Building solutions
for a better future
CSR LIMITED | ANNUAL REPORT 2022
B
CSR LIMITED ANNUAL REPORT 2022 Building solutions
for a better future
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.
Contents
2
CSR at a glance
4
Chair’s Message
6 Managing Director’s Review
8
8
Building Products Overview
– Masonry & Insulation
10 – Interior Systems
12 – Construction Systems
14 Property
15 Aluminium
16 Sustainability at a glance
18 People and safety
20 Climate change
22 Environment
24 Community
25
Supply chain and
modern slavery
26 Financial Overview
27
32
Operating and Financial
Review
Corporate Governance
Statement and Risk
46 Board of Directors
48 Directors’ Report
51 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 30 June 2022
at 10am (AEST). Details on arrangements for the AGM are included in
the Notice of Meeting.
Cover photo: Charlotte by Graya
CSR Dwelling – the new hub for
design inspiration
During the year, CSR also launched Dwelling, a new
content hub which provides inspiration, information
and consultation to apply to renovations and new
building projects. Dwelling combines products,
insights and expert advice for CSR’s entire suite
of brands.
dwelling.csr.com.au
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
13%
15%
YEM22
EBIT1
$291m
72%
Building Products
Property
Aluminium
8%
8%
10%
YEM22
Building Products
Revenue
$1.6bn
54%
20%
Detached
Non-residential
Medium density
High density
Alterations
and additions
1 Before significant items
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 a 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.
2
CSR LIMITED ANNUAL REPORT 2022 Strong financial position1
Operational excellence
with a strong foundation
9%
$2.3bn
Revenue
22%
$291m
Earnings Before Interest
and Tax (EBIT)
20%
$193m
Net profit after tax
20%
39.7c
Earnings per share
18.0c
Final dividend
(fully franked)
31.5c
Full year dividends
(fully franked)
1 Before significant items, unless stated.
2,573
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
$178m
Net cash
$2.4bn
Total assets
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.
Tomago Aluminium is a leading manufacturer of aluminium
products, including extrusion billet, rolling slab, and
aluminium ingot with annual capacity of around
600,000 tonnes of aluminium.
Property
CSR generates earnings from its Property business which
focuses on maximising financial returns from surplus former
manufacturing sites and industrial land.
The Property team also provides the CSR businesses with
strategic property advice on future impacts of urban expansion
on key CSR sites as well as managing CSR’s extensive leased
and owned property portfolio in excess of 170 sites across
Australia and New Zealand.
3
Chair’s
message
JOHN GILLAM CHAIR
An outstanding performance from
CSR’s employees; supporting customers,
maintaining supply and delivering a
strong operational performance.
I am pleased to report that CSR has continued its track record
of strong operational and financial performance while improving
the sustainability of the business.
The CSR team deserve great credit for working through all
manner of significant business-wide challenges during the year -
including covid restrictions and lockdowns - to maintain a strong
product flow to customers whilst well advancing the longer-term
strategic agenda.
CSR has increased its group earnings for the second
consecutive year with net profit after tax (before significant
items) of $193 million; up 20% when compared to last year’s
net profit of $160 million. Note that final statutory net profit
after tax of $271 million includes a significant item relating
to the recognition of carry forward capital tax losses.
The lift in net profit was driven by a 24% increase in Building
Products earnings to a record $228 million, reflecting strong
market activity driving higher volumes, improved factory
performance and continued cost discipline.
Property delivered earnings of $47 million following completion
of several transactions. During the year, CSR secured the final
sale of industrial land at the Horsley Park, NSW site. This is a
great example of how CSR’s Property business plays a crucial
role in our strategy to realise strong long-term shareholder value.
This PGH Bricks site operated for over 50 years before becoming
surplus to requirements. The Property team led a very complex
rehabilitation program to regenerate the site for industrial use
which will generate proceeds over $408 million over six years.
Earnings from our investment in Aluminium were up 70% to $40
million following improved pricing, with hedging in place over the
next five years to reduce volatility and provide greater visibility of
future earnings.
EBIT by business1
13%
Building Products
Property
Aluminium
15%
YEM22
EBIT
$291m
72%
1 Before significant items
Strong cash position supports dividends at top end of range
CSR’s strong performance and financial position has enabled
the company to pay fully franked dividends at the top end of our
range of 60-80% of net profit after tax (before significant items).
We have declared a final dividend of 18 cents per share
(fully franked). This will bring the full year dividend to 31.5 cents
per share (fully franked). This compares to total dividends of
36.5 cents (fully franked) in the previous year which included
the payment of two special dividends.
We ended the year with a very healthy financial position, which
provides significant opportunity to invest in the business over
the coming years.
Progressing strategic initiatives across the business
As mentioned above, this year’s record result in Building
Products was delivered in a challenging environment. Julie and
the team ensured we prioritised the health and safety of our
employees and product flow to customers, which maximised the
market opportunity from strong detached housing demand.
The team have also progressed CSR’s strategy to drive market
share growth in new segments as well as increased investment
this year at key sites to improve productivity, workplace safety,
sustainability and optimise operations.
4
CSR LIMITED ANNUAL REPORT 2022 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.
$153m
In total dividends to be paid
for YEM22
Capital management (dividends and share buy backs) $ million
$137
$138
$131
$177
$153
1
7
136
131
66
111
153
62
20
49
YEM18
YEM19
YEM20
YEM21
YEM22
Dividends
Special dividends
Share buy backs
JOHN GILLAM CHAIR
Sustainability a core foundation of our strategy
Thank you to the CSR team
On behalf of the board, I want to commend the over 2,500 CSR
employees across Australia and New Zealand for their endeavour
and commitment across the year. The great progress we have
made in our operational, strategic and financial results is a strong
endorsement of the skills and resilience of the team.
Thank you to all of our teams for your support for each other and
our customers during the year.
Finally, sincere thanks also to our shareholders for your
ongoing support.
JOHN GILLAM
CHAIR
Climate change is a key priority area for CSR in two distinct
ways. Firstly, in how we operate our business and, secondly
by our supply of products that reduce emissions in the built
environment. During the year we have enhanced our design
and technical support for energy efficient solutions across
insulation, construction fabrics and ventilation with further
investment in compliance across all of CSR’s systems,
products and operations. This has set up the business well
ahead of the 2022 National Construction Code.
CSR is also making good progress with its 2030 sustainability
targets. These cover a range of metrics to improve performance
and reduce environmental impact which follows significant
progress made over the decade to 2020 in improving our
scope 1 and 2 emissions which are now 34% lower per tonne
of saleable product.
At this early stage in the pathway to 2030, we have made
good progress with both energy use and emissions down 3%
in the first year to 30 June 2021. We are also working through
a detailed analysis of our current trajectory to the 2030 targets
which include a reduction in emissions by another 30% per tonne
of saleable product.
In addition, we are extending our decarbonisation pathway
with work on near-term emission reduction opportunities and
a longer-term review of technology trends, innovations and
pilots from partners for future integration into CSR’s operations.
Further details on our approach to sustainability over the past
year are included in the 2021 CSR Sustainability Report which
was published in December 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.”
5
Managing
Director’s
Review
JULIE COATES MANAGING DIRECTOR
AND CEO
Strong financial and operating
performance while continuing to
drive strategy.
All of CSR’s businesses have performed very well during the
year. The team have achieved strong operational performance
to deliver a great result – particularly with a strong pipeline
of detached housing projects expected to continue in the
year ahead.
We have also made good progress on our strategy while
minimising disruption to our current business and delivered
for our customers. This was achieved while managing our
businesses in a COVID safe environment with industry-wide
supply chain constraints.
Building Products earnings up 24%
Record Building Products earnings of $228 million were up
24% reflecting operational efficiency and cost discipline across
the network. We are also seeing the benefits of structural and
organisational changes completed in the previous year, all of
which has improved our EBIT margin to 14.1%.
All of CSR’s business units delivered revenue growth this year
with continued volume growth following strong detached
market activity.
Interior Systems which includes CSR’s largest business in
Gyprock, increased earnings as it delivered volume growth
while managing industry disruptions through the strength of
its leading market position. This year Gyprock celebrates 75
years of innovation and performance in this market and is
featured in the Australian Made and Owned Makers Series.
Masonry & Insulation which includes PGH Bricks, Bradford
Insulation and Monier Roofing also increased earnings reflecting
strong detached market demand, domestic manufacturing
capacity and increasing demand for energy efficient products.
Our earnings in New Zealand also grew following market share
gains and improved business performance following site
consolidation completed last year.
Construction Systems also performed well, particularly in
the second half of the year as more multi-residential projects
commenced. AFS, Cemintel and Hebel are all building
diversification and share growth across new markets with
further investment in our technical service offering.
Investing in our People and Safety
During the year we launched a three year Workplace Health,
Safety and Environment (WHSE) strategy with three core
principles: Hearts & Minds, Systems and Risk. These principles
are interconnected and build on our significant investment in
systems over the past few years.
Last year we moved to a centralised (WHSE) team to drive
a consistent approach across all of CSR supported by our
executive leadership team and operational leaders. We have
seen significant improvement this year with our total recordable
injury frequency rate improving by 27% from 13.4 to 9.8 in
March 2022 (per million work hours). Over 80% of our 143
sites achieved zero recordable injuries in the 12 months to
31 March 2022.
To support our people and keep our workplaces and teams
safe, we provided paid leave for COVID vaccinations for all
employees. During the year, we also launched a new mental
health and wellness program to support our employees and their
families. This was particularly important during the lockdowns
experienced across Australia and New Zealand in 2021.
Outlook for the year ending 31 March 2023 (YEM23)
The strong pipeline of detached housing projects is expected to
continue in the year ahead as completion times lengthen with
supply chain and trade capacity impacting the broader industry.
Activity in the apartment and non-residential markets has
improved after an extended slowdown in the last few years.
Building Products is well positioned to continue to grow, with
a clear strategy to drive improved performance from a strong
portfolio of brands and customer solutions. In YEM23, the
business expects to return to more normal levels of investment
to support the delivery of its strategy.
6
CSR LIMITED ANNUAL REPORT 2022 “ All of CSR’s businesses have performed very
well during the year. The organisational change
we have made streamlining the business over the
last 18 months along with the initiatives aligned
to our supply chain strategy have supported our
ability to deliver for CSR’s customers against a
challenging backdrop.
“We will continue to support our strategy this
year by increased investment at key sites to
further improve productivity, workplace safety,
sustainability and optimise operations.”
In Property, EBIT for YEM23 is expected to be approximately
$52 million which includes completion of the next tranche at
Horsley Park as well as completion of the sale of the Warner,
QLD site.
In Aluminium, CSR has a significant hedge position for YEM23.
At this early point in the year, an indicative earnings range
for YEM23 of $33 million to $49 million is based on current
pricing and cost scenarios. Significant aluminium price and
cost volatility (in particular carbon based inputs) will impact
the final result.
A further update on current trading for the CSR Group will
be provided at the company’s AGM on 30 June 2022.
Thank you to the team for their dedication to CSR this year
In closing, I want to echo John’s comments about the
dedication of the CSR team this year in what has been a
very busy and challenging year. Right across the business
our teams have focused on continuous improvement from
optimising manufacturing capability through to minimising
disruptions to our customers to deliver a great result.
We are continuing 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
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. CSR’s purpose informs our
decision making in our day-to-day activities, drives advocacy
for ourselves and our customers and provides our platform
for growth.
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.
Strong foundation
– 2,500+ experienced team
– Trusted brands with leading market positions
– 18,000+ customers across Australia &
New Zealand
Supply chain excellence
– 40+ manufacturing sites – operations excellence
and innovation
– Extensive network of 100+ CSR branded and
distribution outlets (metro and regional reach)
– Significant upside from supply chain integration
across CSR
Customer engagement
– Highly credentialed CSR team to unlock value and
deliver strategy
– CSR’s leading range of building products and systems
serve a broad range of construction segments
– Sales, marketing and technical expertise in building
technology, compliance, energy efficiency and
architectural design
Sustainable platform
– Strong balance sheet
– Strong 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
7
BUSINESS UNIT OVERVIEW | BUILDING PRODUCTS
Masonry
& Insulation
PGH Bricks Style Guide – find
your inspiration
The PGH Style Guide, launched in 2021, is the ultimate trends
forecast. It is designed to inspire, identify the best style, and
help achieve an exterior colour scheme without the stress. The
PGH guide has nine curated material colour palettes including
Dark & Stormy, Grey All The Way, Hamptons at Home, Luxury
Noir, Modern Industrial, Natural Habitat, Painted Whites and
Warm Earth. These styles cover key exterior material finishes
including roofing, bricks, fascia, gutter, render, cladding, timber
trims and even garage door colours.
pghbricks.com.au/inspiration/styles
Monier Lookbook – the latest trends
in home design & roofing
The Monier Lookbook showcases the latest trends in
Australian home design. The Lookbook contains eight
stunning Australian façade design trends, all the way from
the Hamptons to Designer and Scandi Style. Each look
contains key roof tiles and colour selections required to
create and achieve a great look, from the roof down.
monier.com.au
8
CSR LIMITED ANNUAL REPORT 2022 Bringing 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.
YEM22 Building Products revenue by business
$1.6bn
Masonry & Insulation
43% $688m
3%
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
support 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.
Leading brands
Manufacturing and supplying
insulation materials to the
Australian market for over
80 years, critical to a more
comfortable, sustainable
and energy-efficient building.
With over 100 years experience
Monier is the roofing expert
manufacturing quality roofing
products, underpinned by a
commitment to innovation.
PGH is a leading manufacturer
and innovator of clay bricks,
walling systems and façade
solutions.
CSR sponsor of The Block TV series
The 2021 season of The Block saw the teams use
CSR products to create their own unique styles and
home designs.
The Block showcased the versatility of PGH Bricks
including a variety of design styles from Classic to
Contemporary, Luxury to
Hamptons and Federation-
Style to Mid-Century Modern.
Bradford also was used
throughout every room in
The Block, as insulation
solutions are key to ensuring
comfort and sustainability.
9
BUSINESS UNIT OVERVIEW | BUILDING PRODUCTS
Interior
Systems
Gyprock – Australian Owned and
Made for 75 Years
This year, Gyprock celebrates 75 years of innovation
and performance as the country’s leading plasterboard
manufacturer. Throughout that time, our plasterboards,
cornices and compounds have been Australian Owned
and Made with Gyprock featuring in the Australian
Made’s Makers Series.
Gyprock is an Australian icon having led innovation in
plasterboard and design including the Gyprock Red Book.
The Gyprock Red Book is considered a construction industry
bible across all performance, technical guidance, compliance,
fire and acoustic ratings across CSR’s building systems.
10
Simple to Stunning with Gyprock Living
Gyprock Living highlights that there is no limit on what can
be done with walls and ceilings when you combine innovative
design and superb craftmanship. Gyprock fills the need for both
form and function with a variety of boards such as Superchek for
acoustic and impact requirements as well as cornice for ornate
feature work. These features are included in Gyprock Living’s
second edition of Simple to Stunning launched for 2022.
gyprockliving.com.au
CSR LIMITED ANNUAL REPORT 2022 Building on Gyprock’s leading brand
position with the Interior Systems
expertise of Martini, Himmel and
Potter to provide a complete residential
and commercial offering.
YEM22 Building Products revenue by business
$1.6bn
40%
Interior Systems
$645m
9%
Gyprock – Australia’s leader in plasterboard
For 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. 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
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.
Himmel’s acoustic functionality
with design freedom
Himmel’s Troldtekt design is featured at the upgrade
of the T2 terminal at Sydney’s International Airport.
The design specified significant acoustic requirements
for the busy airport combined with a finished product
to feature in the large open space.
The superior acoustic properties of Troldtekt help to absorb
reverberant airborne sound. The panels are mounted on
the curved ceiling within the terminal walkway to pick up
reflected sound and improve acoustics.
Troldtekt is sourced from wood and cement making
it a naturally strong product with an internationally
recognised standard.
himmel.com.au
Martini featured with CSR products at
the new Log Cabin
Martini acoustic insulation boards dECO Quiet Boards and Soffit XHD75
Black were featured as part of a suite of CSR products in the new Log
Cabin restaurant and function centre re-built on the Nepean River in
Penrith, NSW. This project featured the exterior timber look of Cemintel
Territory Woodlands as well as Gyprock’s new Rigitone ceiling tiles which
provide acoustic insulation that complements the interior architecture.
martini.com.au
“ Martini is the ‘go-to’ solution because it always looks great
and provides the sound insulation we need on our projects.”
Jonathan Parker, Team2 Architects
11
BUSINESS UNIT OVERVIEW | BUILDING PRODUCTS
Construction
Systems
AFS and Hebel – a powerful
combination
CSR worked with JMH Living Design to create a resort
style home, featured above, which included a substantial
basement. This project required consideration on how to
manage the site with limited access. AFS Rediwall enabled a
fast and simple construction process compared to blockwork,
while Hebel was selected to provide a high-quality rendered
finish with durability, thermal and acoustic properties.
afsformwork.com.au | hebel.com.au
“ By using Hebel and AFS on this award winning
project, the designer estimated saving 6 or 7 months
in terms of construction time.”
John Hatch, JMH Living Design
12
Cemintel brings natural and
contemporary look to Sydney
high school
Cemintel was a key design element in the new Integrated
Studies Centre at Macarthur Anglican School in southwest
Sydney. Cemintel Barestone and Surround were used on the
internal and external elements to create a cohesive design with
a modern look in touch with nature. With the school located in a
bushfire zone, Barestone was chosen for its unique combination
of being a beautiful, prefinished, non-combustible, low-maintenance
cladding with the added benefits of being manufactured in Sydney.
Other CSR products integrated into the build included Bradford
insulation and Gyprock.
cemintel.com.au
CSR LIMITED ANNUAL REPORT 2022 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.
YEM22 Building Products revenue by business
17%
$1.6bn
Construction Systems
$281m
2%
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, 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 30 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.
Leading brands
Australia’s only manufacturer
of Aerated Autoclaved Concrete
(AAC) products commonly used in
intertenancy, boundary wall and
cladding solutions.
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.
Hebel PowerpanelXL and Cemintel
Territory Performance
Hebel is known for its versatility, thermal benefits and ease
of installation. This made it the natural choice for this designer
home on the Gold Coast in Queensland. The black rendered
finish of Hebel with Cemintel’s timber Territory Woodlands
product delivered an engaging contrast which will also be
low maintenance for the homeowners. CSR brings integrated
solutions to its projects to provide a seamless look that
delivers across priorities of sustainability, acoustic, thermal
and fire resistance with faster installation and lower ongoing
maintenance.
hebel.com.au
13
BUSINESS UNIT OVERVIEW | PROPERTY
Property
Property delivering strong returns
Property has delivered over $180 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. Property also manage a significant
network of leased sites to support the operational businesses.
The Property team works with the CSR business units
to understand their requirements to grow and expand their
operations. This team has extensive experience in managing
large scale property projects including: site rezoning, remediation,
biodiversity, civil earthworks, road construction and infrastructure
and services. This team also leads CSR’s strategic property
decisions 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
14
Final sale secured at Horsley Park,
NSW industrial site
In July 2021, CSR secured the final sale of land at its
Horsley Park, NSW industrial site. CSR has now sold all
available sites at Horsley Park generating proceeds of $408
million. The total of completed and contracted transactions,
delivered over a six year period, is expected to generate EBIT
in excess of $230 million from the 52 hectare site.
Horsley Park is located in a very attractive area within the
western Sydney industrial market strategically positioned
relative to major transport, power and infrastructure links.
CSR has rehabilitated this site over a number of years to
prepare the land for industrial use with the final transactions
to be completed over the next three years.
CSR LIMITED ANNUAL REPORT 2022 BUSINESS UNIT OVERVIEW | ALUMINIUM
Aluminium
Tomago signs agreement with Capral
Aluminium to reuse scrap aluminium
In March 2022, Tomago signed an agreement with Capral
Aluminium that will see approximately 550 tonnes annually
of manufacturing production scrap returned for remelting
and reuse.
Capral manufactures semi-fabricated aluminium products
used in residential, commercial and industrial applications.
This industry leading arrangement is the first of its kind within
Australia, paving the way for the production of low carbon
aluminium for Australian manufacturers.
CSR is a joint venture participant to 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
GAF aluminium hedge position
In order to reduce volatility and lock-in profitable returns, GAF
has a significant hedge book in place over the next few years.
YEM23
YEM24
YEM25
YEM26
YEM27
A$3,061
A$3,032
A$3,149
A$3,365
A$3,938
95%
79%
70%
57%
4%
AS OF 29
APRIL 2022
Average price
A$ per tonne
(excludes
premiums)
% of net
aluminium
exposure
hedged
15
SUSTAINABILITY | AT A GLANCE
Sustainabililty
at a glance
The work underway on our 2030 targets is part of
developing our longer term strategy beyond 2030. This
work includes detailed analysis of the current trajectory
to the 2030 targets and extending this to CSR’s overall
decarbonisation approach. This includes research of
technology trends, innovations and pilots from partners
and pathways for integration into CSR’s operations.
We also continue to evolve our overarching sustainability
strategy and framework with reference to best practice,
industry and regulatory changes and ensuring we maintain
a strong linkage to CSR’s broader corporate purpose and
strategy. This work will be progressed during the year with
further details to be included in the 2022 CSR Sustainability
Report to be published in December 2022.
“ CSR has set challenging targets to reduce emissions
to 2030 and is extending its ambition to investigate
how we may set a decarbonisation pathway”
Sustainability is a core foundation of
our strategy both in how we operate
and how we will grow
We continue to improve the sustainability of our operations
across CSR.
During the year, we launched many important initiatives
across CSR and further integrated sustainability into
how we operate and how we will grow.
Further details on CSR’s approach to sustainability over the
past year are included in the 2021 CSR Sustainability Report
which was published in December 2021.
Addressing the risks and opportunities
of climate change
Identifying, managing and reporting on climate change is a
key part of CSR’s risk management and governance framework.
CSR was one of the first manufacturing companies in Australia
to set environmental targets back in 2010.
We have now achieved a significant reduction in our use of
energy, water and waste production with our Scope 1 and 2
emissions 34% lower per tonne of saleable product since 2010.
For 2030, we have set challenging targets to transform our
business and further reduce emissions by another 30%
per tonne of saleable product.
16
CSR LIMITED ANNUAL REPORT 2022 CSR’s sustainability focus areas
People and safety
Inspiring our people
by creating a safe and
diverse place to work
and grow.
81%
Safety performance
improving: zero
recordable injuries at
81% of CSR sites
24/7
Wellbeing@CSR
program providing
24/7 support for
employees and their
families
Supporting diversity
and inclusion: updated
parental leave options
and flexible working
arrangements
Climate change
Managing the risks
and opportunities of
climate change.
34%
reduction in CSR’s
Scope 1 and 2
emissions since 2010
(per tonne of saleable
product)
30%
Additional 30%
emissions reduction
target to 2030
(per tonne of saleable
product)
CSR products
delivering energy
efficient design
including thermal and
acoustic insulation,
ventilation, wall wraps
and roof sarking
Environment
Reducing the impact
of our operations on
the environment.
2030
Targets to 2030 to
reduce emissions,
energy, water and
waste underway
9yrs
of Business Clean-
up Day to look after
our sites and remove
unwanted waste
Solar PV systems
installed across 14
sites including $1m
in projects completed
in the last six months
Community
Engaging and
supporting our
local communities.
$16k
donated by CSR
and its employees
to support 2022 flood
rebuild programs
$73k
donated by CSR
and its employees
in YEM22 to three
charities: Youth Off The
Streets, Salvation Army
and Assistance Dogs
Continued to support
charity projects with
CSR product donations
Student mentoring
program has facilitated
over 6,000 volunteer
hours by CSR employees
over the past 10 years
Supply chain and
modern slavery
Creating an efficient
and sustainable supply
chain to enhance our
customers’ experience.
1,200
tonnes of timber saved
going to landfill with our
timber pallet recovery
program underway
5%
2030 target to
spend 5% of indirect
procurement with
social enterprises
including disability and
indigenous suppliers
Integrating logistics
capability across
all of our brands
helping to reduce the
environmental impact
of our networks
17
SUSTAINABILITY | WORKPLACE HEALTH AND SAFETY
People and safety
Picture: Jay Town / Newspix
Workplace health and safety is our
first and overriding priority for all
of our people
During the year, CSR continued to work though the three
year Workplace Health, Safety and Environment (WHSE)
strategy established in 2020 with three core principles:
Hearts & Minds, Systems and Risk.
These three principles are interconnected and depend on
each other for success. We are addressing these key areas
concurrently and this builds on our significant investment
in systems over the past few years to improve reporting
and analysis.
The second year of our plan continues to focus on ensuring that
WHSE remains a top priority for CSR. We have made significant
changes to the way that Senior Leadership engages with our
people on WHSE and in particular their direct involvement with
monitoring and discussing safety performance and high-risk
WHSE events. In addition, we have prioritised embedding our
Risk Reduction Plans across CSR and all of our sites. Each
individual site is required to consider the CSR top risks and
propose corrective actions that can be undertaken to reduce
the potential risk to people or the environment that is within the
site’s control. The execution of these plans is critical to eliminate
or reduce high potential severity events within our business.
18
CSR has modified its systems and processes to reflect the
focus on risk reduction by introducing an additional metric
of Revised Risk Rating for all events which must be completed
by a WHSE professional. This additional metric is intended to
ensure that risks are rated with a high degree of consistency
and accuracy as well as provide a coaching opportunity to
improve our operational understanding of risk assessment.
We have also implemented assurance activities targeting the
quality and execution of our Risk Reduction Plans to ensure
we are rigorously building this process into our ‘business as
usual’ activities.
Safety performance in YEM22
While progressing our risk reduction plans and providing clarity
on our priorities, CSR has achieved a step change in our safety
performance as measured by total recordable injury frequency
rate (TRIFR) which improved from 13.4 in April 2021 to 9.8 in
March 2022 (per million work hours).
We are very proud of the 116 sites who achieved zero recordable
injuries in the 12 months to 31 March 2022.
116 sites
Zero recordable injuries
at 116 sites at 31 March 2022
CSR LIMITED ANNUAL REPORT 2022 Key highlights
81%
81% (116 sites) achieved
zero recordable injuries
in the 12 months to
31 March 2022
27%
Significant improvement
in safety in YEM22 with
the total recordable injury
frequency rate per million
work hours improving by
27% to 9.8
Total recordable injury frequency rate per million
TOTAL RECORDABLE INJURY FREQUENCY RATE
work hours
(Per million work hours)
Safety performance (12 months to 31 March 2022)
14
12
10
8
6
4
2
0
13.4
11.5
9.8
13
14
116
Zero Recordable injuries at
116 sites
1 Recordable injury
at 14 sites
>1 Recordable injury at
13 sites
YEM20
YEM21
YEM22
Note: YEM20 data restated from previous year.
Workplace health and safety in COVID
Throughout this year, we have operated within the COVID
environment with the health and safety of our teams remaining
our first priority. Following on from extensive planning completed
in 2020, we continued to execute a number of business
contingency plans, personal hygiene and social distancing
measures at all sites in line with government guidelines.
During YEM22, we continued to evolve our COVID-safe plans to
manage the risk of transmission in the workplace and operate in
an environment where COVID was widespread in the community.
Paid leave for COVID vaccinations for all employees
To support our employees and to keep our workplaces and
teams safe, CSR encouraged all employees to get vaccinated
and ensured employees could attend vaccination appointments
during work hours without loss of pay.
Mental Health and Wellness
During YEM22, CSR launched a new Wellbeing@CSR program
to help support our employees and their families. This was
particularly important during the lockdowns experienced across
Australia and New Zealand during the year.
Wellbeing@CSR provides a number of tools and resources and
provides 24/7 confidential, free assistance for any personal or
work related issues that may impact our employees and their
family’s health and wellbeing.
Mental health
awareness with
R U OK? Day
CSR continued its
support for mental health
awareness in 2021 which
included company wide
activities for R U OK? Day
in September.
R U OK? is a harm prevention
charity that encourages
people to stay connected and
have conversations that can
help others through difficult
times.
In September 2021, many of CSR’s employees were in
lockdown so R U OK? Day provided a key opportunity
to reach out to our teams. This included live town hall
events which reached over 550 people and included
guest speakers and Q&A sessions with television and
radio host Gus Worland and psychologist Erin Hegerty.
Gus Worland (pictured) led a live Q&A session with
CSR teams focused on mental health.
19
SUSTAINABILITY | CLIMATE CHANGE
Climate
change
CSR delivering energy efficient design to reduce emissions in the built environment
We are continually reinvesting in our business to meet new
opportunities and challenges in energy efficiency while
leading in design, colour and product range.
CSR’s unique product suite in energy efficient design will be a
significant opportunity as we transition to a low carbon economy.
CSR’s full suite of energy efficient systems alongside internal
linings and external cladding products can make a significant
impact on the sustainability of homes and buildings. We are
investing in innovative digital tools and technical resources to
make it easier for our customers to choose the best and most
sustainable solution for their requirements whilst being fully
compliant with changing construction codes to deliver better
energy efficiency.
Sarking and wall wraps
Help contribute with
reflective insulation
benefits, reducing air
leakage and adding a
second skin of protection
to homes.
The increase in time working from home has shown that many
people are finding their homes less comfortable and more
expensive to run. A significant amount of household energy is
used for heating and cooling an average Australian home to
achieve thermal comfort.
CSR brings a whole-of-home approach that will provide a more
comfortable home and save energy from thermal and acoustic
insulation to wall wraps and roof sarking, fire protection
insulation and more. All of which will make a substantial
difference to the comfort and energy efficiency of homes.
Ventilation
Ventilation complements
insulation to provide a
natural and temperate home.
20
Insulation
Insulation for roofs, ceilings, walls and floors
helps to reduce heat transfer with acoustic
insulation reducing sound transfer within
the home.
CSR LIMITED ANNUAL REPORT 2022 Managing the risks and opportunities of climate change
Over the last ten years, CSR has progressed its approach to climate risk and opportunities covering many of the key
recommendations of the Task Force on Climate Related Financial Disclosures (TCFD) framework to assess and disclose
climate-related risks and opportunities.
We have developed a staged approach to assess these risks and opportunities and integrate them into our risk assessment
approach which covers key areas of Strategy, Governance, Risk Management and Metrics and Targets.
CSR’s risk management framework is intended to provide the basis for a systematic approach to the identification and management
of risks. CSR’s material economic, environmental and social sustainability risks are included in the Corporate Governance and Risk
Statement commencing on page 42.
CSR’s manufacturing operations use significant amounts of energy including electricity and gas. These energy costs are increasing
which in turn impacts our cost competitiveness compared to other manufacturers. Where possible, CSR enters into long-term
contracts to provide greater security of energy supply for its factories. CSR’s Finance Committee oversees risks related to electricity
and gas pricing and management.
The transition to a low carbon economy and mitigating the potential impacts of climate change, as well as government regulations
and planning, may affect the availability and nature of energy supply as well as how CSR manages land assets and business
processes. These risks are managed across a number of initiatives:
Internal risk processes were updated
in 2017 to capture specific questions
on climate risks. Physical climate
risk (weather related) assessments
are progressively updated for CSR’s
manufacturing sites.
In 2020, CSR set 10 year targets to
2030, which cover key areas of energy
and emissions reduction, procurement,
packaging, minimising water use and
waste and preserving biodiversity.
Transition risk climate change
scenario analysis has been completed
for CSR’s three largest businesses:
Gyprock plasterboard, Bradford
insulation and PGH bricks.
CSR developed a staged approach to
assess and disclose climate-related
risks and opportunities using the TCFD
framework in 2018.
In the last six months, CSR has
invested over $1 million in Solar PV
capacity at an additional 3 sites.
This gives CSR a total of 14 sites
with a solar PV at a total capacity of
2,600kWs.
Monthly review of progress to 2030
targets and key projects is led by
the Sustainability Steering Committee
which includes the full executive team.
This team is also developing detailed
analysis of the current trajectory to the
2030 targets and extending this to CSR’s
overall decarbonisation pathway.
Progressing CSR’s decarbonisation pathway
In March 2022, CSR launched a decarbonisation project with a climate and energy risk specialist. This project is targeting
near-term emission reduction opportunities over the next five years as well as a longer-term review of technology trends,
innovations and pilots from partners in Australia and internationally.
A key part of CSR’s decarbonisation strategy is developing a roadmap for the potential integration of hydrogen, biogas and
other primary fuels into CSR’s manufacturing processes. This review will be taking a longer-term view to identify the commercial
availability and technical feasibility of future fuels including storage, transportation, supply chain and process integration. This work
is critical to CSR understanding what changes we may need to make to the way we work in the longer term in order to advance our
decarbonisation ambition.
21
SUSTAINABILITY | ENVIRONMENT
Environment
Reducing the impact of our operations
on the environment
CSR is progressing with its sustainability targets to 2030
which cover a range of metrics to improve performance and
reduce environmental impact.
These targets are aligned to the UN Sustainable Development
Goals (SDG) that are most relevant to CSR and the areas where
we can make the greatest impact. All our businesses have three-
year action plans underway to achieve or exceed their 2030
targets. These plans include yearly reduction or improvement
targets as well as a list of projects to assist in achieving those
targets. Progress and projects are regularly reviewed by the
Sustainability Steering Committee, with progress reported to
the Board’s Safety & Sustainability Committee.
At this early stage in the pathway to 2030, CSR has made good
progress across a number of major projects to help meet the
targets. Both energy and emissions are down by 3% over the
period to 30 June 2021. This is due to numerous operational
efficiency projects, the benefits of investment in renewable
energy systems at some sites, in addition to production changes
due to COVID. Potable water use is also down slightly over the
past 12 months with a number of new water saving projects
under review. Further detail across all of the targets will be
included in the 2022 CSR Sustainability Report to be published
in December 2022.
Cemintel reducing energy use
Compressed air systems use a lot of energy.
In Australia, this accounts for nearly 10% of industrial
electricity use. Significant amounts of energy are wasted
due to issues like oversized compressors, outdated
controls and air leaks.
Like many industrial sites, the Cemintel Wetherill Park,
NSW site relies on compressed air to drive its processes.
With the support of the NSW Government Energy Saver
scheme, CSR completed a major review and upgrade
of their compressed air system. The review identified
$83,000 in energy savings through leak repairs and
improvements to controls. CSR has made many of
these changes and repairs, and removed one
compressor completely. The project has provided a
reduction in energy use on site and is an important
step in reaching Cemintel’s energy and emission
reduction targets.
22
CSR LIMITED ANNUAL REPORT 2022 Reducing greenhouse gas emissions
CSR seeks to proactively reduce greenhouse gas emissions
including improving energy efficiency across its network of
manufacturing facilities and the roll-out of renewable energy
solutions to its industrial sites.
All metrics for energy and emissions have detailed project
plans and are included in integrated performance dashboards.
Progress to the targets is reviewed each month by the
Sustainability Steering Committee which includes the full
executive leadership team. This committee is chaired by CSR’s
managing director with the scope of work including developing
priorities and targets to achieve CSR’s sustainability ambitions
and developing a company-wide sustainability roadmap.
GHG EMISSIONS SINCE 2010
GHG emissions (scope 1 and 2) since 2010 per kg/tonne of
(kg/tonne of saleable product)
saleable product
350
300
250
200
150
100
50
0
.
8
5
2
3
.
0
1
0
3
.
4
5
1
3
.
3
3
1
3
.
3
8
0
3
.
3
5
8
2
.
9
1
6
2
.
4
1
6
2
.
2
8
5
2
.
5
6
4
2
.
6
2
2
2
.
1
6
1
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
34%
decrease in CO2e
emissions (per tonne
of saleable product)
since 2010
Note: 2020 data excludes Viridian Glass operations sold in January 2019.
SDG Goals
GOAL 7
Affordable
and Clean
Energy
GOAL 11
Sustainable
Cities and
Communities
GOAL 12
Responsible
Consumption
and Production
GOAL 13
Climate Action
GOAL 15
Life on Land
2030 Targets
Initiatives to help reach targets
– Establish and implement a CSR
connected power network.
– 50% of electricity generated by
renewable energy.
– 20% energy reduction (GJ) per
tonne of saleable product.
– 5% of indirect spend by Procurement
to be spent with social enterprises.
– Since 2015, Solar PV systems installed across 14 sites with
total capacity of 2,600 kWs including $1million in Solar PV
projects completed in the last six months.
– Examples include: Replacing wastewater pumps with high
efficiency pumps at Bradford Ingleburn, NSW and installation
of a more efficient boiler at Cemintel Wetherill Park, NSW.
– Develop tender/contract award procedures and evaluation.
– Training and reporting to embed target across CSR.
– Engaged with Social Traders and Givvable to identify and
expand procurement with social enterprises.
– CSR packaging to be closed loop
(either 100% reusable; recyclable;
compostable).
– 75% reduction in solid waste to landfill.
– Increase data analysis across all packaging to capture
key opportunities.
– Launched expanded timber pallet recycling program.
– Waste, water and packaging reduction projects under review
as part of the roadmap.
– 30% reduction of potable water
consumed (ltr) per tonne of saleable
product.
– An example is the redesign of water spray systems to reduce
potable water use at Bradford ventilation at Sevens Hills,
NSW.
– 30% reduction of greenhouse gas
emissions (CO2e) kg per tonne of
saleable product.
– Viable projects rolled into the CSR wide capital allocation
process.
– All projects are assessed against the CSR targets to
understand pathway to achieving the 2030 ambition.
– Enhance biodiversity outcomes on CSR
– Key biodiversity outcomes underway at property sites
sites and developments.
including Warner, QLD and Horsley Park, NSW.
23
SUSTAINABILITY | COMMUNITY
Community
Engaging and supporting our
local communities
A key part of our sustainability strategy is based on
proactively supporting our social license to work
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:
– Building Product donations: CSR supports a number of
charities to build new facilities with product donations
as well as technical support and installation expertise.
– Site level Community Engagement: Engagement with the
local communities and neighbours surrounding our sites.
– Community Support Program: Launched in 2003, CSR
matches employee contributions dollar for dollar to three
charitable organisations. Over $3.5 million has been donated
by CSR and its employees over the last 19 years. CSR
also provides volunteer support for various activities and
campaigns during the year.
– Student Mentor Program: CSR commenced working with
the Australian Business and Community Network (ABCN)
in 2011 to provide mentoring and coaching programs in
schools in high need areas.
24
Clean-up Business Day 2022
As part of CSR’s commitment as a signatory to the
Australian Packaging Covenant (APC), various CSR sites
across Australia participate in Business Clean-Up Day
each year. The clean up in March 2022 was the ninth
year CSR has participated with volunteers cleaning our
sites and surrounding communities and is a great way
to promote a clean and healthy work environment.
CSR LIMITED ANNUAL REPORT 2022 SUSTAINABILITY | SUPPLY CHAIN AND MODERN SLAVERY
Supply chain
and modern
slavery
Modern Slavery
CSR’s Modern Slavery Statement for the year ended 31 March
2021 was published in September 2021. CSR lodged its first
Modern Slavery Statement in September 2020. Since that
time, CSR has progressed a number of initiatives to assess
and address modern slavery risks including:
– Engaged Fair Supply to analyse CSR’s supply chains beyond
Tier 1 suppliers who provided a modern slavery risk profile for
suppliers up to Tier 10 for each of CSR’s suppliers. This was
mapped to country and industry ratings.
– Conducted an external review of vendors to provide a detailed
analysis of crimes, infringements and sanctions across 95%
of CSR’s vendors (based on spend).
– Implementation of comprehensive vendor on-boarding
process.
– Inclusion of key statistics regarding the number of screened
vendors, number of incidents reviewed, number of staff
trained and suppliers risk assessed during the year.
Creating an efficient and sustainable
supply chain to enhance our
customers’ experience
CSR has a significant investment in warehousing, transport
and distribution.
We have developed a supply chain model that integrates
logistics activities across all of our brands. There are tangible
benefits to customers, while increasing productivity of our
distribution channels with better planning and collaboration
across our sites and reduced environmental impacts from our
transport networks.
Supporting sustainable cities and communities
We have developed a target to 2030 to apply 5% of our indirect
procurement spend on social enterprises to align with this goal.
CSR has now launched a program to track our social spending
with existing suppliers. By working with our supplier network, we
have identified key areas of social spending including:
– Disability enterprises: mostly packaging services and
packaging materials (e.g. pallets)
– Indigenous owned businesses: largest spend with bulk
materials haulage, but also other varied service providers
CSR has engaged with adviser Social Traders who provide
guidance on increasing engagement with social enterprises,
including developing tender/contract award procedures,
evaluation metrics, internal training and reporting outcomes
of social enterprises. Social Traders also certify social
enterprises to ensure compliance.
25
FINANCIAL OVERVIEW
Financial Overview
Net profit after tax (before significant items) of $193 million, up 20% which reflects strong operational
performance and continued cost management
FIVE YEAR PERFORMANCE SUMMARY 1
Year ended 31 March ($ 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
Net profit after tax (before significant items)
Statutory net profit after tax (after discontinued
operations)
Financial position
Total equity
Total assets
Net cash / (debt)
Key data per share
2022
2021
2020
2019
2018
2,311.6
2,122.4
2,212.5
2,322.8
2,237.7
228.2
184.3
46.9
54.2
39.7
23.4
314.8
261.9
(23.4)
(24.0)
291.4
237.9
192.6
160.4
270.6
146.1
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
949.4
1,157.8
2,447.0
2,176.8
177.7
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)
Earnings before significant items (cents)
Earnings after significant items and discontinued
operations (cents)
Dividend ordinary (cents)
Dividend special (cents)
39.7
33.1
55.8
30.1
31.5
–
23.0
13.5
Payout ratio on ordinary dividends (%)
79.4
69.5
Key measures
Profit margin (EBIT/trading revenue) (%)
Return on funds employed (ROFE) (%)3
Employees (number of people employed)
12.6
11.2
27.3
21.1
2,573
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. A reconciliation of funds employed to net assets is contained in note 2 to the financial statements.
26 CSR LIMITED ANNUAL REPORT 2022
OPERATING AND FINANCIAL REVIEW
Operating and Financial
Review
Group EBIT of $291.4 million, up 22% with improved earnings from Building Products and Aluminium
Trading revenue of $2.3 billion for the year ended 31 March 2022 (YEM22), up 9% on the prior year.
Earnings before interest and tax (EBIT before significant items) of $291.4 million, up 22% included the following results:
Building Products - Record EBIT of $228.2 million, up 24%, reflecting strong detached housing activity driving higher volumes, improved
factory performance and operational execution and continued cost discipline across all businesses. Return on funds employed increased
to 27.3% from 20.6%.
Property - EBIT of $46.9 million, down from $54.2 million, including the next stage at Horsley Park and the sale of 4.6 hectares of land at
Badgerys Creek.
Aluminium - EBIT of $39.7 million, up from $23.4 million, reflecting higher aluminium pricing partly offset by higher production costs.
Statutory net profit after tax of $270.6 million, up from $146.1 million which included a significant item relating to the recognition of $86.3
million in carry forward capital tax losses.
Earnings per share (before significant items) of 39.7 cents, up 20%.
Dividends - Final dividend of 18.0 cents per share (fully franked) declared, up from the previous final dividend of 14.5 cents per share (fully
franked) and the previous final special dividend of 9.5 cents per share (fully franked).
A$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
2022
2,311.6
2021
2,122.4
228.2
46.9
39.7
(23.4)
291.4
(9.5)
(81.2)
(8.1)
192.6
78.0
270.6
184.3
54.2
23.4
(24.0)
237.9
(6.1)
(65.7)
(5.7)
160.4
(14.3)
146.1
change
9%
24%
(13%)
70%
3%
22%
20%
85%
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 2022 (YEM22). All comparisons are to the year ended 31 March 2021
(YEM21) unless otherwise stated.
Net profit after tax (before significant items) of $192.6 million for the year ended 31 March 2022, up 20% following an increase in earnings from
Building Products and Aluminium.
Statutory net profit after tax of $270.6 million includes significant items of $78.0 million (after tax). This includes the recognition of deferred tax
assets of $86.3 million in relation to carry forward capital tax losses, which arose primarily from the sale of the Viridian Glass business in 2019.
This follows an assessment of the tax treatment of property sales which are expected to generate capital gains that will utilise these carry
forward tax losses.
Tax expense of $81.2 million (before significant items) was up from $65.7 million due to higher pre-tax profits. CSR’s effective tax rate for the
year (before significant items) was 29% in line with the prior year.
Cash flow from operating activities of $215.3 million was down from $253.0 million, with working capital initiatives realised in the prior year.
Capital expenditure (excluding Property and acquisitions) was $40.0 million during the year. Of this total, $27.7 million was for stay-in-business
projects and $12.3 million was development related capital expenditure. Capital expenditure (excluding Property and acquisitions) was down
from $49.0 million in YEM21, which included the acquisition of the Bradford Brendale, QLD site for $16 million. Property invested $59.7 million
during the year as part of rehabilitation of key sites.
Net cash of $177.7 million decreased from the net cash position of $250.8 million as of 31 March 2021 following payment of prior year income
tax and dividends during the year.
Product liability – As at 31 March 2022, the asbestos provision fell to $213.3 million from $231.0 million as at 31 March 2021. This provision
included a prudential margin of $38.5 million. CSR paid asbestos related claims of $22.9 million (including legal costs) compared to $20.6
million in the prior year.
27
OPERATING AND FINANCIAL REVIEW
BUILDING PRODUCTS PERFORMANCE
Construction market activity by segment
Australia Residential (12 months – 000s)
Detached1
Medium density1
High density1
Total Residential Commencements
Non-residential (A$B)2
Alterations and additions (A$B)2
NZ consents (12 months - 000s)3
2022
2021
change
149.5
36.4
43.3
229.3
48.0
11.1
47.3
104.1
33.0
37.2
174.4
47.7
10.1
37.7
44%
10%
16%
31%
1%
10%
25%
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 two quarter lag – 12 months to September).
The majority of CSR’s Building Products are utilised towards the end of the construction process which historically results in product sales
occurring on average two quarters after the start of a residential housing commencement. However, given the combination of very strong
demand and capacity levels within the building construction sector being adversely impacted, detached house build times have increased by
around 50% to over 12 months according to HIA research. As a result, CSR’s revenues for YEM22 are more closely aligned to residential
completions (up 6% for detached housing; down 11% for multi-residential for the year to December 2021).
Australian residential housing commencements on a two quarter lag basis of 229,300 were up 31% compared to the prior year. Detached
housing on the east coast of Australia increased by 37%, while Western Australia starts have doubled. The medium and high density market also
grew during the period, up 10% and 16% respectively with medium density continuing to attract owner-occupiers and high density activity
recovering following renewed investor activity in anticipation of recovering inwards migration.
The non-residential market was up 1% with 4% growth in the social sector offset by a modestly weaker commercial sector. The alterations and
additions market has performed strongly as larger renovation projects grew in the year. Trade retail was flat (in the year to February 2022) given
the very strong activity in the early months of COVID lockdowns in mid 2020 but has since resumed a strong growth trend. The New Zealand
market remained very strong as the sector emerged from COVID lockdowns. Like Australia, realisation of demand has been impacted by
significant capacity constraints.
Strong detached activity, cost control and operational efficiency lift earnings by 24%
A$m unless stated1
Revenue
EBITDA
EBIT
Funds employed2
EBIT/revenue
Return on funds employed3
2022
1,614.1
302.4
228.2
830.0
14.1%
27.3%
2021
1,534.5
265.7
184.3
843.8
12.0%
20.6%
change
5%
14%
24%
(2%)
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 $1,614.1 million, up 5% with continued volume growth following strong detached market activity.
Building Products earnings of $228.2 million were up 24% reflecting strong detached activity driving higher volumes, improving factory
performance and continued cost discipline across all businesses.
EBIT margin of 14.1% was up from 12.0% with benefits from operational efficiency and cost discipline across the network and organisational
changes completed in the previous year. Return on funds employed of 27.3%, increased from 20.6%.
28 CSR LIMITED ANNUAL REPORT 2022
OPERATING AND FINANCIAL REVIEW
Building Products Business Performance
MASONRY & INSULATION
INTERIOR SYSTEMS
CONSTRUCTION SYSTEMS
43%
40%
17%
YEM22 Performance
YEM22 revenue $688m
(3% above YEM21)
YEM22 Performance
YEM22 revenue $645m
(9% above YEM21)
YEM22 Performance
YEM22 revenue $281m
(2% above YEM21)
Volume growth reflects strong detached
market demand, domestic manufacturing
capacity and growth in energy efficient
products
Improved factory performance from
process improvements and capacity
management
Continued revenue and volume growth in
Gyprock reflected strong end markets,
strength of market position and managing
industry disruptions well
Leveraging strength of the Gyprock brand
as it celebrates 75 years of innovation
and performance in Australia
Margin improvement with disciplined
pricing, cost control and manufacturing
productivity improvements
Higher value product mix and improved
pricing discipline contributed to margin
improvement
Earnings improved in PGH and Bradford
Continuous operational improvement to
reflecting strategy of optimising
operations and factory performance to
deliver for customers
YEM23 Priorities
Manufacturing investment to improve
productivity, sustainability and efficiency
at existing sites
‒ Bradford Brendale, QLD automating
processes and improving productivity
and safety, increasing capacity by 10%
and reducing environmental impact
(80% reduction in potable water use)
‒ PGH Oxley, QLD investment to improve
production speed and efficiency, will
add 10 million units of bricks
Optimising product ranges to drive
incremental improvement in efficiency,
capacity and customer service
Integrated planning work continuing to
provide improved visibility and order
management, enhanced pricing discipline
and better customer experience
maintain low cost position
Higher EBIT reflects improved factory
performance, increased volumes and cost
discipline. Improvement in CSR’s
commercial interiors EBIT despite impact
of COVID lockdowns
YEM23 Priorities
Incremental manufacturing investment at
Gyprock Wetherill Park, NSW to improve
productivity and lower energy
consumption
Expanded presence in non-residential
sector with dedicated technical and
architectural teams
Consolidating leadership of Gyprock
through ongoing range optimisation and
improved customer experience
‒ New premium product range, ongoing
innovation and product development
with strategic management of product
lines
‒ Gyprock Trade Network ongoing
improvement of in-store experience
driving strong connection to customers
Volumes higher in Cemintel and Hebel
reflecting category growth across the year,
especially in the second half
Cemintel established stronger position in
cladding market with increased shifts and
capacity to meet market demand
AFS performance improving with
diversification strategy and customer
service improvements mitigating impact of
subdued activity in apartment market
Margin improvement largely driven by
improved manufacturing performance
Higher EBIT in Hebel and Cemintel reflects
share growth coupled with disciplined cost
management
YEM23 Priorities
Strategy to diversify sector and customer
base gaining traction (medium density
housing in VIC, civil applications in QLD)
‒ Improvements in dynamic planning
have improved lead times, driving
growth in repeat customers
‒ Energy reduction with increased waste
recycling and solar panels at Hebel
factory to reduce energy consumption
by 20%
Build share across all markets, particularly
amongst architects, key contractors and
developers
Strengthen existing Hebel and AFS
operations, optimise Cemintel operational
capability and expand capacity from local
and import supply chains
Ongoing execution of supply chain
Progressive technology adoption at new
initiatives to deliver further benefits in
service and efficiency
Hebel plant to deliver product
improvements and innovation (e.g.
improved paintability)
Building Products Outlook
The strong pipeline of detached housing projects is expected to continue in the year ahead as completion times lengthen with supply chain and
trade capacity impacting the broader industry.
Activity in the apartment and non-residential markets has improved after an extended slowdown in the last few years.
Building Products is well positioned to continue to grow, with a clear strategy to drive improved performance from a strong portfolio of brands
and customer solutions. In YEM23, the business expects to return to more normal levels of investment to support the delivery of its strategy.
29
OPERATING AND FINANCIAL REVIEW
PROPERTY
Good progress on key development projects
A$m unless stated1
EBIT
Funds employed2
Return on funds employed3
2022
46.9
166.1
30.7%
2021
54.2
139.5
35.3%
change
(13%)
19%
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 $46.9 million compared to
$54.2 million in the previous year. The result includes the completion of a number of transactions during the year including Stage 2.2a at
Horsley Park, NSW and the sale of 4.6 hectares of land at the site at Badgerys Creek, NSW for $20.7 million which was announced in February
2022.
Property Outlook
CSR has now sold all available sites at Horsley Park generating proceeds of $408 million. The total of completed and contracted transactions,
delivered over a six year period, is expected to generate EBIT in excess of $230 million from the 52 hectare site.
Completed and contracted transactions at Horsley Park
Tranche
Stage 1
Stage 2.1
Stage 2.2a
Stage 2.2b
Stage 3a
Stage 3b/c
Total
Size
10.1ha
11.7ha
4ha
5ha
8.6ha
12.4ha
52ha
Proceeds
$58m
$80m
$28m
$34m
$84m
$124m
$408m
Project
EBIT
$32m
$52m
$18m
$22m
$48m
$62m
$234m
Completion
Completed
Completed
Completed
YEM23
YEM24
YEM25
EBIT for YEM23 is expected to be approximately $52 million which includes completion of the next tranche at Horsley Park as well as completion
of the sale of the Warner, QLD site.
30 CSR LIMITED ANNUAL REPORT 2022
OPERATING AND FINANCIAL REVIEW
ALUMINIUM
EBIT higher with increased A$ aluminium price
A$m unless stated1
Sales (tonnes)
A$ realised price2
Revenue
EBITDA
EBIT
Funds employed3
EBIT/revenue
Return on funds employed4
2022
211,374
2021
213,722
3,300
697.5
51.5
39.7
121.3
5.7%
30.9%
2,751
587.9
35.4
23.4
136.0
4.0%
16.9%
change
(1%)
20%
19%
45%
70%
(11%)
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$3,300 was up 20% following the sharp increase in the
A$ aluminium price.
Gove Aluminium Finance (GAF – 70% CSR) sales volumes of 211,374 tonnes were down 1% from the prior year due to the timing of
shipments. Trading revenue of $697.5 million was up 19% due to higher LME aluminium prices.
The Australian dollar averaged 74 US cents compared to 72 US cents in the prior year, while the average MJP ingot premium for the year was
US$179 per tonne, compared to US$94 per tonne in the prior year (Platts Metals Week – Main Japanese Port ingot premium).
EBIT of $39.7 million was up from $23.4 million due to higher A$ aluminium prices. This was partly offset by higher alumina costs due to the
linkage to the higher LME aluminium price, along with an increase in other input costs including coke. The overall cost of electricity also
increased due to a higher coal cost pass through.
GAF has secured contracts for 100% of alumina requirements through to the end of calendar year 2024, all of which are effectively linked to the
US$ LME aluminium price.
GAF Aluminium Hedge Book position - 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 2027.
As of 29 April 2022
YEM23
YEM24
YEM25
YEM26
YEM27
Average price A$ per tonne (excludes premiums)
A$3,061
A$3,032
A$3,149
A$3,365
A$3,938
% of net aluminium exposure hedged
95%
79%
70%
57%
4%
Aluminium Outlook
YEM23 EBIT indicative scenario
CSR has a significant hedge position for YEM23. At this early point in the year, an indicative earnings range for YEM23 of $33 million to $49
million is based on current pricing and cost scenarios. Significant aluminium price and cost volatility (in particular carbon based inputs) will
impact the final result.
As of 29 April 2022
YEM23 EBIT A$m
Aluminium average spot price A$/t for YEM23
A$2,960
A$33m
A$3,570
A$40m
A$4,700
A$49m
31
CORPORATE GOVERNANCE STATEMENT AND RISK
Corporate Governance
Statement
Corporate Governance is the framework of rules, relationships,
systems and processes by which CSR is directed and managed. It
underpins the company’s values and behaviours, the way we conduct
business and provides clear guidance for effective decision making in
all areas through:
the role of the board of directors and their accountability to
shareholders for the operations, financial performance and growth
of the company;
strategic and operational planning;
ethical business practices and high standards of personal conduct;
effective risk management and compliance; and
constructive engagement with stakeholders.
This Corporate Governance Statement is current as at 11 May 2022
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 as it is an
integral part of the culture and business practices of the CSR group.
Throughout the reporting period, being 1 April 2021 through to 31
March 2022, CSR complied with the recommendations contained in
the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations (4th edition) (ASX CGC Principles).
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,
supply chain, 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.
32 CSR LIMITED ANNUAL REPORT 2022
CORPORATE GOVERNANCE STATEMENT AND RISK
Directors’ independence
At all times throughout YEM22, 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
Matthew Quinn
Penny Winn
Date appointed
December 2017
September 2019
December 2020
October 2016
August 2013
November 2015
Date last re-elected
2021 Annual Meeting
2020 Annual Meeting
2021 Annual Meeting
2020 Annual Meeting
2019 Annual Meeting
2021 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 Safety & Sustainability 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.
33
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 five 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 46
to 47 and is also available on CSR’s website on the Corporate
Governance page.
Figure 1: Board diversity
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 YEM22 one change to the composition of the board took place, with
Mike Ihlein retiring from the board on 25 June 2021.
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.
INDUSTRY SECTOR EXPERIENCE
33%
Manufacturing operations 33%
50%
Supply chain management 33%
Property development 17%
Technology & Digital 17%
17%
17%
33%
17%
TENNURE
0 to 2 years 17%
2 to 5 years 33%
33%
5 to 10 years 50%
GENDER DIVERSITY
50%
50%
Men 50%
Women 50%
17%
17%
50%
TERTIARY QUALIFICATIONS
Commerce/Accounting 50%
Mathematics/Education 16%
Engineering/Science 17%
33%
16%
Business Administration & Management 17%
17%
50%
AGE
50 - 55 17%
56 - 59 50%
60 - 65 33%
34 CSR LIMITED ANNUAL REPORT 2022
Directors with
skill/experience
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
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 community
concerns, climate change risks, 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.
35
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 Penny Winn. Until 10 June
2021 the committee was chaired by Mike Ihlein and the other
members of the committee were Nigel Garrard, Christine Holman,
Matthew Quinn and Penny Winn. From 11 June 2021 the committee
continued to be chaired by Mike Ihlein and the other members of the
committee were Nigel Garrard, Christine Holman and Penny Winn.
From 26 June 2021 the committee has been chaired by Penny Winn
and the other members of the committee are Nigel Garrard and
Christine Holman. Each of these directors is deemed to be
independent and their qualifications and experience are set out on
pages 46 and 47 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 42 and 43 of this statement.
The Risk & Audit Committee Charter sets out the committee’s specific
responsibilities, and includes:
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 auditors, risk manager 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 YEM22, 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 and its committees. An external review of the
board and its committees was commenced in April 2022.
Board Committees
To increase its effectiveness, the board has three committees
consisting of the Risk & Audit Committee, Safety & Sustainability
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 Safety & Sustainability
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 Safety &
Sustainability 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.
36 CSR LIMITED ANNUAL REPORT 2022
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 YEM22
Details of director attendance at board and board committee
meetings held during the year are provided on page 49 of the
Directors’ Report.
The Remuneration & Human Resources Committee is chaired by
Matthew Quinn. 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.
Safety and Sustainability Committee
An important part of CSR’s governance commitments includes
protection of its people’s workplace health and safety, and protection
of the environment (WHS&E). The board endorsed WHS&E Policy
details the company’s and individuals’ obligations in respect of
WHS&E.
The board’s Safety & Sustainability Committee, previously known as
the Workplace Heath, Safety & Environment Committee, oversees and
reports to the board on the management of the company’s WHS&E
responsibilities. The Safety & Sustainability Committee is chaired by
Christine Holman. Until 10 June 2021 the other members of the
committee were John Gillam, Mike Ihlein and Penny Winn. From 11
June 2021 the other members of the committee were John Gillam,
Mike Ihlein and Matthew Quinn, and from 26 June 2021 the other
members of the committee have been John Gillam and Matthew
Quinn. The managing director and other members of management
attend meetings of the Safety & Sustainability Committee by
invitation.
The committee’s specific responsibilities are set out in the Safety &
Sustainability Committee Charter, and include:
receiving regular performance reports from management on
WHS&E matters;
monitoring the effectiveness of the WHS&E risk management
framework and 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 YEM22, two committee meetings were held virtually due
to COVID-19 travel restrictions.
37
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 YEM22, steering committees were established across a
number of key functional areas, bringing together the executive
leadership team and subject matter experts, providing an opportunity
for regular cadence to drive collaboration and initiatives, enabling
successful project delivery, in accordance with the strategy set by the
board.
Senior executive appointments and service agreements
CSR undertakes background checks on prospective senior executives,
covering the candidate’s 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 2021, as well as in April 2022.
38 CSR LIMITED ANNUAL REPORT 2022
During YEM22, change management, capability and reward have
continued to be key focus areas, with CSR’s reward strategy further
reviewed to align and standardise remuneration, reward practices and
incentives 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 as embedded within the company’s
behaviours. 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, as embedded within the
company’s behaviors, are set out both in the code and separately on
CSR’s website and guide the day-to-day interactions of employees and
supports the delivery of CSR’s strategy. 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
submit 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. 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 YEM22, 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.
CORPORATE GOVERNANCE STATEMENT AND RISK
Culture
Throughout YEM22, CSR has continued to promote and develop the
culture and behaviors required to align with our purpose – Building
Solutions for a Better Future. Attracting diverse talent and motivating
the right behaviours are key elements of CSR’s remuneration and
reward framework, which is reviewed regularly.
Diversity and Inclusion at CSR
CSR has policies and practices designed to improve diversity and
inclusion. The company’s Fairness, Respect & Diversity Policy is
available on CSR’s website.
CSR places great importance on the health, safety, wellbeing and
engagement of our people and remains committed to increasing
diversity and inclusion in the workplace by applying policies and
practices designed to attract, retain and develop diverse talent.
Teams that are diverse will provide new and different perspectives to
foster innovation and ultimately better solutions for our customers.
The building products manufacturing industry provides an opportunity
for CSR to attract and develop female talent into underrepresented
roles. CSR regularly reviews and monitors our attraction, retention
and development frameworks, considering opportunities to attract
diverse talent and in particular female talent into underrepresented
roles. 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 and each business unit; and
Gender pay equity.
CSR workplace profile
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 YEM22, the percentage of women in the
CSR workforce was 20%. During YEM22, 27% of new hires were
women.
In YEM22, the proportion of CSR’s workforce currently represented by
women in leadership roles is set out below:
Figure 2: Women in leadership
1 In December 2020, the number of Directors increased from six to seven as a
temporary measure to facilitate board transition.
39
CORPORATE GOVERNANCE STATEMENT AND RISK
Measurable objectives
Improving diversity and inclusion requires cultural change driven by leaders and commitment of the board and senior management. CSR has
structured its measurable objectives around this commitment. The achievements for YEM22 and the initiatives for YEM23, as approved by the
Remuneration & Human Resources Committee, are set out below:
Table 3: Diversity measurable objectives
Measurable objective
YEM22 achievements
Overview of YEM23 initiatives
Leadership
and culture
Implemented consistent behavioural standards
Implementation of enhanced means of
measuring culture to provide more meaningful
real-time insights. Survey results indicated
minimal difference in engagement by gender
Continue to monitor and reinforce CSR’s expected
behavioural standards
Continue to measure culture and engagement
ensuring that all line managers have an action plan to
address areas of focus
Promoted diversity and inclusion through
Monitor culture and engagement results based on
recognition and celebration of International
Women’s Day by showcasing female leaders in
underrepresented leadership roles
Improved accessibility to training and
development by providing access to online
learning, for individual and team development, as
well as new career opportunities through strategic
projects
Provided two “thank you” leave days to CSR
employees for their efforts in YEM22
Membership and participation in the Champions
of Change Coalition to support gender equality in
the value chain and assist with improved diversity
and inclusion at CSR
Gender pay is analysed and adjusted through the
annual salary review cycle. In addition, ongoing bi-
annual reviews of gender pay parity have resulted
in significant progress to address gender pay
disparity. Across the organisation female salaries
have been reviewed and where necessary
adjusted in line with market benchmarks
Launch of a Wellbeing program available to all
employees, providing access to a holistic well
resourced Wellbeing portal, including online
health assessments
Attracted and promoted females into
underrepresented roles including operations
team members and leaders, logistics/warehouse
management and engineering roles
Continued to appoint female talent to strategic
on-job development opportunities
gender participation and engagement, taking action
as required
Recruit and promote leaders who role model
inclusiveness to build diversity and inclusion
Aspire to achieve gender participation rate of 30% at
all levels over time, exceeding the Australian Bureau
of Statistics manufacturing industry average of 27%
Focusing on appointing females into
underrepresented roles
Continued monitoring of gender pay parity and action
to address where required
Further review of parental leave policy to be
competitive with other employers
Update Supplier Code of Conduct that sets
expectations relating to diversity and inclusion
Improve recruitment and selection processes to make
operations roles more accessible for females
Build future female talent pipelines with tertiary
institutions
Customise sourcing strategies to target female talent
Identify opportunities in operational environments to
ensure that amenities, team culture and behaviours
are welcoming for diverse new hires
Policy & Governance
Recruitment
and retention
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. Any
adjustment to the remuneration of direct reports, must comply with CSR’s remuneration policies and approvals process.
The Remuneration Report, commencing on page 51 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 YEM22
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.
40 CSR LIMITED ANNUAL REPORT 2022
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;
Safety & Sustainability 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 define (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
September 2021.
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 YEM22
was operating effectively; and
the systems relating to financial reporting were operating
effectively in all material respects.
In YEM22 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.
41
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 4: 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
Digital and cyber
security
Product liability
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.
As a supplier to the construction market, CSR
is subject to a number of competitive forces
including other domestic and international
suppliers and new technologies which could
replace existing building methods.
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.
The release of future land supply for residential development
relies on the coordination of government and regulatory
bodies with builders and developers to deliver infrastructure
and services for new projects.
Digital services are increasingly used by the
Regular user security awareness training is ongoing, including
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.
simulated phishing campaigns and implementation of
advanced threat protection.
Ongoing implementation of a cyber security improvement
plan with accreditation in accordance with ISO27001.
Regular penetration testing and patching across systems.
Previous involvement in asbestos in Australia
and exporting asbestos to the United States.
CSR ceased asbestos mining in 1966 and
divested remaining interests in 1977.
CSR meets all valid claims in both Australia and the United
States 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.
Reputational risk
associated with breach
of social licence to
operate
CSR operates a number of factories across
CSR’s code of business conduct sets out the behaviours
Australia and New Zealand and employs over
2,500 employees.
expected of all employees, suppliers and other contractors.
Compliance with the code is measured annually.
CSR‘s activities can impact the community
and environment in which it operates.
There is a dedicated, external confidential hotline available to
employees and other stakeholders for reporting misconduct.
Central technical team established to maintain product
governance.
42 CSR LIMITED ANNUAL REPORT 2022
CORPORATE GOVERNANCE STATEMENT AND RISK
Environmental, social and economic sustainability risks (continued)
Table 4: Material economic, environmental and social sustainability risks (continued)
Key areas of materiality
Risks
Monitor and manage risk
Supply Chain and
product compliance
Sustainability, climate
change and energy
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.
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.
Active implementation of CSR’s sustainable procurement
strategy, including extensive raw material and product
testing, compliance and certification. 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, to increase the quantity of
products purchased from social enterprises (including
indigenous and disability owned businesses).
CSR’s manufacturing operations use
For 2030, CSR has set 10 year sustainability targets which
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.
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 Safety &
Sustainability 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 have now been
completed for each of Gyprock plasterboard, Bradford
insulation and PGH Bricks, 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.
Sustainability Steering Committee was formed to provide
focused oversight, with external advisors engaged as
necessary to provide specialist sustainability advice.
Workplace health
and safety
CSR has a stated long-term objective of
The board Safety & Sustainability Committee regularly
achieving zero harm to CSR people across all
operations.
Impact of disruption as a result of COVID-19
isolation requirements.
reviews initiatives targeting improved safety performance
across CSR’s businesses.
Supported workforce to attend COVID vaccination
appointments with paid leave.
Note: Material Risks are listed alphabetically.
43
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.
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 internal audit
The Risk & Audit Committee recommends to the board the
appointment or dismissal of the internal audit partner, who is
independent of the external auditor.
The internal audit function utilises external expertise to provide
objective independent assurance to management and the board on
the effectiveness of CSR’s internal control, risk management and
governance systems and processes. The internal audit lead has direct
access to the chair of the Risk & Audit Committee and oversees the
execution of the internal audit plan, as approved by the Risk & Audit
Committee.
The role of internal audit 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;
provide objective assurance over the adequacy and effectiveness
of controls;
oversee the implementation of CSR’s risk framework across the
organisation; and
recommend improvements to the company’s risk management
framework.
Internal audit has full access to all CSR businesses, records and
personnel.
The annual 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.
44 CSR LIMITED ANNUAL REPORT 2022
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. The company
encourages shareholders to provide email addresses so that company
information can be provided to shareholders electronically.
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 meeting, an opportunity for shareholders to ask
questions orally and in writing and to 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
including all
organisations and sub-contractors providing goods and services to
CSR, based in Australia, New Zealand and overseas.
to all suppliers,
During YEM22, 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.
Details of the company’s engagement with the community are
available in the Sustainability Report found on CSR’s website.
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 securities 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.
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.
45
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 the Safety &
Sustainability 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 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. 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 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 & Packaging 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)
Chairman of Flinders Port Holdings Limited (2021 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)
46 CSR LIMITED ANNUAL REPORT 2022
BOARD OF DIRECTORS
CHRISTINE HOLMAN
PGDipBA, MBA, GAICD.
Non-executive director since October 2016.
Other CSR responsibilities: Chair of the Safety & Sustainability 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 Collins Foods Limited (2019 to current)
Non-executive director of The National Intermodal Corporation, 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 (2017 to current)
Non-executive director of the McGrath Foundation (2020 to current)
Previously a director of WiseTech Global Limited (2018 to 2019)
Previously a director of Blackmores Limited (2019 to 2021)
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
Safety & Sustainability 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 TSA Management Group Holdings Pty Limited (2018 to current)
Non-executive director of Elders Limited (2020 to current)
Member of the Australian Business and Community Network Scholarship Foundation
Previously a non-executive director of Regis Healthcare Limited (2018 to 2021)
Previously a non-executive director of Class Limited (2015 to 2022)
PENNY WINN
BCOM, MBA, GAICD.
Non-executive director since November 2015.
Other CSR responsibilities: Chair of the Risk & Audit Committee and Member of the Remuneration &
Human Resources Committee.
Experience and expertise: Penny was formerly director Group Retail Services with Woolworths responsible for
leading the Logistics and Information Technology divisions and the Customer Engagement teams, a position
held until October 2015. Penny has over 30 years of experience in retail in senior management roles in Australia
and overseas.
Other directorships/offices held:
Non-executive director of Ampol Limited, previously Caltex Australia Limited (2015 to current)
Board member of the ANU Foundation (2020 to current)
Board member of the Amphora Group PLC (2021 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 2021)
Previously a non-executive director of Goodman Limited and Goodman Funds Management Limited
(2018 to 2021)
47
DIRECTORS’ REPORT
Directors’ Report
The board of directors of CSR Limited (CSR) presents its report of the
consolidated entity, being CSR and its controlled entities (CSR group),
for the year ended 31 March 2022. The information appearing on
pages 48 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 2022 is set out on the inside front cover to page 45 and
pages 71 to 112 of the annual report and forms part of the directors’
report. This includes the summary of consolidated results, 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 2022.
Events after balance sheet date
Dividends
On 11 May 2022 the board resolved to pay a final dividend of 18.0
cents per share, fully franked at the 30% corporate tax rate. The final
dividend for the financial year ended 31 March 2022 has 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:
a final ordinary dividend of 14.5 cents per ordinary share and a
final special dividend of 9.5 cents per ordinary share (100%
franked at the 30% corporate tax rate), with respect to the financial
year ended 31 March 2021, was paid on 2 July 2021; and
an interim ordinary dividend of 13.5 cents per ordinary share
(100% franked at the 30% corporate tax rate) was paid on 10
December 2021 (as set out in note 19 to the financial statements
on page 93).
No other distributions were paid during the year.
Options over share capital
Other than as disclosed in the Remuneration Report:
no CSR options were granted to executives or non-executive
directors during the year;
there were no unissued shares or interests in CSR subject to
options at the date of this report; and
no CSR shares or interests were issued pursuant to exercised
options during or since the end of the year.
Indemnities and insurance
Under rule 101 of CSR’s constitution, CSR indemnifies every person
who is or has been an officer of CSR, to the extent permitted by law
and subject to the restrictions in sections 199A and 199B of the
Corporations Act 2001 against:
liability 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 2022 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 2023. 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 2022. 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 (2021: $nil) and as such disclosure to the
Australian Electoral Commission was not required.
48 CSR LIMITED ANNUAL REPORT 2022
DIRECTORS’ REPORT
Auditor independence
Directors and company secretary
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 2022, an officer of the CSR group. No auditor who
played a significant role in the CSR group audit for the year ended 31
March 2022 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 50.
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 111. 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 51 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.
Table 1: Meetings of directors
On 25 June 2021 Mr Mike Ihlein retired from the Board. There were
no other changes to the board in the year ended 31 March 2022.
The names of directors who held office at 11 May 2022, 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 46 and 47 and forms part of the directors’ report.
The qualifications and experience of the company secretary at 11 May
2022 are as follows:
Jill Hardiman
AGIA
Jill joined in CSR in 2002 and has worked within the Company
Secretariat team since 2003, and as Assistant Company Secretary
since May 2018. In November 2021 Jill was appointed Company
Secretary and has broad secretariat and corporate governance
experience. Jill holds a Graduate Diploma in Applied Corporate
Governance and is an Associate of the Governance Institute of
Australia.
The number of meetings of the company’s board of directors and each
board committee held during the year ended 31 March 2022, 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.
Year ended
31 March 2022
CSR Board
Risk & Audit
Committee
Safety & Sustainability
Committee
Remuneration &
Human Resources Committee
Held1
Attended2
Held1
Attended2
Held1
Attended2
Held1
Attended2
John Gillam
Nigel Garrard3
Christine Holman4
Michael Ihlein5, 6
Matthew Quinn7
Penny Winn8
Julie Coates
8
8
8
2
8
8
8
8
8
8
2
8
8
8
n/a
4
4
1
1
4
4
3
4
4
1
2
4
4
4
n/a
4
1
4
n/a
4
4
–
4
1
4
–
4
4
4
n/a
n/a
4
4
4
4
4
4
2
4
4
4
1 Meetings held while a member.
2 Meetings attended.
3 Director is not a member of the Safety & Sustainability Committee.
4 Director is not a member of the Remuneration & Human Resources Committee.
5 Director retired 25 June 2021.
6 Director was not a member of the Remuneration & Human Resources Committee.
7 Director was appointed a member of the Safety & Sustainability Committee from 11 June 2021 and ceased to be a member of the Risk & Audit Committee on the same
date.
8 Director ceased to be a member of the Safety & Sustainability Committee from 11 June 2021.
John Gillam
Chair of the board
11 May 2022
Julie Coates
Managing Director and CEO
11 May 2022
49
AUDITOR’S INDEPENDENCE DECLARATION
The Directors
CSR Limited
Triniti 3
39 Delhi Road
North Ryde NSW 2113
11 May 2022
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 2022, 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.
50 CSR LIMITED ANNUAL REPORT 2022
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 2022 (YEM22).
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.
YEM22 targets and performance
In its response to the ongoing pandemic, management prioritised the health and safety of CSR’s employees, as well as business continuity.
Challenges included evolving public health orders and external supply chain disruptions.
Notwithstanding the business disruption related to the pandemic, management progressed with the business strategy which is enabled by the
development of industry best practice supply chain and digitisation of systems and processes. The business is well positioned to drive the most
competitive product and service solutions for the market and our customers.
The Company has been well managed by the executive leadership team, delivering strong financial performance and positive outcomes for
shareholders. The Building Products business segment produced a 30-year record EBIT and the share price hit a 10 year high in November
2021.
Remuneration outcomes
Challenging and motivating short-term incentive (STI) targets were set by the board at the start of the year to incentivise performance. We are
pleased to report that CSR’s YEM22 EBIT exceeded the financial target, which accounts for 60% of total STI assessment. The board also
reviewed significant items and determined that no adjustments were required to EBIT for STI assessment purposes.
The STI payout reflects stretch performance and the management team and employees have been appropriately rewarded for their efforts and
results.
The board has not exercised any discretion in determining the STI award for YEM22.
Looking forward
YEM22 was a very good year for CSR, both in terms of financial performance and continued progress with strategic objectives. 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
51
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 2022 (YEM22) and the remuneration framework. The
report also details proposed changes for the financial year ended 31 March 2023 (YEM23).
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 YEM22 are detailed in the table below. KMP are as defined by the Accounting Standard AASB 124 Related Party Disclosures (AASB
124).
Following a review of senior executives against the criteria for determining executive KMP, only the Managing Director and CEO and Chief
Financial Officer and Executive General Manager, Property and Aluminium qualify as executive KMP, consistent with prior years.
Table 1: Key management personnel
Name
Position
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
Term as KMP
Full year
Full year
Full year
To 25 June 2021
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. 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
Heath Hopwood
Andrew Mackenzie
Gary May
Andrew Rottinger
Cameron Webb
Mark White
Former senior executives
Executive General Manager, Logistics
Executive General Manager, Interior Systems
Executive General Manager, Human Resources
Executive General Manager, Masonry & Insulation
General Manager, Property
Executive General Manager, Customer Solutions
Executive General Manager, Construction Systems
Full year
Full year
Full year
From 5 July 2021
Full year
Full year
Full year
Executive General Manager, Transformation, Technology & Digital Full year
General Manager, Aluminium
Full year
Anthony Tannous
Executive General Manager, Masonry & Insulation
To 12 May 2021
52 CSR LIMITED ANNUAL REPORT 2022
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 YEM22. 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
YEM22, 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 2022
Statutory
remuneration
disclosures
As above
STI award for
YEM22, 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 YEM22 relates to YEM20 to
YEM22 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 2022
Julie Coates
David Fallu
Total
31 March 2021
Julie Coates
David Fallu
Total
Fixed
remuneration
Short-term
incentive
Long-term
incentive
Other
benefits1
1,150,000
715,000
1,865,000
1,094,800
662,400
1,757,200
1,150,000
1,104,000
700,000
700,000
1,850,000
1,804,000
–
142,062
142,062
–
92,827
92,827
–
1,000
1,000
–
999
999
Total
2,244,800
1,520,462
3,765,262
2,254,000
1,493,826
3,747,826
1 Other benefits include USOP.
Table 5: Commentary on actual remuneration received by executive KMP
Area
Explanation
Fixed
remuneration
Ms Coates’ fixed remuneration was not increased during the year.
Mr Fallu’s fixed remuneration was increased from 1 July 2021 from $700,000 to $720,000 per annum, through CSR's
annual remuneration review.
53
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
(STI)
The board assessed Ms Coates’ performance against the objectives set and determined that Ms Coates would be
awarded an STI at 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 continuing to manage
complexities and disruption due to the COVID-19 pandemic. Strong momentum has been gained following the
streamlining of the business in YEM21, with operational efficiencies and cost disciplines reflected in the financial results
for the year. The CSR strategy to develop market leading customer solutions, industry best practice supply chain and
digitisation of systems and processes is well-progressed. The STI award represents 95% of Ms Coates’ maximum STI
opportunity for YEM22.
The board assessed Mr Fallu’s performance against the objectives set and determined that Mr Fallu would be awarded
an STI at between target and stretch. The STI outcome recognises Mr Fallu’s role in the implementation of strategic
initiatives and improvement of cost disciplines. The outcome also reflects Mr Fallu’s leadership of the Property and
Aluminium businesses, both of which have delivered strong financial performances in YEM22. The STI award represents
92% of Mr Fallu’s maximum STI opportunity for YEM22.
Further detail on the STI outcomes is included in sections 4 and 7.
Long-term incentives represent the partial vesting of the YEM19 LTI for Mr Fallu. The LTI for YEM22 reflects a slightly
higher vesting outcome of the TSR LTI tranche and a higher share price at the time of vesting.
Long-term
incentives
(LTI)
Other benefits Other benefits included USOP.
Further detail is included in sections 4, 8 and 12.
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 increase in total remuneration is due to higher STI outcomes in YEM22 due to the senior executive team being in place for the full year.
Further explanation on STI outcomes is set out in section 4. The LTI outcomes in YEM22 were lower as several current senior executive team
members were not participants in the YEM19 LTI grant.
Table 6: Senior executive remuneration
Year ended 31 March
$
20221
2021
Actual fixed
remuneration
received
4,389,472
4,094,123
Short-term
incentive
3,645,468
2,586,859
Long-term
incentive
308,574
446,211
Other
benefits2
4,998
2,996
Total
8,348,512
7,130,189
1 Actual fixed remuneration received is based on the term as a senior executive and includes the former senior executive listed in table 2.
2 Other benefits include USOP.
54 CSR LIMITED ANNUAL REPORT 2022
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
4
Performance outcomes
Summary of performance outcomes for YEM22
A summary of the YEM22 short-term and long-term incentive outcomes are set out in tables 7 to 10 below, with further detail on the plans
included in sections 7 and 8 respectively.
i) Short-term incentive outcomes
Table 7: YEM22 STI CSR group financial targets and assessment of performance outcomes
Area
Explanation
YEM22 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.
The financial targets for YEM22 were set by the board in March 2021, with earnings before interest and tax (EBIT) the
primary STI financial measure. The board has elected not to disclose detailed financial and/or individual targets due to
commercial sensitivities.
Assessment of
performance
against targets
The CSR group and business segments YEM22 EBIT exceeded the financial targets set. Further detail on the business
segment targets and performance is summarised in table 8.
The actual CSR group EBIT of $291 million represented an increase of $54 million or 22% compared to YEM21 and
was significantly above the financial target set. As a result, the CSR group financial component of STI was awarded at
stretch.
The CSR group financial performance for YEM22 reflected:
‒ Building Products 30-year record earnings, with strong operational performance, continued cost disciplines and
realisation of benefits following the streamlining of the organisation in YEM21.
‒ Continued progress on the CSR strategy including building supply chain capability and creating customer driven
integrated solutions to drive the most competitive product and service solutions for the market.
‒ Management of the uncertainty and business disruptions arising from COVID-19, including the impact of various
public health restrictions in place during the year.
‒ The delivery of all targeted property sales and the sale of two additional sites.
‒ Higher Aluminium earnings, while also increasing the longer-term hedging portfolio.
An assessment of significant items was also completed by the board and did not result in a change in the actual EBIT
result for STI purpose. Details of this assessment are set out in table 9.
The Board did not exercise any discretion in relation to STI outcomes.
The total STI awarded amounts to a payout ratio of 7.3% of YEM22 EBIT (YEM21: 7.5% of EBIT).
STI awarded
as a % of EBIT
Table 8: YEM22 STI business financial targets and assessment of performance outcomes
Business
Explanation of STI financial targets
Assessment of performance outcomes
Outcome
Building
Products
The targets were established having regard to
forecast construction activity for YEM22, including
the expected capacity constraints of the
construction industry. These forecasts are
formulated with reference to external data sources
and independent economic models.
The business was tasked to deliver earnings
growth, while maintaining a continued focus on
operational leverage and realising the benefits of
business streamlining and cost disciplines
embedded in YEM21.
The financial targets set for YEM22 also assumed
that there would be minimal business disruption
due to the COVID-19 pandemic.
Building Products sales revenue for YEM22 was
slightly above the target set, with growth across all
businesses.
Building Products EBIT of $228 million was up $44
million or 24% on YEM21. The significant earnings
growth was driven by strong operational
performance, realisation of benefits from
organisational streamlining and continued cost
disciplines.
The business also managed unplanned disruptions
caused by the COVID-19 pandemic, including
impacts of restrictions on worker movements and
temporary construction site closures in Sydney and
Melbourne.
Earnings significantly exceeded the financial target
set and the financial STI component was awarded
at stretch.
Financial STI outcomes
Stretch
Between target
and stretch
At target
Between threshold
and target
Below threshold
55
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
4
Performance outcomes (continued)
i) Short-term incentive outcomes (continued)
Table 8: YEM22 STI business financial targets and assessment of performance outcomes (continued)
Business
Explanation of STI financial targets
Assessment of performance outcomes
Outcome
Property
A challenging earnings target was set for the
Property business in YEM22, which included:
o
the sale of Horsley Park stage 2.2a which
required completion of rehabilitation works;
o completion of the final stages of Chirnside
Park residential project; and
the sale of the Moss Vale site.
The earnings target for YEM22 was set below
o
YEM21 due to the significant Horsley Park sale
transaction completed during YEM21.
Aluminium
In the context of volatile Aluminium prices and
higher production costs, the Aluminium business
was set a target which would see earnings increase
compared to YEM21.
The financial target reflected the hedging held at
the time and forecast production costs.
The Property business generated earnings of $47
million. In addition to completing all of the targeted
transactions during YEM22, the Property business
also finalised the sale of 4.6 hectares of land at
Badgerys Creek and the sale of the Thornton site.
The business also continued to strategically advance
the long-term property portfolio, including quarry
rehabilitation at Badgerys Creek and progressing
rezoning of the Schofields site.
Overall, the YEM22 Property business earnings
significantly exceeded the financial targets set and
the financial STI component was awarded at stretch.
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 an increase in the hedged
position to provide a buffer against the elevated
operating cost.
These actions resulted in a favourable earnings
performance for YEM22, with the financial STI
component awarded at stretch.
Financial STI outcomes
Stretch
Between target
and stretch
At target
Between threshold
and target
Below threshold
Consideration of significant items recorded in YEM22
The STI financial targets are set based on EBIT before significant items. The CSR 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 YEM22, the board has determined that the reported CSR group EBIT of $291 million is
appropriate for assessment of remuneration outcomes. 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 YEM22 is contained in note 3 to the
financial statements on page 80.
Table 9: Assessment of significant items for remuneration purposes
Amount
(pre-tax)
$’million
Remuneration
outcomes
adjusted
86.3
(6.9)
No
No
Item
Recognition of
tax losses
Software-as-a-
Services
implementation
costs
Product liability
provision
(5.0)
No
Rationale for treatment for remuneration purposes
This benefit relates to legacy carried forward capital tax losses which are now
expected to be utilised against capital gains made on CSR property sales.
These costs relate to the implementation of Software-as-a-Service arrangements
which are now required to be expensed due to a change in international
accounting guidance.
These items have not been adjusted for remuneration purposes as the target
earnings did not contemplate the change in accounting treatment (i.e. the
accounting change occurred after the targets had been set).
In addition, the amortisation charge that would have been recorded in EBIT under
the previous accounting treatment was considered. No adjustment to STI was
made as the amount was immaterial and did not impact the STI outcome.
The product liability expenses relate to matters pre-dating current management
and the board has consistently treated these amounts as significant items with no
adjustment to STI.
56 CSR LIMITED ANNUAL REPORT 2022
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
4
Performance outcomes (continued)
ii) Short-term incentive outcomes (continued)
STI non-financial measures
The board did not exercise any discretion in determining the non-financial STI component awarded in YEM22, which is also assessed against
targets set at the start of the year. The CSR group and businesses met their business unit financial target and as a result their non-financial STI
component was awarded. This treatment is in accordance with the STI plan (as detailed in table 13).
iii) Long-term incentive outcomes
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.
Table 10: YEM22 long-term incentive outcomes
LTI measure
Explanation
Overall
The YEM19 LTI performance hurdles were partially met resulting in 34% of the YEM19 PRP grant vesting in March
2021.
The value of LTI that vested in YEM21 increased compared to YEM20 due to a higher number of rights vesting.
Further detail is contained in section 8.
TSR
EPS
Total shareholder return (TSR) target: 34% vested out of 50% potential.
Earnings per share (EPS) target: nil% vested out of 50% potential.
iv) 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 11: 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
YEM22
YEM21
YEM20
YEM19
YEM18
291.4
13.4
39.7
27.3
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
6.15
5.78
3.17
3.32
5.18
1.8
1.8
0.57
1.4
1.2
3.6
2.6
–7
2.0
2.2
7.3%8
7.5%
2.6%
6.3%
5.4%
0.1
0.1
0.7
2.0
1.8
0.3
0.4
0.7
2.1
1.8
1 EBIT and EPS are calculated before significant items.
2 TSR at 31 March sourced from Bloomberg. Relative TSR performance is disclosed in Table 20 along with the LTI vesting outcomes.
3 Return on Funds Employed (ROFE) defined in note 2 to the CSR group financial statements.
4 Closing share price at 31 March.
5 Represents the value of PRPs vested 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 five years are disclosed on page 26.
7 An STI was not awarded to executive KMP or senior executives for YEM20, except for the special incentive paid to the retiring CEO Mr Sindel based on goals set by the
board and determined for services up to 31 August 2019.
8 Total STI awarded for YEM22 represents 152% of the target STI opportunity. Further detail on the STI awarded is outlined in tables 7 and 8.
57
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 policies and
procedures are 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 Culture
Monitors, recommends and reports to the board on:
Remuneration guidelines and incentive policies for
management, executives and KMP, aligned to long-term
growth, shareholder value and CSR’s company behaviours.
Superannuation arrangements.
Employee share plans.
Recruitment, retention and termination policies and
procedures for senior management.
Board remuneration including the terms and conditions of
appointment, retirement and non-executive remuneration
within aggregate total amounts approved by shareholders.
Monitors, recommends and reports to the board on:
The quality of talent pools for senior management
succession.
The effectiveness of CSR's diversity policies and initiatives,
including an annual assessment against measurable
objectives and proportion of women at all levels of
management.
Leadership development frameworks and individual
development progress for key talent.
Monitoring surveys conducted by the company in relation to
the culture of the organisation.
Initiatives to improve and drive a strong performance culture.
CSR's compliance with external reporting requirements.
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 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 recommendations received from external
providers during the year in relation to remuneration policy
changes.
58 CSR LIMITED ANNUAL REPORT 2022
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 if the executive resigns
or due to clawback for malus
Equity with performance assessed
over three years
From the YEM21 LTI grant onwards,
there is 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: YEM22 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
59
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 is based on are outlined below.
Table 12: Key principles of CSR’s executive remuneration
Objective
Explanation
Performance
driven and
aligned with
shareholder
interests
Fixed remuneration should reward executives based on their seniority and experience. The ‘at risk’ 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 and are aligned with shareholder returns.
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).
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 and Executive General
Manager, Property and Aluminium
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 retain, motivate and attract 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 and a group of industry peers. This ensures that remuneration
for KMP is based on roles of comparable size.
At risk remuneration (through STI and LTI) provides the opportunity to earn reward that reaches the top quartile of the
market for superior performance.
60 CSR LIMITED ANNUAL REPORT 2022
REMUNERATION REPORT | COMPONENTS OF REMUNERATION
7
(i)
At risk remuneration – short-term incentive
Table 13: Details of the short-term incentive plan
Purpose
Motivates and rewards individuals 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 following the release of CSR’s annual financial results.
Performance
measures
The performance measures for the STI were updated in YEM22 to align with CSR’s business strategy. Performance
measures are based on a combination of financial and non-financial measures:
Performance component
Corporate roles
Business unit roles
CSR group EBIT
Business segment EBIT
Individual objectives
Total
60%
–
40%
100%
30%
30%
40%
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 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.
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.
STI financial performance targets are set out in the table below.
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 is calculated based on the financial target plus the amount of STI payable if the budget is achieved.
The STI accrues on a straight-line basis for financial performance between threshold and target and between target
and stretch.
No STI is payable in relation to the financial component unless the threshold EBIT is exceeded.
If either the CSR group or business segment financial threshold is not met the non-financial component is discounted
by 50%. Should both CSR and the applicable business segment not reach the financial threshold, any payment will be
at the discretion of the board.
Individual objectives are documented in CSR’s performance management system ACHiEVE@CSR and performance is
monitored during the year, with a final assessment at year end. The non-financial objectives are aligned to the
business strategy and CSR’s defined culture and behaviours. These objectives include relevant KPI’s such as safety
and sustainability, customer experience, leadership and development of people, operational improvement and growth
and delivery of CSR’s strategic initiatives.
For individuals whose behaviour is inconsistent with CSR’s culture and behavioural standards, the non-financial STI
may be forfeited.
Significant
items
Minimum
financial
performance
requirements
Non-financial
objectives
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 and behaviour in achieving these objectives. All recommendations are reviewed and
approved by the business unit Executive General Manager and ultimately the CEO and Managing Director. The
Remuneration & Human Resources Committee recommends to the board executive KMP and senior executive STIs
and the overall STI pool in aggregate.
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REMUNERATION REPORT | COMPONENTS OF REMUNERATION
7
(i)
At risk remuneration – short-term incentive (continued)
Table 13: Details of the short-term incentive plan (continued)
Board discretion
The Board’s philosophy 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 significant items;
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.
Service condition
New starters or people promoted into eligible roles may participate in the STI scheme with pro rata entitlements.
Employees must be employed at time of payment to be eligible for any reward.
Equity deferral
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.
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.
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.
62 CSR LIMITED ANNUAL REPORT 2022
REMUNERATION REPORT | COMPONENTS OF REMUNERATION
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 the delivery of strategic objectives that create long-term shareholder value;
enables executives to build their interests in CSR equity; and
retain, motivate and attract executive talent to deliver and sustain business performance and increase shareholder returns.
(ii) Details of the LTI plan
The long-term incentive plan is delivered through the CSR Performance Rights Plan (PRP). Details of the PRP grants from YEM19 to YEM22 are
set out below.
Table 14: 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, and 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
Awards are subject to a three year vesting period and 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).
At vesting
For all PRP grants, rights are eligible for one CSR Limited share per one performance right on vesting.
Holding lock
From the YEM22 PRP grant onwards, a 12-month holding lock on shares awarded under the LTI has been introduced to
aid senior executive retention and strengthen CSR’s clawback provisions.
During the holding lock period, provided the participant remains employed by CSR, they have full voting rights and are
entitled to receive dividends.
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 2022, 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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REMUNERATION REPORT | COMPONENTS OF REMUNERATION
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 15: Performance hurdles for each PRP grant
Note
YEM22
YEM21
YEM20
YEM19
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 YEM21 and YEM22 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 dividends, capital management and share price growth.
Relative TSR for the YEM21 and YEM22 PRPs
Relative TSR was adopted as a performance measure for the YEM21 and YEM22 PRP grants as it is an established measure with greater
alignment to market practice.
Absolute TSR is a 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 is 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 are calculated based on a 90-day VWAP at the start and end of the performance period.
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 16 below.
Relative TSR for the YEM19 PRP (vested on 31 March 2021)
TSR performance was 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 were calculated based on 10 trading days VWAP.
Table 16: 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 major 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 aligned with shareholder
interests and provided transparency and focus of executives in driving both earnings and share price growth.
The targets are set out in table 17 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 17: 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%
64 CSR LIMITED ANNUAL REPORT 2022
REMUNERATION REPORT | COMPONENTS OF REMUNERATION
8
At risk remuneration – long-term incentive (continued)
(iii) PRP performance conditions (continued)
3. Earnings per share (EPS)
Compound growth in EPS measures 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 YEM22 outcome summarised in section 4(i) and table 9. In addition, the board may adjust EPS to
exclude the effects of material business acquisitions or divestments.
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 18: Performance hurdles for the YEM19 to YEM22 PRP grants
EPS performance hurdle
Target
Stretch
Target
Stretch
Target
Stretch
Target
Stretch
YEM22
YEM21
YEM20
YEM19
Cumulative EPS required over next three
years (cents per share)
Average EPS required over next three
years (cents per share)
Table 19: EPS PRP vesting schedule
CAGR of EPS
Below 5%
At 5%
Between 5% and 10%
10% and above
109.6
120.5
85.4
93.9
119.5
131.4
140.0
154.0
36.5
40.2
28.5
31.3
39.8
43.8
46.7
51.3
Proportion of Tranche B to vest
0%
50%
Straight-line vesting between 50% and 100%
100%
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REMUNERATION REPORT | COMPONENTS OF REMUNERATION
8 At risk remuneration – long-term incentive (continued)
(iv) Details of the PRP awards outstanding
Table 20: Status and key dates of PRP awards
Grant
date
Valuation
per right1
Holding
period
Performance
testing period
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
Expiry date
(if hurdle
not met)
1 April 2021
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
1 April 2022
Performance status2
Tranche A (TSR): Performance condition was met
and 68% of allocation vested and the remaining
unvested rights lapsed.
Tranche B (EPS): Actual average EPS of 31.3 cents
compared to a target of 46.7 cents. Compound
growth performance condition was not met and all
rights lapsed.
Total award was 34%.
Subsequent to 31 March 2022:
Tranche A (TSR): Actual absolute TSR was 29%.
Performance condition was met, resulting in 100%
vesting of the allocation grant.
Tranche B (EPS): Actual average EPS of 32.5 cents
compared to a target of 39.8 cents. Compound
growth performance condition was not met and all
rights lapsed.
Total award was 50%.
21 July 2020
(YEM21)
21 July 2021
(YEM22)
Tranche A (TSR)
$1.06
Tranche B (EPS)
$3.08
Tranche A (TSR)
$2.32
Tranche B (EPS)
$4.67
21 July 2020 to
31 March 2023
1 April 2020 to
31 March 2023
1 April 2023
Performance testing not commenced.
21 July 2021 to
31 March 2024
1 April 2021 to
31 March 2024
1 April 2024
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 relative TSR hurdles.
(v)
Long-term incentive framework changes
No changes are proposed to the LTI framework for YEM23.
(vi) Other equity incentive plans
Table 21: Other equity incentive plans
Universal Share Ownership Plan (USOP)
Employee Share Acquisition Plan (ESAP)
Participation
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.
Form and quantum
of award
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 2022
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 22: 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% 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
13.
The value of any award of performance rights is set at a maximum of 140% 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.
Chief Financial Officer and Executive General Manager, Property and Aluminium – Executive service agreement
David Fallu was appointed as Chief Financial Officer effective 2 February 2017. In April 2020 following the business reorganisation, Mr Fallu was
appointed Chief Financial Officer and Executive General Manager, Property and Aluminium. Mr Fallu’s remuneration package is summarised
below:
Table 23: Chief Financial Officer and Executive General Manager, Property and Aluminium’s remuneration package
Fixed annual
remuneration
Fixed annual remuneration of $720,000 inclusive of superannuation contributions effective from 1 July 2021. 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 YEM22 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% 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 13.
The potential value of any award of performance rights is set at a maximum of 80% 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).
67
REMUNERATION REPORT | REMUNERATION IN DETAIL
9
Service agreements (continued)
Table 24: Treatment of the Managing Director and CEO’s and Chief Financial Officer and Executive General Manager, Property and Aluminium’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 and CEO’s and Chief Financial Officer and Executive General Manager, Property and Aluminium’s remuneration
The remuneration table below shows an increase in total remuneration expensed for accounting purposes for executive KMP in YEM22
compared with YEM21.
Table 25: Executive KMP statutory remuneration
Fixed
Variable
‘At risk’
$ Year ended
31 March
Cash
salary
Super-
annuation
Leave
benefits
Other
benefits1
STI
expense2
LTI
expense3
Total
STI4
LTI4
Managing Director and CEO – Julie Coates
23,100
1,126,900
2022
21,521
1,128,479
2021
55,880
20,845
–
–
1,023,347
846,400
867,712
363,043
3,096,939
2,380,288
Chief Financial Officer and Executive General Manager, Property and Aluminium – David Fallu
2022
2021
691,900
678,479
624,507
565,860
42,766
37,809
23,100
21,521
1,000
999
304,010
145,935
1,687,283
1,450,603
33%
36%
37%
39%
28%
15%
18%
10%
1 Other benefits comprise USOP.
2 STI expense for YEM22 plus amortisation of STI deferrals relating to prior years’ grants.
3 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 20.
4 STI and LTI as a percentage of total remuneration.
11 Deferred shares
Table 26: STI deferred shares for executive KMP
Julie Coates
David Fallu
Number of STI deferred shares
Balance
1 April 2021
–
–
Granted1
75,628
47,952
Vested1
(37,814)
(23,976)
Lapsed
Balance
31 March 2022
–
–
37,814
23,976
1 The value of deferred shares provided at grant date was $5.84 per share. These shares related to the YEM21 STI and were granted in May 2021. Half vested on 31 March
2022 and the remaining balance will vest on 31 March 2023 consistent with the STI deferral plan.
Deferred STI in relation to the YEM22 STI award was issued subsequent to 31 March 2022 and will be disclosed in the YEM23 Remuneration
Report.
68 CSR LIMITED ANNUAL REPORT 2022
REMUNERATION REPORT | REMUNERATION IN DETAIL
12 Performance rights
Table 27: Executive KMP performance rights
Julie Coates
David Fallu
Number of performance rights
Balance
1 April 2021
913,192
385,164
Granted1
275,727
98,645
Vested2
Lapsed
Balance
31 March 2022
–
–
1,188,919
(24,135)
(46,849)
412,825
1 The accounting value of Ms Coates and Mr Fallu’s rights granted were $963,667 and $344,765 respectively.
2 The following rights vested to ordinary shares during the year ended 31 March 2022:
Mr Fallu: YEM19 Tranche A rights vested of 24,135. A total of 24,135 shares were issued on 4 June 2021, and the value of each of these shares was $5.89, representing a
total value to Mr Fallu of $142,062.
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. 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 28: Executive KMP shareholdings
Julie Coates
David Fallu
Balance
1 April 2021
1,217
88,055
Number of CSR shares1
Acquired2
76,569
73,287
Sold or
transferred
–
–
Other
–
–
Balance
31 March 2022
77,786
161,342
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 834 shares acquired under ESAP, 75,628 shares acquired under the STI deferral plan and 107 shares acquired under the Dividend Reinvestment Plan. Mr
Fallu’s acquired shares include 24,135 shares issued on vesting of PRPs, 47,952 shares acquired under the STI deferral plan, 834 shares acquired under ESAP and 366
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 YEM21 and YEM22.
69
REMUNERATION REPORT | NON-EXECUTIVE DIRECTORS
Non-executive directors
15 Arrangements
Non-executive directors are paid a base fee for service to the board, with additional fees for service to each board committee. The fees are set
with consideration to the fees paid by 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 29: Non-executive Director (NED) arrangements
Role
Annual fee for YEM22 (including superannuation guarantee)
Chair base fees (including all committee memberships)
Other NED base fees
Chair of the Risk & Audit Committee
Chair of the Remuneration & Human Resources Committee
Chair of the Workplace Health, Safety & Environment Committee
Committee memberships
$403,169
$149,269
$27,996
$27,996
$27,996
$11,999 per committee
Following benchmarking undertaken in YEM22, an amendment to the structure of the NED base fee was made. Previously, the NED base fee
included one committee membership, however this committee membership is now listed separately. There is no net change to the combined
annual NED base fee and one committee fee membership as a result of this structural change. All non-executive directors are members of
multiple committees and so receive additional committee membership or committee chair fees in addition to the NED base fee (excluding the
chair of the board).
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 and shareholdings
Table 30: Non-executive directors’ fees
Year ended 31 March
John Gillam (chair of the board)
Nigel Garrard1
Christine Holman
Michael Ihlein2
Matthew Quinn
Penny Winn
Total non-executive directors
1 Appointed 1 December 2020.
2 Retired 25 June 2021.
YEM22
YEM21
YEM22
YEM21
YEM22
YEM21
YEM22
YEM21
YEM22
YEM21
YEM22
YEM21
YEM22
YEM21
Table 31: Non-executive directors’ shareholdings
Directors’ fees
Termination
benefits
Superannuation
380,069
373,743
157,695
51,710
172,255
161,208
45,166
181,529
172,255
169,455
170,982
167,936
1,098,422
1,105,581
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23,100
21,521
15,571
4,913
17,009
15,315
–
4,024
17,009
16,098
16,889
15,954
89,578
77,825
Total
403,169
395,264
173,266
56,623
189,264
176,523
45,166
185,553
189,264
185,553
187,871
183,890
1,188,000
1,183,406
John Gillam (chair of the board)
Nigel Garrard
Christine Holman
Michael Ihlein2
Matthew Quinn
Penny Winn
Balance
1 April 2021
253,510
60,000
81,360
64,345
75,507
51,248
Number of CSR shares1
Acquired
Other3
Balance
31 March 2022
–
–
5,169
405
5,662
–
–
–
–
(64,750)
–
–
253,510
60,000
86,529
–
81,169
51,248
1 CSR shares in which the director has a beneficial interest, including shares held under the ESAP trust or via related parties.
2 Retired 25 June 2021.
3 Following Mr Ihlein’s retirement on 25 June 2021, he is no longer a KMP. The ‘other’ change does not represent a disposal of shares.
70 CSR LIMITED ANNUAL REPORT 2022
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 (benefit) 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
Capital structure and risk management
17 Credit facilities
18
Issued capital
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
85
86
89
90
91
92
93
93
93
93
94
95
100
100
100
103
103
104
105
106
106
110
110
110
111
111
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 benefit (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
7
7
8
24
4
4
2022
2021
2,311.6
(1,610.2)
701.4
63.9
(216.5)
(266.6)
15.6
(7.0)
(6.3)
284.5
0.5
(15.0)
270.0
8.7
278.7
8.1
270.6
278.7
55.8
55.5
2,122.4
(1,516.9)
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
1 Net profit before significant items attributable to shareholders of CSR Limited is $192.6 million (2021: $160.4 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 2022
FINANCIAL REPORT
Statement of comprehensive income
$million
Profit after tax
Other comprehensive (expense) income, net of tax
Items that may be reclassified to profit or loss
Hedge loss recognised in equity
Hedge loss (profit) transferred to statement of financial performance
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 on superannuation defined benefit plans
Income tax expense relating to these items
Other comprehensive expense – net of tax
Total comprehensive (expense) income
Total comprehensive (expense) income attributable to:
Non-controlling interests
Shareholders of CSR Limited
Total comprehensive (expense) income
Note
2022
278.7
2021
151.8
21
21
20
13
28
(571.2)
135.0
(0.1)
130.8
0.1
–
(305.4)
(26.7)
(93.0)
66.3
(26.7)
(67.0)
(18.2)
(3.2)
25.6
17.6
(5.3)
(50.5)
101.3
(12.1)
113.4
101.3
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
Lease liabilities
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 CSR Limited
Non-controlling interests
Total equity
Note
2022
20211
34
10
10
11
21
32
11
26
21
12
14
12
12
13
32
10
14
21
15
14
21
15
28
18
20
24
177.7
228.4
374.1
53.0
98.3
8.9
8.5
948.9
22.7
113.9
40.1
114.8
666.1
126.0
59.9
10.1
332.8
11.7
1,498.1
2,447.0
314.4
30.0
251.5
13.1
138.8
747.8
135.5
379.4
232.8
2.1
749.8
250.8
224.2
313.8
40.7
63.0
0.4
8.9
901.8
23.4
102.6
35.4
57.7
693.7
127.2
58.3
13.6
150.7
12.4
1,275.0
2,176.8
256.7
30.2
71.1
46.9
131.6
536.5
141.1
86.0
252.7
2.7
482.5
1,497.6
949.4
1,019.0
1,157.8
966.7
(293.7)
334.0
1,007.0
(57.6)
949.4
966.7
(89.6)
245.3
1,122.4
35.4
1,157.8
1 Balances have been restated to reflect the group’s change in accounting policy for capitalised costs relating to Software-as-a-Service (SaaS) arrangements (refer note 1)
and a correction to deferred tax on property, plant and equipment (refer note 13).
The above statement of financial position should be read in conjunction with the accompanying notes.
74 CSR LIMITED ANNUAL REPORT 2022
FINANCIAL REPORT
Statement of changes in equity
$million
Balance at 1 April 2021
Profit for the year
Other comprehensive income (expense)
– net of tax
Dividends paid
Acquisition of shares by CSR employee
share trust
Share-based payments – inclusive of tax
Balance at 31 March 2022
Balance at 1 April 2020
Change in accounting policy1
Deferred tax adjustment2
Restated balance at 1 April 2020
Profit for the year
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
Note
19
20
20
1
13
19,24
20
20
20
Issued
capital
966.7
–
–
Reserves
(89.6)
–
(204.4)
Retained
profits
245.3
270.6
0.1
CSR
Limited
interest
1,122.4
270.6
(204.3)
Non-
controlling
interests
35.4
8.1
(101.1)
–
–
–
(6.0)
(182.0)
–
(182.0)
(6.0)
–
966.7
6.3
(293.7)
–
334.0
6.3
1,007.0
966.7
–
–
966.7
–
–
–
–
–
–
(45.7)
–
–
(45.7)
–
(45.0)
–
(1.0)
(0.1)
2.2
144.0
(0.5)
4.1
147.6
146.1
12.3
(60.7)
–
–
–
1,065.0
(0.5)
4.1
1,068.6
146.1
(32.7)
(60.7)
(1.0)
(0.1)
2.2
–
–
–
(57.6)
60.5
–
1.7
62.2
5.7
(17.8)
(14.7)
–
–
–
Total
equity
1,157.8
278.7
(305.4)
(182.0)
(6.0)
6.3
949.4
1,125.5
(0.5)
5.8
1,130.8
151.8
(50.5)
(75.4)
(1.0)
(0.1)
2.2
Balance at 31 March 2021
966.7
(89.6)
245.3
1,122.4
35.4
1,157.8
1 Balances have been restated to reflect the group’s change in accounting policy for capitalised costs relating to Software-as-a-Service (SaaS) arrangements. Refer to note 1
for further details.
2 Balances have been restated to reflect a correction to deferred tax on property, plant and equipment. Refer note 13.
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 intangible assets
Purchase of controlled entities and businesses, net of cash acquired
Payments for financial assets
Loans and receivables advanced
Net cash (outflow) inflow from investing activities
Cash flows from financing activities
Net repayment of borrowings
Dividends paid1
Acquisition of shares by CSR employee share trust
Lease payments
Interest and other finance costs paid2
Net cash outflow from financing activities
Net decrease 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
2022
2021
26
12
9
20
14
2
24
6
12
20
5
2,546.9
(2,261.9)
10.9
0.9
(81.5)
2,376.1
(2,081.6)
18.3
1.3
(61.1)
215.3
253.0
100.1
(59.7)
(40.0)
(2.9)
(53.5)
(2.3)
(58.3)
–
(182.0)
(6.0)
(31.9)
(10.1)
(230.0)
(73.0)
250.8
(0.1)
177.7
270.6
8.1
88.5
7.0
(4.7)
4.0
10.1
(60.3)
(4.6)
(60.1)
57.7
(17.7)
5.4
(91.3)
2.6
215.3
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
1 During the year ended 31 March 2022, of the $182.0 million in dividends paid to CSR Limited shareholders, $11.9 million was used to purchase CSR shares on-market to
2
satisfy obligations under the Dividend Reinvestment Plan (DRP), and the remaining $170.1 million was paid in cash.
In accordance with AASB 16 Leases, interest and other finance costs paid for the year ended 31 March 2022 includes finance costs relating to leases of $7.0 million
(2021: $8.0 million). Refer to notes 7 and 14 for further details.
The above statement of cash flows should be read in conjunction with the accompanying notes.
76 CSR LIMITED ANNUAL REPORT 2022
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
limited company
incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange.
is a
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.
and customisation costs for cloud computing arrangements (commonly
known as Software-as-a-Service). As a result, the CSR group has
adopted a change in accounting policy for capitalisation of intangible
assets. Under the revised accounting policy, costs that would have been
previously capitalised as intangible assets are treated as operating
expenditure where the group cannot demonstrate the ability to control
the relevant software.
In accordance with Australian Accounting Standards the change in
accounting policy has been adopted retrospectively and prior
comparative periods have been restated.
For the year ended 31 March 2022, the change in accounting policy has
resulted in a decrease in earnings before interest and tax of $6.9 million
and decrease in net profit after tax of $4.8 million. These costs would
have previously been capitalised as an intangible asset and amortised
over the useful life of the intangible asset. This cost has also been
recorded in ‘other expenses’ in the Statement of Financial Performance
and disclosed as a significant item (refer note 3).
The change in accounting policy has been retrospectively applied and
impacted the prior year financial statements as follows:
Basis of preparation: The financial report is based on historical cost,
except for certain financial assets and liabilities which are at fair value.
a decrease in intangible assets at 1 April 2020 of $0.2 million.
a decrease in equity accounted investments at 1 April 2020 of $0.3
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 2022.
As at the date these financial statements are authorised for issue, the
directors of CSR Limited consider it appropriate that the group is able to
continue as a going concern and pay its debts as and when they
become due and payable.
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
(ASIC)
the Australian Securities and
Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, dated 24 March 2016.
Investments Commission
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 2021.
Accounting policy change: In April 2021, the IFRS Interpretations
Committee published an agenda decision relating to the configuration
million.
a decrease in retained earnings at 1 April 2020 of $0.5 million.
the impact on the statement of financial performance for YEM21 and
deferred tax balances at 1 April 2020 was not material.
Where relevant, comparative information has been restated and
changes have been footnoted throughout the financial statements.
New standards not yet applicable: 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
8
12
15
Treatment of tax losses
Asset impairment
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 2022, the CSR group's trading revenue from external
customers in Australia amounted to $2,242.1 million (2021:
$2,065.6 million), with $69.5 million (2021: $56.8 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 $999.9 million at 31 March 2022
(2021: $1,023.9 million), with $10.5 million (2021: $7.3 million)
related to other geographical areas.
78 CSR LIMITED ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
2
Segment information (continued)
$million
Trading revenue1
EBITDA before
significant items2
Depreciation and
amortisation
Business segment
2022
2021
2022
2021
Building Products
Property
Aluminium
Corporate3
Restructuring and provisions4
1,614.1
1,534.5
–
697.5
–
–
–
587.9
–
–
302.4
46.9
51.5
(19.2)
(1.7)
265.7
54.2
35.4
(16.6)
(4.6)
2022
(74.2)
–
(11.8)
(2.5)
–
2021
(81.4)
–
(12.0)
(2.8)
–
Earnings before
interest, tax and
significant items
2022
2021
228.2
46.9
39.7
(21.7)
(1.7)
184.3
54.2
23.4
(19.4)
(4.6)
Total CSR group
2,311.6
2,122.4
379.9
334.1
(88.5)
(96.2)
291.4
237.9
Reconciliation of earnings before interest, tax and significant items to profit after tax
$million
Earnings before interest, tax and significant items
Net finance costs
Income tax expense
Profit after tax before significant items (before non-controlling interests)
Less: non-controlling interests
Note
7
2022
291.4
(9.5)
(81.2)
200.7
(8.1)
2021
237.9
(6.1)
(65.7)
166.1
(5.7)
Profit after tax before significant items attributable to shareholders of CSR Limited
192.6
160.4
Significant items after tax attributable to shareholders of CSR Limited
3
78.0
(14.3)
Profit after tax attributable to shareholders of CSR Limited
270.6
146.1
Business segment
As at 31 March 2022
As at 31 March 20217
As at 31 March 2022
As at 31 March 2021
Funds employed ($million)5
Return on funds employed (%)6
Building Products
Property
Aluminium
Corporate
Total CSR group
830.0
166.1
121.3
(47.3)
843.8
139.5
136.0
(54.8)
1,070.1
1,064.5
27.3%
30.7%
30.9%
–
27.3%
20.6%
35.3%
16.9%
–
21.1%
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 2022 is calculated as net assets of $949.4
million (2021: $1,157.8 million), excluding the following assets: cash of $177.7 million (2021: $250.8 million), net tax assets of $328.6 million (2021: $104.2 million), net
superannuation assets of $8.3 million (2021: $8.4 million) and interest receivable of $0.1 million (2021: $0.7 million). In addition, the following liabilities have been
excluded from funds employed: asbestos product liability provision of $213.3 million (2021: $231.0 million) and net financial liabilities of $422.1 million (2021: $39.8
million).
6 Return on funds employed (ROFE) is calculated based on EBIT before significant items for the 12 months to year end divided by average funds employed. ROFE is not a
measure used for Corporate costs which are considered in the context of the CSR group result. Property ROFE varies due to timing of projects.
7 Balance has been restated to reflect the group’s change in accounting policy for capitalised costs relating to Software-as-a-Service (SaaS) arrangements. Refer to note 1 for
further details.
79
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
3
Significant items
$million
Software-as-a-Service (SaaS) implementation costs
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
Recognition of capital tax losses
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 after tax attributable to shareholders of CSR Limited
Significant items after tax attributable to shareholders of CSR Limited
Net profit after tax before significant items attributable to shareholders of CSR Limited
Note
2022
(i)
(ii)
(iii)
(iv)
(v)
7
(vi)
(6.9)
–
–
–
–
(6.9)
(5.0)
86.3
3.6
78.0
–
78.0
270.6
(78.0)
192.6
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
Earnings per share attributable to shareholders of CSR Limited before significant items1
Basic (cents per share)
Diluted (cents per share)
39.7
39.5
33.1
32.9
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)
(iii)
Software-as-a-
Service (SaaS)
implementation
costs
Impairment of
Building Products
assets
Business
streamlining
restructure costs
(iv)
Site closure costs
(v)
Previously
recorded
significant items
During the year ended 31 March 2022, the Building Products segment incurred implementation costs of
$6.9 million in relation to Software-as-a-Service arrangements which are now required to be expensed due
to a change in international accounting guidance. Refer note 1 for further detail.
During the year ended 31 March 2021, the Building Products segment recorded an impairment charge of
$8.3 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 ended
31 March 2021, 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 was recorded, 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.
(vi)
Recognition of
capital tax losses
During the year ended 31 March 2022, the CSR group recognised a deferred tax asset of $86.3 million in
relation to carry forward capital tax losses, which arose primarily from the sale of the Viridian Glass business
in 2019. This follows an assessment of the tax treatment of property sales which are expected to generate
capital gains that will utilise these carry forward tax losses.
Recognition and measurement
Significant items are those which by their size and nature or incidence are relevant in explaining the financial performance of the CSR group,
and as such are disclosed separately.
80 CSR LIMITED ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
4
Earnings per share
Weighted average number of ordinary shares used in the calculation of basic EPS (million)1
Weighted average number of ordinary shares used in the calculation of diluted EPS (million)2
Profit after tax attributable to shareholders of CSR Limited ($million)
Basic EPS (cents per share)
Diluted EPS (cents per share)
2022
484.7
487.4
270.6
55.8
55.5
2021
485.1
487.1
146.1
30.1
30.0
1 Calculated by reducing the total weighted average number of shares on issue of 485.4 million (2021: 485.4 million) by the weighted average number of shares purchased
on market and held in trust to satisfy incentive plans as these plans vest of 666,479 (2021: 242,666).
2 Calculated by increasing the weighted average number of shares used in calculating basic EPS by outstanding performance rights of 2,700,156 (2021: 1,987,861).
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
2022
2021
2
3
2,311.6
2,122.4
60.3
–
3.6
57.2
9.3
6.4
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: the net gain (loss) is recognised in ‘other income (expense)’ when control of the asset passes to the purchaser.
81
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
6
Expenses
$million
Expenses
Significant items1
Employee benefits expense
Depreciation
Amortisation
Note
2022
2021
3
12,14
12
6.9
444.1
85.1
3.4
24.2
419.4
91.0
5.2
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
Finance costs
Interest income
Net finance costs
Finance costs included in significant items
Net finance costs before significant items
Recognition and measurement
Note
2022
2021
14
3
3.1
7.0
5.0
0.8
(0.9)
15.0
(0.5)
14.5
(5.0)
9.5
5.6
8.0
5.6
0.8
(6.8)
13.2
(1.5)
11.7
(5.6)
6.1
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 2022
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
8
Income tax (benefit) expense
Reconciliation of income tax (benefit) expense charged to the statement of financial performance:
$million
Profit before income tax
Income tax expense calculated at 30%
(Decrease) increase in income tax expense due to:
Recognition of carried forward capital tax losses
Share of net profit of joint venture entities
Taxable profit on property disposals
Income tax under provided in prior years
Other items
Total income tax (benefit) expense
Comprising of:
Current tax expense
Deferred tax credit relating to movements in deferred tax balances
Total income tax (benefit) expense
Note
2022
270.0
81.0
3
(86.3)
(4.4)
0.6
0.3
0.1
(8.7)
2021
211.3
63.4
–
(3.9)
0.1
0.7
(0.8)
59.5
13
40.2
(48.9)
72.3
(12.8)
(8.7)
59.5
Recognition and measurement
Current and deferred tax is recognised as an expense in the statement of financial performance except when it relates to items credited or
debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting of
a business acquisition, in which case it is taken into account in the determination of goodwill.
Tax transparency report
The CSR group has prepared a voluntary tax transparency report which is available to view online or to download from the CSR website
(www.csr.com.au). The report sets out relevant tax information for CSR Limited and its controlled entities for the year ended 31 March 2022.
Disclosure of company tax information
Under tax legislation the Australian Taxation Office will publish in 2022 the following data for the CSR Limited tax consolidated group and
Gove Aluminium Finance Limited in relation to the 2021 tax year:
Entity
CSR Limited (ABN: 90 000 001 276)
Gove Aluminium Finance Limited (ABN: 45 001 860 073)
Total revenue1
($million)
Taxable income
($million)
Tax payable
($million)
1,835.0
596.2
196.1
33.7
32.9
7.2
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 2021 was $32.9 million because CSR was entitled to utilise franking credits on dividends received and R&D tax
offsets to reduce its tax payable.
83
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
8
Income tax (benefit) expense (continued)
Significant judgement and critical accounting estimate – treatment of tax losses
Carry forward tax losses or unused tax credits are recognised as a deferred tax asset to the extent that it is probable that future taxable
profit will be available against which the unused tax losses and unused tax credits can be utilised.
During the year ending 31 March 2022, the CSR group has recognised a deferred tax asset of $86.3 million in relation to carry forward
capital tax losses, which arose primarily from the sale of the Viridian Glass business in 2019. This follows an assessment of the tax
treatment of property sales which are expected to generate capital gains that will utilise these carry forward tax losses.
The net amount of tax losses, capital losses and rebates carried forward at the end of the year for which no deferred tax asset has been
recognised is set out below:
Value of tax losses, capital losses and rebates
carried forward (net)
CSR group
2022
($million)
107.8
2021
($million)
187.5
The gross value of unused tax losses for which no deferred tax asset has been recognised are $36.9 million (2021: $36.5 million). Unused
tax losses were predominately generated by a New Zealand subsidiary and it is not considered probable that the unrecognised tax losses will
be utilised 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 $325.0 million (2021: $590.9 million).
These unrecognised capital losses were predominately generated from the sale of the Viridian Glass business, and it is not considered
probable that the unrecognised capital losses will be utilised in the foreseeable future. Unused capital and tax losses can be carried forward
indefinitely subject to meeting ownership continuity requirements.
9 Business combinations
i)
Current year
Building Products segment
During the year ended 31 March 2022, the Building Products segment acquired the business assets of an entity for total consideration of $2.0
million with goodwill arising of $1.6 million.
The Building Products segment also invested in an entity for cash consideration of $0.9 million.
ii) Prior 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.
84 CSR LIMITED ANNUAL REPORT 2022
ii)
Inventories
2021
$million
2022
2021
Current
Raw materials and stores
Work in progress
Finished goods
Total current inventories
138.7
25.2
210.2
374.1
112.2
16.8
184.8
313.8
1 Write-down of inventories recognised as an expense within cost of sales for the
year ended 31 March 2022 totalled $14.1 million (2021: $14.4 million).
iii) Current payables
$million
Trade payables
Other payables
Total current payables
2022
281.9
32.5
314.4
2021
229.1
27.6
256.7
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
Balance sheet items
10 Working capital
i)
Current receivables
$million
Trade receivables
Allowance for doubtful debts
2022
216.0
(10.2)
216.1
(8.2)
Net trade receivables
205.8
207.9
Other loans and receivables
Total current receivables
22.6
228.4
16.3
224.2
Ageing
Past due 0-60 days – not impaired
Past due >60 days – not impaired
Past due 0-60 days – impaired
Past due >60 days – impaired
Movement in allowance for
doubtful debts
Opening balance
Trade debts written off
Trade debts provided
Closing balance
11 Property holdings
$million
Current
Held for sale
Total current property holdings
Non-current
Held for sale
Property projects
1.0
–
7.6
2.6
(8.2)
0.4
(2.4)
(10.2)
2.6
–
7.1
1.1
(8.6)
1.8
(1.4)
(8.2)
2022
2021
53.0
53.0
39.1
74.8
40.7
40.7
16.4
86.2
Total non-current property holdings
113.9
102.6
Recognition and measurement
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 2022 has been assessed to consider the impact of the
COVID-19 pandemic and no material recoverability issues have been identified.
Inventories: 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.
Property holdings: 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.
85
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
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
2022
2021
2022
2021
2022
2021
398.8
392.5
1,354.4
1,347.5
1,753.2
1,740.0
Accumulated depreciation and impairment
(113.1)
(104.5)
(974.0)
(941.8)
(1,087.1)
(1,046.3)
Net carrying amount
Net carrying amount at 1 April
Capital expenditure
Disposed
Depreciation
Impairments1
Exchange differences
Acquisitions - business combinations
Transferred to intangible assets
285.7
288.0
288.0
292.1
7.6
(2.7)
(8.3)
(0.5)
–
–
–
0.7
(0.8)
(8.2)
(0.4)
–
–
–
6
9
Transferred from/(to) property plant and equipment and
property holdings
1.6
4.6
380.4
405.7
32.4
(0.4)
(49.0)
(6.5)
–
0.2
(0.2)
(1.8)
405.7
449.4
43.6
(0.4)
666.1
693.7
40.0
(3.1)
693.7
741.5
44.3
(1.2)
(52.7)
(57.3)
(60.9)
(7.5)
(0.1)
–
–
(26.6)
(7.0)
–
0.2
(0.2)
(0.2)
(7.9)
(0.1)
–
–
(22.0)
Balance at 31 March
285.7
288.0
380.4
405.7
666.1
693.7
1 The impairment expense relates to a write down of plant and equipment at a former operating site and was recorded within the Property segment earnings before interest
and tax.
ii) Goodwill and other intangible assets
$million
Cost
Accumulated amortisation and
impairment
Net carrying amount
Net carrying amount at 1 April
Capital expenditure
Amortisation
Impairments
Exchange differences
Goodwill
Software
Other
Total other
intangible assets
Note
2022
2021
2022
20212
2022
2021
2022
2021
6
59.9
–
59.9
58.3
–
–
–
–
1.6
–
58.3
–
58.3
58.3
–
–
–
–
–
–
88.6
87.6
30.3
31.2
118.9
118.8
(85.6)
(82.0)
(23.2)
(23.2)
(108.8)
(105.2)
3.0
5.6
–
(2.8)
–
–
–
0.2
3.0
5.6
8.0
3.5
(4.4)
(1.4)
(0.1)
–
–
7.1
8.0
–
8.0
7.6
1.2
10.1
13.6
–
(0.6)
(0.8)
(3.4)
–
–
–
(0.3)
–
–
–
–
–
–
–
(0.1)
13.6
15.6
4.7
(5.2)
(1.4)
(0.1)
–
–
5.6
7.1
8.0
10.1
13.6
Acquisitions - business combinations
9
Transferred from/(to) property plant
and equipment and property holdings
Balance at 31 March
59.9
58.3
2 Balance has been restated to reflect the group’s change in accounting policy for capitalised costs relating to Software-as-a-Service (SaaS) arrangements. Refer to note 1 for
further details.
86 CSR LIMITED ANNUAL REPORT 2022
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 accumulated 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.
Software-as-a-Service (SaaS) arrangements: during the year, the group revised its accounting policy in relation to upfront configuration
and customisation costs incurred in implementing SaaS arrangements. Historical financial information has been restated to account for
the impact of the change (refer note 1). SaaS arrangements are service contracts providing the Group with the right to access the cloud
provider’s application software over the contract period. Costs incurred to configure or customise, and the ongoing fees to obtain access
to the cloud provider's application software, are recognised as operating expenses when the services are received. Some of these costs
incurred are for the development of software code that enhances or modifies, or creates additional capability to, existing on-premise
systems and meets the definition of and recognition criteria for an intangible asset. These costs are recognised as intangible software
assets and amortised over the useful life of the software on a straight-line basis.
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 (2021: $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: $59.9 million and $1.6
million respectively (31 March 2021: $58.3 million and $1.6 million respectively). The recoverable amounts of the cash generating units that
include goodwill are determined using discounted cash flow projections.
Key assumptions used in the impairment assessments:
Cash flow forecasts: The cash flows are modelled over a five-year period with a terminal value used from year six onwards. The first five
years represent financial plans forecast by management, based on the CSR group's view of the most recent outlook on building activity
levels and the current climate-related regulations in place, with the terminal year representing long-term average activity levels. These
estimates are informed by a review of a sample of external forecasts available as at the date of these financial statements. In addition,
cash flows for the Aluminium cash generating unit reflect the most recent forecasts for key assumptions such as the US$ 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 CGUs other than Aluminium which
uses 10.5% (2021: 9.0% for all CGUs other than Aluminium which was 10.5%).
Terminal value: The terminal value annual growth rate assumed is 2.0% (2021: 2.0%).
87
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
12 Property, plant and equipment and intangible assets (continued)
Critical accounting estimate – carrying value assessment (continued)
Roofing cash generating unit
As at 31 March 2022, the carrying value of the Roofing CGU was $44 million, which does not include any goodwill or intangible assets.
During the year ended 31 March 2022, the Roofing CGU experienced a shortfall in earnings when compared to internal forecasts, mainly
due to the competitive market in which the business operates and cost pressures. As a result, the Roofing CGU was assessed for
impairment at 31 March 2022 in accordance with AASB 136 Impairment of Assets.
Key assumptions used in the impairment assessment are consistent with those outlined on page 87. In addition, the impairment
assessment assumes that the Roofing CGU will maintain market share and deliver operational improvements.
Following the detailed impairment review of future cash flow projections, the recoverable amount of the Roofing CGU is estimated to exceed
the carrying amount of the CGU at 31 March 2022 by $1 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 $18 million.
A 1% increase in the discount rate applied (from 9% to 10%) would result in an impairment of $3 million.
A 1% decrease in the terminal annual growth rate (from 2% to 1%) would result in an impairment of $2 million.
No other reasonable possible changes in key assumptions have been identified.
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 2022, 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 2022, the business experienced a decrease in earnings following reductions in market activity for the New
South Wales apartment segment. An operational improvement plan was implemented during the year which has yielded positive results,
despite the disruptions of COVID-19 restrictions during the year.
Given the business has indefinite life intangible assets and due to the limited headroom in the impairment model for the year ended 31
March 2021, an impairment assessment was performed for the AFS CGU at 31 March 2022 in accordance with AASB 136 Impairment of
Assets.
Key assumptions used in the impairment assessment are consistent with those outlined on page 87. In addition, the impairment
assessment assumes that the operational improvement plan will continue to be delivered, including revenue growth across various
segments and geographies.
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 2022 by $17 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 $12 million.
A 1% increase in the discount rate applied (from 9% to 10%) would reduce the headroom to $5 million.
A 1% decrease in the terminal annual growth rate (from 2% to 1%) would reduce the headroom to $8 million.
No other reasonable possible changes in key assumptions have been identified.
88 CSR LIMITED ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
13 Net deferred income tax assets
$million
Net deferred income tax assets arising on temporary differences
Tax losses recorded as asset
Capital tax losses recorded as asset
Total net deferred income tax assets
Movement in deferred income tax assets
$million
2022
Property, plant and equipment
Right-of-use lease assets
Lease liabilities
Product liability provision
Employee benefits provisions
Other provisions
Fair value of hedges
Accrued expenses
Property sales on capital account
Other individually insignificant balances
Tax losses
Capital tax losses
Total net deferred income tax assets
2021
Property, plant and equipment1
Right-of-use lease assets
Lease liabilities
Product liability provision
Employee benefits provisions
Other provisions
Spares and stores
Fair value of hedges
Accrued expenses
Other individually insignificant balances
Tax losses
Total net deferred income tax assets
2022
288.3
0.6
43.9
332.8
2021
148.8
1.9
–
150.7
Opening
balance
Credited
(charged) to
profit or loss
Credited
(charged) to
equity
Other
(including
transfers)
Closing
balance
(9.1)
(38.1)
51.4
69.3
27.0
22.1
18.8
9.0
–
(1.6)
1.9
–
150.7
(9.9)
(45.9)
60.0
74.1
24.4
21.3
(11.8)
(6.8)
6.4
4.9
0.9
117.6
(2.8)
8.3
(9.8)
(5.3)
2.8
0.5
–
2.1
8.7
1.8
(1.3)
43.9
48.9
1.2
9.7
(10.5)
(4.8)
2.6
0.8
11.8
–
2.6
(1.6)
1.0
12.8
–
–
–
–
–
–
130.8
–
–
2.3
–
–
–
(8.0)
8.0
–
–
0.1
–
–
–
–
–
–
133.1
0.1
–
–
–
–
–
–
–
25.6
–
(4.9)
–
20.7
(0.4)
(1.9)
1.9
–
–
–
–
–
–
–
–
(11.9)
(37.8)
49.6
64.0
29.8
22.7
149.6
11.1
8.7
2.5
0.6
43.9
332.8
(9.1)
(38.1)
51.4
69.3
27.0
22.1
–
18.8
9.0
(1.6)
1.9
(0.4)
150.7
1 Balance has been restated to reflect a correction to deferred tax on property, plant and equipment.
Recognition and measurement
Current tax: represents the amount expected to be paid in relation to taxable income for the financial year measured using tax rates and tax laws
that have been enacted or substantively enacted by the reporting date. Current tax for current and prior periods is recognised as a liability (or asset)
to the extent that it is unpaid (or refundable).
Deferred income tax: is provided in full, using the balance sheet liability method, on temporary differences arising between the carrying amounts of
assets and liabilities for financial reporting and tax purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted by 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.
89
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’
2022
2021
112.4
8.3
5.3
126.0
30.0
135.5
165.5
116.5
6.3
4.4
127.2
30.2
141.1
171.3
2022
2021
22.2
2.9
2.7
27.8
7.0
13.2
2022
31.9
7.0
38.9
24.1
2.5
3.5
30.1
8.0
11.5
2021
34.0
8.0
42.0
6
7
7
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
Total undiscounted cash flows
90 CSR LIMITED ANNUAL REPORT 2022
2022
36.7
62.5
44.3
56.2
2021
37.1
61.8
45.9
62.3
199.7
207.1
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
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
Recognised/
remeasured
Settled/
transferred
Discount
unwind
60.7
–
22.9
–
6.9
3.1
93.6
–
(22.9)
0.8
–
(2.7)
–
(24.8)
(51.4)
(2.5)
(22.9)
(0.6)
(4.4)
(4.6)
(86.4)
0.3
–
–
(0.7)
–
(0.7)
(1.1)
–
–
–
–
–
–
–
–
5.2
–
–
0.7
0.1
6.0
2022
94.6
1.4
24.0
0.9
7.9
10.0
138.8
4.9
189.3
2.7
10.2
15.4
10.3
232.8
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.
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 annually by independent experts.
Other provisions
Employee benefits: 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.
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.
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.
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.
91
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 2022, CSR had resolved
approximately 5,300 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 Gnarus
Advisors, LLC as the independent expert to estimate the United States
liabilities. The independent experts make their own determination of
the methodology most appropriate for estimating CSR’s future
liabilities. The assessments of those independent experts project
CSR’s claims experience into the future using modelling techniques
that take into account a range of possible outcomes. The present
value of the liabilities is estimated by discounting the estimated cash
flows using the pre-tax rate that reflects the current market
assessment of the time value of money and risks specific to those
liabilities.
Many factors are relevant to the independent experts’ estimates of
future asbestos liabilities, including:
numbers of claims received by disease and claimant type and
expected future claims numbers, including expectations as to
when claims experience will peak;
expected value of claims;
the presence of other defendants in litigation or claims involving
CSR;
the impact of and developments in the litigation and settlement
environment in each of Australia and the United States;
estimations of legal costs;
expected claims inflation (Australian liability 3.25% and US liability
2.30%); and
the discount rate applied to future payments (Australian liability
3.25% and US liability 1.90%).
92 CSR LIMITED ANNUAL REPORT 2022
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 2022 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
289.0
268.0
246.9
231.0
213.3
500
400
300
200
100
0
2018
2019
Base case provision A$m
2020
2021
2022
Prudential margin A$m
$million
Base case estimate
Prudential margin
Prudential margin %
Total product liability provision
Year ended 31 March
2022
2021
174.8
38.5
22.0%
213.3
196.1
34.9
17.8%
231.0
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
Capital structure and risk management
17 Credit facilities
The CSR group has a total of $420.0 million (31 March 2021: $420.0 million) committed standby facilities with external financial institutions.
These facilities have fixed maturity dates as follows: $109.0 million in 2023, $191.0 million in 2024, $75.0 million in 2025 and $45.0 million in
2026. As at 31 March 2022, $420.0 million of the standby facilities were undrawn (2021: $420.0 million undrawn).
18
Issued capital
On issue 31 March 2021
On issue 31 March 2022
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 2022 and 31 March 2021 under employee share plans as shares in respect of the
plans were acquired on market. During the years ended 31 March 2022 and 31 March 2021, 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 2022 are $1.93 (2021: $2.16). Net tangible assets per share is calculated
as net assets attributable to CSR Limited shareholders of $1,007.0 million (2021: $1,122.4 million) less intangible assets of $70.0 million
(2021: $71.9 million) divided by the number of issued ordinary shares of 485.4 million (2021: 485.4 million).
19 Dividends and franking credits
i) Dividends
Dividend type
2020 Final
2021 Interim ordinary
2021 Interim special
2021 Final ordinary
2021 Final special
2022 Interim ordinary
2022 Final ordinary1
Cents per
share
Franking
Total
amount
$million
Date
paid/payable
–
8.5
4.0
14.5
9.5
13.5
18.0
–
–
–
100%
100%
100%
100%
100%
100%
41.3 8 December 2020
19.4 8 December 2020
70.4
2 July 2021
46.1
2 July 2021
65.5 10 December 2021
1 July 2022
87.4
Graph 1: Dividends declared relating to each financial year
– cents per share
40.0
30.0
20.0
10.0
-
36.5
31.5
27.0
26.0
14.0
2018
2019
2020
2021
2022
1 The final dividend for the financial year ended 31 March 2022 has not been recognised in this financial report because it was resolved to be paid after 31 March 2022. The
amounts disclosed as recognised in 2022 are the final dividends in respect of the financial year ended 31 March 2021 and the interim dividend in respect of the financial
year ended 31 March 2022.
ii) Franking credits
$million
Franking account balance on an accruals basis1
2022
43.4
2021
88.4
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.
93
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
20 Reserves
$million
Balance at 1 April 2021
Hedge loss recognised in equity
Hedge loss 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
Balance at 31 March 2022
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
Nature and purpose of reserves
Hedge
reserve
(32.5)
(384.6)
92.8
–
87.5
–
–
–
(236.8)
9.3
(49.2)
(10.6)
–
18.0
–
–
–
–
(32.5)
Foreign
currency
translation
reserve
Employee
share
reserve
Share
based
payment
trust
reserve
Non-
controlling
interests
reserve
(25.4)
–
–
–
–
–
–
(6.0)
(68.8)
–
–
–
–
–
–
–
Total
(89.6)
(384.6)
92.8
(0.1)
87.5
4.0
2.3
(6.0)
(31.4)
(68.8)
(293.7)
(24.4)
–
–
–
–
–
–
(1.0)
–
(68.7)
–
–
–
–
–
–
–
(0.1)
(45.7)
(49.2)
(10.6)
(3.2)
18.0
1.7
0.5
(1.0)
(0.1)
42.4
–
–
–
–
4.0
2.3
–
48.7
40.2
–
–
–
–
1.7
0.5
–
–
42.4
(25.4)
(68.8)
(89.6)
(5.3)
–
–
(0.1)
–
–
–
–
(5.4)
(2.1)
–
–
(3.2)
–
–
–
–
–
(5.3)
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 $5.81 (2021: $4.55) per share
Issue of shares under executive incentive plans
Closing balance
2022
2021
102,181
1,031,614
(382,983)
21,354
225,000
(144,173)
750,812
102,181
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.
94 CSR LIMITED ANNUAL REPORT 2022
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 2022
and 31 March 2021.
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
2022
Current payables
Commodity financial
instruments
Foreign currency financial
instruments
314.4
248.9
–
284.8
–
61.4
314.4
595.1
2.5
6.5
1.9
10.9
Total
565.8
291.3
63.3
920.4
2021
Current payables
Commodity financial
instruments
Foreign currency financial
instruments
256.7
76.6
–
110.4
–
3.3
256.7
190.3
1.1
0.9
–
2.0
Total
334.4
111.3
3.3
449.0
95
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENTCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
21 Financial risk management (continued)
iii) Market risk
The table below provides information about commodity derivatives (to manage commodity price exposures) and significant exchange rate exposures in forward exchange rate contracts, entered
into by the CSR group:
$million
Average price/
exchange rate 1,2
1 year or
less
1 to 3 years
3 to 5 years
Total
Asset
Liability
Price/exchange
rate strengthens
by 10%
Price/exchange
rate weakens by
10%
Notional value
Fair value3,4
Change in equity before tax
2022
Commodity swaps – aluminium
Commodity swaps – alumina/aluminium
Commodity swaps – oil
Commodity swaps & futures – electricity
Forward exchange rate contracts (US dollars – sell)6
2021
Commodity swaps – aluminium
Commodity swaps – alumina/aluminium
Commodity swaps – oil
Commodity swaps & futures – electricity
Commodity swaps & options – gas
Forward exchange rate contracts (US dollars – sell)6
2,239.7
–5
83.7
57.1
0.7
1,940.6
–5
83.7
61.2
6.4
0.7
344.1
113.2
13.8
10.1
307.4
292.7
69.9
13.8
11.8
20.2
302.5
669.1
207.7
10.0
11.9
538.6
456.4
203.1
25.1
18.9
–
421.2
296.2
87.2
–
0.2
1,309.4
408.1
23.8
22.2
235.0
1,081.0
108.0
–
–
1.2
–
45.0
857.1
273.0
38.9
31.9
20.2
768.7
0.2
37.4
11.4
22.4
53.5
0.9
–
–
0.3
0.1
92.4
(603.9)
(9.9)
–
(0.1)
(8.7)
(129.3)
(12.9)
(3.3)
(9.1)
(0.5)
(0.9)
(185.5)
57.7
3.5
4.4
100.4
(97.7)
28.8
3.5
2.2
0.1
70.5
185.5
(57.7)
(3.5)
(4.4)
(122.7)
97.7
(28.8)
(3.5)
(2.2)
(0.1)
(86.2)
Exchange rate applicable to forward exchange rate contracts.
Average deal price is in USD/metric tonne (aluminium), AUD/barrel (oil), AUD/MWh (electricity) and AUD/GJ (gas).
1
2
3 $542.4 million net of commodity contract losses (2021: $153.5 million net losses) were deferred in 2022 as the losses relate to cash flow hedges of highly probable forecast transactions. The expected timing of recognition based on
the fair values at 31 March 2022 is one year or less: $229.5 million loss (2021: $69.4 million loss); one to three years: $256.5 million loss (2021: $81.2 million loss); three to five years: $56.4 million loss (2021: $2.9 million loss). The
fair value of $542.5 million (2021: $153.8 million) includes $0.1 million of losses (2021: $0.3 million of losses) recognised in profit or loss.
4 $44.8 million of net foreign exchange contract gains (2021: $91.5 million net gains) have been deferred as the gains relate to cash flow hedges of highly probable forecast transactions. The expected timing of recognition based on the
fair values at 31 March 2022 is one year or less: $36.0 million gain (2021: $45.6 million gain); one to three years: $5.2 million gain (2021: $44.9 million gain) and three to five years $3.6 million gain (2021: $1.0 million gain).
5 Under the alumina/aluminium swaps entered into, the CSR group receives a floating alumina price and pays a floating aluminium price.
6
Sale of US dollars is the dominant foreign exchange hedge. In addition, the CSR group uses FX swaps to manage foreign currency cash positions and FX forwards to purchase foreign currency expended in manufacturing inputs. The fair
value of these at 31 March 2022 is an asset value of $0.6 million (2021: $0.6 million) and liability value of $1.7 million (2021: $1.1 million).
9
6
C
S
R
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I
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I
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D
A
N
N
U
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E
P
O
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2
0
2
2
96
I
I
N
O
T
E
S
T
O
T
H
E
F
N
A
N
C
A
L
R
E
P
O
R
T
|
C
A
P
I
T
A
L
S
T
R
U
C
T
U
R
E
A
N
D
R
S
K
M
A
N
A
G
E
M
E
N
T
I
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
$177.7 million (2021: net cash balance of $250.8
million).
The maturity profile for the net cash balance of
$177.7 million is less than 1 year. The average
interest rate on debt for the year was 0% (2021:
1.1%) and the average interest rate on cash
balances for the year was 0.15% (2021: 0.39%).
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 2022 the group had no interest rate risk management
measures in place because it had no material 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 $0.9 million
higher/lower (2021: $0.8 million higher/lower).
This is mainly due to higher/lower interest income on net cash
balances.
The CSR group uses a variety of foreign exchange risk management
instruments, including spot, forward and swap currency contracts and
currency options, to hedge foreign currency denominated receipts
resulting from revenue and payments for raw materials and capital
equipment denominated in foreign currencies.
The CSR group’s policy is to hedge its net US dollar aluminium
exposure to reduce the volatility of aluminium earnings, when
acceptable Australian dollar outcomes can be achieved.
Forecast US dollar receipts are based on highly probable forecast
monthly sales receipts of aluminium which ensures that the underlying
foreign currency exchange risk is identical to the hedged risk
component (i.e. the US dollar price). Hedging is undertaken at
declining levels for up to four years.
Sensitivity of fair values to changes in exchange rate is disclosed in
the market risk table on page 96.
The table below provides details on the nature and risk management in relation to commodity price risk. Sensitivity of fair values to changes in
commodity prices is disclosed in the market risk table on page 96.
Commodity Nature of commodity price risk
Commodity price risk management
Aluminium
The CSR group has exposure to aluminium
commodity prices which arises from sales contracts
that commit the CSR group to supply aluminium in
future years. Prices for product supplied under these
contracts are a function of the US dollar market
price at the time of delivery.
Alumina
The CSR group has exposure to alumina commodity
prices through the consumption of alumina at the
US$ 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.
97
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 at fair value.
$million
Current1
Non-current
Total
Current1
Non-current
Total
2022
2021
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
Payments in advance2
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
Futures margin3
Total
–
–
7.4
10.3
–
37.6
42.8
0.2
98.3
237.5
9.9
–
0.1
–
2.5
1.5
251.5
0.2
37.4
4.0
12.1
–
16.5
40.3
4.3
0.2
37.4
11.4
22.4
–
54.1
83.1
4.5
114.8
213.1
366.4
–
–
–
–
7.9
5.1
379.4
603.9
9.9
–
0.1
–
10.4
6.6
630.9
0.3
–
–
0.2
0.1
46.3
16.1
–
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
–
86.0
0.9
–
–
0.3
0.1
93.0
23.0
3.4
120.7
129.3
12.9
3.3
9.1
0.5
2.0
–
157.1
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 Payments in advance against unrealised losses on derivative instruments.
3 Futures margin as required for trading under futures account agreements.
The CSR group’s financial instruments are Level 2, except for payments in advance assets and futures margin liabilities which are Level 1. The
definitions of the fair value hierarchy levels are below.
Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs). 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 2022 and no transfers in either direction in 2022.
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.
98 CSR LIMITED ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
21 Financial risk management (continued)
vi) Cash flow hedging
The impact of hedging instruments designated in material hedging relationships as of 31 March 2022 on the statement of financial position of the CSR group is as follows:
Notional amount
Asset
carrying
amount
Liability
carrying
amount
Changes in value
of instrument used
for calculating
hedge
ineffectiveness –
gain (loss)
Changes in value
of hedged item
used for
calculating hedge
ineffectiveness –
gain (loss)
Cash flow hedge
reserve
(continuing
hedges) –
gain (loss)
Hedge gain (loss)
recognised in
other
comprehensive
income1
Gain (loss)
reclassified from
other
comprehensive
income to profit or
loss before tax2
Line item in
statement of
comprehensive
income
2022
Aluminium commodity swaps
439,350 tonnes
0.2
(603.9)
Alumina/aluminium commodity
swaps3
873,000 tonnes
37.4
(9.9)
Oil commodity swaps
285,000 barrels
Electricity commodity swaps
388,946 MWh
Gas commodity swaps
Forward currency contracts (sales)
Forward currency contracts
(purchases)
–
1,080.0
51.0
11.4
22.5
–
53.5
0.6
–
(0.1)
–
(8.7)
(1.6)
(475.3)
40.4
14.7
31.0
0.4
(46.6)
(0.8)
Environmental certificates
96,500 certificates
0.2
–
0.2
2021
Aluminium commodity swaps
Alumina/aluminium commodity
swaps3
335,550 tonnes
675,000 tonnes
Oil commodity swaps
465,000 barrels
Electricity commodity swaps
Gas commodity swaps
Forward currency contracts (sales)
Forward currency contracts
(purchases)
521,453 MWh
2,420,000 GJ
768.4
15.2
0.9
(129.3)
(181.6)
–
–
0.5
0.1
92.4
1.2
(12.9)
(3.3)
(9.1)
(0.5)
(0.9)
(1.4)
(4.7)
6.2
(1.5)
(0.5)
101.6
(4.9)
477.3
(43.1)
(14.7)
(31.0)
0.2
46.6
0.8
(0.2)
182.1
4.7
(6.2)
1.9
(0.2)
(101.5)
4.9
(603.7)
27.5
11.4
22.4
–
44.8
(1.1)
0.2
(128.4)
(12.9)
(3.3)
(8.6)
(0.4)
91.5
(0.2)
(621.8)
10.3
18.1
32.8
0.5
(10.7)
(0.6)
0.2
(170.6)
(16.6)
3.5
(5.6)
(0.4)
127.8
(5.1)
146.5
Trading revenue
30.1
Cost of sales
(3.4)
(1.8)
(0.1)
Cost of sales
Cost of sales
Cost of sales
(36.0)
Trading revenue
(0.3)
Cost of sales
–
Cost of sales
(11.0)
11.9
Trading revenue
Cost of sales
2.7
4.1
0.1
Cost of sales
Cost of sales
Cost of sales
(26.2)
Trading revenue
0.2
Cost of sales
1
2
The net hedge loss recognised in other comprehensive income totalling $571.2 million (2021: $67.0 million) less non-controlling interests of $186.6 million (2021: $17.8 million) reconciles to the hedge loss
transferred to equity in note 20.
The net loss reclassified from other comprehensive income to profit or loss before tax totalling $135.0 million (2021: $18.2 million net gain) less non-controlling interests of $42.2 million (2021: $7.6 million)
reconciles to the hedge loss transferred to the statement of financial performance in note 20.
3 Under the alumina/aluminium swaps entered into, the CSR group receives a floating alumina price and pays a floating aluminium price. Notional amount is tonnes of alumina.
9
9
99
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S
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|
C
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A
N
D
R
S
K
M
A
N
A
G
E
M
E
N
T
I
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
Group structure
22 Subsidiaries
Entity
2022
2021
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 Ltd2
CSR Industrial Property Trust
CSR Industrial Property Nominees No. 1 Pty Limited
CSR Industrial Property Nominees No. 2 Pty Limited
CSR International Pty Ltd
CSR Investments Pty Limited2
CSR Investments (Asia) Pty Limited
CSR Investments (Indonesia) Pty Limited
CSR Martini Pty Limited2
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
2022
2021
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.
23 Deed of cross guarantee
CSR Limited, AFS Systems Pty Limited, Bricks Australia Services Pty Limited, CSR Building Products Limited, CSR Martini Pty 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 and Rivarol Pty Limited are parties to a deed of cross guarantee (‘the Deed’) under which each
company guarantees the debts of the others. By entering into the Deed, the wholly owned entities have been relieved from the requirement to
prepare a financial report and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no other parties to the Deed that are
controlled by CSR Limited, they also represent the ‘extended closed group’.
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 2022
and 31 March 2021 of the closed group.
100 CSR LIMITED ANNUAL REPORT 2022
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 benefit (expense)
Profit after tax
ii) Consolidated statement of comprehensive income
$million
Profit after tax
Other comprehensive income, net of tax
Items that may be reclassified to profit or loss
Hedge profit recognised in equity
Hedge profit transferred to statement of financial performance
Exchange differences arising on translation of foreign operations
Income tax (expense) benefit relating to these items
Items that will not be reclassified to profit or loss
Actuarial gain on superannuation defined benefit plans
Income tax expense relating to these items
Other comprehensive income, net of tax
Total comprehensive income
iii) Summary of movements in consolidated retained profits
$million
Opening retained profits
Profit for the year
Actuarial gain on superannuation defined benefit plans (net of tax)
Dividends provided for or paid
Closing retained profits
2022
2021
1,544.7
(934.2)
1,477.7
(935.8)
610.5
57.0
(182.2)
(247.1)
14.7
(7.0)
(5.2)
240.7
0.5
(14.8)
226.4
22.0
248.4
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
2022
248.4
2021
167.8
51.1
(5.6)
(0.1)
(13.7)
0.1
–
31.8
280.2
2022
274.9
248.4
0.1
(182.0)
341.4
2.0
(2.6)
(3.2)
0.2
17.6
(5.3)
8.7
176.5
2021
155.5
167.8
12.3
(60.7)
274.9
101
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
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
2022
20211
168.7
298.2
224.6
53.0
18.5
8.9
7.6
779.5
20.5
113.9
32.2
117.8
575.7
110.5
59.9
8.8
163.5
11.7
243.2
158.4
210.3
40.7
5.1
0.4
7.7
665.8
21.2
102.6
27.8
104.5
600.6
116.2
58.3
11.6
122.9
12.4
1,214.5
1,178.1
1,994.0
1,843.9
218.5
30.0
3.1
18.9
120.7
391.2
–
125.5
5.2
222.8
2.1
355.6
746.8
111.4
30.2
5.7
47.3
112.4
307.0
0.1
134.4
8.3
242.5
2.7
388.0
695.0
1,247.2
1,148.9
966.7
(60.9)
341.4
966.7
(92.7)
274.9
1,247.2
1,148.9
1 Balances have been restated to reflect the group’s change in accounting policy for capitalised costs relating to Software-as-a-Service (SaaS) arrangements (refer note 1).
102 CSR LIMITED ANNUAL REPORT 2022
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 expense for the year
Total comprehensive expense for the year
Statement of cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net decrease in cash held
Transactions with non-controlling interests
Profit allocated to non-controlling interests
Dividends paid to non-controlling interests
Gove Aluminium Finance
Limited
2022
2021
245.2
370.9
424.4
385.2
697.5
26.8
(337.1)
(310.3)
41.4
(74.3)
29.5
(3.4)
8.1
–
191.5
186.31
172.1
88.7
587.9
18.9
(59.3)
(40.4)
12.4
(25.4)
(37.5)
(50.5)
5.7
14.7
1 Balance has been restated to reflect a correction to deferred tax on property, plant and equipment.
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% (2021: 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% (2021: 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.
103
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
26 Equity accounting information
Carrying amount ($million)
Entity1
Building products
Rondo Building Services Pty Ltd2,4
Gypsum Resources Trust Australia2
New Zealand Brick Distributors3
Other2
Total investment
2022
Equity
accounted
investment
Long-term
loan
Net
investment
Long-term
loan
2021
Equity
accounted
investment4
Net
investment4
–
12.0
–
–
12.0
20.0
–
7.8
0.3
28.1
20.0
12.0
7.8
0.3
40.1
–
12.0
–
–
12.0
15.6
–
7.5
0.3
23.4
15.6
12.0
7.5
0.3
35.4
1 The CSR group’s interest in these entities is 50% (2021: 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 investment4
Share of net profit before income tax
Share of income tax
Dividends and distributions received
Foreign currency translation and other
Disposal of equity accounted investment
Closing net investment
ii) Summarised financial information of joint venture entities
$million
Statement of financial position
Current assets
Non-current assets4
Current liabilities
Non-current liabilities
Statement of financial performance
Revenue
Share of net profit after tax
Rondo Building Services Pty Ltd
Other
2022
35.4
22.2
(6.6)
(10.9)
–
–
40.1
2021
42.3
19.3
(5.8)
(18.3)
(1.8)
(0.3)
35.4
2022
2021
122.9
59.2
79.4
46.6
100.1
66.2
67.8
50.4
344.8
259.3
14.7
0.9
12.8
0.7
4 Balance has been restated to reflect the group’s change in accounting policy for capitalised costs relating to Software-as-a-Service (SaaS) arrangements. Refer to note 1
for further details.
iii) Balances and transactions with joint venture entities
$million
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
Note
2022
2021
32
0.5
10.6
9.8
48.1
3.9
0.4
8.4
7.5
33.6
4.2
104 CSR LIMITED ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
27 Parent entity disclosures
i)
Summary financial information of CSR Limited
$million
Statement of financial position
Current assets1
Non-current assets
Current liabilities1, 2
Non-current liabilities2
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
Statement of financial performance
Profit after tax for the year
Total comprehensive income
2022
2021
737.3
1,850.2
(1,203.7)
(238.1)
684.2
1,787.9
(1,013.6)
(265.6)
1,145.7
1,192.9
966.7
11.3
167.7
966.7
11.0
215.2
1,145.7
1,192.9
134.4
134.7
124.7
125.5
1 As at 31 March 2022 CSR Limited is in a net current liability position of $466.4 million (2021: $329.4 million). The net current liability position is due to intercompany
payable balances held with controlled entities. CSR Limited, as the parent entity, determines when these balances will be settled and the subsidiaries cannot call upon
these liabilities for settlement.
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 $7.9 million
respectively (2021: $24.0 million and $5.4 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 $189.3 million and $15.4 million respectively (2021: $207.0 million and $17.4 million respectively). See notes 15 and 16
for further details.
2
ii) CSR Limited transactions with controlled entities
During the financial years ended 31 March 2022 and 2021, 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
2022
2021
28
120.1
2.2
122.3
123.4
3.2
126.6
1 Financial guarantees disclosed above relate to bank guarantees provided to third parties to guarantee CSR Limited’s performance of its liabilities of $77.3 million (2021:
$80.6 million) and guarantees provided to third parties outside of the CSR group of $42.8 million (2021: $42.8 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 2022 (2021: $nil).
105
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 2022 for the CSR group were $32.0 million (2021: $31.9 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 2022 contributions
totalled $29.5 million (2021: $28.9 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 2021. The funding requirements were
reviewed as at 30 June 2021. 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 104%. Therefore, as at 31 March 2022, CSR Limited was required to provide bank guarantees of $2.2
million to the trustee of the fund to satisfy the balance of its commitments (2021: $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 2021
$nil from 1 April 2021
63.4
32.1
(57.1)
(28.0)
6.3
4.1
0.2
0.1
Pilkington (Australia)
Superannuation Scheme DBD $nil from 1 April 2021 16.2 (18.3) (2.1) –
1 Actuarial liabilities are determined to be past service liabilities based on membership accrued up to 31 March 2022.
106 CSR LIMITED ANNUAL REPORT 2022
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
Actuarial gain incurred during the financial year and recognised in the statement of comprehensive income
2022
2021
3.6
2.5
27.4
53.0
6.1
13.5
2.8
2.5
28.1
47.0
2.7
22.2
2022
2021
0.7
3.0
(3.2)
0.5
0.1
0.9
2.9
(2.7)
1.1
17.6
Cumulative actuarial losses recognised in the statement of comprehensive income
(50.5)
(50.6)
1 Disclosed in selling, administration and other operating costs.
Impact of plans on the statement of financial position
$million
Net asset of superannuation defined benefit plans
Fair value of assets
Present value of liabilities
Net asset
Included in the statement of financial position
Other non-current assets (note 32)
Other non-current liabilities
Net asset
Movements in the fair value of the defined benefit plan assets
Assets at the beginning of the financial year
Interest income
Return on assets (in excess of interest income)
Contributions from the employer
Contributions from participants
Benefits paid
Assets at the end of the financial year
Movements in the present value of the defined benefit plan liabilities
Liabilities at the beginning of the financial year
Current service cost
Finance cost
Contributions from participants
Actuarial gain
Benefits paid
Liabilities at the end of the financial year
2022
2021
111.7
(103.4)
123.5
(115.1)
8.3
8.4
10.4
(2.1)
11.1
(2.7)
8.3
8.4
123.5
3.2
0.1
0.3
0.1
(15.5)
121.4
2.7
10.8
0.4
0.1
(11.9)
111.7
123.5
115.1
0.7
3.0
0.1
–
(15.5)
129.9
0.9
2.9
0.1
(6.8)
(11.9)
103.4
115.1
107
NOTES TO THE FINANCIAL REPORT | OTHER
28 Employee benefits (continued)
i)
Superannuation commitments (continued)
Net asset (liability) of superannuation defined benefit plans
169.9
158.5
180
160
140
120
100
80
60
40
20
0
134.3
126.1
129.9
121.4
123.5
115.1
111.7
103.4
11.4
8.2
(8.5)
8.4
8.3
2018
2019
2020
2021
2022
Present value of fund liabilities ($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 2022, 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
2022
3,143,063
835,606
(186,398)
(386,023)
2021
3,116,307
1,372,449
(247,314)
(1,098,379)
3,406,248
3,143,063
There were no vested and exercisable shares at 31 March 2022 (2021: 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 2022 is set out below:
Grant date
25 July 2018
19 July 2019
21 July 2020
21 July 2021
Total
Expiry date
1 April 2021
1 April 2022
1 April 2023
1 April 2024
Performance rights
2022
–
1,235,549
1,335,093
835,606
2021
503,592
1,267,022
1,372,449
–
3.406,248
3,143,063
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 2021
Relative TSR with a
positive absolute TSR
requirement
Monte-Carlo simulation
1 April 2021
21 July 2021
EPS growth
Binominal tree
1 April 2021
31 March 2024 31 March 2024
2.7 years
$5.30
32%
4.7%
0.14%
$4.67
2.7 years
$5.30
32%
4.7%
0.14%
$2.32
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.
108 CSR LIMITED ANNUAL REPORT 2022
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
2022
272,319
$5.84
2021
–
–
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
2022
348,406
78,185
2021
531,674
109,573
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 $5.46 (2021: $3.49).
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
2022
2021
2,520,154
1,509,875
951,555
1,106,453
598,766
928,369
4,981,584
2,633,588
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.
109
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 2022 (2021: 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
2022
4,800,500
1,171,722
5,972,222
2021
4,505,319
508,978
5,014,297
Details of remuneration and the CSR Limited equity holdings of directors and other key management personnel are shown in the remuneration
report on pages 51 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 2022 (2021: 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 2022 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 2022, refer to note 19.
31 Commitments and contingencies
i)
Commitments
$million
Contracted capital expenditure comprises:
Payable within one year
Payable within one to five years
Total contracted capital expenditure
ii) Contingencies
2022
2021
27.9
1.9
29.8
8.6
–
8.6
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.
110 CSR LIMITED ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORT | OTHER
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
34 Other accounting policies
Note
26
28
2022
10.6
12.1
22.7
1.3
10.4
11.7
2021
8.4
15.0
23.4
1.3
11.1
12.4
2022
2021
657,000
29,500
657,000
37,080
686,500
694,080
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 2022 included $177.7 million of cash at bank and on hand (2021: $95.8 million) and $nil short-term deposits
(2021: $155.0 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.
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 2022; 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
11 May 2022
Julie Coates
Managing Director and CEO
11 May 2022
112 CSR LIMITED ANNUAL REPORT 2022
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report to the Members of CSR Limited
Report on the Audit of the Financial Report
Opinion
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
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 2022, 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 2022 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
$213.3 million as at 31 March 2022. 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 2022 the Group’s consolidated
statement of financial position includes goodwill
amounting to $59.9 million, other intangible assets
amounting to $10.1 million, property, plant and
equipment amounting to $666.1 million and right-of-
use lease assets amounting to $126.0 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 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.
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 Roofing and AFS CGUs were identified by
management as the CGUs requiring additional
disclosure due to their 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 Group’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 Roofing and AFS CGUs 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.
- 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;
- assessing the historical accuracy of forecasting of the CGUs;
- obtaining and reading the position papers prepared by management to
support the models for the CGUs;
- evaluating management’s process, including testing design and
implementation of controls in respect of the preparation and review of
impairment conclusions including forecasts and key assumptions; 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 2022, 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 2022
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 51 to 70 of the CSR Limited annual
report for the year ended 31 March 2022.
In our opinion, the Remuneration Report of CSR Limited for the year ended 31 March 2022, complies with section 300A of the Corporations Act
2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A
of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
J L Gorton
Partner
Chartered Accountants
Sydney, 11 May 2022
115
SHAREHOLDER INFORMATION
Shareholder information
20 LARGEST HOLDERS OF ORDINARY SHARES
As at 29 April 2022
RANK
NAME
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
PRUDENTIAL NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
NAVIGATOR AUSTRALIA LTD
MR ALLAN ERNEST ORMES
CSR SHARE PLAN PTY LIMITED
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMS PTY LTD
V M NOMINEES PTY LTD
CSR SHARE PLAN PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
MR BRIAN FREDERICK DITCHFIELD
NETWEALTH INVESTMENTS LIMITED
Top 20 holders of issued capital
Remaining holders balance
SUBSTANTIAL SHAREHOLDERS OF CSR LIMITED
UNITS
% OF UNITS
150,703,076
63,751,635
61,873,388
31,831,314
11,497,333
4,915,908
3,918,782
3,423,667
2,500,000
1,620,977
1,075,351
1,066,667
819,211
812,149
763,592
550,000
547,321
500,000
500,000
488,079
343,158,450
142,224,326
31.0
13.1
12.7
6.6
2.4
1.0
0.8
0.7
0.5
0.4
0.2
0.2
0.2
0.2
0.2
0.1
0.1
0.1
0.1
0.1
70.7
29.3
State Street Corporation and its subsidiaries advised that as of 26 October 2021, it and its associates had an interest in 24.4 million shares,
which represented 5.03% of CSR’s issued capital at that time.
The Vanguard Group Inc. and its subsidiaries advised that as of 5 January 2022, it and its associates had an interest in 24.3 million shares,
which represented 5.002% of CSR’s issued capital at that time.
Blackrock Group and its subsidiaries advised that as of 19 April 2022, it and its associates had an interest in 24.3 million shares, which
represented 5.01% of CSR’s issued capital at that time.
SHAREHOLDINGS BY GEOGRAPHIC LOCATION
Location
AUSTRALIA
NEW ZEALAND
HONG KONG
UNITED KINGDOM
UNITED STATES OF AMERICA
Other
Total
Units
481,838,732
2,181,795
431,446
350,888
164,940
414,975
Units %
99.3
0.4
0.1
0.1
0.0
0.1
Holders
47,093
1,047
30
220
92
197
Holders %
96.7
2.2
0.1
0.5
0.2
0.3
485,382,776
100.0
48,679
100.0
116 CSR LIMITED ANNUAL REPORT 2022
% of issued capital
2.4
9.3
5.3
9.6
73.4
100.0
Units
32,357
Franked amount
per share at 30%
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
14.5 cents
9.5 cents
13.5 cents
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
23,505
19,257
3,656
2,177
84
48,679
Units
11,459,948
44,975,924
26,388,961
46,454,562
356,103,381
485,382,776
Minimum $500.00 parcel at $6.08 per unit
83
Minimum parcel size
Holders
1,306
RECENT CSR DIVIDENDS
Date paid
December 2016
July 2017
December 2017
July 2018
December 2018
July 2019
December 2019
December 2019
December 2020
December 2020
July 2021
July 2021
December 2021
Type of dividend
Dividend per share
Franking
Interim
Final
Interim
Final
Interim
Final
Interim ordinary
Interim special
Interim ordinary
Interim special
Final ordinary
Final special
Interim ordinary
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
14.5 cents
9.5 cents
13.5 cents
0%
50%
50%
75%
100%
50%
50%
50%
100%
100%
100%
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
117