward and retain strong performers.
Workplace Health, Safety and Environment (WHS&E) Committee
An important part of CSR’s governance commitments includes
protection of its people’s workplace health and safety, and protection
of the environment. The board endorsed WHS&E Policy details the
company’s and individuals’ obligations in respect of WHS&E.
The board’s Workplace Health, Safety & Environment Committee
oversees and reports to the board on the management of the
company’s WHS&E responsibilities. The Workplace Health, Safety &
Environment Committee is chaired by Christine Holman. Until 28
October 2020 the committee was chaired by Penny Winn and the
other members of the committee were Christine Holman and Mike
Ihlein. From 29 October 2020 the other members of the committee
are John Gillam, Mike Ihlein and Penny Winn. The managing director
and other members of management attend meetings of the
Workplace Health, Safety & Environment Committee by invitation.
The committee’s specific responsibilities are set out in the Workplace
Health, Safety & Environment Committee Charter, and include:
receiving regular performance reports from management on
WHS&E matters;
overseeing the risk management of WHS&E matters;
reviewing the adequacy and effectiveness of CSR’s WHS&E
management systems and ensuring appropriate improvement
objectives and targets are set and monitored; and
monitoring potential liabilities, changes in legislation, community
expectations, research findings and technological changes.
The committee conducts every meeting at a CSR site and such
meetings include a presentation from local management and a site
tour. During YEM21, two committee meetings were held virtually due
to COVID-19 restrictions.
35
CORPORATE GOVERNANCE STATEMENT AND RISK
SENIOR MANAGEMENT
Delegations to 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.
The company has an executive leadership team, comprised of the
managing director and direct reports. The executive team meets
weekly and is responsible for:
implementing the strategic objectives as set by the board;
operating within the risk framework as approved by the board;
all other aspects of the day-to-day management of the company;
instilling and reinforcing values as set by the board;
and
ensuring timely and accurate reporting to the board and board
committees.
During YEM21, progress has been made building substantial change
management and transformation capability within the management
team. As part of this, three new building products business units have
been created, as well as new teams in areas of customer solutions,
transformation and logistics to deliver the strategy set by the board.
Senior executive appointments and service agreements
CSR undertakes background checks on prospective senior executives,
covering the candidates’ character, experience, education, criminal
record and bankruptcy history.
Senior executives’ responsibilities and terms of employment, including
termination entitlements, are set out in a formal executive service
agreement. A summary of the main elements and terms of the
managing director’s and chief financial officer’s service agreements
are set out in the remuneration report.
Induction of senior executives
New executives undertake a structured induction program when they
join the company. This includes comprehensive briefings and
information on the company’s businesses, and its policies and
procedures. Additionally, the program includes site visits and
meetings with people in key internal and external roles in order to
build the relationships necessary to meet the requirements of their
roles.
As discussed further below, and in the remuneration report, key
performance indicators are agreed with each executive to ensure
goals and performance measures are fully and accurately understood
and disclosed.
Performance evaluation of senior executives
CSR’s performance management framework requires that a balanced
scorecard of annual key performance indicators (including financial
and non-financial measures) is set for each senior executive. Every
half year, each senior executive discusses their performance with
their manager.
At the end of the year, as part of a formal review process, each senior
executive’s performance is reviewed against the performance
indicators. Also, each individual’s performance and behaviour are
internally and externally benchmarked and assessed. CSR conducted
evaluations of its senior executives in accordance with this process in
October 2020, as well as in March/April 2021.
During YEM21, change management, capability and reward have
been key focus areas. During the year, a review of CSR’s reward
strategy was undertaken considering all elements of reward across
the company with particular focus on the link between performance
and reward to drive a high-performance culture.
Further details of the process for evaluating the performance of key
management personnel and the remuneration policy for key
management personnel are provided in the remuneration report.
CODE OF BUSINESS CONDUCT, ETHICS AND CULTURE
Code of business conduct and ethics
CSR has a Code of Business Conduct and Ethics (the code) which
underpins its goals and values. The code sets the standards for
dealing with external stakeholders.
The underlying principle of CSR’s code is that lawful, ethical and
responsible behaviour is required of directors, executives and all other
employees, as well as advisers, consultants and contractors. The
board has endorsed the Code of Business Conduct and Ethics.
The code formalises the longstanding obligation of all CSR’s
employees (including directors) and contractors, to behave ethically,
act within the law, avoid conflicts of interest and act honestly and
responsibly in all business activities.
The code articulates how employees are expected to operate in line
with CSR’s fundamental values. CSR's Values are set out both in the
code and separately on CSR’s website. The code incorporates CSR’s
anti-bribery and corruption policy as well as all relevant whistle-blower
protection laws.
The code reinforces the company’s commitment to giving proper
regard to the interests of people and organisations dealing with the
company. Each CSR employee and contractor is required to respect
and abide by the company’s obligations to employees, shareholders,
customers, suppliers and the communities in which it operates.
CSR employees, directors and major contractors are required to sign a
certificate of compliance each year signifying that they have read and
complied with the code and are not aware of any breaches of that
code.
Further, CSR employees are encouraged to report potential breaches
in a number of ways, including via a confidential telephone service.
The company's Reporting Incidents Policy provides that an employee
will not be subject to retaliation by CSR for reporting in good faith a
possible violation of the code of business conduct and ethics. The
board is advised of all material breaches of the code and incidents
reported under the policy via the Risk & Audit Committee.
CSR is committed to conducting business honestly and fairly and in
compliance with all laws and regulations. The company’s Supplier Code
of Conduct sets out the expectations of CSR’s suppliers, and applies to
all suppliers, including all organisations and sub-contractors providing
goods and services to CSR, based in Australia, New Zealand and
overseas.
During YEM21, the company submitted a Modern Slavery Statement
in accordance with the Commonwealth Modern Slavery Act 2018. The
Statement addresses the company’s key modern slavery risks and
how these risks have been identified and assessed, as well as
information on the actions being taken to mitigate those risks and
how the effectiveness of these mitigating actions is assessed.
36 CSR LIMITED ANNUAL REPORT 2021
CORPORATE GOVERNANCE STATEMENT AND RISK
Culture
CSR workplace profile
Throughout YEM21, CSR has undertaken substantial work to better
align culture and behaviours to the CSR strategy and purpose. CSR’s
remuneration framework is kept under review to ensure that at all times
it is attracting diverse talent and motivating the right behaviours across
the company.
Diversity at CSR
CSR has policies and practices designed to improve diversity. The
company’s Fairness, Respect & Diversity Policy is available on CSR’s
website.
CSR places great importance on our people and remains committed to
promoting an inclusive workplace by applying policies and practices
designed to improve both gender equality and diversity within our
organisation. Improving diversity brings a range of benefits to our
business, such as improved business decision making, new and
different perspectives to foster innovation and ultimately better
solutions for our customers.
Year on year we review our recruitment and retention strategies and
practices to further support gender diversity and equity in our
workplace. We have maintained regular reporting on attraction,
selection and retention of female employees by tracking metrics on:
The number of women that have joined CSR;
Women who have left CSR and the reason for leaving;
The gender participation ratio for CSR as well for each business unit;
and
Gender pay equity.
The diversity of CSR's employees remains fundamental to its success
and CSR is committed to increasing female representation at all levels
of management and across the organisation.
In accordance with the requirements of the Workplace Gender
Equality Act 2012 (Cth), CSR submits its Gender Equality Indicators
with the Workplace Gender Equality Agency. The report can be viewed
at the website of the Workplace Gender Equality Agency and also on
CSR’s website. At the end of YEM21, the percentage of women in the
CSR workforce was 21%. During YEM21, 21% of new hires were
women.
In YEM21, the proportion of CSR’s workforce currently represented by
women in leadership roles is set out below:
Table 3: Women in leadership
Level of
leadership
Directors
Executives
Senior
Management
Roles
Board of Directors
Executive Leadership
Team (CEO-1)
Reporting to the
Executive Leadership
Team (CEO-2)
YEM21
YEM20
43%1
25%
50%
18%
27%
27%
1 In December 2020, the number of Directors increased from six to
seven as a temporary measure to facilitate board transition.
37
CORPORATE GOVERNANCE STATEMENT AND RISK
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 YEM21 and the initiatives for YEM22, as approved by the
Remuneration & Human Resources Committee, are set out below:
Table 4: Diversity measurable objectives
Measurable objective
YEM21 achievements
Overview of YEM22 initiatives
Leadership
and culture
Changes made to the business structure included
identifying and selecting internal talent for key
opportunities, resulting in 33% of all promotions
during the year being women, which is higher
than CSR’s workforce participation rate of women
of 21%
Policy & Governance
Responded proactively to current and prospective
employees’ expectations on flexibility as a result
of COVID-19, with improved processes to plan
and manage flexibility and in particular remote
working and working from home up to two days
per week, complementing the Flex@CSR
programs introduced in 2019
Gender pay analysis completed and corrective
actions implemented
Completed a comprehensive review of the paid
parental leave policy with new processes
implemented to bring it more in line with market
expectations
Central management of remuneration has been
implemented to ensure consistency and parity
throughout the company
Recruitment
and retention
CSR monitors female voluntary terminations and
seeks to understand the reasons for these
21% of all new hires were women
Implementation of consistent behaviours, improving
alignment to the newly implemented company
purpose and strategy
Implementation of enhanced means of measuring
culture to provide more meaningful real-time insights
Promote diversity and inclusion through recognition
and celebration of global events
Implementation of online learning tools for individual
and team development
Continue the established bi-annual process to ensure
gender pay parity including reviews by the executive
team and the board
Implementation of a paid domestic (violence) leave
policy
Launch of a new Wellbeing provider, aimed at
providing all employees with the tools needed to stay
well, both physically and mentally
Continuously review company policies, procedures
and ways of working to ensure that CSR’s practices
align with market practice
Continue to further develop and implement a plan to
improve gender participation rates for females (21%
as at March 2021) to be better than the industry
standard of 27.5% (ABS as at December 2020),
including continuing to target recruitment of women
into engineering, operations and sales roles
Continue to identify female talent to be assigned to
strategic on-job development opportunities
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. Executives and directors may forgo a small part of their cash salary or, for non-executive directors, their directors’ fees, to acquire shares
in CSR. Further details are included on page 66 of the Remuneration Report. Employees cannot approve their own remuneration, nor can they
review that of their direct subordinates without their manager’s approval.
The Remuneration Report, commencing on page 50 of the annual report, includes further details on CSR’s remuneration policy and its
relationship to the company’s performance. It also includes details of the remuneration of directors and key management personnel for YEM21
and clearly distinguishes between the structure of non-executive director remuneration from that of the executive director and other key
management personnel. Shareholders are invited to vote on the adoption of the remuneration report at the company’s annual general meeting.
38 CSR LIMITED ANNUAL REPORT 2021
CORPORATE GOVERNANCE STATEMENT AND RISK
RISK MANAGEMENT
There are many 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 constantly and
deliberately assumes certain levels of risk in a calculated and
controlled manner. CSR has in place a range of policies and
procedures to monitor the risk in its activities as well as defined limits
of authority for all levels of management and these are periodically
reviewed by the board. CSR’s Risk Management Policy sets out the
framework for risk management, internal compliance and control
systems.
There are several layers that assist the board in ensuring the
appropriate focus is placed on the risk management framework:
Risk & Audit Committee – reviews and reports to the board in
relation to the company’s financial reporting, internal control
structure, risk management systems including the risk framework
and risk appetite statements and the internal and external audit
functions;
Workplace Health, Safety & Environment Committee – reviews and
reports to the board on the management of the company’s safety,
health and environment liabilities and legal responsibilities as well
as the company’s involvement in the communities in which
it operates; and
Executive management team – manages and reports to the board
on business and financial risks and overall compliance.
Risk management is sponsored by the board and is a priority for
senior managers, starting with the managing director. The board
oversees the risk profile of CSR and ensures that business
developments are consistent with the goals of CSR. The board
receives monthly assurances from the management team that
significant risks are being managed appropriately.
A risk management framework is in place covering business risk,
financial risk, financial integrity, legal compliance and sustainability
risk. The risk management framework requires current and emerging
risks across the businesses to be identified, evaluated, monitored and
controlled. Risks are classified as either strategic/commercial,
operational, financial or compliance/conduct risks. The framework
also includes evaluation of mitigation strategies.
CSR’s Risk Appetite Statements, approved by the board, are core to
the Risk Management Policy and defines (within practical boundaries)
the amount of risk the organisation is willing to accept in pursuing its
strategic objectives. By expressly articulating and documenting its
Risk Appetite Statements, CSR aims to ensure that:
risks can be measured, managed and monitored;
risk appetites can be consistently articulated and understood by all
relevant stakeholders; and
day-to-day operations are undertaken in alignment with CSR’s
tolerance for risk.
The board, through the Risk & Audit Committee, receives
recommendations in relation to the risk profile of CSR, breaches of
the policy framework and external developments which may impact on
the effectiveness of the risk management framework. It also approves
significant changes to the risk management framework, risk appetite
statements and related policies.
The Risk & Audit Committee has responsibility for monitoring
compliance with the risk management framework approved by the
board for internal control and compliance matters. In this role, the
Risk & Audit Committee monitors and reviews the effectiveness of the
internal audit and compliance functions.
CSR’s Corporate Governance and Disclosure Committee has
responsibility for any governance matters. Committees exist at the
executive management level to ensure the necessary elements of
expertise are focused on specific risk areas. Beneath this level, other
committees exist where subject matter experts focus on specific risks
as appropriate.
Risk management accountability
As part of the process of approving the financial statements, at each
reporting date, the managing director and other responsible senior
executives provide statements in writing to the board on the quality
and effectiveness of the company’s risk management and internal
compliance and control systems. The Risk & Audit Committee reviews
the risk management framework annually to confirm that the
framework continues to be appropriate and effective. The most recent
assessment of the risk management framework took place in October
2020.
The board has also received statements from the managing director
and the chief financial officer certifying that, having made all
reasonable enquiries and to the best of their knowledge and belief:
the statements made in relation to the financial integrity of the
CSR group financial reports are founded on a sound system of
effective and efficient risk management and internal compliance
and control;
the system of risk management in operation throughout YEM21
was operating effectively; and
the systems relating to financial reporting were operating
effectively in all material respects.
In YEM21 the board received the relevant declarations required under
section 295A of the Corporations Act 2001 from the managing
director and chief financial officer as well as the relevant reports and
assurances that their opinions were formed on the basis of a sound
system of risk management and internal controls which are operating
effectively.
Financial report accountability
CSR’s managing director and chief financial officer, who are present
for board discussion of financial matters, declare to the board, in
writing, that the company’s financial statements are in accordance
with relevant accounting standards, give a true and fair view in all
material respects of the company’s and the group’s financial condition
and operational results and comply with the Corporations Act 2001
and associated regulations.
The chief financial officer oversees a robust internal process, where
business unit financial managers regularly meet with representatives
from the corporate finance team to discuss the financial aspects of
each business. This includes a review of the business unit profit and
loss statement, balance sheet and all other relevant matters.
Non-financial report accountability
For those periodic corporate reports that are not audited or reviewed
by the external auditor, a rigorous internal review process is
implemented. This process is led by the internal subject matter
experts with reviews undertaken by management and key internal
stakeholders. External advice is obtained as required.
Non-audited periodic reports include the annual Sustainability Report,
the Modern Slavery Statement and this corporate governance
statement. These periodic reports are approved by the board.
39
CORPORATE GOVERNANCE STATEMENT AND RISK
Environmental, social and economic sustainability risks
CSR’s risk management framework is intended to provide the basis for a systematic approach to the identification and management of risks. The
matters below reflect CSR’s material economic, environmental and social sustainability risks.
Table 5: Material economic, environmental and social sustainability risks
Key areas of materiality
Risks
Monitor and manage risk
Aluminium, currency
and debt markets
Australian construction
markets and competitor
activity
CSR’s results are impacted by movements in
the global US dollar price for aluminium and
currency fluctuations.
Some risks related to the aluminium
operation cannot be hedged including
regional price premiums, global relativity of
price of electricity and inputs such as
alumina and petroleum coke as well as
changes to the joint venture structure or
potential operational issues at the Tomago
smelter including electricity curtailments.
CSR has a policy to hedge both US dollar sales and foreign
currency exposure when specific targets are met, with the
primary objective of reducing short-to-medium term earnings
volatility. This policy is monitored regularly by CSR’s Finance
Committee which includes CSR’s managing director, chief
financial officer, group treasurer and the general manager of
Gove Aluminium Finance.
CSR regularly monitors cash flow and the group financial
position as part of the Finance committee’s function.
CSR is actively engaged with the Tomago operating
committee through its position on the Tomago Board.
Tomago undertakes separate material risk analysis to
identify and mitigate potential operational risks.
Approximately 70% of CSR’s total revenue is
generated from products and services
supplied into the construction sector of
Australia and New Zealand which is
impacted by several macro-economic
factors.
Changes in ownership in the construction
sector has resulted in larger customers
representing an increasing proportion of
CSR’s revenue.
Reviews of market activity are factored into CSR’s monthly
reporting, quarterly forecasting and annual budget and
planning cycles, which in turn drive capacity and capital
planning. Furthermore, the nature of CSR’s building
products is that they are typically sold late in the
construction process, giving CSR some visibility of changes
in market conditions before specifically impacting demand.
CSR is actively developing and acquiring new products,
services and distribution networks to improve its position in
the market and provide a comprehensive service offering.
As a supplier to the construction market,
The release of future land supply for residential
Digital and cyber
security
Energy and climate
change
CSR is subject to a number of competitive
forces including other domestic and
international suppliers and new technologies
which could replace existing building
methods.
Digital services are increasingly used by the
construction sector. CSR’s digital
development program is critical to achieving
growth in its key markets.
CSR network and data risks for cyber
security breaches.
CSR’s manufacturing operations use
significant amounts of energy including
electricity and gas.
These energy costs are increasing,
particularly for Tomago aluminium, which in
turn impacts its cost competitiveness
compared to global smelters.
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 energy supply as well as how CSR
manages our land assets and business
processes.
development relies on the coordination of government and
regulatory bodies with builders and developers to deliver
infrastructure and services for new projects.
Implemented regular user security awareness training.
A cyber security improvement plan launched with
accreditation in accordance with ISO27001.
Regular penetration testing and patching across systems.
For 2030, CSR has set new 10 year targets which cover key
areas of energy and emissions reduction, procurement,
packaging, minimising water use and waste and preserving
biodiversity.
Initial three year planning is underway as a pathway to
achieve 2030 targets which is monitored and reviewed
regularly by senior management and the board Workplace
Health, Safety & Environment Committee.
Where possible, CSR enters into long-term contracts to
provide greater security of energy supply for its factories.
CSR’s Energy and Carbon Management Committee oversees
risks related to electricity and gas pricing and management.
Alternative energy sources including solar power systems
are installed at some sites in addition to site specific energy
reduction initiatives.
Transition risk assessment scenarios were completed for
Gyprock plasterboard and Bradford insulation, two of CSR’s
largest businesses by revenue. This analysis focused on
transition (market, policy & regulatory) risks, complementing
earlier work undertaken on the physical (weather) risks
impacting sites and supply chain risks.
40 CSR LIMITED ANNUAL REPORT 2021
CORPORATE GOVERNANCE STATEMENT AND RISK
Environmental, social and economic sustainability risks (continued)
Table 5: Material economic, environmental and social sustainability risks (continued)
Key areas of materiality
Risks
Monitor and manage risk
Product liability
Previous involvement in asbestos in
CSR meets all valid claims in both Australia and the United
Reputational risk
associated with breach
of social licence to
operate
Supply Chain and
product compliance
Australia and exporting asbestos to the
United States.
CSR ceased asbestos mining in 1966 and
divested remaining interests in 1977.
CSR operates a number of factories across
Australia and New Zealand and employs
over 2,500 employees.
CSR‘s activities can impact the community
and environment in which it operates.
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.
Changes in building codes requires ongoing
assessment to ensure products are fit for
purpose and compliant with all relevant
codes. This includes additional risks
associated with supply and install services.
States on an equitable basis.
The asbestos provision is impacted by movements in claim
numbers, settlement rates and values and movements in
AUD/US$ exchange rate.
CSR’s code of business conduct sets out the behaviours
expected of all employees, suppliers and other contractors.
Compliance with the code is measured annually.
There is a dedicated, external confidential hotline available
to employees and other stakeholders for reporting
misconduct.
CSR has a quality management system to ensure that all
products manufactured or supplied consistently meet the
requirements and specifications of international and
national quality standards and customer expectations.
CSR has launched a two-year work plan to develop and
implement its sustainable procurement strategy. This
process will also align CSR with the requirements of
Australian Modern Slavery legislation.
The company’s Supplier Code of Conduct sets out the
expectations of CSR’s suppliers, and applies to all suppliers,
including all organisations and sub-contractors providing
goods and services to CSR, based in Australia, New Zealand
and overseas.
CSR has set targets out to 2030, with a view to increasing
the quantity of products purchased from social enterprises.
Workplace health
and safety
CSR has a stated long-term objective of
achieving zero harm to CSR people across all
operations.
The board WHS&E Committee regularly reviews initiatives
targeting improved safety performance across CSR’s
businesses.
Note: Material Risks are listed alphabetically.
41
CORPORATE GOVERNANCE STATEMENT AND RISK
Role of the external auditor
The Risk & Audit Committee seeks to ensure the independence of the
external auditor. The policy on auditor independence applies to
services supplied by the external auditor and their related firms to
CSR. Under the policy on auditor independence:
the external auditor is not to provide non-audit services under
which the auditor assumes the role of management, becomes an
advocate for the group, or audits its own professional expertise;
significant permissible non-audit assignments awarded to the
external auditor must be approved in advance by the committee or,
between committee meetings by the chair of the committee;
the external audit engagement partner and review partner must
be rotated every five years;
procedures for selection and appointment of the external auditor,
and for the rotation of external audit engagement partners, are set
out in the committee charter; and
the external auditor confirms its independence within the meaning
of applicable legislation and professional standards at each half-
year and full-year.
The external auditor attends the company’s annual general meeting
so shareholders are given the opportunity to ask questions relevant
to:
the conduct of the audit;
the preparation and content of the auditor’s report;
the accounting policies adopted by the company in relation to the
preparation of the financial statements; and
the independence of the auditor in relation to the conduct of the
audit.
Role of the internal auditor
The Risk & Audit Committee recommends to the board the
appointment or dismissal of the internal auditor, who is independent
of the external auditor.
The internal audit function is led by the head of legal, company
secretary and risk and provides objective assurance to management
and the board on the effectiveness of CSR’s internal control, risk
management and governance systems and processes. The function
oversees the execution of the internal audit plan, as approved by the
Risk & Audit Committee. The head of legal, company secretary and
risk has a reporting line to the chief financial officer as well as to the
Risk & Audit Committee.
The role of the internal auditor is to:
report to the board through the Risk & Audit Committee on CSR’s
compliance against its governance framework and policies,
including investigating, and advising on, any potential or actual
breaches;
oversee the implementation of CSR’s risk framework across the
organisation; and
recommend improvements to the company’s risk management
framework.
The function comprises a mix of qualified in-house professionals and
support from relevant external expertise. The internal audit function
has full access to all CSR businesses, records and personnel. Noting
the reporting line and the combined role of the Head of Legal,
Company Secretary and Risk, the board does not consider the internal
audit function to be completely independent of management. In cases
where this may impact the objectivity of the function, then external
auditors/investigators are retained.
The internal audit plan is formulated using a risk-based approach to
align assurance with CSR’s key risks. Internal audit activity and
outcomes are reported to the Risk & Audit Committee at least bi-
annually.
ENGAGEMENT WITH STAKEHOLDERS
CSR has a number of stakeholders including shareholders,
employees, customers, suppliers and local communities. The board
identifies and prioritises CSR’s key stakeholders, develops a strategy
for engagement with stakeholders and supports management to
engage with key stakeholders to understand, consider and respond to
issues.
Continuous disclosure
CSR believes that shareholders, regulators, ratings agencies and the
investment community generally, should be informed of all major
business events and risks that influence CSR, in a factual, timely and
widely available manner. 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. Under this
policy, any price sensitive material for public announcement, including
full-year and half-year results announcements, release of financial
reports, presentations to investors and analysts and other prepared
investor briefings for CSR, will be:
lodged with the ASX as soon as practical and before external
disclosure elsewhere; and
posted on CSR’s website.
The policy limits external briefings in the periods between the end of a
full-year and half-year and the release to the ASX of the relevant
results.
The board has responsibility for compliance with CSR’s continuous
disclosure obligations to keep the market fully informed of information
that may have a material effect on the price or value of CSR’s
securities. Internal procedures and guidelines for continuous
disclosure and communications have been developed. These
procedures sit together with CSR’s Share Market Disclosure Policy to
ensure the board and the Corporate Governance and Disclosure
Committee is made aware of any information that should be
considered for release to the market.
CSR’s Corporate Governance and Disclosure Committee meets as
required, and often on very short notice, to ensure compliance with
disclosure requirements. Members of this committee are the
managing director, chief financial officer, chair of the Risk & Audit
Committee, company secretary and general manager investor
relations and corporate communications.
The managing director approves all disclosures before they are
released. The board approves all disclosures that are significant. All
announcements include a statement identifying the title of the body,
or the name and title of the officer of the company, who approved the
disclosure. Directors receive a copy of all ASX disclosures promptly
following release.
The Share Market Disclosure Policy is reviewed regularly to ensure
compliance with the ASX Listing Rules and guidance on continuous
disclosure.
The company secretary is responsible for communications with the
ASX.
42 CSR LIMITED ANNUAL REPORT 2021
CORPORATE GOVERNANCE STATEMENT AND RISK
Commentary on financial results
Role of the investor relations function
CSR provides a review of operations and financial performance in the
full-year and half-year results, which also includes the company’s
financial report. Results announcements to the ASX, analyst
presentations and the full text of the chair’s and managing director’s
addresses at the company’s annual general meeting are made
available on CSR's website.
Other engagement activities
CSR strives to communicate effectively with shareholders about the
company’s performance, presenting the annual report and other
corporate information in clear language, supported by descriptive
graphics and tables. This approach is outlined in the company’s
Shareholder Communication Policy.
Where practicable, the company uses the latest widely available
electronic technology to communicate openly and continuously with
shareholders, and the share market in general. Announcements to the
ASX, significant briefings, presentations, notices of meetings and
speeches at annual general meetings are promptly posted on the
Investors and News section of CSR’s website.
Shareholders can register to receive shareholder information and can
lodge proxies electronically for the annual general meeting. The
annual general meeting, results announcements and other major
briefings are available via a live webcast from CSR’s website, for
access by all interested parties.
Shareholders are encouraged to submit questions or comments
ahead of, or during, the company’s annual general meeting. Members
of senior management are present at the annual general meeting,
along with directors, to answer questions about the company’s
operations. On occasions when the annual general meeting may be
held as a hybrid or virtual meeting, an opportunity for shareholders to
ask questions and vote in real time will be made available. All
resolutions at the annual general meeting are decided by a poll rather
than on a show of hands.
The company’s Sustainability Report provides information on CSR’s
sustainability record across a number of priority areas including the
environment, people and safety, community and supply chain.
The company’s Supplier Code of Conduct sets out the expectations of
CSR’s suppliers, and applies to all suppliers, including all organisations
and sub-contractors providing goods and services to CSR, based in
Australia, New Zealand and overseas.
During YEM21, the company submitted a Modern Slavery Statement
in accordance with the Commonwealth Modern Slavery Act 2018. The
Statement addresses the company’s key modern slavery risks and
how these risks have been identified and assessed, as well as
information on the actions being taken to mitigate those risks and
how the effectiveness of these mitigating actions is assessed.
CSR’s investor relations function is designed to ensure that the
market is kept informed of all aspects relevant to the company and
also to provide an opportunity for investors and other stakeholders to
express views on the company. The program includes lodgement of
information on the ASX platform, managing and updating the CSR
website, investor roadshows, conferences and other briefings with all
materials lodged with the ASX prior to distribution.
CSR utilises the following activities to promote effective
communication with the market:
comprehensive and up to date company website;
investor briefings, presentations, conferences and other events;
encouraging questions via the company’s website and ahead of
the AGM as outlined in the Notice of Meeting; and
webcasting important company events.
SHARE TRADING POLICY
Under the company’s Share Trading Policy, directors, senior managers
and identified designated employees may only buy or sell CSR shares,
or give instructions to the trustee of CSR’s employee share acquisition
plan (ESAP), or vary their participation in the dividend reinvestment
plan (DRP) during one month periods commencing 24 hours after the
date of the full-year and half-year results announcements and the
annual general meeting. Also, they are prohibited from dealing in any
financial products relating to CSR securities or entering into hedging
arrangements in respect of CSR securities they hold, or which are held
on their behalf.
Additional clearance requirements apply to directors of CSR Limited,
the managing director, chief financial officer as well as senior
executives who are eligible to participate in CSR’s long-term incentive
plan. Each of these individuals must obtain clearance for any
proposed dealing in CSR’s securities.
Under the policy, and as required by law, all directors and employees
are prohibited from buying or selling CSR shares at any time if they
are aware of any market sensitive information that has not been
made public. All CSR share dealings by directors are notified to the
ASX within the required time. Additional trading restrictions apply to
key management personnel.
OTHER IMPORTANT POLICIES
In addition, the board has adopted specific internal policies in key
areas, including trade practices; workplace health, safety and the
environment; fairness, respect and diversity in employment; capital
investment; dealing with price sensitive and other confidential
information; privacy; indemnification of employees; and requirements
for authorising and entering into business transactions on behalf of
CSR.
Details of the company’s engagement with the community are
available in the Sustainability Report found on CSR’s website.
DISCLOSURE
CSR considers that the above corporate governance practices comply
with the ASX CGC Principles and Recommendations (4th edition).
The company’s corporate governance framework is kept under review,
with a report provided to the board by the company secretary at least
annually, recommending any improvements necessary to respond to
changes to the company’s business or applicable legislation
and standards.
43
BOARD OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors are responsible for and oversee the governance, culture and
management of CSR. CSR’s shareholders approve the appointment of Directors and
hold them accountable for the performance of the Company.
JOHN GILLAM
BCom, MAICD, FAIM.
Chair of the board since 1 June 2018, non-executive director since December 2017.
Other CSR responsibilities: Member of the Remuneration & Human Resources Committee and Workplace
Health, Safety & Environment Committee.
Experience and expertise: John joined Wesfarmers Limited in 1997 and held a number of senior leadership
roles in the company over 20 years, including CEO of the Bunnings Group from 2004 to 2016, Managing
Director of CSBP from 2002 to 2004 and Chairman of Officeworks from 2007 to 2016.
Other directorships/offices held:
Chairman of Nufarm Limited (Director since July 2020 and Chair since September 2020 to current)
Chairman of BlueFit Pty Limited (2018 to current)
Director of Trinity Grammar School, Kew (2018 to current, Chairman to July 2020)
Director of Heartwell Foundation (2009 to current)
Director of Clontarf Foundation (2017 to current)
JULIE COATES
BA, DipE.
Appointed to the board as an executive director and managing director on 2 September 2019, having
joined CSR on the same date.
Other CSR responsibilities: Attends committee meetings by invitation.
Experience and expertise: Julie was formerly the managing director of Goodman Fielder Australia and
Goodman Fielder New Zealand. Julie has also held several senior roles at Woolworths Limited, including
managing director of Big W, chief logistics officer and human resources director, working closely on business
strategy and major transformational change programs, delivering strong results at both a divisional and group
level. Julie has proven leadership skills, a strong understanding of manufacturing, safety and operational
processes and deep experience in supply chain efficiency, optimisation and digitisation.
Other directorships/offices held:
Previously a non-executive director of Coca-Cola Amatil Limited (2018 to 2019)
NIGEL GARRARD
BEc, CA, MAICD.
Non-executive director since December 2020.
Other CSR responsibilities: Member of the Risk & Audit Committee and Remuneration & Human
Resources Committee.
Experience and expertise: Nigel was formerly managing director and CEO of leading packaging manufacturing
company Orora Limited from 2013 to 2019. Nigel has also held a number of senior positions in a range of
manufacturing industries including managing director/president of Amcor Australasia & Packing Distribution,
managing director Coca-Cola Amatil Food & Services Division and managing director of the then listed SPC
Ardmona.
Other directorships/offices held:
Non-executive director of Ansell Limited (2020 to current)
Chairman of McMahon Services Aust. Group advisory board (2019 to current)
Director of Hudson Institute Medical Research (2016 to current)
Director of Detmold Group advisory board (2020 to current)
Previously a director of Orora Limited (2013 to 2019)
44 CSR LIMITED ANNUAL REPORT 2021
BOARD OF DIRECTORS
CHRISTINE HOLMAN
PGDipBA, MBA, GAICD.
Non-executive director since October 2016.
Other CSR responsibilities: Chair of the Workplace Health, Safety & Environment Committee and member
of the Risk & Audit 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 Metcash Limited (2020 to current)
Non-executive director of Blackmores Limited (2019 to current)
Non-executive director of Collins Foods Limited (2019 to current)
Non-executive director of The Moorebank Intermodal Company, a Federal Government Business
Enterprise (2018 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)
Non-executive director of the T20 World Cup 2020 Cricket Board (2018 to current)
Non-executive director of the McGrath Foundation (2020 to current)
Previously a non-executive director of HT&E Limited (2015 to 2018)
Previously a non-executive director of WiseTech Global Limited (2018 to 2019)
MIKE IHLEIN
BBUS (Accounting), FAICD, FCPA, FFIN, MFEI.
Non-executive director since July 2011.
Other CSR responsibilities: Chair of the Risk & Audit Committee and member of the Workplace Health,
Safety & Environment Committee.
Experience and expertise: Mike was formerly chief executive office and executive director of Brambles Limited
until November 2009, prior to which he was Brambles chief financial officer for four years. Mike has 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 of Inghams Group Limited (2020 to current)
Non-executive director of Ampol Limited (2020 to current)
Non-executive director of Kilfinan Australia Limited (2016 to current)
Previously a non-executive director of Snowy Hydro Limited (2012 to 2019)
MATTHEW QUINN
BSc (HONS), ACA, ARCS.
Non-executive director since August 2013.
Other CSR responsibilities: Chair of the Remuneration & Human Resources Committee and member of the
Risk & Audit Committee.
Experience and expertise: Matthew was formerly managing director of Stockland for 12 years until January
2013. Matthew has an extensive background in commercial, retail, industrial and residential property
investment, development and environmental land rehabilitation.
Other directorships/offices held:
Chairman of Class Super (Director since 2015, Chair since 2017 to current)
Chairman of TSA Management Group Holdings Pty Limited (2018 to current)
Non-executive director of Regis Healthcare Limited (2018 to current)
Non-executive director of Elders Limited (2020 to current)
Member of the Australian Business and Community Network Scholarship Foundation
PENNY WINN
BCOM, MBA, GAICD.
Non-executive director since November 2015.
Other CSR responsibilities: Member of the Risk & Audit Committee, Remuneration & Human Resources
Committee and the Workplace Health, Safety & Environment Committee.
Experience and expertise: Penny was formerly director of 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, including experience in workplace health & safety.
Other directorships/offices held:
Non-executive director of Ampol Limited (2015 to current)
Non-executive director of Goodman Limited and Goodman Funds Management Limited (2018 to
current)
Board member of the ANU Foundation (2020 to current)
Previously Chairman of Port Waratah Coal Services Limited (2015 to 2019)
Previously a non-executive director of Coca-Cola Amatil Limited (2019 to May 2021)
45
DIRECTORS REPORT
DIRECTORS REPORT
Events after balance sheet date
Dividends
On 12 May 2021 the board resolved to pay a final dividend of 14.5
cents per share and a special dividend of 9.5 cents per share. Both of
these dividends will be fully franked at the 30% corporate tax rate.
The final and special dividend for the financial year ended 31 March
2021 have not been recognised in this financial report.
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:
an interim ordinary dividend of 8.5 cents per ordinary share and an
interim special dividend of 4.0 cents per ordinary share (100%
franked at the 30% corporate tax rate) was paid on 8 December
2020 (as set out in note 19 to the financial statements on page
92).
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.
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 2021. The information appearing on
pages 46 to 70 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 the CSR group operations and results for the year ended
31 March 2021 is set out on the inside front cover to page 43 and
pages 71 to 112 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
There have been no significant changes to the CSR group in the
financial year ended 31 March 2021.
Impact of COVID-19 pandemic
The CSR group has managed, and continues to actively manage, the
risks arising from the COVID-19 pandemic and any known impacts
have been reflected in the financial statements for the year ending 31
March 2021.
CSR’s response includes a financial response plan that incorporates
scenario and contingency planning at various levels of construction
activity. In addition to a CSR group business continuity plan (BCP), all
CSR businesses have tailored BCPs, which are specific to their
business and contemplate the operational responses at various levels
of construction activity.
As at 31 March 2021, CSR had cash of $250.8 million and $420.0
million in undrawn borrowing facilities. This provides CSR with
financial flexibility to manage during an uncertain business activity
environment.
46 CSR LIMITED ANNUAL REPORT 2021
DIRECTORS REPORT
Indemnities and insurance
Auditor independence
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 incurred by that person as an officer of CSR (including
liabilities incurred by the officer as a director of a subsidiary of CSR
where CSR requested the officer to accept appointment as
director); and
reasonable legal costs incurred in defending an action for a liability
or an alleged liability incurred by that person as such an officer of
CSR (including such legal costs incurred by the officer as a director
of a subsidiary of CSR where CSR requested the officer to accept
appointment as director).
For the purposes of rule 101 of CSR’s constitution, ‘officer’ means a
director, secretary and executive officer of CSR (as defined in the
Corporations Act 2001).
CSR has entered into a deed of indemnity, insurance and access with
current and former directors of CSR and its subsidiaries. Under each
director’s deed, CSR indemnifies the director against all costs, losses
or liabilities, including without limitation, legal costs and expenses, on
a full indemnity basis, incurred by the director in their capacity as a
director of CSR or, in some cases as a director of a CSR subsidiary.
The deeds also provides directors certain rights of access to board
papers and require CSR to maintain insurance cover for directors. No
director or officer of CSR has received benefits under an indemnity
from CSR during or since the end of financial year.
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 2021 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 2022. 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 2021. 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. No fees were paid to
attend these events (2020: $nil) and as such disclosure to the
Australian Electoral Commission was not required.
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 2021, an officer of the CSR group. No auditor who
played a significant role in the CSR group audit for the year ended 31
March 2021 has done so for a period exceeding the extended audit
involvement period of five successive financial years. The auditor’s
independence declaration (made under section 307C of the
Corporations Act 2001) is set out on page 49.
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 33 to the financial statements on
page 110. 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
(KMP)
The remuneration report on pages 50 to 70 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 and company secretary
On 1 December 2020 Mr Nigel Garrard was appointed as a non-
executive director.
The names of directors who held office at 12 May 2021, 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 44 and 45 and forms part of the directors’ report.
The qualifications and experience of the company secretary at 12 May
2021 are as follows:
Debbie Schroeder
BED (HONS), LLB, GAICD, AGIA.
Joined CSR in 2001 and has been company secretary since 2010. In
2018, Debbie was appointed head of risk and internal audit, and in
July 2020 was also appointed head of legal. Prior to joining CSR,
Debbie was a lawyer at Tress Cocks & Maddox and Landers & Rogers.
Debbie has extensive experience in corporations law and corporate
governance, risk management and compliance, dispute resolution,
employment law and insurance. Debbie holds a Graduate Diploma in
Applied Corporate Governance, is an Associate of the Governance
Institute of Australia and a Graduate of the Australian Institute of
Company Directors (AICD).
47
DIRECTORS REPORT
Directors’ meetings and directors’ shareholdings
The number of meetings of the company’s board of directors and each board committee held during the year ended 31 March 2021, 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 69 and 70. 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 2021
CSR Board1
Risk & Audit
Committee
Workplace Health, Safety &
Environment Committee
Remuneration &
Human Resources Committee
Held2
Attended3
Held2
Attended3
Held2
Attended3
Held2
Attended3
John Gillam4
Nigel Garrard5, 6
Christine Holman7
Michael Ihlein7
Matthew Quinn6
Penny Winn8
Julie Coates
17
3
17
17
17
17
17
17
3
17
17
17
17
17
n/a
1
5
5
5
1
5
5
1
5
5
5
5
5
2
n/a
4
4
n/a
4
4
2
–
4
4
–
4
4
4
1
n/a
n/a
4
4
4
4
1
4
3
4
4
4
Includes additional meetings held to specifically discuss COVID-19 implications.
1
2 Meetings held while a member.
3 Meetings attended.
4 A member of the Workplace Health, Safety & Environment Committee from 29 October 2020.
5 Appointed as non-executive director from 1 December 2020.
6 Director is not a member of the Workplace Health, Safety & Environment Committee.
7 Director is not a member of the Remuneration & Human Resources Committee.
8 A member of the Risk & Audit Committee from 29 October 2020.
John Gillam
Chair of the board
12 May 2021
Julie Coates
Managing Director and CEO
12 May 2021
48 CSR LIMITED ANNUAL REPORT 2021
AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF CSR LIMITED
The Directors
CSR Limited
Triniti 3
39 Delhi Road
North Ryde NSW 2113
12 May 2021
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 2021, 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
J L Gorton
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
49
REMUNERATION REPORT
REMUNERATION REPORT
Shareholder letter
Dear Shareholder
On behalf of the board, I am pleased to present CSR’s Remuneration Report for the year ended 31 March 2021 (YEM21).
One of our most important roles as a board is to implement a remuneration framework for our senior executives and employees that is fair,
reasonable and motivates them to deliver strong performance. The key principle of our remuneration strategy is alignment of executive and
shareholder outcomes.
We meet regularly with major shareholders and their advisors to discuss the framework and ensure it remains fit for purpose in a dynamic and
rapidly changing business environment.
YEM21 targets and performance
The financial targets for YEM21 were set by the board in March 2020 prior to the commencement of the financial year, before the impact of the
COVID-19 pandemic could be foreseen.
The COVID-19 pandemic created uncertainty and challenges, and it was clear that the risks to the businesses operations and the financial results
would need to be closely managed. At the onset of the pandemic, the leadership team acted immediately and decisively. Business continuity plans
were deployed, cost disciplines and new ways of working embedded.
Notwithstanding the uncertainty of the pandemic, the management team continued to implement the business strategy to streamline CSR’s
operating model from five to three business units, along with a dedicated focus on logistics and customer solutions. The business is now leaner
and fit for purpose, and CSR is well positioned to drive the most competitive product and service solutions for the market.
The business has been well managed by the executive leadership team through a year of uncertainty and change, delivering strong financial
performance and positive outcomes for shareholders. The share price hit a 10 year high in April 2021 and the YEM21 full year dividend is the
highest in 12 years.
Remuneration outcomes
Despite the onset of COVID-19, the board and executive team agreed that the original financial targets set in March 2020 should remain unchanged
for the purpose of assessing performance for STI, and we are pleased to report that CSR’s YEM21 EBIT exceeded the target.
The board also determined that certain significant items should be adjusted for in determining STI, reducing EBIT for STI assessment purposes
from $238 million to $230 million. Even allowing for this adjustment, the STI payout reflects stretch performance against targets set at the
beginning of the year. As a result, the management team and employees have been appropriately rewarded for their efforts and results.
Apart from the downward adjustment for significant items, the board has not exercised any discretion in determining the STI award for YEM21.
Looking forward
YEM21 was a very good year for CSR, both in terms of financial performance and setting the company up for success. The board is confident that
our remuneration framework is appropriate and will motivate our executives to create value for our shareholders in the long term.
Matthew Quinn
Chair, Remuneration & Human Resources Committee
50 CSR LIMITED ANNUAL REPORT 2021
REMUNERATION REPORT | REMUNERATION REPORT OVERVIEW
Overview
1 Basis of preparation of the Remuneration Report
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 2021 (YEM21) and the remuneration framework. The
report also details proposed changes for the financial year ended 31 March 2022 (YEM22).
Consistent with prior years, actual remuneration of executive KMP has been included in the Remuneration Report in section 3.
2 Key management personnel (KMP) and senior executives
KMP for YEM21 are detailed in the table below. KMP are as defined by the Accounting Standard AASB 124 Related Party Disclosures (AASB
124).
Given the flat organisational structure of the company and following a review of senior executives against the criteria for determining executive
KMP, only the Managing Director and CEO and Chief Financial Officer qualify as executive KMP, consistent with prior years.
Table 1: Key management personnel
Name
Position
Term as KMP
Non-executive Directors (NEDs)
John Gillam
Nigel Garrard
Christine Holman
Michael Ihlein
Matthew Quinn
Penny Winn
Executive KMP
Julie Coates
David Fallu
Director and Chair of the board
Director
Director
Director
Director
Director
Full year
From 1 December 2020
Full year
Full year
Full year
Full year
Managing Director and CEO
Chief Financial Officer and Executive General Manager, Property
and Aluminium
Full year
Full year
The senior executives are detailed in the table below. Following the business reorganisation undertaken during YEM21, there have been some
changes to the senior executives.
These senior executives are not KMP as defined by AASB 124. In some cases, where aspects of remuneration apply to other senior roles within
CSR, the term ‘executive’ is also used.
Table 2: Senior executives
Name
Position
Term as senior executive
Current senior executives
Amy Bentley
Paul Dalton
Catherine Flynn
Andrew Mackenzie
Gary May
Andrew Rottinger
Anthony Tannous
Mark White
Cameron Webb
Former senior executives
Ian Hardiman
Nick Pezet
Andrea Pidcock
Executive General Manager, Logistics
Executive General Manager, Interior Systems
Executive General Manager, Human Resources
General Manager, Property
Executive General Manager, Customer Solutions
Executive General Manager, Construction Systems
Executive General Manager, Masonry & Insulation
General Manager, Aluminium
From 14 September 2020
From 28 September 2020
From 4 May 2020
Full year
From 1 June 2020
From 17 June 2020
Full year
Full year
Executive General Manager, Transformation, Technology & Digital From 28 September 2020
Executive General Manager, New Business, Innovation &
Technology
To 5 June 2020
Executive General Manager, PGH Bricks
To 3 July 2020
Executive General Manager, Interior Systems
To 4 September 2020
51
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
Remuneration and performance outcomes
3
Actual remuneration
The actual remuneration disclosure has been prepared to provide shareholders with a view of CSR’s remuneration structure and how
remuneration was paid to the executive KMP for YEM21. The board believes presenting information in this way provides shareholders with
increased clarity and transparency of 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 section 10,
with a summary of the differences detailed in the table below.
Table 3: Comparison of actual and statutory remuneration disclosures
Fixed annual
remuneration
Short-term
incentive (STI)
Long-term incentive (LTI)
Actual
remuneration
disclosures
Cash salary,
superannuation
contributions and
other eligible salary
sacrifice benefits
STI award for
YEM21, inclusive
of the 40% 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 2021
Statutory
remuneration
disclosures
As above
STI award for
YEM21, 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
for YEM21 relates to YEM19 to
YEM21 LTI grants
Leave
accruals
Not
included
Included
Other benefits
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
Performance Rights Plan
(PRP) rights are granted
as part of contractual
obligations. These are
expensed over the vesting
period
Executive KMP actual remuneration
Actual remuneration received by executive KMP is set out in table 4 below and is prepared on the basis summarised in table 3. Commentary on
the key components of remuneration is set out in table 5 below.
Table 4: Actual remuneration received by executive KMP
Year ended
$
31 March 2021
Julie Coates
David Fallu
Total
31 March 2020
Julie Coates
David Fallu
Rob Sindel1
Total
Fixed
remuneration
Short-term
incentive
Long-term
incentive
Other
benefits
1,150,000
700,000
1,850,000
670,833
631,625
678,254
1,980,712
1,104,000
700,000
1,804,000
–
–
522,000
522,000
–
92,827
92,827
–
–
683,048
683,048
–
999
999
–
1,563
–
1,563
Total
2,254,000
1,493,826
3,747,826
670,833
633,188
1,883,302
3,187,323
1 Actual fixed remuneration for Mr Sindel for YEM20 was up to September 2019. The short-term incentive represents a special incentive paid to Mr Sindel based on goals
set by the board and determined for services up to 31 August 2019.
Table 5: Commentary on actual remuneration received by executive KMP
Area
Explanation
Total
remuneration
Total actual remuneration has increased due to higher STI outcomes in YEM21, with Ms Coates and Mr Fallu forfeiting
any entitlement to a STI in YEM20, in recognition of the uncertainty arising from the COVID-19 pandemic when the STI
awards were determined in May 2020.
Further detail on the STI awarded is detailed below and in section 4.
Fixed
remuneration
Ms Coates’ fixed remuneration was not increased during the year. As Ms Coates’ commenced as Managing Director and
CEO on 2 September 2019 the YEM20 total remuneration does not include a full year of fixed remuneration.
Mr Fallu’s fixed remuneration was increased from 1 April 2020 from $635,500 to $700,000 per annum, as a market
adjustment to align with a relevant industry peer group.
52 CSR LIMITED ANNUAL REPORT 2021
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
3
Actual remuneration (continued)
Table 5: Commentary on actual remuneration received by executive KMP (continued)
Area
Explanation
Short-term
incentives
The board assessed Ms Coates’ performance against the objectives set and determined that Ms Coates would be
awarded an STI between target and stretch. The STI outcome recognises Ms Coates’ leadership of the business over the
last year, including the significant efforts to deliver financial results above the target while managing the business
through a period of uncertainty and disruption due to the COVID-19 pandemic. In addition, significant progress has been
made implementing the CSR strategy, including streamlining of the business operating model to focus on driving the
most competitive product and service solutions for the market. The STI award represents 96% of Ms Coates’ maximum
STI opportunity for YEM21.
The board assessed Mr Fallu’s performance against the objectives set and determined that Mr Fallu would be awarded
an STI at stretch. The STI outcome recognises Mr Fallu’s management of the business during the COVID-19 pandemic
and significant role in the CSR strategy implementation. Mr Fallu has played a critical role in managing the financial
uncertainty faced by the business throughout the COVID-19 pandemic and has led the Property and Aluminium
businesses, both of which have delivered strong financial performances in YEM21 and progressed their respective
strategies. The STI award represents 100% of Mr Fallu’s maximum STI opportunity for YEM21.
Further detail on the STI outcomes is included in sections 4 and 7.
Long-term
incentives
Other benefits Other benefits included USOP.
Long-term incentives represent the partial vesting of the YEM18 LTI for Mr Fallu.
Further detail is included in sections 4, 8 and 12.
There were no termination benefits paid to executive KMP during the year.
Senior executive actual remuneration
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 3. The analysis excludes the executive KMP.
The disclosure of senior executives for YEM21 has been expanded by two existing roles and now includes all Executive General Managers
reporting to the Managing Director and CEO and the General Manager of Aluminium and the General Manager of Property. Due to changes in the
composition of senior executives during YEM21, the senior executive actual remuneration disclosure is not directly comparable to YEM20.
The increase in total remuneration is due to higher STI outcomes in YEM21 with the senior executives forfeiting any entitlement to an STI in
YEM20 in recognition of the uncertainty arising from the COVID-19 pandemic. Further explanation on STI outcomes is set out in table 7 over the
page.
Table 6: Senior executive remuneration
Year ended 31 March
$
2021
2020
Actual fixed
remuneration
received1
4,094,123
3,731,054
Short-term
Incentive2
2,586,859
–
Long-term
incentive
446,211
693,887
Other
benefits3
2,996
5,876
Total
7,130,189
4,430,817
1 Actual fixed remuneration received is based on the term as a senior executive and includes the three former senior executives listed in table 2.
2
3 Other benefits include USOP.
In recognition of the uncertainty arising from the COVID-19 pandemic senior executives forfeited any entitlement to an STI in YEM20.
53
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
4
Performance outcomes
Summary of performance outcomes for YEM21
A summary of the YEM21 short-term and long-term incentive outcomes are set out in table 7 and table 8 below, with further detail included in
sections 7 and 8 respectively.
Table 7: YEM21 short-term incentive outcomes
Area
Explanation
YEM21 financial
targets for STI
purposes
At the start of each year, the board sets challenging financial targets taking into account the relevant factors for each
business segment including forecasts for building activity, aluminium pricing and the property market, as well as
considering investor requirements for a certain level of sustainable returns.
As earnings before interest and tax (EBIT) is the primary STI financial measure, the board has elected not to disclose
Assessment of
performance
against targets
the financial target due to commercial sensitivity.
The financial targets for YEM21 were set by the board in March 2020 prior to the commencement of the financial year
and did not contemplate any impact arising from the COVID-19 pandemic. The executive KMP and senior executives
were tasked by the board to achieve the YEM21 target earnings, irrespective of the impacts of the COVID-19
pandemic.
YEM21 CSR group EBIT exceeded the financial target set due to:
‒ Strong cost control and operational improvements, which mitigated the impact of lower Building Products
revenue. Although Building Products revenue was down by 6% compared to the financial target set, strong cost
disciplines led to earnings being ahead of the financial target set. Building Products EBIT margin (calculated as
EBIT divided by revenue) increased to 12.0%, which is ahead of YEM20’s EBIT margin of 10.7%.
‒ The sale of Horsley Park Stage 2.1 was delivered in line with the target set and significant progress was also
made on the balance of the site, with a further sale at this site announced during the year and site rehabilitation
tracking ahead of schedule.
‒ The group’s Aluminium business delivered higher earnings compared to the financial target set, due to profitable
hedging secured during YEM21. In addition, the longer-term hedging portfolio has increased, providing greater
certainty of Aluminium earnings for the next three years.
‒ Decisive action taken to respond to the uncertainty and financial impact of disruptions arising from COVID-19,
including implementing business continuity plans and embedding cost disciplines and new ways of working.
‒ Further detail on the financial performance is detailed in Table 13.
An assessment of significant items was also completed by the board resulting in a lowering of the actual EBIT result for
STI purpose from $238 million to $230 million.
Details of the significant items assessment, including the adjustments made and business performance are set out in
section 7.
STI awarded
The STI awarded amounts to a payout ratio of 7.5% of YEM21 EBIT.
When the combined YEM21 and YEM20 STI award is considered over the two years earnings, it amounts to an
average payout ratio of 5% per annum. This measure is relevant as in YEM20, in response to the uncertainty regarding
the impact of the COVID-19 pandemic, the Managing Director, Chief Financial Officer and all senior executives
forfeited their entitlement to a STI for YEM20. In addition, a company-wide remuneration review was not conducted for
salaried employees during YEM21.
The STI awarded by the board acknowledges the significant efforts of management to produce financial results above
the financial target, while managing the business through a period of uncertainty and disruption due to the COVID-19
pandemic, and continuing to progress the implementation of the new CSR strategy.
Table 8: YEM21 long-term incentive outcomes
LTI measure
Explanation
Overall
The YEM18 LTI performance hurdles were partially met resulting in 28.7% of the YEM18 PRP grant vesting in March
2020.
The value of LTI that vested in YEM21 decreased compared to YEM20 due to a lower number of rights vesting.
Further detail is contained in section 8.
TSR
EPS
Total shareholder return (TSR) target: 28.7% vested out of 50% potential.
Earnings per share (EPS) target: nil% vested out of 50% potential.
54 CSR LIMITED ANNUAL REPORT 2021
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
4
Performance outcomes (continued)
Overall financial performance and variable remuneration
The following table summarises the clear link between company performance and incentives awarded to executive KMP, senior executives and
other eligible employees:
Table 9: Summary of financial performance and STIs and LTIs awarded
Financial performance6
STI
LTI
EBIT
($ million)1
TSR
(%)2
EPS
(cents)1
ROFE
(%)3
Share
price ($)4
Executive
KMP
($ million)
Senior
executives
($ million)
All eligible
employees
STI as a %
of EBIT
Vested value
– Executive
KMP
($ million)5
Vested value
– Senior
executives
($ million)5
YEM21
YEM20
YEM19
YEM18
YEM17
237.9
87.3
33.1
21.1
216.8
1.5
27.3
17.8
265.0
(32.9)
36.1
21.8
320.3
25.3
41.9
27.8
298.0
45.7
36.5
21.6
5.78
3.17
3.32
5.18
4.51
1.8
0.57
1.4
1.2
0.9
2.6
–7
2.0
2.2
2.0
7.5%8
2.6%
6.3%
5.4%
5.5%
0.1
0.7
2.0
1.8
2.8
0.4
0.7
2.1
1.8
2.2
1 EBIT and EPS are calculated before significant items. For YEM18 to YEM21, EBIT and EPS are from continuing operations before significant items.
2 TSR at 31 March sourced from Bloomberg. Relative TSR performance is disclosed in Table 21 along with the LTI vesting outcomes.
3 Return on Funds Employed (ROFE) defined in note 2 to the CSR group financial statements. ROFE for YEM18 to YEM21 is from continuing operations.
4 Closing share price at 31 March.
5 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.
6 Dividends paid for the last four years are disclosed on page 24.
7 An STI was not awarded to executive KMP or senior executives for YEM20, except for the special incentive paid to Mr Sindel based on goals set by the board and
determined for services up to 31 August 2019.
8 Total STI awarded for YEM21 represents 141% of the target STI opportunity. Further detail on the STI awarded is outlined in table 7.
Further detail on the assessment of each of the performance measures for short and long-term incentives is set out in sections 7 and 8
respectively.
55
REMUNERATION REPORT | REMUNERATION GOVERNANCE
Remuneration Governance
5 Remuneration governance
CSR’s remuneration governance framework is set out below. While 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, shareholder value and behaviours consistent with
CSR’s company behaviours.
Superannuation arrangements.
Employee share plans.
Recruitment, retention and termination policies and
procedures for senior management.
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 of management.
Management development frameworks and individual
development progress for key talent.
Board remuneration including the terms and conditions of
Monitoring surveys conducted by the company in relation to
appointment and retirement and non-executive remuneration
within aggregate approved by shareholders.
The remuneration of the executive KMP and senior
the culture of the organisation.
Initiatives to improve and drive a strong performance culture.
CSR's compliance with external reporting requirements.
executives.
Managing Director and Executive General Manager - Human
Resources
Provides information to the Remuneration & Human Resources
Committee for the Committee to recommend on:
Incentive targets and outcomes.
Remuneration policy.
Long and short-term incentive participation.
Individual remuneration and contractual arrangements for
executives.
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, Korn Ferry Hay Group,
Herbert Smith Freehills and Mercer Consulting (Australia)
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.
56 CSR LIMITED ANNUAL REPORT 2021
REMUNERATION REPORT | COMPONENTS OF REMUNERATION
Components of remuneration
6
Summary of the fixed and ‘at risk’ components of remuneration
The core elements of CSR’s remuneration strategy for the executive KMP and senior executives are outlined below.
Figure 2: CSR’s remuneration strategy and structure
Performance driven
Alignment with shareholder interests
Market competitive remuneration
Total target remuneration
Fixed
At risk
Fixed annual remuneration
Short-term incentive
Long-term incentive
Fixed annual remuneration for KMP is
targeted at the median of a custom
peer group that falls within 50% to
200% of CSR’s market capitalisation,
revenue and EBIT. Reference is also
made to CSR’s major competitors who
compete directly for the services of
KMP. For senior executives the Korn
Ferry Hay Group industrial and services
database as well as internal relativities
are considered
CSR’s executives participate in an STI
plan. The STI plan is weighted 60% to
financial metrics and 40% to
individual performance metrics
Refer to section 7 for further detail
LTIs are provided through the
Performance Rights Plan (PRP) and are
linked to:
Total shareholder return
Growth in CSR’s EPS
Refer to section 8 for further detail
Base salary
Superannuation
Other eligible salary sacrifice benefits
Reviewed annually or on promotion,
with no guaranteed increases
included in any executives’ contracts
60% cash and 40% shares
50% shares are deferred for one
year and 50% deferred for two
years
Deferred equity remains at risk
until vesting
Equity with performance assessed
over three years
From the YEM21 LTI grant onwards,
there is a restriction on trading
through a 12 month holding lock for
all shares awarded under the LTI
The following figure illustrates the timing of how remuneration is earned, subject to performance measures being met for executive KMP and
senior executives.
Figure 3: YEM21 short-term and long-term incentive plans
Year 1
Year 2
60% paid as cash
Year 3
Year 4
1 year performance period
20% shares restricted for 1 year
Vesting
20% shares restricted for 2 years
Vesting
3 year performance period
Holding lock
Vesting
Short Term
Incentive Plan
Long Term
Incentive Plan
57
REMUNERATION REPORT | COMPONENTS OF REMUNERATION
6
Summary of the fixed and ‘at risk’ components of remuneration (continued)
The key principles on which CSR’s executive remuneration policy is based are outlined below.
Table 10: Key principles of CSR’s executive remuneration
Objective
Explanation
Performance
driven
Remuneration should reward executives based on individual performance and contribution aligned to business strategy
and long-term shareholder returns. The variable components of remuneration (both short-term and long-term) are driven
by challenging targets, focussed on both external and internal measures of financial and non-financial performance.
A significant proportion of executive remuneration is ‘at risk’. The following chart sets out the remuneration mix as fixed
annual remuneration, target STI and the maximum value of the LTI granted during the year for the executive KMP.
Managing Director and CEO
Chief Financial Officer
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fixed
STI
LTI
Market
competitive
remuneration
Remuneration, including those elements which can be earned subject to business 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 against a custom peer group of between 15 to 20 companies that falls within 50% to
200% of CSR’s market capitalisation, revenue and EBIT. This ensures that remuneration for KMP is based on roles of
comparable size.
In setting executive remuneration, reference is also made to CSR’s major competitors, the Korn Ferry Hay Group
industrial and services database as well as internal relativities.
At risk remuneration (through STI and LTI) provides the opportunity to earn reward that reaches the top quartile of the
market for superior performance.
Alignment
with
shareholder
interests
Executive remuneration is aligned with shareholder interests through a significant emphasis on ‘at risk’ remuneration.
Incentive plans and performance measures are aligned with CSR’s strategy for short and long-term success.
KMP and senior executives are required to hold, or make progress towards holding, a minimum CSR shareholding. The
requirement for KMP is 100% of fixed annual remuneration, acquired over a reasonable timeframe. Further detail on this
policy is set out in section 13.
Ownership of CSR shares is encouraged through the LTI plan, STI deferral plan for executive KMP and senior executives,
the Universal Share Ownership Plan (USOP) and the ability to forgo part of fixed remuneration to acquire shares annually
through the Employee Share Acquisition Plan (ESAP).
58 CSR LIMITED ANNUAL REPORT 2021
REMUNERATION REPORT | COMPONENTS OF REMUNERATION
7
(i)
At risk remuneration – short-term incentive
Table 11: Details of the short-term incentive plan
Purpose
Motivates and rewards people and teams to deliver the business strategy and financial performance to increase
shareholder value.
Frequency and
timing
Awards are determined on an annual basis with performance measured over the year to 31 March, with payment
made in July.
Performance
measures
The performance measures for the STI are based on a combination of financial and non-financial measures:
Performance component
Corporate roles
Business unit roles
CSR group EBIT
Business unit EBIT
Individual objectives
Customer objectives
Total
60%
–
30%
10%
100%
30%
30%
30%
10%
100%
Financial measures are based on the board approved EBIT budget. Given the cyclical nature of the building industry, it
is not appropriate to set financial targets based on year-on-year linear growth. Instead, at the start of each year, the
board sets challenging financial targets taking into account the relevant factors for each business segment including
forecasts for building activity, aluminium pricing and the property market, as well as considering investor requirements
for a certain level of sustainable returns.
Return on Funds Employed (ROFE) is also assessed by the board to ensure the effectiveness with which capital is
deployed, measured and rewarded.
The maximum STI payable is 200% of a participant’s target STI opportunity (target STI opportunity varies based on
seniority) except for the Managing Director and CEO who is capped at 143% of target STI opportunity, equivalent to
100% of fixed annual remuneration. Detail on the actual performance for YEM21 compared to the targets set is
summarised later in this section.
The board reviews items classified as significant at the end of each financial year to determine the extent, if any, by
which reported EBIT should be adjusted for STI purposes depending on whether the items were influenced by or within
the control of management.
A minimum financial performance threshold is based on 95% of the board approved EBIT budget, below which no
financial component will be paid. Target financial performance equates to the approved EBIT budget while stretch
performance is 110% of the approved EBIT budget. The target and stretch budgets are set at a challenging level. The
STI accrues on a straight-line basis for financial performance between threshold and target and between target and
stretch. These parameters apply at both the CSR and business unit level.
Performance component
Threshold2
Percentage of EBIT target achieved
Percentage of target STI payable1
95%
0%
Target
100%
100%
Stretch
110%
200%
1 Managing director and CEO’s STI is capped at 143% of target STI opportunity, equivalent to 100% of fixed annual remuneration.
2
The financial threshold target is calculated based on the financial target plus the amount of STI payable if the budget is achieved.
Under the plan rules, if the financial threshold is not met the non-financial individual and customer objectives are
discounted by 50%. Should both CSR and the applicable business unit not reach the financial threshold, then any
payment will be at the discretion of the board. In addition, under the plan rules, the board has discretion to reduce,
remove or increase any STI payable after considering overall business performance.
Significant
items
Minimum
financial
performance
requirements
Individual
objectives
The non-financial objectives are set for each participant at the beginning of the financial year and are aligned to the
business strategy and CSR’s desired culture and behaviours. These objectives include relevant KPI’s such as safety
and sustainability, meeting customer needs, leadership and development of people, operational improvement and
growth.
These objectives are documented in CSR’s performance management system ACHiEVE@CSR and performance is
assessed during the year, with a final assessment to coincide with year end.
Customer
objectives
Customer objectives are set at a group level and business unit level at the start of the year. The objectives are
focussed on improvements in the customer experience through specific measures for customer feedback.
Assessment of
performance
against measures
Individual performance assessments and recommendations are made by the participant’s immediate manager, based
on the delivery of set objectives. All recommendations are reviewed and approved by the business unit Executive
General Manager.
The Remuneration & Human Resources Committee approves executive KMP and senior executive STIs as well as the
overall STI pool in aggregate.
59
REMUNERATION REPORT | COMPONENTS OF REMUNERATION
7
(i)
At risk remuneration – short-term incentive (continued)
Table 11: Details of the short-term incentive plan (continued)
Board discretion
The intention is to minimise discretionary adjustments to the plan outcomes. However, the board and the Managing
Director and CEO retain discretion in certain circumstances to alter payments having regard to:
CSR’s overall financial performance, including consideration of any material amounts recorded outside of EBIT (e.g.
Service condition
Equity deferral
‘significant items’);
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 and reputation;
any short-term action which causes market share loss or other damage to CSR;
other special circumstances (e.g. acquisitions and divestments); and
any breach of CSR’s Business Code of Conduct and Ethics policy.
New starters or people promoted into eligible roles may 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. Employees must be actively employed at
time of payment to be eligible for any reward.
For participants who retire, die or are retrenched after the performance period, the Managing Director and CEO has
discretion in awarding a STI. Unless the board determines otherwise, no payment will be made to participants who
cease employment voluntarily, or have their employment terminated for inadequate performance or for cause.
Under the STI deferral plan, 40% of any STI earned by executive KMP and senior executives is delivered in CSR shares
with half released to participants at the end of year one and the balance released at the end of year two. These shares
are held in trust subject to trading restrictions and are contingent on the participant remaining employed at the end of
each period. During the restriction periods, the shares are subject to forfeiture if the executive resigns or is terminated
for cause. No further performance conditions apply and shares fully vest to the participant 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,
during the restriction period participants 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 allow the board to withhold some
or all of the deferred equity whether vested or not in the event of fraudulent or dishonest acts including financial
errors, misstatements or misrepresentations.
(ii) Table 12: Changes from YEM22 – short-term incentive plan
Objective
Details of YEM22 STI Framework
Link to
strategy
Performance
measures
Aligning with CSR’s new purpose and strategy, the YEM22 STI framework will reinforce team behaviour to leverage
growth opportunities across CSR’s products and brands for delivery of customer solutions.
Changes in relation to the STI framework are as follows;
For those individuals in a business unit role, 30% of STI will now be based on the overall business segment
financial performance rather than business unit financial performance. Business segments are Building
Products, Property and Aluminium.
Individual non-financial reward component of 40% will be subject to performance of ACHiEVE goals, aligned with
individual priorities for the year and will include a relevant customer measure and safety and sustainability
measure.
The revised STI framework for YEM22 is illustrated below:
Performance component
Corporate roles
Business unit roles
CSR group EBIT
Business segment EBIT
Individual objectives
Total
60%
–
40%
100%
30%
30%
40%
100%
60 CSR LIMITED ANNUAL REPORT 2021
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7
At risk remuneration – short-term incentive (continued)
(iii) Assessment of YEM21 short-term incentive performance
Details on the short-term incentive target setting process and an assessment of the YEM21 performance outcomes are summarised in the table
below.
Table 13: YEM21 STI financial targets and assessment of performance outcomes
Business
Explanation of STI financial targets and assessment of performance outcomes
Building
Products
YEM21 STI financial targets
The targets were established having regard to the forecast reduction in new housing activity, with building activity
for YEM21 forecast to be down across both detached and multi-residential segments. The business was tasked to
mitigate the impact of reduced market activity through growth initiatives and cost savings.
Given the expected shortfall in building activity, the YEM21 financial targets for the Building Products businesses
were set below the YEM20 result.
YEM21 assessment of STI performance outcomes
Building Products sales revenue for YEM21 was 6% below the target set. Businesses with concentrated levels of
exposure to high-rise building activity (Construction Systems business) experienced a more pronounced impact
compared to those with greater detached and renovations exposure (Masonry & Insulation and Interior Systems).
In response to lower sales and uncertainty and disruptions caused by the COVID-19 pandemic, business continuity
plans and cost disciplines were immediately embedded. Significant reductions in expenditure were delivered, with
selling, administration and other operating costs down 20% compared to the financial target and 15% compared to
YEM20. Despite revenue falling short, total Building Products EBIT exceeded the financial target set.
The roll-out of the new CSR strategy continued, with a focus on streamlining the organisation and establishing more
efficient ways of working. This has not only delivered financial results for YEM21, but also positioned the business
to drive the most competitive product and service solutions for the market.
Property
YEM21 STI financial targets
A challenging target was set for the Property business in YEM21, including the sale of Horsley Park stage 2.1
which required completion of rehabilitation works. The delivery of this site would result in proceeds of $80 million
and EBIT of $52 million in YEM21.
YEM21 assessment of STI performance outcomes
The completed Horsley Park site was delivered to the purchaser in the second half of YEM21. The business also
continued the development of the Property portfolio including the announced sale of 8.6 hectares of land at
Horsley Park and progressed the rezoning process for the Schofields site.
The Property business exceeded the financial targets set and the business unit financial STI component was
awarded slightly above target.
Aluminium
YEM21 STI financial targets
In the context of a volatile decline in Australian dollar aluminium price during YEM20 and higher production costs,
the Aluminium business was set a YEM21 financial target of lower EBIT compared to YEM20.
YEM21 assessment of STI performance outcomes
During the year the Tomago smelter has performed well and with the US dollar Aluminium prices improving over
the past year, CSR has taken the opportunity to secure a significant increase in the long-term hedged position to
provide buffer against the elevated operating cost.
These actions have resulted in a more favourable earnings performance for YEM21, with the financial target
significantly exceeded, and the business unit financial STI component awarded at stretch.
CSR group
YEM21 assessment of STI performance outcomes
The actual EBIT result is above the financial target set for the CSR group and resulted in the CSR group financial
component of STI being awarded at stretch.
An assessment of significant items was also completed by the board resulting in a lowering of the actual EBIT result
for STI purpose from $238 million to $230 million. Details of this assessment, including the adjustments made are
set out in table 14.
The uncertainty and disruptions arising from the COVID-19 pandemic have been managed through decisive
management which saw business continuity plans deployed and measures implemented to deliver the financial
results, such as cost disciplines and new ways of working.
CSR did not qualify for the Australian JobKeeper Payment scheme and the amount received from the New Zealand
Wage Subsidy scheme of NZ$0.3m was fully distributed to employees who were stood down due to the lockdown.
Due to the average six-month lag between housing commencements and the use of CSR’s products in construction,
the government incentives to stimulate building activity has not had a material impact on YEM21 earnings.
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7
At risk remuneration – short-term incentive (continued)
(iii) Assessment of YEM21 short-term incentive performance (continued)
Consideration of significant items recorded in YEM21
The STI financial targets are set based on EBIT before significant items. The board reviews all ‘significant items’ at the end of each performance
period and considers whether it is appropriate to adjust for their impact on incentive outcomes. In forming its views, the board will have
consideration as to whether the item was due to current management control or decisions.
After assessing the significant items reported in YEM21, the board has determined that the earnings used in assessing the remuneration
outcomes would be adjusted down from $238 million to $230 million. Detail on the assessment of each of the significant items is outlined
below, including the rationale for the treatment for remuneration purposes. Further detail on significant items reported for YEM21 is contained in
note 3 to the financial statements on page 80.
Table 14: Assessment of significant items for remuneration purposes
Amount
(pre-tax)
$’million
Remuneration
outcomes
adjusted
(12.7)
No
(8.3)
Yes
Item
Business
streamlining
restructure costs
Impairment of
building product
assets
Horsley Park
closure costs
(5.2)
No
Product liability
provision
Previous
significant items
(5.6)
11.3
No
No
STI non-financial measures
Rationale for treatment for remuneration purposes
The employee related restructure cost incurred to implement the business
streamlining was not known when the financial targets were set, and the full
benefit of the streamlining will not be realised until YEM22.
These assets were previously impaired in YEM17 and treated as a significant item,
with remuneration outcomes downgraded for the impairment charge.
A consistent treatment has been applied in YEM21, with EBIT and EPS used in the
assessment of STI and LTI outcomes downgraded by the current year impairment
charge.
A higher EPS will be used to set the LTI targets for the YEM22 PRP grant, as the
EPS will not be downgraded by the impairment charge.
The cost of closing the site was not contemplated when the financial targets were
set, and the benefit of the sale is not anticipated until YEM24, once site
rehabilitation works have been completed.
The product liability expenses pre-dates current management and the board has
consistently treated these amounts as significant items.
These adjustments relate to previous significant items and do not relate to current
year trading.
The board did not exercise any discretion in determining the non-financial STI component awarded in YEM21.
The CSR group and a number of businesses met their business unit financial target and as a result their non-financial STI component was
awarded. For businesses that did not meet their business unit financial targets their non-financial STI pool was halved. This treatment is in
accordance with the STI plan (as detailed in table 11).
62 CSR LIMITED ANNUAL REPORT 2021
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8
At risk remuneration - long-term incentive
(i)
Purpose of the long-term incentive (LTI) plan
CSR’s long-term incentive 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.
(ii) Details of the LTI plan
The long-term incentive plan is delivered through the CSR Performance Rights Plan (PRP). The following plan details apply to PRP grants from
YEM18 to YEM21.
Table 15: Features of the long-term incentive plan
Participation
Managing director, senior executives 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, calculated using a face value of shares and convert to
shares subject to performance vesting criteria. If performance conditions are met, CSR shares will be purchased on
market and transferred to participants. Refer to section 8(iii) for more detail.
Vesting and
performance
period
Treatment of
capital
return
Awards are subject to a three year vesting period. Immediately following completion of the vesting period, the
performance conditions 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).
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.
At vesting
For all PRP grants, rights are eligible for one CSR Limited share per one performance right on vesting.
Holding lock
From the YEM21 PRP grant onwards, a 12 month holding lock on shares awarded under the LTI has been introduced to
aid senior executive retention and supplement CSR’s clawback provisions.
During the holding lock period, provided the participant remains employed by CSR, they are entitled to receive dividends
and other distributions and have full voting rights.
Sales restrictions
post vesting
Shares transferred to participants on the vesting of performance rights are subject to the CSR Share Trading Policy.
Dividends
There is no entitlement to dividends on performance rights during the performance period.
Treatment on
cessation of
employment
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. If the cessation of employment is the result of retirement, redundancy, total
or permanent disablement, death or any other special circumstances, the treatment of the rights will be determined at
the board’s discretion.
Vested awards: Awards that have vested are transferred to participants 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 2021, 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.
Board discretion
The board retains discretion to reduce or lapse performance rights (or recover the net proceeds where vested shares
have been sold) in several circumstances including, but not limited to, material financial misstatements, the
performance and conduct of the participant, the performance of the business unit the participant is employed in, CSR
group performance, fraudulent or dishonest acts, bringing CSR or any business unit into disrepute or breach of duties or
obligations to CSR (including acting in breach of the terms and conditions of their employment and/or CSR’s Code of
Business Conduct and Ethics).
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8 At risk remuneration – long-term incentive (continued)
(iii) PRP performance conditions
A summary of the performance hurdles for each PRP grant, along with further detail on how each hurdle is measured, is set out below.
Table 16: Performance hurdles for each PRP grant
Note
YEM21
YEM20
YEM19
YEM18
Relative TSR (Tranche A)
Absolute TSR (Tranche A)
Earnings per share (Tranche B)
1
2
3
50%
–
50%
–
50%
50%
50%
–
50%
50%
–
50%
1. Relative TSR for YEM18, YEM19 and YEM21 PRPs
TSR is the percentage growth in shareholder value, which measures the changes in share price, taking into account dividends and capital
returns.
The board believes relative TSR is an appropriate measure for the PRP as it directly aligns with shareholder interests and provides transparency
and focus of eligible executives in driving both earnings and share price growth.
Relative TSR for the YEM21 PRP
Relative TSR has been reintroduced as a performance measure for the YEM21 PRP grant as it is an established measure with greater
alignment to market practice.
Absolute TSR will be retained but as a positive gateway to vesting to ensure that participants are only rewarded for positive shareholder
returns. If absolute TSR is negative over the performance period, no rights will vest in this tranche.
The comparator peer group used to calculate relative TSR will be those companies comprising the S&P/ASX51 – ASX150 defined at the start
of each performance period. This peer group is sufficiently broad to measure relativity and the market capitalisation has greater alignment to
CSR than the S&P ASX200. The board may adjust the comparator group to take into account events including, but not limited to, takeovers,
mergers or de-mergers that might occur during the performance period.
In measuring TSR, share prices will be calculated based on a 90-day VWAP at the start and end of the performance period (compared to the
current 10 day calculation) to address share price volatility.
Assuming the absolute TSR gate is met, the proportion of the Tranche A performance rights that vest will be determined based on CSR’s
relative TSR, in accordance with the vesting schedule in table 17 below.
Relative TSR for the YEM18 and YEM19 PRPs
TSR performance is assessed against the constituents of the S&P/ASX 200 index (Peer Group) defined at the start of the performance period.
For the purposes of the TSR calculation, the start and end share prices will be calculated based on 10 trading days VWAP.
Table 17: Vesting schedule for all Relative TSR PRP grants
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%
75th percentile or greater
100%
2. Absolute TSR for YEM20 PRP
For the YEM20 PRP, a review of performance hurdles was conducted incorporating potential property transactions over the ensuing three
years. As a result, relative TSR was replaced with absolute TSR.
The board considered that absolute TSR was a more appropriate measure for the YEM20 PRP as it more directly aligns with shareholder
interests and provides transparency and focus of executives in driving both earnings and share price growth.
The targets are set out in table 18 below. In setting these targets consideration was given to the historical TSR performance of CSR, the cost
of capital and projected earnings through the performance period.
Table 18: Vesting schedule for the Absolute TSR grant
Cumulative Average Growth Rate (CAGR) of TSR
Proportion of Tranche A to vest
Below TSR of 14%
TSR of 14%
0%
75%
Between TSR of 14% and 18%
Straight-line vesting between 75% and 100%
18% and above
100%
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8 At risk remuneration – long-term incentive (continued)
(iii) PRP performance conditions (continued)
3. Earnings per share (EPS)
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. The use of EPS as a long-term performance measure is also consistent with market
practice. EPS is defined as net profit after tax per share before significant items. The board reviews all ‘significant items’ at the end of each
performance period and considers whether it is appropriate to adjust for the impact on incentive outcomes. A consistent treatment is applied for
both STI and LTI assessments, with the YEM21 outcome summarised in section 7 (iii) and table 14. In addition, the board may adjust EPS to
exclude the effects of material business acquisitions or divestments and for certain one-off costs.
EPS is measured on an averaged basis over the three year performance period rather than point to point to reflect the cyclical nature of the
business. Target performance is calculated by taking the total EPS from the performance period using actual EPS of the base year and
compounding 5% per annum for three years and dividing the result by three. Stretch performance is calculated using the same methodology,
except the growth is compounded by 10% per annum.
Table 19: Performance hurdles for the YEM18 to YEM21 PRP grants
YEM21
YEM20
YEM19
YEM18
EPS performance hurdle
Target
Stretch
Target
Stretch
Target
Stretch
Target
Stretch
Cumulative EPS required over next
three years (cents per share)
Average EPS required over next three
years (cents per share)
85.4
93.9
119.5
131.4
140.0
154.0
120.8
132.9
28.5
31.3
39.8
43.8
46.7
51.3
40.3
44.3
The reduction in the EPS target for the YEM21 grant is due to a lower EPS in YEM20 compared to the prior three years.
Table 20: EPS PRP vesting schedule
CAGR of EPS
Below 5%
At 5%
Between 5% and 10%
10% and above
Proportion of Tranche B to vest
0%
50%
Straight-line vesting between 50% and 100%
100%
(iv) Assessment of performance impacting YEM21 remuneration
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 EPS growth and TSR performance as measured through the movement in the share price and dividends paid.
In relation to the YEM18 PRP assessment, the EPS and TSR outcomes are described over the page in table 21.
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REMUNERATION REPORT | COMPONENTS OF REMUNERATION
8 At risk remuneration – long-term incentive (continued)
(v) Details of the PRP awards outstanding
Table 21: Status and key dates of PRP awards
Grant
date
Valuation
per right1
Holding
period
Performance testing
period
25 July 2017
(YEM18)
Tranche A (TSR) $1.76
Tranche B (EPS) $3.37
25 July 2017 to
31 March 2020
1 April 2017 to
31 March 2020
Expiry date
(if hurdle
not met)
1 April 2020
Performance
status2
Tranche A (TSR): Performance
condition met with 57.3% of the
allocation vesting and the remaining
unvested rights lapsed.
Tranche B (EPS): compound growth
performance condition not met and all
rights lapsed.
25 July 2018
(YEM19)
Tranche A (TSR) $1.36
Tranche B (EPS) $3.60
25 July 2018 to
31 March 2021
1 April 2018 to
31 March 2021
1 April 2021 Subsequent to 31 March 2021:
Tranche A (TSR): Performance
condition was met and 68% of
allocation vested and the remaining
unvested rights lapsed.
Tranche B (EPS): compound growth
performance condition was not met
and all rights lapsed.
19 July 2019
(YEM20)
Tranche A (TSR) $1.99
Tranche B (EPS) $3.72
19 July 2019 to
31 March 2022
1 April 2019 to 31
March 2022
21 July 2020
(YEM21)
Tranche A (TSR) $1.06
Tranche B (EPS) $3.08
21 July 2020 to
31 March 2023
1 April 2020 to 31
March 2023
1 April 2022
Performance testing not commenced.
1 April 2023
Performance testing not 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.
(vi) Long-term incentive framework changes
No changes are proposed to the LTI framework for YEM22.
(vii) Other equity incentive plans
Table 22: 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 directors), who have
the equivalent of at least one year’s full-time service at
the date the shares are allotted.
All full and part time 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.
66 CSR LIMITED ANNUAL REPORT 2021
REMUNERATION REPORT | REMUNERATION IN DETAIL
Remuneration in detail
9
Service agreements
Managing Director and CEO – Executive service agreement
Julie Coates was appointed as Managing Director and CEO effective 2 September 2019. Ms Coates’ contractual remuneration package is
summarised below:
Table 23: Managing Director and CEO’s remuneration package
Fixed annual
remuneration
Fixed annual remuneration of $1,150,000 inclusive of superannuation contributions. Fixed annual remuneration is
reviewed annually and increases are not guaranteed.
Notice period Under the Executive Service Agreement there is no fixed term and Ms Coates’ employment can be terminated by:
the company giving her 12 months’ notice of termination; or
Ms Coates giving six months’ notice of resignation.
STI
LTI
There is no guaranteed entitlement to an STI payment and the maximum STI opportunity is 100% of fixed annual
remuneration for exceptional performance. Achievement of target performance would result in 70% of the maximum STI
being paid. The STI is weighted 60% to financial performance and 40% to individual performance.
Under the STI deferral plan rules, 40% (YEM20: 20%) of the STI value will be deferred into CSR shares which vest over two
years (50% at the end of the first year and 50% at the end of the second year). Further details on the STI deferral plan is
contained in table 11.
The value of any award of performance rights is currently set at a maximum of 120% of fixed annual remuneration. Grants
of performance rights are subject to performance hurdles and vesting criteria set by the board (refer to section 8(iii) for
details) and are subject to shareholder approval at the AGM.
Following benchmarking, the board is proposing that the award of performance rights for the YEM22 LTI grant is adjusted
upwards to 140% of fixed annual remuneration. Further information will be included in the CSR 2021 Notice of Meeting.
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 below:
Table 24: Chief Financial Officer’s remuneration package
Fixed annual
remuneration
Fixed annual remuneration of $700,000 inclusive of superannuation contributions effective from 1 April 2020. This
represented an increase of 10% compared to YEM20 as a market adjustment to align with a relevant industry peer group.
Fixed annual remuneration is reviewed annually and increases are not guaranteed.
Notice period
Under the Executive Service 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 guaranteed entitlement to an STI payment and the maximum STI opportunity for YEM21 is 100% of fixed
annual 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, 40% (YEM20: 20%) of the STI value will be deferred into CSR shares which vest over two
years (50% at the end of the first year and 50% at the end of the second year). Further details on the STI deferral plan is
contained in table 11.
The potential value of any award of performance rights is set at a maximum of 60% of fixed annual remuneration. Grants of
performance rights are subject to performance hurdles and vesting criteria set by the board (refer to section 8(iii) for
details).
Following benchmarking, the board has determined that the award of performance rights for the YEM22 LTI grant will be
adjusted upwards to 80% of fixed annual remuneration.
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9
Service agreements (continued)
Table 25: 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, retirement,
redundancy, death or permanent
disability
apply (including deferred STI).
STI is forfeited unless board determines
otherwise.
Board discretion to award STI on a pro rata
basis (including deferred STI).
Change of control
STI will be paid on a pro-rata basis.
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.
10 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 YEM21
compared with YEM20.
Table 26: 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 and CEO – Julie Coates
1,128,479
2021
655,081
20206
21,521
15,752
20,845
31,267
–
–
846,400
–
363,043
307,695
2,380,288
1,009,795
Chief Financial Officer – David Fallu
2021
2020
678,479
610,740
21,521
20,885
37,809
24,504
999
1,563
565,860
49,288
145,935
74,522
1,450,603
781,502
Former Managing Director – Rob Sindel7
–
2021
–
–
2020
667,870
10,384
(8,403)
–
–
–
–
–
645,311
(618,839)
696,323
36%
–
39%
6%
–
–
15%
30%
10%
10%
–
–
1 Fixed annual remuneration may be allocated at the executive’s discretion to cash, superannuation (subject to legislative minimums), motor vehicles and certain other
benefits.
2 Other benefits included USOP.
3 STI expense for YEM21 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 and are detailed in table 21.
5 STI and LTI as a percentage of total remuneration.
6 2020 actual fixed remuneration for the Managing Director and CEO reflects for time in role from 2 September 2019.
7 Former Managing Director Mr Sindel ceased to be a KMP on 2 September 2019 and remained employed until 13 September 2019. The STI paid to Mr Sindel includes a
specific incentive based on goals set by the board and determined for services up to 31 August 2019.
11 Deferred shares
Table 27: STI deferred shares for executive KMP
Julie Coates
David Fallu
Number of STI deferred shares
Balance
1 April 2020
–
26,600
Granted
Vested
Lapsed
Balance
31 March 2021
–
–
–
(26,600)
–
–
–
–
Deferred STI in relation to the YEM21 STI award is issued subsequent to 31 March 2021 and will be disclosed in the YEM22 Remuneration
Report.
68 CSR LIMITED ANNUAL REPORT 2021
REMUNERATION REPORT | REMUNERATION IN DETAIL
12 Performance rights
Table 28: Executive KMP performance rights
Julie Coates
David Fallu
Number of performance rights
Balance
1 April 2020
460,986
323,589
Granted1
452,206
137,628
Vested2
Lapsed
Balance
31 March 2021
–
–
(21,789)
(54,264)
913,192
385,164
1 The accounting value of Ms Coates and Mr Fallu’s rights granted were $936,066 and $284,890 respectively.
2 The following rights vested to ordinary shares during the year ended 31 March 2021:
Mr Fallu: YEM18 Tranche A rights vested of 21,789. A total of 21,789 shares were issued on 4 June 2020, and the value of each of these shares was $4.26, representing a
total value to Mr Fallu of $92,827.
13 Shareholdings
Minimum shareholding requirements
KMP are required to accumulate over time the equivalent of 100% of fixed annual remuneration in CSR shares. The value of the shares held by
the KMP is calculated as the higher of the current market price or the price the shares were acquired at. The minimum shareholding
requirements are applicable to the Managing Director and CEO, Chief Financial Officer and CSR Non-executive Directors. Non-executive Directors
are required to meet the minimum shareholding requirements within four years of appointment. Executive KMP will be provided a reasonable
timeframe in which to accumulate the minimum shareholding having regard to the business cycle and likely variable incentive outcomes that
may become available to count towards the requirements.
Senior executives are required to hold 50% of fixed annual remuneration in CSR shares.
Table 29: Executive KMP shareholdings
Julie Coates
David Fallu
Balance
1 April 2020
–
64,497
Number of CSR shares1
Acquired2
1,217
23,558
Sold or
transferred
–
–
Other
–
–
Balance
31 March 2021
1,217
88,055
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. Ms Coates acquired
shares include 1,196 shares acquired under ESAP and 21 shares acquired under the Dividend Reinvestment Plan. Mr Fallu’s acquired shares include 21,789 shares
issued on vesting of PRPs, 1,197 shares acquired under ESAP and 572 shares acquired under USOP.
14 Other transactions with KMP
The CSR group offers staff discounts on certain products which are also made available to KMP.
There were no other transactions, including loans between CSR and KMP (including their related parties), during YEM20 and YEM21.
69
REMUNERATION REPORT | NON-EXECUTIVE DIRECTORS
Non-executive directors
15 Arrangements
Non-executive directors are paid a base fee for service to the board which includes one committee membership, with an additional fee for
service to additional board committees. The fees are set with consideration to the fees paid in companies of a similar size and complexity and
are inclusive of superannuation. The shareholder approved fee pool is currently $1,450,000 per annum including superannuation.
Table 30: Non-executive Director (NED) arrangements
Role
Annual fee for YEM21 (including superannuation guarantee)
Chair base fees (including all committee memberships)
Other NED base fees (including one committee membership)
Chair of the Risk & Audit Committee
Chair of the Remuneration & Human Resources Committee
Chair of the Workplace Health, Safety & Environment Committee
Additional committee memberships
$395,264
$158,106
$27,447
$27,447
$27,447
$11,764 per additional committee
(applies to NEDs other than the chairman)
Following benchmarking in YEM21 and considering that no fee increases have been made in the past two years, effective 1 April 2021 a 2.0%
fee increase was applied to all NED annual fees.
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 may 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 equivalent to 100% of their fixed annual remuneration. Further information is detailed in section 13.
16 Non-executive director fees
Table 31: Non-executive directors’ fees
Year ended 31 March
John Gillam (chair of the board)
Nigel Garrard
Christine Holman
Michael Ihlein
Matthew Quinn
Penny Winn
Total non-executive directors
YEM21
YEM20
YEM21
YEM20
YEM21
YEM20
YEM21
YEM20
YEM21
YEM20
YEM21
YEM20
YEM21
YEM20
17 Shareholdings
Table 32: Non-executive directors’ shareholdings
Directors’ fees
Termination
benefits
Superannuation
373,743
374,379
51,710
–
161,208
155,131
181,529
169,455
169,455
169,455
167,936
169,455
1,105,581
1,037,875
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21,521
20,885
4,913
–
15,315
14,738
4,024
16,098
16,098
16,098
15,954
16,098
77,825
83,917
Total
395,264
395,264
56,623
–
176,523
169,869
185,553
185,553
185,553
185,553
183,890
185,553
1,183,406
1,121,792
John Gillam (chair of the board)
Nigel Garrard
Christine Holman
Michael Ihlein
Matthew Quinn
Penny Winn
Number of CSR shares1
Balance
1 April 2020
Included in
remuneration
253,510
–
79,312
63,148
72,419
51,248
–
–
–
–
–
–
Acquired
–
60,000
2,048
1,197
3,088
–
Other
Balance
31 March 2021
–
–
–
–
–
–
253,510
60,000
81,360
64,345
75,507
51,248
1 CSR shares in which the director has a beneficial interest, including shares held under the ESAP trust or via related parties.
70 CSR LIMITED ANNUAL REPORT 2021
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
Notes to the financial report
1
Basis of preparation
Financial performance overview
Segment information
2
Significant items
3
Earnings per share
4
Revenue
5
Expenses
6
Net finance costs
7
Income tax expense
8
Business combinations
9
72
73
74
75
76
77
112
113
116
Balance sheet items
10 Working capital
11 Property holdings
12 Property, plant and equipment and intangible assets
13 Net deferred income tax assets
14
15 Provisions
16 Product liability
Leases
Issued capital
Capital structure and risk management
17 Borrowings and credit facilities
18
19 Dividends and franking credits
20 Reserves
21
Financial risk management
Group structure
22 Subsidiaries
23 Deed of cross guarantee
24 Non-controlling interests
25
26 Equity accounting information
27 Parent entity disclosures
Interest in joint operations
Other
28 Employee benefits
29 Related party disclosures
30 Subsequent events
31 Commitments and contingencies
32 Other non-current assets
33
34 Other accounting policies
Auditor’s remuneration
77
77
78
78
80
81
81
82
82
83
84
85
85
86
86
88
89
90
91
92
92
92
92
93
94
99
99
99
102
102
103
104
105
105
109
109
110
110
110
111
71
FINANCIAL REPORT
Statement of financial performance
$million
Trading revenue – sale of goods
Cost of sales
Gross profit
Other income
Warehouse and distribution costs
Selling, administration and other operating costs
Share of net profit of joint venture entities
Impairment expense
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
2,5
5
26
12,26
7
7
8
24
4
4
2021
2020
2,122.4
(1,516.9)
2,212.5
(1,541.5)
605.5
72.9
(191.4)
(251.1)
13.5
(9.3)
(17.1)
223.0
1.5
(13.2)
211.3
(59.5)
151.8
5.7
146.1
151.8
30.1
30.0
671.0
17.7
(197.0)
(282.4)
13.9
(9.1)
(4.7)
209.4
3.3
(20.3)
192.4
(53.9)
138.5
13.2
125.3
138.5
25.4
25.4
1 Net profit before significant items attributable to shareholders of CSR Limited is $160.4 million (2020: $134.8 million). Refer to note 3 of the financial statements.
The above statement of financial performance should be read in conjunction with the accompanying notes.
72 CSR LIMITED ANNUAL REPORT 2021
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
Exchange differences arising on translation of foreign operations
Income tax benefit (expense) relating to these items
Items that will not be reclassified to profit or loss
Actuarial gain (loss) on superannuation defined benefit plans
Income tax (expense) benefit relating to these items
Other comprehensive expense – net of tax
Total comprehensive income
Total comprehensive income attributable to:
Non-controlling interests
Shareholders of CSR Limited
Total comprehensive income
Note
2021
151.8
2020
138.5
21
21
20
13
28
13
(67.0)
(18.2)
(3.2)
25.6
17.6
(5.3)
(50.5)
101.3
(12.1)
113.4
101.3
12.9
(10.5)
1.3
(0.7)
(13.9)
4.2
(6.7)
131.8
18.6
113.2
131.8
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
73
FINANCIAL REPORT
Statement of financial position
$million
Current assets
Cash and cash equivalents
Receivables
Inventories
Property holdings
Other financial assets
Income tax receivable
Prepayments and other current assets
Total current assets
Non-current assets
Receivables
Property holdings
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment
Right-of-use lease assets
Goodwill
Other intangible assets
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Lease liabilities
Other financial liabilities
Tax payable
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
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.
74 CSR LIMITED ANNUAL REPORT 2021
Note
2021
2020
34
10
10
11
21
32
11
26
21
12
14
12
12
13
32
10
14
21
15
17
14
21
15
13
28
18
20
24
250.8
224.2
313.8
40.7
63.0
0.4
8.9
901.8
23.4
102.6
35.7
57.7
693.7
127.2
58.3
13.8
144.9
12.4
1,269.7
2,171.5
256.7
30.2
71.1
46.9
131.6
536.5
–
141.1
86.0
252.7
–
2.7
482.5
414.8
254.1
341.9
59.7
48.1
–
10.0
1,128.6
15.0
87.0
42.6
31.5
741.5
153.2
58.3
15.8
130.3
0.7
1,275.9
2,404.5
245.5
32.9
33.2
39.4
129.9
480.9
320.0
167.1
19.0
265.0
18.5
8.5
798.1
1,019.0
1,152.5
1,279.0
1,125.5
966.7
(89.6)
241.7
1,118.8
33.7
1,152.5
966.7
(45.7)
144.0
1,065.0
60.5
1,125.5
FINANCIAL REPORT
Statement of changes in equity
$million
Note
Balance at 1 April 2020
Profit for the year
Total other comprehensive income
(expense) – net of tax
Dividends paid
Acquisition of shares by CSR employee
share trust
Acquisition of non-controlling interest
Share-based payments – inclusive of tax
19,24
20
9,20
20
Issued
capital
966.7
–
–
–
–
–
–
Reserves
Retained
profits
(45.7)
–
(45.0)
–
(1.0)
(0.1)
2.2
144.0
146.1
12.3
(60.7)
–
–
–
CSR
Limited
interest
1,065.0
146.1
(32.7)
(60.7)
(1.0)
(0.1)
2.2
Non-
controlling
interests
60.5
5.7
(17.8)
(14.7)
–
–
–
Total
equity
1,125.5
151.8
(50.5)
(75.4)
(1.0)
(0.1)
2.2
Balance at 31 March 2021
966.7
(89.6)
241.7
1,118.8
33.7
1,152.5
Balance at 1 April 2019
Profit for the year
Total other comprehensive income
(expense) – net of tax
Dividends paid
On-market share buy-back
Acquisition of shares by CSR employee
share trust
Acquisition of non-controlling interest
Share-based payments – inclusive of tax
19,24
20
9,20
20
1,028.8
–
–
–
(62.1)
–
–
–
(38.4)
–
(2.4)
–
–
(0.1)
(6.3)
1.5
162.1
125.3
(9.7)
(133.7)
–
–
1,152.5
125.3
(12.1)
(133.7)
(62.1)
(0.1)
–
–
(6.3)
1.5
52.7
13.2
5.4
(6.8)
–
–
(4.0)
–
1,205.2
138.5
(6.7)
(140.5)
(62.1)
(0.1)
(10.3)
1.5
Balance at 31 March 2020
966.7
(45.7)
144.0
1,065.0
60.5
1,125.5
The above statement of changes in equity should be read in conjunction with the accompanying notes.
75
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 inflow from operating activities
Cash flows from investing activities
Proceeds from sale of property holdings and other assets
Purchase relating to property holdings
Purchase of property, plant and equipment and other assets
Proceeds from sale of business
Purchase of controlled entities and businesses, net of cash acquired
Costs associated with disposal of businesses
Payments for financial assets
Loans and receivables (advanced) repaid
Net cash inflow from investing activities
Cash flows from financing activities
On-market share buy-back
Net (repayment) drawdown of borrowings
Dividends paid1
Acquisition of shares by CSR employee share trust
Lease payments
Interest and other finance costs paid2
Net cash (outflow) inflow from 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
Share of profits of associates not received as dividends or distributions
Share-based payments
Finance cost net of discount unwind
Net gain on disposal of property holdings
Net change in current receivables
Net change in current inventories
Net change in current payables
Net change in product liability provision
Net change in other provisions
Net change in current and deferred tax balances
Net change in other assets and liabilities
Net cash from operating activities
Note
2021
2020
26
9
20
14
2
24
6
20
5
2,376.1
(2,081.6)
18.3
1.3
(61.1)
2,500.7
(2,252.1)
10.6
3.5
(16.6)
253.0
246.1
130.6
(29.8)
(49.0)
–
(0.7)
–
(23.0)
(0.7)
27.4
–
(320.0)
(75.4)
(1.0)
(34.0)
(13.8)
(444.2)
(163.8)
414.8
(0.2)
250.8
146.1
5.7
96.2
9.3
4.8
1.7
13.6
(57.2)
13.6
28.1
10.9
(15.9)
6.5
(5.3)
(5.1)
253.0
114.5
(42.2)
(100.2)
78.5
(16.8)
(0.7)
–
13.6
46.7
(62.1)
320.0
(140.5)
(0.1)
(33.9)
(11.6)
71.8
364.6
50.0
0.2
414.8
125.3
13.2
99.7
9.1
(3.3)
0.3
11.6
(3.5)
26.9
(10.6)
(11.6)
(21.1)
(26.5)
33.4
3.2
246.1
1 During the year ended 31 March 2021, within the $75.4 million of dividends paid, dividends to CSR Limited shareholders were $60.7 million. Of the $60.7 million in
dividends, $5.7 million was used to purchase CSR shares on-market to satisfy obligations under the Dividend Reinvestment Plan (DRP), and the remaining $55.0 million
was paid in cash.
In accordance with AASB 16 Leases, interest and other finance costs paid for the year ended 31 March 2021 includes finance costs relating to leases of $8.0 million
(2020: $9.4 million). Refer to notes 7 and 14 for further details.
2
The above statement of cash flows should be read in conjunction with the accompanying notes.
76 CSR LIMITED ANNUAL REPORT 2021
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 34.
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 and liabilities 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.
Impact of COVID-19 pandemic: The CSR group has managed, and
continues to manage, the risks arising from the COVID-19 global
pandemic, with any known impacts being included in the financial
statements for the year ending 31 March 2021.
CSR’s response includes a financial response plan that incorporates
financial forecasts over the near term, which are regularly updated for any
material changes in market conditions. In addition to a CSR group
business continuity plan (BCP), all CSR businesses have tailored BCPs,
which are specific to their business with operational responses
implemented at varying levels of construction activity.
To mitigate the impacts of COVID-19, governments have provided
businesses with financial assistance. CSR did not qualify for the
Australian JobKeeper Payment scheme. During the year ending 31 March
2021 the CSR group qualified for the New Zealand Wage Subsidy and
received an amount of NZ$0.3m which was fully distributed to employees
who were stood down due to the lockdown.
As of 31 March 2021, the CSR group had:
net cash position of $250.8 million, calculated as cash and cash
equivalents less borrowings, as disclosed in the statement of
financial position. The net cash position at 31 March 2021
increased by $156.0 million compared to 31 March 2020;
nil borrowings, with available undrawn borrowing facilities of $420.0
million, as disclosed in note 17;
positive cash inflow from operating activities of $253.0 million, as
disclosed in the statement of cash flows; and
net current assets of $365.3 million, calculated as current assets of
$901.8 million less current liabilities of $536.5 million, as disclosed
in the statement of financial position.
On the basis of reviews of the financial forecasts and consideration of the
financial position summarised above, as at the date these financial
statements are authorised for issue, the directors of CSR Limited
consider it is appropriate for the going concern basis to be adopted in the
preparation of this financial report.
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 obtained control and until such time as it ceased 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.
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.
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 for the CSR group from 1 April 2020. There have been no new
or revised accounting standards which materially impacted the financial
report. Standards not yet applicable are not expected to have a material
impact on the CSR group.
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
12
15
15
Asset impairment
Measurement of provisions for restoration and
environmental rehabilitation
Provision for uninsured losses and future claims
15, 16
Product liability
25
Classification of joint arrangements
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 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.
77
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
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 products 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 a
reportable segment.
Building
Products
Property
The Building Products business unit comprises Interior
Systems (Gyprock plasterboard, Martini, Himmel
Interior Systems and Rondo rolled formed steel
products joint venture), Construction Systems (Hebel
autoclaved aerated concrete products, AFS walling
systems and Cemintel fibre cement), and Masonry and
Insulation (Bradford insulation, Bradford energy
solutions, Edmonds ventilation systems, Monier
roofing, PGH Bricks and Pavers and New Zealand Brick
Distributors joint venture).
The Property business unit generates returns typically
from the sale of former operating sites. 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.
Aluminium 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.
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 costs; and
significant items.
Geographical information
The CSR group operates principally in Australia. For the year ended 31
March 2021, the CSR group's trading revenue from external
customers in Australia amounted to $2,065.6 million (2020:
$2,140.9 million), with $56.8 million (2020: $71.6 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 in Australia amounted to $1,024.1 million at 31 March 2021
(2020: $1,062.3 million), with $7.3 million (2020: $9.2 million)
related to other geographical areas.
78 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
2
Segment information (continued)
$million
Trading revenue1
EBITDA before
significant items2
Depreciation and
amortisation
Earnings before
interest, tax and
significant items
Business segment
2021
2020
2021
2020
2021
2020
2021
2020
Building Products
Property
Aluminium
Corporate3
Restructuring and provisions4
1,534.5
1,591.3
–
587.9
–
–
–
621.2
–
–
265.7
54.2
35.4
(16.6)
(4.6)
254.9
(0.8)
71.5
(8.0)
(1.1)
Total CSR group
2,122.4
2,212.5
334.1
316.5
81.4
–
12.0
2.8
–
96.2
Reconciliation of earnings before interest, tax and significant items to profit after tax
$million
Earnings before interest, tax and significant items
Net finance costs
Income tax expense
Profit after tax before significant items (before non-controlling interests)
Less: non-controlling interests
84.4
0.7
11.9
2.7
–
99.7
Note
7
184.3
54.2
23.4
(19.4)
(4.6)
170.5
(1.5)
59.6
(10.7)
(1.1)
237.9
216.8
2021
237.9
(6.1)
(65.7)
166.1
(5.7)
2020
216.8
(10.8)
(58.0)
148.0
(13.2)
Profit after tax before significant items attributable to shareholders of CSR Limited
160.4
134.8
Significant items after tax attributable to shareholders of CSR Limited
3
(14.3)
(9.5)
Profit after tax attributable to shareholders of CSR Limited
146.1
125.3
Business segment
As at 31 March 2021
As at 31 March 2020
As at 31 March 2021
As at 31 March 2020
Funds employed ($million)5
Return on funds employed (%)6
Building Products
Property
Aluminium
Corporate
Total CSR group
844.3
139.5
136.0
(54.8)
945.8
167.8
141.0
(65.6)
1,065.0
1,189.0
20.6%
35.3%
16.9%
–
21.1%
18.0%
(0.8%)
42.4%
–
17.8%
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.
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 2021 is calculated as net assets of $1,152.5
million (2020: $1,125.5 million), excluding the following assets: cash of $250.8 million (2020: $414.8 million), net tax assets of $98.4 million (2020: $72.4 million), net
financial assets of $nil (2020: $24.0 million), net superannuation assets of $8.4 million (2020: $nil) and interest receivable of $0.7 million (2020: $0.7 million). In
addition, the following liabilities have been excluded from funds employed: borrowings of $nil (2020: $320.0 million), asbestos product liability provision of $231.0 million
(2020: $246.9 million), net financial liabilities of $39.8 million (2020: $nil) and net superannuation liabilities of $nil (2020: $8.5 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.
79
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
3
Significant items
$million
Impairment of Building Products assets
Business streamlining restructure costs
Site closure costs
Previously recorded significant items, including lease adjustments
Significant items before finance costs and income tax
Discount unwind and hedging relating to product liability provision
Income tax benefit on significant items
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
Note
(i)
(ii)
(iii)
(iv)
7
2021
(8.3)
(12.7)
(5.2)
11.3
(14.9)
(5.6)
6.2
(14.3)
–
(14.3)
146.1
14.3
160.4
2020
(10.9)
–
–
3.5
(7.4)
(6.2)
4.1
(9.5)
–
(9.5)
125.3
9.5
134.8
Earnings per share attributable to shareholders of CSR Limited before significant items1
Basic (cents per share)
Diluted (cents per share)
33.1
32.9
27.3
27.3
1 The basis of calculation is consistent with the earnings per share disclosure in the statement of financial performance. Refer to note 4.
Note
Description
Further explanation
(i)
(ii)
Impairment of
Building Products
assets
Business
streamlining
restructure costs
(iii)
Site closure costs
(iv)
Previously
recorded
significant items
During the year ended 31 March 2021, the Building Products segment recorded an impairment charge of
$8.3 million (2020: $10.9 million) to reduce the carrying value of assets to their recoverable amount.
During the year ended 31 March 2021, the CSR group incurred employee related restructure costs of $12.7
million associated with the CSR strategy implementation.
Costs incurred were associated with the re-organisation and streamlining of the operating model to drive
efficiency of business performance.
The sale of 8.6 hectares of the third tranche of land at Horsley Park was announced during the year, with
the sale expected to be recorded in the financial year ended 31 March 2024.
To prepare the site for sale, the PGH Bricks Horsley Park manufacturing site was closed and costs of $5.2
million were incurred, including redundancies and inventory relocation costs.
During the year ended 31 March 2021, the CSR group:
sub-let two leased sites where the leased assets had previously been impaired through significant
items. A receivable for the sub-lease income has been recorded during the period, resulting in a gain of
$9.3 million; and
reassessed and re-measured provisions associated with prior significant items, resulting in a gain of
$2.0 million.
During the year ended 31 March 2020, the CSR group recorded income of $3.5 million following the
settlement of a legal dispute.
Recognition and measurement
Significant items are those which by their size and nature or incidence are relevant in explaining the financial performance of the CSR group,
and as such are disclosed separately.
80 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
4
Earnings per share
Weighted average number of ordinary shares used in the calculation of basic EPS (million)1
Weighted average number of ordinary shares used in the calculation of diluted EPS (million)2
Profit after tax attributable to shareholders of CSR Limited ($million)
Basic EPS (cents per share)
Diluted EPS (cents per share)
2021
485.1
487.1
146.1
30.1
30.0
2020
493.5
494.1
125.3
25.4
25.4
1 Calculated by reducing the total weighted average number of shares on issue of 485.4 million (2020: 493.9 million) by the weighted average number of shares purchased
on market and held in trust to satisfy incentive plans as these plans vest of 242,666 (2020: 423,278).
2 Calculated by increasing the weighted average number of shares used in calculating basic EPS by outstanding performance rights of 1,987,861 (2020: 642,017).
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.
5 Revenue
$million
Trading revenue
Other income
Net gain on disposal of property holdings
Significant items
Other
Recognition and measurement
Note
2021
2020
2
3
2,122.4
2,212.5
57.2
9.3
6.4
3.5
3.5
10.7
Sale of goods: the group sells a range of building products and aluminium. Sales are recognised when control of the products has
transferred, being when the products are delivered and accepted by the customer. A receivable is recognised when the goods are
delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the
payment is due. The group’s obligation to repair or replace faulty products under the standard warranty terms is recognised as a
provision.
Sale and installation of goods: certain CSR businesses supply and install building products. Sales are recognised over time given that
there is generally no alternative use of the product (it is generally specified based on the requirements of the building) and there is an
enforceable right to payment. Revenue from providing services is recognised in the accounting period in which the services are rendered.
For fixed-priced contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion
of the total services to be provided because the customer receives and uses the benefits simultaneously. For each of these contracts an
appropriate driver is determined which is then used to recognise revenue as the work is completed. In the case of fixed-price contracts,
the customer generally pays the fixed amount based on a payment schedule. If the services rendered by CSR exceed the payment, a
contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.
Some contracts include multiple deliverables, such as the sale of product and related installation services. However, if the installation
could be performed by another party it is accounted as a separate performance obligation. Where the contracts include multiple
performance obligations, the transaction price will be allocated to each performance obligation based on the stand-alone selling price.
Revenue in relation to the sale of the product is recognised at a point in time when the product is delivered, and legal title has passed,
and the customer has accepted the goods. Estimates of revenues, cost or extent of progress toward completion are revised if
circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in
which the circumstances that give rise to the revision become known by management.
Sale and installation of goods revenue is disclosed within ‘trading revenue’ above and in note 2 given it is not material for separate
disclosure.
Sale of property holdings: income is recognised when control over the property has been transferred to the customer. The properties
have generally no alternative use for the group due to contractual relationships. An enforceable right to payment does not arise until
after the customer has taken control of the property which is the earlier of when title of the property passes or when the customer has
physical possession of the property. As a result, income is recognised when control of the property passes to the customer. Income 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. In most cases, the consideration is due when legal title is transferred. Profit realised on the sale of
property holdings are disclosed within ‘net gain on disposal of property holdings’ and classified as 'other income’ on the statement of
financial performance and is recognised in the Property segment.
Disposal of assets: income is recognised when control of the asset passes to the purchaser. 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.
81
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
6
Expenses
$million
Expenses
Significant items1
Employee benefits expense
Depreciation
Amortisation
Note
2021
2020
3
12,14
12
24.2
419.4
91.0
5.2
10.9
443.8
92.5
7.2
1
Significant items are included within impairment expense and other expenses in the statement of financial performance.
Nature of expense
Employee benefits expense: includes salaries and wages, share-based payments and other entitlements.
7 Net finance costs
$million
Interest expense and funding costs
Finance cost - leases
Discount unwind and hedging 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
2021
2020
14
3
5.6
8.0
5.6
0.8
(6.8)
13.2
(1.5)
11.7
(5.6)
6.1
2.2
9.4
6.2
0.8
1.7
20.3
(3.3)
17.0
(6.2)
10.8
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.
82 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
8
Income tax expense
Reconciliation of income tax expense charged to the statement of financial performance:
$million
Profit before income tax
Income tax expense calculated at 30%
(Decrease) increase in income tax expense due to:
Share of net profit of joint venture entities
Taxable profit on property disposals
Non-deductible impairment of goodwill and other assets
Income tax under (over) provided in prior years
Other items
Total income tax expense
Comprising of:
Current tax expense
Deferred tax credit relating to movements in deferred tax balances
Total income tax expense
Note
13
2021
211.3
63.4
(3.9)
0.1
–
0.7
(0.8)
59.5
72.3
(12.8)
59.5
2020
192.4
57.7
(4.1)
0.1
0.4
(0.2)
–
53.9
59.1
(5.2)
53.9
Recognition and measurement
Current and deferred tax is recognised as an expense in the statement of financial performance except when it relates to items credited or
debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting of
a business acquisition, in which case it is taken into account in the determination of goodwill.
Tax transparency report
The CSR group has prepared a voluntary tax transparency report which is available to view online or to download from the CSR website
(www.csr.com.au). The report sets out relevant tax information for CSR Limited and its controlled entities for the year ended 31 March 2021.
Disclosure of company tax information
Under tax legislation the Australian Taxation Office will publish in 2021 the following data for the CSR Limited tax consolidated group and
Gove Aluminium Finance Limited in relation to the 2020 tax year:
Entity
CSR Limited (ABN: 90 000 001 276)
Gove Aluminium Finance Limited (ABN: 45 001 860 073)
Total revenue1
($million)
Taxable income
($million)
Tax payable
($million)
1,609.9
627.3
198.2
107.3
35.4
30.4
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 or note 24.
Income tax is payable on taxable income (not total revenue) after allowing for expenses and specific adjustments under the tax law. For CSR
Limited, tax payable for 2020 was $35.4 million because CSR was entitled to utilise franking credits on dividends received and R&D tax
offsets to reduce its tax payable.
The net amount of tax losses, capital losses and rebates carried forward at the end of the year is set out below:
Value of tax losses, capital losses and rebates
carried forward (net)
CSR group
2021
($million)
187.52
2020
($million)
190.2
2 The gross value of unused tax losses for which no deferred tax asset has been recognised are $36.5 million (31 March 2020: $38.7 million). Unused tax losses were
predominately generated by a New Zealand subsidiary that is no longer considered likely to utilise the tax losses in the foreseeable future. Unused tax losses can be
carried forward indefinitely subject to meeting ownership continuity requirements. The gross value of unused capital losses for which no deferred tax asset has been
recognised are $590.9 million (31 March 2020: $598.0 million). Unused capital losses were predominately generated from the sale of the Viridian Glass business and
it is not considered likely that the capital losses will be utilised in the foreseeable future. Unused capital losses can be carried forward indefinitely subject to meeting
ownership continuity requirements.
83
The accounting for this acquisition, the necessary tax consolidation
calculations and the net impact of this transaction on equity have
been finalised in the year ended 31 March 2021.
Building Products segment
During the year ended 31 March 2020, the Building Products
segment acquired the business assets of two entities for total
consideration of $3.9 million with goodwill of $1.8 million arising as a
result of these acquisitions. Cash consideration of $3.2 million has
been paid, with $0.7 million deferred.
The Building Products segment also invested in an entity for cash
consideration of $1.5 million.
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
9 Business combinations
i)
Current year
Building Products segment
During the year ended 31 March 2021, deferred consideration of
$0.7 million was paid in relation to an acquisition that occurred during
the year ended 31 March 2020.
ii) Prior year
CSR Martini Pty Limited
Background
On 20 December 2019, the CSR group acquired the 30% minority
interest in CSR Martini Pty Limited (Martini) for cash consideration of
$12.1 million.
Revenue and profit contribution
If the minority interest share of Martini was excluded from the CSR
group results for the year ended 31 March 2020, profit after tax
attributable to non-controlling interests would have been $1.1 million
lower and profit after tax attributable to shareholders of CSR Limited
would have been $1.1 million higher.
Acquisition accounting for the transaction
In accordance with AASB 10 Consolidated Financial Statements, as
the CSR group has a controlling interest in Martini, 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 minority interest in Martini and the non-controlling
interest has been recorded in the non-controlling interest reserve. Fair
value acquisition accounting is not required and the CSR group
continues to consolidate Martini. Effective 21 December 2019, the
CSR group has recognised 100% of the net profit after tax of Martini.
Details of the effect of changes in the ownership interest on the equity
attributable to shareholders of the CSR group is summarised as
follows:
Carrying amount of non-controlling interest
at acquisition date
Consideration paid
Add: put option liability extinguished
Less: deferred tax impact arising from
Martini joining the CSR tax consolidation
group
Amount recognised in non-controlling
interest reserve
Note $million
4.0
(12.1)
3.3
(a)
(1.6)
(6.4)
a) Deferred tax impact arising from Martini joining the CSR tax
consolidation group
Martini automatically entered the CSR tax consolidation group at
acquisition date. Accordingly, the tax cost base of the net assets of
Martini needed to be reset, which has resulted 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 balances
has been recorded in equity in the year ended 31 March 2020.
84 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
Balance sheet items
10 Working capital
i)
Current receivables
ii)
Inventories
$million
2021
2020
$million
2021
2020
Trade receivables
Allowance for doubtful debts
Net trade receivables
Property receivable
Other loans and receivables
Total loans and receivables
216.1
(8.2)
228.1
(8.6)
207.9
219.5
–
16.3
16.3
17.3
17.3
34.6
Current
Raw materials and stores
Work in progress
Finished goods
Total current inventories
100.5
16.8
196.5
313.8
102.7
18.0
221.2
341.9
1 Write-down of inventories recognised as an expense within cost of sales for the
year ended 31 March 2021 totalled $14.4 million (2020: $13.6 million).
iii) Current payables
$million
Trade payables
Other payables
Total current payables
2021
229.1
27.6
256.7
2020
217.4
28.1
245.5
Total current receivables
224.2
254.1
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 disposed
Trade debts provided
Closing balance
Recognition and measurement
2.6
–
7.1
1.1
(8.6)
2.2
–
(1.8)
(8.2)
7.9
–
3.7
4.9
(7.2)
1.8
–
(3.2)
(8.6)
Trade receivables: are recognised initially at fair value and are subsequently measured at amortised cost. The CSR group has adopted an
expected credit loss (‘ECL’) model under AASB 9 Financial Instruments. The ECL model requires the CSR group to account for expected
credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition
of the financial assets. Accordingly, the CSR group’s allowance for doubtful debts calculation applies the expected loss model and takes
into consideration the likely level of bad debts (based on historical experience and forward looking information) as well as any known ‘at
risk’ receivables. 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. The recoverability of debtors at 31 March 2021 has been assessed to consider the impact of
the COVID-19 pandemic and no material recoverability issues have been identified.
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. 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.
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.
85
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
11 Property holdings
$million
Current
Held for sale
Total current property holdings
Non-current
Held for sale
Property projects
Total non-current property holdings
2021
2020
40.7
40.7
16.4
86.2
102.6
59.7
59.7
13.7
73.3
87.0
Property holdings are accounted for as Investment Properties in
accordance with AASB 140 Investment Property. The carrying
amount of property holdings includes the cost of acquisition and
costs incurred in preparing the site for sale. Costs incurred after
completion of the site are expensed as incurred.
Property holdings are classified as either:
Held for sale: if the carrying amount will be recovered
principally through a sale transaction and a sale is considered
highly probable. The assets are measured at the lower of
their carrying amount and fair value less costs to sell. Held for
sale property assets that are not expected to settle within 12
months but are subject to a sales agreement are classified as
non-current assets.
Property projects: property holdings are the investment
properties which are not yet classified as ‘held for sale’.
Property holdings not expected to be fully developed within
12 months are classified as non-current assets.
12 Property, plant and equipment and intangible assets
i)
Property, plant and equipment
$million
Cost or written down value
Land and buildings
Plant and equipment
Total
Note
2021
2020
2021
2020
2021
2020
392.5
388.5
1,347.5
1,344.8
1,740.0
1,733.3
Accumulated depreciation and impairment
(104.5)
(96.4)
(941.8)
(895.4)
(1,046.3)
(991.8)
Net carrying amount
Net carrying amount at 1 April
Capital expenditure
Disposed
Depreciation
Impairments
Exchange differences
Acquisitions - business combinations
Transferred from (to) property plant and equipment,
property holdings and other assets
288.0
292.1
0.7
(0.8)
(8.2)
(0.4)
–
–
292.1
252.7
25.7
–
405.7
449.4
43.6
(0.4)
(8.1)
(52.7)
–
–
–
(7.5)
(0.1)
–
449.4
456.9
71.0
(0.4)
(52.7)
(3.5)
–
1.5
693.7
741.5
44.3
(1.2)
(60.9)
(7.9)
(0.1)
–
4.6
21.8
(26.6)
(23.4)
(22.0)
741.5
709.6
96.7
(0.4)
(60.8)
(3.5)
–
1.5
(1.6)
6
9
Balance at 31 March
288.0
292.1
405.7
449.4
693.7
741.5
ii) Goodwill and other intangible assets
$million
Cost
Accumulated amortisation and
impairment
Net carrying amount
Net carrying amount at 1 April
Capital expenditure
Disposed
Amortisation
Impairments
Exchange differences
Acquisitions - business
combinations
Balance at 31 March
Goodwill
Software
Other
Total other intangible
assets
Note
2021
2020
2021
2020
2021
2020
2021
2020
58.3
–
58.3
58.3
–
–
–
–
–
–
58.3
–
58.3
57.2
–
–
–
(0.7)
–
1.8
88.8
(83.0)
87.3
(79.1)
31.2
(23.2)
30.0
120.0
117.3
(22.4)
(106.2)
(101.5)
5.8
8.2
3.5
–
(4.4)
(1.4)
(0.1)
–
8.2
13.6
2.6
–
(5.6)
(2.4)
–
–
8.0
7.6
1.2
–
(0.8)
–
–
–
7.6
10.1
1.0
–
(1.6)
(1.9)
–
–
13.8
15.8
4.7
–
(5.2)
(1.4)
(0.1)
–
15.8
23.7
3.6
–
(7.2)
(4.3)
–
–
58.3
58.3
5.8
8.2
8.0
7.6
13.8
15.8
6
9
86 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
12 Property, plant and equipment and intangible assets (continued)
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.
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. 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.
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 acquired businesses, are measured at fair value at
the date of acquisition. Trade names of $1.6 million (2020: $1.6 million) that have an indefinite life are assessed for recoverability
annually. 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 acquired businesses are measured at cost. These assets are
subsequently carried at cost less accumulated amortisation and impairment losses.
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.
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 determined each reporting period using the CGU’s fair value
which is calculated using the discounted cash flows expected to arise from the asset. Management judgment is required in these
valuations to forecast future cash flows and to determine 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.
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.
The carrying amount of goodwill and trade names with indefinite lives forms part of the Building Products segment: $58.3 million and $1.6
million respectively (31 March 2020: $58.3 million and $1.6 million respectively). The recoverable amounts of the cash generating units that
include goodwill are determined using discounted cash flow projections.
Key assumptions used in the impairment assessments:
Cash flow forecasts: The cash flows are modelled over a five-year period with a terminal value used from year six onwards. The first five
years represent financial plans forecast by management, based on the CSR group's view of the most recent outlook on building activity
levels, with the terminal year representing long-term average activity levels. These estimates are informed by a review of a sample of
external forecasts available as at the date of these financial statements. In addition, cash flows for the Aluminium cash generating unit
reflect the most recent forecasts for key assumptions such as the US$ London Metal Exchange (LME) price and USD:AUD exchange rate.
Post-tax discount rate: The valuation is calculated using a post-tax annual discount rate of 9.0% for all segments other than Aluminium
which uses 10.5% (2020: 10.0% for all segments other than Aluminium which was 11.2%).
Terminal value: The terminal value annual growth rate assumed is 2.0% (2020: 2.5%).
AFS cash generating unit
AFS is a business within the Building Products segment and provides permanent formwork walling solutions for the construction industry. At
31 March 2021, the carrying value of the AFS CGU was $70 million, which included goodwill and other intangible assets of $38 million.
During the year ended 31 March 2021, the business experienced a shortfall in earnings when compared to internal forecasts, mainly due to
reductions in market activity for the New South Wales apartment segment. As a result, an impairment assessment was performed for the
AFS CGU at 31 March 2021 in accordance with AASB 136 Impairment of Assets.
Key assumptions used in the impairment assessment are consistent with those outlined above. The cash flow forecast for AFS assumes a
recovery in market activity consistent with external forecasts. Following the detailed impairment review of future cash flow projections, the
recoverable amount of the AFS CGU is estimated to exceed the carrying amount of the CGU at 31 March 2021 by $5 million. The impact of
reasonable possible changes in key assumptions has also been considered:
A 10% reduction in the volumes throughout the period modelled would result in an impairment of $24 million.
A 1% increase in the discount rate applied (from 9% to 10%) would result in an impairment of $8 million.
A 1% decrease in the terminal annual growth rate (from 2% to 1%) would result in an impairment of $5 million.
No other reasonable possible changes in key assumptions have been identified.
87
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
13 Net deferred income tax assets
$million
Net deferred income tax assets arising on temporary differences1
Net deferred income tax liabilities arising on temporary differences
Tax losses – revenue recorded as asset1
Total net deferred income tax assets
2021
143.0
–
1.9
144.9
2020
129.4
(18.5)
0.9
111.8
1 For the year ended 31 March 2021, deferred income tax assets in the statement of financial position total $144.9 million (31 March 2020: $130.3 million).
Movement in deferred income tax assets
$million
2021
Property, plant and equipment
Right-of-use lease assets
Lease liabilities
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
2020
Property, plant and equipment
Right-of-use lease assets
Lease liabilities
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
Recognition and measurement
Opening
balance
Credited
(charged) to
profit or loss
Credited
(charged) to
equity
Other
(including
transfers)
Closing
balance
(15.7)
(45.9)
60.0
2.5
74.1
24.4
21.3
(11.8)
(6.8)
8.8
0.9
111.8
(17.4)
–
–
(2.6)
80.4
28.2
26.3
(11.9)
(6.1)
(4.8)
–
92.1
1.2
9.7
(10.5)
0.3
(4.8)
2.6
0.8
11.8
–
0.7
1.0
12.8
1.5
9.7
(10.2)
0.9
(6.3)
(3.8)
(0.6)
0.1
–
13.0
0.9
5.2
–
–
–
(5.3)
–
–
–
–
25.6
0.4
–
20.7
(0.6)
(51.2)
66.0
4.2
–
–
(3.4)
–
(0.7)
0.3
–
14.6
(0.4)
(1.9)
1.9
–
–
–
–
–
–
–
–
(14.9)
(38.1)
51.4
(2.5)
69.3
27.0
22.1
–
18.8
9.9
1.9
(0.4)
144.9
0.8
(4.4)
4.2
–
–
–
(1.0)
–
–
0.3
–
(0.1)
(15.7)
(45.9)
60.0
2.5
74.1
24.4
21.3
(11.8)
(6.8)
8.8
0.9
111.8
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 the 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.
88 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
14 Leases
i)
The CSR group’s leasing activities
The CSR group leases various properties, equipment and vehicles. Property leases typically are for a period of 4 to 10 years and often have extension
options and equipment and vehicle leases are typically for a period of 3 to 6 years. Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for
borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement of financial performance over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset
is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the statement of
financial performance. Short-term leases are leases with a term of 12 months or less. Low-value assets comprise IT equipment and office equipment
such as photocopiers.
ii) Amounts recognised in the financial statements
The statement of financial position shows the following amounts relating to leases:
$million
Right-of-use assets
Properties
Equipment
Vehicles
Total right-of-use assets
Lease liabilities
Current
Non-current
Total lease liabilities
The statement of financial performance contains the following amounts relating to leases:
$million
Depreciation charge for right-of-use assets
Properties
Equipment
Vehicles
Total depreciation charge for right-of-use assets
Interest expense (included in finance cost)
Expense relating to short-term and low-value leases
The statement of cashflows contains the following amounts within ‘financing activities’ relating to leases:
$million
Lease payments
Interest
Total lease cash outflows included in ‘cash flows from financing activities’
2021
2020
116.5
6.3
4.4
127.2
30.2
141.1
171.3
140.4
6.4
6.4
153.2
32.9
167.1
200.0
2021
2020
24.1
2.5
3.5
30.1
8.0
11.5
2021
34.0
8.0
42.0
6
7
7
25.4
2.3
4.0
31.7
9.4
12.6
2020
33.9
9.4
43.3
2020
42.1
69.6
54.4
83.2
The table below analyses the undiscounted cash flows for the CSR group’s lease liabilities, into relevant maturity groupings based on the
remaining lease term at the reporting date:
$million
1 year or less
1 to 3 years
3 to 5 years
Over 5 years
2021
37.1
61.8
45.9
62.3
Total undiscounted cash flows
207.1
249.3
89
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
15 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
Make-good for property leases
Uninsured losses and future claims
Other1
Total non-current provisions
2020
Recognised/
remeasured
Settled/
transferred
Discount
unwind
76.8
6.6
30.0
1.1
4.0
11.4
129.9
4.3
216.9
0.7
11.5
20.0
11.6
265.0
49.0
10.0
14.6
0.6
3.6
5.4
83.2
–
(14.6)
1.2
–
(3.3)
–
(16.7)
(40.5)
(12.7)
(20.6)
(0.2)
(2.2)
(5.3)
(81.5)
0.3
–
–
(0.6)
–
(0.8)
(1.1)
–
–
–
–
–
–
–
–
4.7
–
–
0.7
0.1
5.5
2021
85.3
3.9
24.0
1.5
5.4
11.5
131.6
4.6
207.0
1.9
10.9
17.4
10.9
252.7
1
Includes provision for anticipated disposal costs of Tomago aluminium smelters spent pot lining and onerous lease liabilities.
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 16 for further details of the key assumptions and uncertainties in estimating this liability.
Measurement of provisions for restoration and environmental rehabilitation: 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 program for workers’ compensation. 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 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.
Make-good for property leases: provision has been recognised for the present value of the estimated expenditure to restore leased
properties to their original condition at the end of the respective lease terms. These costs have been capitalised as part of the cost of the
right-of-use leased asset and are amortised over the shorter of the term of the lease and the useful life of the assets.
Restructure and rationalisation: provision is made for restructuring and rationalisation where the CSR group has a present legal or
constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and
the amount can be reliably estimated. The provision is measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the end of the reporting period.
90 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
16 Product liability
Background
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.
CSR has been settling claims since 1989. It has been, and remains,
CSR’s policy to ensure that all legitimate asbestos related claims,
whether in Australia or the US, are resolved on a fair and equitable
basis. Where there is a demonstrated liability, CSR will seek to offer a
fair settlement and, in the case of US claimants, one that is consistent
with claim settlement values in Australia.
Default judgements have been sought and obtained against CSR in
the US, without CSR being present or represented (and for damages
that are excessive and of a nature that would not be recognised in
Australia). Australian law does not recognise the jurisdiction of US
courts in such matters. There have not been any US judgements
enforced against CSR. As at 31 March 2021, CSR had resolved
approximately 5,100 claims in Australia and approximately 137,900
claims in the United States.
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.
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 Australia and the United States.
CSR has appointed Finity Consulting Pty Limited as the independent
expert to estimate the Australian liabilities. CSR has appointed Nathan
Associates, Inc 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 (Australian liability 2.50% and US liability
2.0%); and
the discount rate applied to future payments (Australian liability
2.25% and US liability 1.70%).
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
considerations referred to above;
the future costs 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.
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 and any material uncertainties that may affect future
liabilities. As evidenced by the analysis below, 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.
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 2021 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 understate 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 Australia and the
United States will not have a material adverse impact on the CSR
group’s financial condition.
CSR’s asbestos provision is summarised in the graph and table below:
Table and Graph 1: Five year history – asbestos provision
312.4
289.0
268.0
246.9
231.0
500
400
300
200
100
0
2017
2018
Base case provision A$m
2019
2020
2021
Prudential margin A$m
$million
Base case estimate
Prudential margin
Prudential margin %
Total product liability provision
Year ended 31 March
2021
2020
196.1
34.9
17.8%
231.0
218.9
28.0
12.8%
246.9
91
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
Capital structure and risk management
17 Borrowings and credit facilities
i)
Borrowings
$million
Non-current borrowings – unsecured
Recognition and measurement
2021
–
2020
320.0
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 $420.0 million (31 March 2020: $320.0 million) committed standby facilities with external financial institutions.
These facilities have fixed maturity dates as follows: $154.0 million in 2023, $191.0 million in 2024 and $75.0 million in 2025. As at 31 March
2021, $420.0 million of the standby facilities were undrawn (2020: $320.0 million drawn).
18
Issued capital
On issue 31 March 2020
On-market share buy-back – net of transaction costs
On issue 31 March 2021
Ordinary shares
fully paid1
Issued capital
$million
485,382,776
–
485,382,776
966.7
–
966.7
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 2021 and 31 March 2020 under employee share plans as shares in respect of the
plans were acquired on market. During the years ended 31 March 2021 and 31 March 2020, 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 2021 are $2.16 (2020: $2.04). Net tangible assets per share is calculated
as net assets attributable to CSR Limited shareholders of $1,118.8 million (2020: $1,065.0 million) less intangible assets of $72.1 million
(2020: $74.1 million) divided by the number of issued ordinary shares of 485.4 million (2020: 485.4 million).
During the year ended 31 March 2021, the company ended the on-market share buy-back program.
19 Dividends and franking credits
i) Dividends
Dividend type
2019 Final
2020 Interim ordinary
2020 Interim special
2020 Final
2021 Interim ordinary
2021 Interim special
2021 Final ordinary1
2021 Final special1
Cents per
share
Franking
Total
amount
$million
Date
paid/payable
Graph 1: Dividends declared relating to each financial year
– cents per share
13.0
10.0
4.0
–
8.5
4.0
14.5
9.5
50%
50%
50%
–
100%
100%
100%
100%
64.9
2 July 2019
49.1 10 December 2019
19.7 10 December 2019
–
–
41.3 8 December 2020
19.4 8 December 2020
70.4
46.1
2 July 2021
2 July 2021
40.0
30.0
20.0
10.0
-
26.0
27.0
26.0
36.5
14.0
2017
2018
2019
2020
2021
1 The amounts disclosed as recognised in 2021 are the interim dividends in respect of the financial year ended 31 March 2021.
ii) Franking credits
$million
Franking account balance on an accruals basis1
2021
88.4
2020
39.8
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.
92 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
20 Reserves
$million
Balance at 1 April 2020
Hedge loss recognised in equity
Hedge profit transferred to the statement of financial
performance
Translation of foreign operations
Income tax related to other comprehensive income
Share-based payments expense
Income tax related to share-based payments expense
Acquisition of shares by CSR employee share trust
Acquisition of non-controlling interest
Balance at 31 March 2021
Balance at 1 April 2019
Hedge profit recognised in equity
Hedge profit transferred to the statement of financial
performance
Translation of foreign operations
Income tax related to other comprehensive income
Share-based payments expense
Income tax related to share-based payments expense
Acquisition of shares by CSR employee share trust
Acquisition of non-controlling interest
Balance at 31 March 2020
Nature and purpose of reserves
Hedge
reserve
9.3
(49.2)
(10.6)
–
18.0
–
–
–
–
(32.5)
13.0
3.8
(9.1)
–
1.6
–
–
–
–
9.3
Foreign
currency
translation
reserve
Employee
share
reserve
Non-
controlling
interests
reserve
Other
Total
Share
based
payment
trust
reserve
(24.4)
–
–
–
–
–
–
(1.0)
–
40.2
–
–
–
–
1.7
0.5
–
–
(68.7)
–
–
–
–
–
–
–
(0.1)
42.4
(25.4)
(68.8)
38.7
–
–
–
–
0.3
1.2
–
–
(24.3)
–
–
–
–
–
–
(0.1)
–
(59.1)
–
–
(3.3)
–
–
–
–
–
–
–
(9.6)
–
–
–
–
–
3.3
–
–
–
–
–
–
–
–
–
–
(45.7)
(49.2)
(10.6)
(3.2)
18.0
1.7
0.5
(1.0)
(0.1)
(89.6)
(38.4)
3.8
(9.1)
1.3
1.6
0.3
1.2
(0.1)
(6.3)
(2.1)
–
–
(3.2)
–
–
–
–
–
(5.3)
(3.4)
–
–
1.3
–
–
–
–
–
(2.1)
40.2
(24.4)
(68.7)
–
(45.7)
Hedge reserve: the hedge 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 63 to 66 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 $4.55 (2020: $3.40) per share)
Issue of shares under executive incentive plans
Closing balance
2021
2020
21,354
225,000
(144,173)
683,663
25,000
(687,309)
102,181
21,354
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.
Other reserves: other reserves were used to recognise the written put option the minority shareholders of the Martini business had to sell all
of their remaining interest to the group at an agreed price (based on the financial results of the business). The written put option was
extinguished as a result of the CSR group’s purchase of the remaining 30% of Martini. Refer to note 9 for further details.
93
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
21 Financial risk management
The CSR group’s activities expose it to a variety of financial risks,
including credit, liquidity and market risks.
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 market risk, specifically
interest rate risk, foreign exchange risk and commodity risk
(aluminium, alumina, oil, electricity and gas) 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
market risks. There have been no changes in the type and scale of
risk that the CSR group is exposed to or the risk management policies
used to manage these risks during the years ended 31 March 2021
and 31 March 2020.
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 sector 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. Credit 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 trade customers and accounts, ageing analysis and, where
necessary, carries out a reassessment of credit 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 measures the loss allowance at an amount that
reflects expected losses for trade and other receivables (refer to note
10).
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
Moody’s, 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 in combination with
continuously monitoring forecast and actual cash flows, to enable
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
obligations 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 17.
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
2021
Current payables
Commodity financial
instruments
Foreign currency financial
instruments
256.7
76.6
–
110.4
– 256.7
3.3 190.3
1.1
0.9
–
2.0
Total
334.4
111.3
3.3 449.0
2020
Current payables
Borrowings (including
interest)
Commodity financial
instruments
Foreign currency financial
instruments
245.5
3.4
–
297.9
– 245.5
25.1 326.4
8.4
9.6
1.0
19.0
18.8
8.4
–
27.2
Total
276.1
315.9
26.1 618.1
94 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
5
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95
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
21 Financial risk management (continued)
iii) Market risk (continued)
The table below provides details on the nature, risk management and sensitivity in relation to interest rate and foreign exchange risk.
Risk
Nature of risk
Risk management and sensitivity
Interest
rate
Foreign
exchange
At the reporting date, CSR group’s interest rate
exposure is limited to the net cash balance of
$250.8 million (2020: net cash balance of $414.8
million).
The maturity profile for the net cash balance of
$250.8 million is less than 1 year. The average
interest rate on debt for the year was 1.1% (2020:
1.1%) and the average interest rate on cash
balances for the year was 0.39% (2020: 1.07%).
The CSR group’s major foreign currency exposure
relates to its US dollar aluminium sales revenue.
A portion of revenue is unhedged to offset its US
dollar expense requirements for raw materials and
equipment.
The group also has foreign currency exposure arising
from payments for raw materials and capital
equipment in its other businesses. This exposure is
not material compared to aluminium sales revenue
exposure.
The CSR group has a policy of hedging interest rate risk to reduce the
volatility of interest expense.
At 31 March 2021 the group had no interest rate risk management
measures in place because it had no significant borrowings.
If interest rates had increased/decreased by one percentage point per
annum from the year end rate with all other variables held constant,
the post-tax profit for the year would have been $0.8 million
higher/lower (2020: $0.6 million higher/lower).
This is mainly due to higher/lower interest income on net cash
balances.
The CSR group uses a variety of foreign exchange risk management
instruments, including spot, forward and swap currency contracts and
currency options, to hedge foreign currency denominated receipts
resulting from revenue and payments for raw materials and capital
equipment denominated in foreign currencies.
The CSR group’s policy is to hedge its net US dollar aluminium
exposure to reduce the volatility of aluminium earnings, when
acceptable Australian dollar outcomes can be achieved.
Forecast US dollar receipts are based on highly probable forecast
monthly sales receipts of aluminium which ensures that the underlying
foreign currency exchange risk is identical to the hedged risk
component (i.e. the US dollar price). Hedging is undertaken at
declining levels for up to four years.
Sensitivity of fair values to changes in exchange rate is disclosed in
the market risk table on page 95.
The table below provides details on the nature and risk management in relation to commodity price risk. Sensitivity of fair values to changes in
commodity prices is disclosed in the market risk table on page 95.
Commodity Nature of commodity price risk
Commodity price risk management
Aluminium
The CSR group has exposure to aluminium
commodity prices which arises from sales contracts
that commit the CSR group to supply aluminium in
future years. Prices for product supplied under these
contracts are a function of the US dollar market
price at the time of delivery.
Alumina
The CSR group has exposure to alumina commodity
prices through the consumption of alumina at the
US$ denominated market price.
Oil
The CSR group has exposure to oil commodity prices
through oil price linked gas purchasing contracts.
The A$ gas purchase price is partially a function of
the prevailing US$ oil price and A$/US$ exchange
rate.
Electricity
The CSR group purchases electricity from the
National Electricity Market which gives rise in
exposure to the spot electricity price.
Gas
The CSR group has exposure to gas hub prices
through purchases of gas from the Victorian
Declared Wholesale Gas Market and New South
Wales, South Australia and Queensland Short-Term
Trading Markets.
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 CSR group has a policy of hedging its alumina purchases to
reduce the volatility of its aluminium manufacturing costs. Eligible
hedging instruments are commodity forward contracts and commodity
futures contracts. The commodity forward contracts utilised are
typically of the form where the CSR group receives a floating alumina
price and pays a floating aluminium price.
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 are commodity forward contracts and
commodity futures contracts. These contracts are either denominated
in A$ or US$. If denominated in US$ the risk arising from movements
in the A$/US$ exchange rate is managed through foreign exchange
forward and option contracts.
The CSR group has a policy of hedging the electricity spot price to
reduce the volatility of its energy costs. Eligible hedging instruments
are commodity forward contracts and options and commodity futures
contracts and options.
The CSR group has a policy of hedging its exposure to gas hub prices
to reduce the volatility of its energy costs. Eligible hedging instruments
are commodity forward contracts and options and commodity futures
contracts and options.
96 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
21 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 meet their obligations as and when due, take
advantage of business opportunities as they present, and continue as a going concern while maximising the return to shareholders in the context
of business and financial market conditions.
The capital structure of the CSR group consists of cash and cash equivalents, issued capital and reserves disclosed in notes 18 and 20, retained
profits and debt. 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 repayment 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.
The CSR group only has Level 2 financial instruments in the fair value hierarchy.
$million
Current1
Non-current
Total
Current1
Non-current
Total
2021
2020
Financial assets at fair value
Commodity swaps – aluminium
Commodity swaps – alumina/aluminium
Commodity swaps – oil
Commodity swaps – electricity
Commodity swaps – gas
Forward exchange rate contracts
Collateral with financial institutions2
Other
Total
Financial liabilities at fair value
Commodity swaps – aluminium
Commodity swaps – alumina/aluminium
Commodity swaps – oil
Commodity swaps – electricity
Commodity swaps – gas
Forward exchange rate contracts
Other
Total
0.3
–
–
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0.1
46.3
16.1
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63.0
59.6
5.8
0.6
3.5
0.5
1.1
–
71.1
0.6
–
–
0.1
–
46.7
6.9
3.4
57.7
69.7
7.1
2.7
5.6
–
0.9
–
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0.9
–
–
0.3
0.1
93.0
23.0
3.4
120.7
129.3
12.9
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–
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34.2
–
–
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–
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–
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3.3
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31.5
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52.2
1 Derivatives are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period.
2 Collateral against unrealised losses on derivative instruments, under credit support and futures account agreements.
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 2021 and no transfers in either direction in 2021.
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 the 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 is 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.
97
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
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98
CSR LIMITED ANNUAL REPORT 2021
1
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
D
E
T
I
M
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L
R
S
C
8
9
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
Group structure
22 Subsidiaries
Entity
2021
2020
Entity
% CSR
ownership
Incorporated in Australia
A-Jacks Hardwall Plaster Pty Ltd
A-Jacks Unit Trust
AFS Systems Pty Limited2
AFS Unit Trust
BI (Contracting) Pty Limited
Bradford Insulation Industries Pty Limited
Bradford Insulation (S.A.) 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 Limited2
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 Limited2, 3
CSR Share Plan Pty Limited
CSR Structural Systems Pty Limited2
CSR Subsidiary Finance Pty Limited2
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Incorporated in Australia (continued)
100 CSR Subsidiary Holdings Limited2
100 CSR-ER Nominees Pty Limited
100 Gove Aluminium Finance Limited
100 High Road Capital Pty Limited
100 Midalco Pty Limited
100 Monier PGH Superannuation Pty Limited
100 PASS Pty Limited
100 PGH Bricks & Pavers Pty Limited2
100 Rediwall Unit Trust
100 Rivarol Pty Limited2
100 Seltsam Pty Limited
100 Softwood Holdings Limited1
100 Softwood Plantations Pty Limited1
100 Softwoods Queensland Pty Limited1
100 Thiess Bros Pty Limited
100 Thiess Holdings Pty Limited
100
100
100 CSR Building Products (NZ) Ltd
100
100
100 CSR Guangdong Glasswool Co., Ltd (China)
100 CSR Insurance Pte Limited (Singapore)
100 PT Prima Karya Plasterboard (Indonesia)
Incorporated in other countries
Incorporated in New Zealand
% CSR
ownership
2021
2020
100
100
70
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
100
100
100
100
79
100
100
79
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.
3 The CSR group held a 70% interest in CSR Martini Pty Limited until 20 December 2019 when the remaining 30% interest was acquired. Refer to note 9 for further details.
23 Deed of cross guarantee
CSR Limited, AFS Systems Pty Ltd, Bricks Australia Services Pty Limited, CSR Building Products Limited, CSR Finance Ltd, CSR Investments Pty
Limited, CSR Structural Systems Pty Limited, CSR Subsidiary Finance Pty Limited, CSR Subsidiary Holdings Limited, PGH Bricks & Pavers Pty
Limited, Rivarol Pty Limited and CSR Martini Pty Limited (joined during the year ended 31 March 2020) 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’.
Set out on the following page 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 2021
and 31 March 2020 of the closed group.
99
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
23 Deed of cross guarantee (continued)
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
Impairment expense
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 (expense), net of tax
Items that may be reclassified to profit or loss
Hedge profit (loss) recognised in equity
Hedge profit transferred to statement of financial performance
Exchange differences arising on translation of foreign operations
Income tax benefit relating to these items
Items that will not be reclassified to profit or loss
Actuarial gain (loss) on superannuation defined benefit plans
Income tax (expense) benefit relating to these items
Other comprehensive income (expense) – net of tax
Total comprehensive income
iii) Summary of movements in consolidated retained profits
$million
Opening retained profits
Profit for the year
Actuarial gain (loss) on superannuation defined benefit plans (net of tax)
Dividends provided for or paid
Closing retained profits
100 CSR LIMITED ANNUAL REPORT 2021
2021
2020
1,477.7
(935.8)
1,519.8
(952.5)
541.9
104.9
(163.9)
(233.7)
12.9
(9.3)
(16.5)
236.3
1.5
(18.1)
219.7
(51.9)
167.8
567.3
26.4
(170.0)
(262.3)
13.7
(9.1)
(4.6)
161.4
2.8
(18.8)
145.4
(36.7)
108.7
2021
167.8
2020
108.7
2.0
(2.6)
(3.2)
0.2
17.6
(5.3)
8.7
176.5
2021
156.0
167.8
12.3
(60.7)
275.4
(17.3)
(5.7)
1.3
6.9
(13.9)
4.2
(24.5)
84.2
2020
190.7
108.7
(9.7)
(133.7)
156.0
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
23 Deed of cross guarantee (continued)
iv) Consolidated statement of financial position
$million
Current assets
Cash and cash equivalents
Receivables
Inventories
Property holdings
Other financial assets
Income tax receivable
Prepayments and other current assets
Total current assets
Non-current assets
Receivables
Property holdings
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment
Right-of-use lease assets
Goodwill
Other intangible assets
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Lease liabilities
Other financial liabilities
Tax payable
Provisions
Total current liabilities
Non-current liabilities
Payables
Lease liabilities
Borrowings
Other financial liabilities
Provisions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Equity attributable to shareholders of the closed group
2021
2020
243.2
158.4
210.3
40.7
5.1
0.4
7.7
665.8
21.2
102.6
28.1
104.5
600.6
116.2
58.3
11.8
122.9
12.4
409.6
180.3
240.2
59.7
–
–
9.3
899.1
26.1
87.0
34.4
162.0
643.2
143.0
58.3
14.5
127.2
0.7
1,178.6
1,296.4
1,844.4
2,195.5
111.4
30.2
5.7
47.3
112.4
307.0
0.1
134.4
–
8.3
242.5
2.7
388.0
188.6
32.9
0.6
31.9
110.8
364.8
4.0
159.1
320.0
10.6
254.6
8.5
756.8
695.0
1,121.6
1,149.4
1,073.9
966.7
(92.7)
275.4
966.7
(48.8)
156.0
1,149.4
1,073.9
101
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
24 Non-controlling interests
Summarised financial information for each subsidiary that has non-controlling interests that are material to the CSR group is set out below. 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 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 (decrease) increase in cash held
Transactions with non-controlling interests
Profit allocated to non-controlling interests1
Dividends paid to non-controlling interests2
Gove Aluminium Finance
Limited
2021
2020
191.5
180.5
172.1
88.7
587.9
18.9
(59.3)
(40.4)
12.4
(25.4)
(37.5)
(50.5)
5.7
14.7
212.2
140.4
114.0
38.1
621.2
40.5
18.0
58.5
58.2
(8.4)
(16.3)
33.5
12.1
4.5
1 Profit allocated to non-controlling interests for subsidiaries that are not material for disclosure was $nil for the year ended 31 March 2021 (2020: $1.1 million).
2 Dividends paid to non-controlling interests for subsidiaries that are not material for disclosure were $nil (2020: $2.3 million).
Recognition and measurement
Non-controlling interests in the results and equity of subsidiaries are shown separately in the 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.
25
Interest in joint operations
The CSR group’s interest in the Tomago aluminium smelter joint operation of 36.05% (2020: 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% (2020: 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
26.
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.
102 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
26 Equity accounting information
Carrying amount ($million)
Entity1
Building products
Rondo Building Services Pty Ltd2
Gypsum Resources Trust Australia2
New Zealand Brick Distributors3
Other2
Total investment
2021
Equity
accounted
investment
Long-term
loan
Net
investment
Long-term
loan
2020
Equity
accounted
investment
Net
investment
–
12.0
–
–
12.0
15.9
–
7.5
0.3
23.7
15.9
12.0
7.5
0.3
35.7
–
12.0
–
–
12.0
21.7
–
8.1
0.8
30.6
21.7
12.0
8.1
0.8
42.6
1 The CSR group’s interest in these entities is 50% (2020: 50%).
2 Entities incorporated in Australia.
3 Entity is a limited partnership in New Zealand.
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.
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
Impairment of equity accounted investment
Foreign currency translation and other
Disposal of equity accounted investment
Impact of new leases standard
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
Rondo Building Services Pty Ltd
Other
2021
42.6
19.3
(5.8)
(18.3)
–
(1.8)
(0.3)
–
35.7
2020
40.4
20.0
(6.1)
(10.6)
(0.6)
0.8
–
(1.3)
42.6
2021
2020
100.1
66.5
67.8
50.4
98.6
77.1
53.1
56.8
259.3
293.1
12.8
0.7
13.8
0.1
iii) Balances and transactions with joint venture entities
$million
Note
2021
2020
Current loans payable to CSR
Non-current loans payable to CSR
Current payables to joint venture entities
Purchases of goods and services
Sales of goods and services
32
0.4
8.4
7.5
33.6
4.2
0.8
7.7
7.0
35.3
7.1
103
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
27 Parent entity disclosures
i)
Summary financial information of CSR Limited
$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
2021
2020
684.2
1,787.9
(1,013.6)
(265.6)
725.1
1,779.6
(768.0)
(609.8)
1,192.9
1,126.9
966.7
11.0
215.2
966.7
9.8
150.4
1,192.9
1,126.9
124.7
125.5
48.8
48.6
1
Included within current liabilities are the current portion of the product liability provision and uninsured losses and future claims provision of $24.0 million and $5.4 million
respectively (2020: $30.0 million and $4.0 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 $207.0 million and $17.4 million respectively (2020: $216.9 million and $20.0 million respectively). See notes 15 and 16
for further details.
ii) CSR Limited transactions with controlled entities
During the financial years ended 31 March 2021 and 2020, 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 parties1
Bank guarantees to Harwood Superannuation Fund2
Total contingent liabilities
Note
2021
2020
28
123.4
3.2
116.9
3.2
126.6
120.1
1 Financial guarantees disclosed above relate to bank guarantees provided to third parties to guarantee CSR Limited’s performance of its liabilities of $80.6 million (2020:
$80.4 million) and guarantees provided to third parties outside of the CSR group of $42.8 million (2020: $36.5 million). 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.
2 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 107% of
the amount required to meet the actuarial liabilities.
iv) Capital commitments
CSR Limited has committed $nil to the acquisition of any property, plant and equipment as at 31 March 2021 (2020: $nil).
104 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | OTHER
Other
28 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 2021 for the CSR group were $31.9 million (2020: $36.2 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 2021 contributions
totalled $28.9 million (2020: $32.3 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.
The Pilkington (Australia) Superannuation Scheme Trust Deed was amended with effect from midnight on 31 January 2019 to restructure the
plan within the fund, including splitting the Pilkington (Australia) Superannuation Scheme defined benefit plan into two separate plans. The
amendment reflected the agreement between CSR Limited and Viridian Glass Limited that Viridian Glass Limited would assume full
responsibility to fund its obligations for defined benefit members employed by the Viridian Glass Limited business. The CSR group will retain the
funding obligations in respect of the Viridian pensioner defined benefit plan. As such, amounts recorded for the CSR group exclude funding
obligations and share of assets and liabilities which have been assumed by Viridian Glass Limited.
Asset backing
The last actuarial assessment for the Harwood Superannuation Fund was completed as at 30 June 2020. The funding requirements were
reviewed as at 30 June 2020. 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.
The Trust Deed sets out a minimum funding level of 103% and a funding guarantee of 107% of actuarial liabilities for the DBD CSR and DBD
Harwood Pensioner plans. At the time of the last actuarial review, DBD CSR had a funding position in excess of 107% and DBD Harwood
Pensioner had a funding position of 103%. Therefore, as at 31 March 2021, CSR Limited was required to provide bank guarantees of $3.2
million to the trustee of the fund to satisfy the balance of its commitments (2020: $3.2 million). The bank guarantees have been disclosed in
note 27.
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 2020
$nil from 1 April 2020
67.5
39.6
(60.2)
(35.8)
7.3
3.8
0.2
0.2
Pilkington (Australia)
Superannuation Scheme DBD2 $nil from 1 April 2020 16.4 (19.1) (2.7) –
1 Actuarial liabilities are determined to be past service liabilities based on membership accrued up to 31 March 2021.
2 Funds contributed by CSR are for accumulation members.
105
NOTES TO THE FINANCIAL REPORT | OTHER
28 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
2021
2020
2.8
2.5
28.1
47.0
2.7
22.2
2.4
2.5
26.5
45.0
3.4
25.1
2021
2020
0.9
2.9
(2.7)
1.1
1.0
4.2
(4.4)
0.8
Actuarial gain (loss) incurred during the financial year and recognised in the statement of comprehensive income
17.6
(13.9)
Cumulative actuarial losses recognised in the statement of comprehensive income
(50.6)
(68.2)
1 Disclosed in selling, administration and other operating costs.
Impact of plans on the statement of financial position
$million
Net asset (liability) of superannuation defined benefit plans
Fair value of assets
Present value of liabilities
Net asset (liability)
Included in the statement of financial position
Other non-current assets (note 32)
Other non-current liabilities
Net asset (liability)
Movements in the fair value of the defined benefit plan assets
Assets at the beginning of the financial year
Interest income
Return on assets (in excess of interest income)
Contributions from the employer
Contributions from participants
Benefits paid
Assets at the end of the financial year
Movements in the present value of the defined benefit plan liabilities
Liabilities at the beginning of the financial year
Current service cost
Finance cost
Contributions from participants
Actuarial (gain) loss
Benefits paid
Liabilities at the end of the financial year
106 CSR LIMITED ANNUAL REPORT 2021
2021
2020
123.5
(115.1)
121.4
(129.9)
8.4
(8.5)
11.1
(2.7)
8.4
121.4
2.7
10.8
0.4
0.1
(11.9)
–
(8.5)
(8.5)
134.3
4.4
(6.5)
(2.0)
0.4
(9.2)
123.5
121.4
129.9
0.9
2.9
0.1
(6.8)
(11.9)
126.1
1.0
4.2
0.4
7.4
(9.2)
115.1
129.9
NOTES TO THE FINANCIAL REPORT | OTHER
28 Employee benefits (continued)
i)
Superannuation commitments (continued)
Net asset (liability) of superannuation defined benefit plans
200
180
160
140
120
100
80
60
40
20
0
172.8
158.3
169.9
158.5
134.3
126.1
129.9
121.4
123.5
115.1
14.5
11.4
8.2
(8.5)
8.4
2017
2018
2019
2020
2021
Present value of fund liabilities ($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 2021, 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
2021
3,116,307
1,372,449
(247,314)
(1,098,379)
2020
3,004,974
1,609,588
(535,107)
(963,148)
3,143,063
3,116,307
There were no vested and exercisable shares at 31 March 2021 (2020: 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 2021 is set out below:
Grant date
25 July 2017
25 July 2018
19 July 2019
21 July 2020
Total
Expiry date
1 April 2020
1 April 2021
1 April 2022
1 April 2023
Performance rights
2021
–
503,592
1,267,022
1,372,449
2020
863,248
687,269
1,565,790
–
3,143,063
3,116,307
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
21 July 2020
Relative TSR with a
positive absolute TSR
requirement
21 July 2020
EPS growth
Monte Carlo simulation Binominal Tree
1 April 2020
1 April 2020
31 March 2023 31 March 2023
2.7 years
$3.49
32%
4.7%
0.29%
$3.08
2.7 years
$3.49
32%
4.7%
0.29%
$1.06
Further details on the LTI plan and the terms of the grants during the year are detailed in the remuneration report on pages 63 to 66.
107
NOTES TO THE FINANCIAL REPORT | OTHER
28 Employee benefits (continued)
ii) Share-based payments (continued)
Deferred shares
Under the STI deferral plan, 40% of any STI earned by senior executives is delivered in CSR shares. These shares must be held in trust subject to
trading restrictions and 50% are deferred for one year and 50% are deferred for two years.
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 vest. 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
2021
–
–
2020
207,502
$3.29
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
2021
531,674
109,573
2020
406,692
89,321
1 Number of shares issued includes the number of purchased shares issued to employees under the plan. Each participant was issued with shares to a maximum value of $1,000
based on the weighted average market price of $3.49 (2020: $4.27).
For further details on the USOP and the ESAP, refer to page 66 of the remuneration report.
Expenses arising from share-based payment transactions
$
Long-term incentive plan (PRP)
Deferred shares
Other plans
Total expense
2021
1,106,453
598,766
928,369
2020
(351,685)
682,886
867,926
2,633,588
1,199,127
Recognition and measurement
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.
108 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | OTHER
29 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 2021 (2020: 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
2021
4,505,319
508,978
5,014,297
2020
3,846,034
(236,622)
3,609,412
Details of remuneration and the CSR Limited equity holdings of directors and other key management personnel are shown in the remuneration
report on pages 50 to 70.
iii) Other related parties
Other than transactions with joint venture entities disclosed in note 26, no material amounts were receivable from, or payable to, other related
parties as at 31 March 2021 (2020: 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 28.
30 Subsequent events
Except for the items disclosed below, there has not arisen in the interval between 31 March 2021 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 2021, refer to note 19.
109
NOTES TO THE FINANCIAL REPORT | OTHER
31 Commitments and contingencies
i)
Commitments
$million
Contracted capital expenditure comprises:
Payable within one year
ii) Contingencies
2021
2020
8.6
16.1
Contingencies for CSR Limited are outlined in the parent entity note 27. There are no other contingencies in relation to controlled entities within
the CSR group.
32 Other non-current assets
$million
Loans to joint venture entities1
Other loans and receivables
Total non-current receivables
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.
33 Auditor’s remuneration
$
Deloitte Touche Tohmatsu and related network firms
Audit or review of financial reports
Other assurance and agreed-upon procedures under other legislation or contractual arrangements
Total auditor’s remuneration
Note
26
28
2021
8.4
15.0
23.4
1.3
11.1
12.4
2020
7.7
7.3
15.0
0.7
–
0.7
2021
2020
657,000
37,080
657,000
41,200
694,080
698,200
110 CSR LIMITED ANNUAL REPORT 2021
NOTES TO THE FINANCIAL REPORT | OTHER
34 Other accounting policies
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 2021 included $95.8 million of cash at bank and on hand (2020: $299.8 million) and $155.0 million short-term
deposits (2020: $115.0 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.
111
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 2021; and
there are reasonable grounds to believe that CSR Limited and the group entities identified in note 23 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.
John Gillam
Chair of the board
12 May 2021
Julie Coates
Managing Director and CEO
12 May 2021
112 CSR LIMITED ANNUAL REPORT 2021
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
Independent Auditor’s Report to the Members of CSR Limited
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 2021, 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 2021 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 (including Independence Standards) (the “Code”) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We 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 16 Product Liability)
CSR has recognised a product liability provision of
$231.0 million as at 31 March 2021. 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 assumption in respect of discount rates has a
significant impact on the estimate of provisions.
In conjunction with actuarial specialists, our procedures included, but were not
limited to:
assessing the objectivity, independence and competence 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;
enquiring 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 Notes to the
financial statements.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation
113
INDEPENDENT AUDITOR’S REPORT
Key audit matter
Asset valuation
(Refer to Note 12 Property, plant and equipment and
intangible assets and Note 14 Leases)
At 31 March 2021 the Group’s consolidated
statement of financial position includes goodwill
amounting to $58.3 million, other intangible assets
amounting to $13.8 million, property, plant and
equipment amounting to $693.7 million and right-of-
use lease assets amounting to $127.2 million,
comprised of several cash generating units (CGUs).
The assessment of impairment of the company’s
goodwill, other intangible assets, property, plant and
equipment and right-of-use lease asset 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,
including the impact of the COVID-19 pandemic.
Management prepare an impairment trigger analysis
to identify which CGUs should be considered further
for impairment analysis. Based on the analysis
performed, no impairments have been recognised.
The AFS CGU was identified by management as the
CGU requiring additional disclosure due to its
sensitivity to changes in specific assumptions.
How the scope of our audit responded to the key audit matter
In conjunction with valuation specialists, our procedures included, but not limited
to:
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
- confirming 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 AFS CGU by:
- assessing the appropriateness of the impairment model methodology, key
inputs and assumptions used in the model using our knowledge of the
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, including the impact of the COVID-19 pandemic.
- testing on a sample basis, the mathematical accuracy of the cash flow
model;
- agreeing relevant data in the cash flow model to the latest Board approved
forecasts, including the impact of the COVID-19 pandemic;
- assessing the historical accuracy of forecasting of the CGU;
- obtaining and reading the position papers prepared by management to
support the model for this CGU;
- evaluating management’s process, including testing design and
implementation of controls in respect of the preparation and review of
forecasts; and
- assessing the appropriateness of the relevant disclosures in the Notes to
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 2021, 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.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the 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.
114 CSR LIMITED ANNUAL REPORT 2021
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,
actions taken to eliminate threats or safeguards applied.
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 which forms part of the directors’ report and is included in pages 50 to 70 of the CSR Limited annual
report for the year ended 31 March 2021.
In our opinion, the Remuneration Report of CSR Limited for the year ended 31 March 2021, complies with section 300A of the Corporations Act
2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A
of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance
with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
J L Gorton
Partner
Chartered Accountants
Sydney, 12 May 2021
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation
115
SHAREHOLDER INFORMATION
Shareholder information
20 LARGEST HOLDERS OF ORDINARY SHARES
As at 30 April 2021
RANK
NAME
1.
2.
3.
4.
5.
6.
7.
8.
9.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
10.
PRUDENTIAL NOMINEES PTY LTD
11.
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
12.
AMP LIFE LIMITED
13.
MR ALLAN ERNEST ORMES
14.
NATIONAL NOMINEES LIMITED
15.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
16.
CSR SHARE PLAN PTY LIMITED
17.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - GSCO ECA
18.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
19.
V M NOMINEES PTY LTD
20.
CS THIRD NOMINEES PTY LIMITED
Top 20 holders of issued capital
Remaining holders balance
SUBSTANTIAL SHAREHOLDERS OF CSR LIMITED
UNITS
% OF UNITS
141,541,384
71,116,406
69,989,742
31,236,903
10,195,133
9,711,424
8,499,769
4,046,962
2,882,000
2,500,000
1,511,637
1,382,087
1,066,667
1,008,237
646,908
599,791
568,988
551,293
550,000
511,020
360,116,351
125,266,425
29.2
14.7
14.4
6.4
2.1
2.0
1.8
0.8
0.6
0.5
0.3
0.3
0.2
0.2
0.1
0.1
0.1
0.1
0.1
0.1
74.2
25.8
Dimensional Entities and its subsidiaries advised that as of 20 June 2013, it and its associates had an interest in 30.4 million shares, which
represented 6.01% of CSR’s issued capital at that time.
The Vanguard Group Inc. and its subsidiaries advised that as of 31 March 2020, it and its associates had an interest in 29.2 million shares,
which represented 6.01% of CSR’s issued capital at that time.
SHAREHOLDINGS BY GEOGRAPHIC LOCATION
Location
AUSTRALIA
NEW ZEALAND
UNITED KINGDOM
UNITED STATES OF AMERICA
SINGAPORE
Other
Total
Units
481,874,898
2,229,786
290,928
184,389
94,085
708,690
Units %
99.3
0.5
0.1
0.0
0.0
0.1
Holders
44,140
1,097
222
93
44
185
Holders %
96.4
2.4
0.5
0.2
0.1
0.4
485,382,776
100.0
45,781
100.0
116 CSR LIMITED ANNUAL REPORT 2021
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
22,758
18,033
3,061
1,860
69
45,781
Units
11,087,745
40,997,648
21,859,050
40,679,076
370,759,257
485,382,776
Minimum $ 500.00 parcel at $5.97 per unit
84
Minimum parcel size
Holders
1,274
RECENT CSR DIVIDENDS
Date paid
December 2015
July 2016
December 2016
July 2017
December 2017
July 2018
December 2018
July 2019
December 2019
December 2019
December 2020
December 2020
Type of dividend
Dividend per share
Franking
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim ordinary
Interim special
Interim ordinary
Interim special
11.5 cents
12.0 cents
13.0 cents
13.0 cents
13.5 cents
13.5 cents
13.0 cents
13.0 cents
10.0 cents
4.0 cents
8.5 cents
4.0 cents
0%
0%
0%
50%
50%
75%
100%
50%
50%
50%
100%
100%
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
Telephone
International
Facsimile
International
1800 676 061
+61 3 9415 4033
(03) 9473 2500
+61 3 9473 2500
www.investorcentre.com/contact
Investor relations and news
The CSR Annual Report, Corporate Governance Statement and
Sustainability Report are available to view online or download, visit
www.csr.com.au
Email investorrelations@csr.com.au
CSR Limited
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
Telephone (02) 9235 8000
International +61 2 9235 8000
www.csr.com.au
% of issued capital
2.3
8.4
4.5
8.4
76.4
100.0
Units
30,928
Franked amount
per share at 30%
NA
NA
NA
6.5 cents
6.75 cents
10.125 cents
13.0 cents
6.5 cents
5.0 cents
2.0 cents
8.5 cents
4.0 cents
117
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CSR.COM.AU